of health care fraud, waste, and abuse schemes and wasted resources have been identified by government investigators, auditors, and insurance specialists.
Fraud, waste, and abuse offenses committed by administrative personnel in programs include: employee misrepresentation of recipient eligibility; overpayments or underpayments to recipients, third parties, or auxiliary providers; and withholding services and benefits to beneficiaries.
Examples of crimes perpetrated by auxiliary providers are collusive bidding, inferior delivery of services, and malicious destruction of records.
In addition, fraud, waste, and abuse are sometimes committed by organized criminal groups intent on shifting the balance of political power or wealth, creating "black markets."
Finally, some schemes are committed by street criminals who use government checks, food stamps, and so on for personal gain.
In some entitlement programs, the benefits themselves are counterfeited, altered, or manipulated, either manually or by technical means, thus compromising program objectives and derailing delivery networks. To reduce opportunities for fraud, waste, and abuse of checks, food stamps, coupons, or tokens in these programs, new electronic delivery systems are being installed that utilize computer debit "smart" cards. The risk-assessment premise is that by decreasing the number of benefit transfer points in the delivery process, program vulnerabilities can be reduced.
Fraud, waste, and abuse are particularly extensive in procurement. When public bureaucracies acquire and distribute large quantities of goods and services, the integrity of the process can be jeopardized by fraud, waste, and abuse. In the early 1990s, for example, over half of the U.S. Department of Defense budget was devoted to procurement. In one of the largest procurement prosecutions, clubbed "Ill Wind," dozens of defense contractors and Pentagon current and former employees were convicted for accepting kickbacks and paying bribes to obtain contract work illegally.
Typically, fraud, waste, and abuse occur in procurement systems in which there are excessive regulations and in those that lack competitive bidding processes or that require multiple layers of negotiations using intermediaries. Ineffective and inadequate internal checks and audits also create opportunities for malfeasance.
The number of civil and criminal prosecutions at both federal and state levels has increased dramatically over the past 20 years. In the federal court system, sentencing guidelines for white-collar offenses specify sanctions for fraud in government assistance programs and government procurement. Other prosecutorial techniques that have been used effectively include: the use of multijurisdictional task forces, targeting of prosecutions, and in very serious cases, invocation of the independent counsel statute whereby a special prosecutor pursues the investigation. Prosecutorial and investigative techniques, such as the use of financial document search warrants to seize records, files, accounting ledgers, and computer hardware and software, have proved helpful for combating fraud. The initiation of undercover investigations, storefront or sting operations, and increased use of visual and telephonic interceptions have also aided investigations and prosecutions in certain cases. Responses to fraud, waste, and abuse have also come from the administrative adjudication process. Administrative suspensions and debarments, for example, are being used with more frequency in benefit abuse and procurement cases now than in the past.
ANDREA G. LANGE
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