Millions Milked In Health Scams
The Sun Herald
Saturday June 13, 1992
IT'S the ultimate golden goose - scams that cost the Australian health industry millions of dollars each year as Australia's Medicare bill spirals to$4.2 billion.
And for people with private health insurance - about half the population -their bill is at least 8 per cent higher because of fraud against private companies like MBF, Medibank Private and HCF.
Neil Swindells, MBF's NSW general manager, estimates that MBF pays $20 million a year to dentists alone in fraudulent claims.
Just how much money is lost through Medicare fraud is unknown, concedes the country's top health fraud investigator, Richard Karling, an ex-Federal Police officer who now heads the Health Insurance Commission's Professional Review Division.
He said fraud was increasing and scams becoming more ingenious, although the vast majority of Australia's 30,000 doctors were honest.
"With the recession a lot of people try various avenues to get money," Mr Karling said.
"The health system - through Medicare - is a prime target. It's the golden goose."
Last year (1990/91), 77 cases of fraud were referred to the Director of Public Prosecutions. So far, 25 receptionists and patients and 15 doctors have been prosecuted, while others are still before the courts.
The year before (1989/90), 48 receptionists and patients and 11 doctors were prosecuted.
THE DOCTOR
IN WHAT is the biggest known case of Medifraud, Sydney doctor Paul Corbett, 34, took only 13 months to defraud Medicare of $556,000 by forging Medicare forms.
In the scam, Corbett asked receptionists and nurses to sign forms for services they had not received.
If they refused to sign, they were threatened with the sack.
He also asked 12 doctors he employed to sign blank forms "for administrative convenience". He then claimed services under Medicare.
The HIC's Richard Karling said Corbett "decided to make as much money as he possibly could from the golden goose - Medicare".
"Usually the matters that we deal with aren't of that magnitude."
Mr Karling said Corbett, who drove a Volvo with the personalised plates"DRPAUL", advertised for doctors to work as locums in his Sydney practices.
The doctors applied for a provider number under Medicare and once they had advised Corbett of the locum number were told the job had fallen through.
Corbett then used their locum numbers to bill Medicare.
In jailing Corbett for six years at Katoomba District Court, Judge Cooper said Corbett, a high-flying Sydney University graduate, first broke the law three weeks after opening his practice at St Marys, in Sydney's west.
The court was told Corbett had claimed $815,266 in one 13-month period and of this, $556,762 came from false claims.
Two of the offences were committed two weeks after Corbett had been arrested and charged with the other 90 counts. They related to receipts given to a receptionist to allow her to make claims on Medicare in substitution for her wages.
THE RECEPTIONIST
THEY are the trusted ones who often know more about a medical practice than the doctors who employ them.
Yet more receptionists than doctors are involved with fraud and are caught
"If a receptionist is committing fraud, the amount of money involved is always very large because they have access to the money," Mr Karling noted.
In what is believed to be the biggest scam involving a receptionist, Queenslander Susan Gae Davidson, of Warwick, was charged with forging receipts worth $72,000. Health Insurance Commission investigators went through more than 30,000 Medicare forms to uncover the extent of the fraud.
The case was heard in Brisbane District Court in March, 1992, and Davidson was sentenced to three years in jail and will serve a minimum of nine months.
Davidson had been filling out forms using patients' Medicare numbers kept on file. She forged patient's signatures and cashed the Medicare cheques when they arrived at the surgery.
Mr Karling said that in several cases, doctors only realised their receptionists had been faking Medicare forms when they saw they had been paid for home visits or for conducting minor surgery.
"They know they don't do home visits yet they have been paid for them," Mr Karling said.
"When members of the public commit fraud it may be a one off. But fraud involving receptionists may run over a period of years.
"Sometimes they are not only taking Medicare to the cleaners but the doctor who employs them as well.
"Often because the receptionist does the banking the doctor doesn't have a clue how much they (the doctors) are earning.
"Often the scams don't come to light until the end of the financial year."
The most common way receptionists defraud Medicare is by tampering with Medicare claim forms, which patients sign when they are treated.
These are packaged in batches of 50 and the doctor signs a cover note saying the information contained in the batch is true and correct. But among the 50 forms may be one or two phoney ones for services not rendered.
When the cheques for these services arrive, the receptionist may bank them in an account and then withdraw the money for himself or herself.
THE PATIENT
SCOTT Bradstreet was fined $1,500 in Waverley Local Court, in eastern Sydney, for five fraud offences involving Medicare.
Bradstreet stole documents from a pathology lab and made claims to Medicare for services not received, according to Detective Constable John Watson, of Bondi police.
Bradstreet was paid $532 in cash at a Medicare office. Once picked up by the HIC, he pleaded guilty to all charges.
Mr Karling, of the Health Insurance Commission, said patient fraud was the most common type of Medifraud.
Patients alter doctors' accounts to obtain more money or alter item numbers so they can claim for services not received.
Another scam involves illegal immigrants who attempt to avoid Australian health bills.
In 1990/91, the HIC recovered 74 Medicare cards from illegal immigrants trying to receive free health cover.
"It is the public purse that is ultimately being robbed," Mr Karling said. "We're talking about small amounts of money, but you find in these cases many illegal immigrants have fake passports and visas.
"It is small but organised."
THE PHARMACIST
PRESCRIPTION fraud costs the Pharmaceutical Benefits Scheme hundreds of thousands of dollars a year.
In what is believed to be the biggest fraud involving a pharmacist, William Katsogiannis, of Sydney, pleaded guilty to a $190,000 prescription fraud.
Katsogiannis, who owned and operated Bill's Pharmacy in Pittwater Road, Gladesville, admitted making an extra $10,000-$15,000 a month through false claims made over a 19-month period. He told investigators he did it because he had no money to pay his tax bills.
Katsogiannis was sentenced to two years in jail, with a minimum term of nine months, at Sydney District Court.
Claims for pharmaceutical benefits - the amount not covered by the patient's contribution - are made each month by pharmacists.
The HIC discovered Katsogiannis was claiming for repeats on prescriptions when the maximum number of repeats on the original prescriptions had already been issued.
More than 80 patients who had used the pharmacy were interviewed and 69 made statements which confirmed medication had been wrongly claimed for by Katsogiannis.
The prescriptions related to the supply of insulin and non-medication needs, including needles, to diabetics.
PATHOLOGY
DESPITE recent publicity about the big money to be made in pathology, the Health Insurance Commission has yet to prosecute anyone for pathology fraud.
"We don't know where the greatest amount of money is involved but pathology has certainly had the greatest publicity," Mr Karling said.
In 1990/91 pathology cost the Federal Government $630 million.
Mr Karling said a major problem was that in most States pathology laboratories are owned by business people.
"I believe this is a potential problem. I believe non-medical persons see pathology as a money-making business - not a health service," he said. "There are greater ethical and legal requirements placed on doctors.
"Why else would entrepreneurs be there? It's not because they're interested in pathology.
"They see it was a business."
Mr Karling said agreements between labs and doctors, which give doctors a percentage of the Medicare benefit generated by the tests they ordered, were"against the spirit of the legislation".
So were payments for staff at a doctor's surgery, for cellular phones, for cars or for children's school fees.
"But we cannot prosecute," Mr Karling said.
"The legislation says a pathologist shall not offer any inducement to encourage a doctor to request pathology services. But most large laboratories employ teams of lawyers to get around the legislation."
Mr Karling said the Health Insurance Act, written in 1973, needed to be rewritten to tighten the regulations.
PRIVATE HEALTH FUNDS
HEALTH insurance companies esti mate 8pc of outlays are paid in fraudulent claims by patients or health providers such as dentists and physiotherapists.
At MBF - the largest private health fund in NSW - $20 million (or 8pc of total outlays) is paid each year in fraudulent claims to dentists alone, according to NSW general manager Neil Swindells.
This means that without fraud, health insurance would cost at least 8pc less for consumers.
"We obviously face fraud, as do all industries," Mr Swindells said. "But the public perception is that fraud against a health fund isn't fraud.
"People think that because they pay year in and year out, they should be able to get what they can from the system.
"We are discovering more and more fraud. And people are becoming more ingenious. But the big money is still being lost in the tried and tested methods - the most common being changing item numbers on accounts."
Mr Swindells said MBF in NSW employed nine people to investigate fraud.
The most common type of fraud is when a dentist bills a patient for services worth $400 when only $200 of services were rendered.
The patient claims from the health fund for $400 of services and is reimbursed half the fee - $200. The dentist is paid the full fee - the $200 -and the patient doesn't have to pay the gap.
The most well-known case among health insurers is known as The Black Glove Affair.
In 1989, a man dressed in drag entered an MBF office and filed a membership form. The scam was uncovered when a clerk realised there were nine other applications with different names and addresses - all in the same handwriting
Mr Swindells said by paying about $1,000 for the first month's membership for each of the 10 applications, the fraudster could have claimed thousands of dollars in health costs.
Fortunately, the fraud was picked up before the applications were approved
MEDIFRAUD: HOW THE WAR IS BEING WAGED
WHILE the incidence of Medifraud appears to be increasing, the number of Health Insurance Commission investigators has been cut.
Richard Karling, who heads the Health Insurance Commission fraud section, said in 1987/88 36 investigators were working on fraud cases. This year the figure is down to 27.
"The screws have been tightened and when people have left they have not been replaced," Mr Karling said. "It's difficult. The more people you have to do the work, obviously the more cases you can investigate."
For private health funds, the effort to combat fraud is increasing.
MBF alone now employs nine people to investigate fraudulent claims, up from three people in 1987.
"It takes time and costs money but it's part of the business," MBF NSW general manager Neil Swindells said.
The NSW branch of the Australian Medical Association has a committee to help doctors who are under investigation.
Dr Anthony Dinnen, chairman of the AMA's medical practice defence committee, was sceptical about the worth of the HIC's investigations.
"The efforts put into finding the bad apple have been excessive," he said. "Most doctors are honest. Considering the number of investigations and the surveillance carried out on doctors, the net result of doctors prosecuted for fraud and convicted is not very great.
"They could spend 10 times as much and they probably wouldn't find many more cases of fraud."
© 1992 The Sun Herald