DOJ's Rebecca Pyne on fighting fraud by organized crime

Health insurance programs have lost hundreds of millions of dollars due to fraud by organized crime rings. To learn how payers can recognize and respond effectively to this threat, FierceHealthPayer: Anti-Fraud spoke to Rebecca Kettelle Pyne, a trial attorney in the organized crime and gang section of the criminal division of the U.S. Department of Justice.

FierceHealthPayer: Anti-Fraud: Why are organized crime syndicates and gangs turning to health insurance fraud, and is this type of criminal behavior the work of American syndicates, international ones or both?

Rebecca Pyne: "Organized crime" is a phrase that can be interpreted in many ways. Our office is interested in international organized crime and traditional mafia/La Cosa Nostra (LCN) organized crime activity. So our office has a more limited focus in the world of healthcare rather than broadly [examining] any organized activity.

There are a number of reasons why organized crime groups would find it attractive to be involved in healthcare fraud. They're simply following the money, since successful fraudulent billing schemes can generate millions of dollars in a relatively short period. Healthcare fraud is also attractive because once a fraud scheme is perfected, it can be duplicated locally, regionally and even nationwide. This multiplies the profits from a particular scheme.

Also, there may be a belief that there's a low risk of detection in healthcare fraud. At least when the analysis is done between risk and reward, the analysis may weigh in terms of the reward side. Sophisticated schemes can be layered so that those who mastermind them are removed from actual criminal conduct. They can direct the scheme and profit from it but insulate themselves from directly engaging in the front-line criminal act.

In the past, there was also a perception that punishments for healthcare fraud may be less severe than other crimes, but I think that's no longer true. Federal statutes and the sentencing guidelines have enhanced enforcement and also increased sentences for healthcare fraud.

FHPAF: What are some typical schemes?

Pyne: With respect to international organized crime groups and LCN involvement in healthcare fraud, we see sophisticated healthcare fraud schemes carried out. For example, one of the largest Medicare fraud  schemes ever perpetrated by a single enterprise was conducted by an international organized crime group with members and associates located in the United States and Armenia. That scheme operated phantom clinics all across the country and drove more than $100 million in bogus bills to Medicare.

That international organization was linked to the highest level of Russian organized crime. It was operated with the assistance of a Russian "vor," a person high-ranking in criminal leadership in the former Soviet Union.

One of the problems when existing organized crime groups get involved in healthcare fraud is that they can employ their associates and members to carry out the scheme. Often the international organized crime groups draw from ethnic communities for assistance in perpetrating their offenses. We've seen this with Armenian and Russian groups. And we've also seen leaders overseas and proceeds moving overseas.

The types of schemes we've seen with international organized crime involve purely bogus medical claims. Patients were paid bribes for access to their Medicare numbers or for going in for services or testing. Medical claims can be billed under provider numbers stolen from doctors, so criminals combine stolen Medicare patient and provider information to submit fictional claims.

There are variations involving claims for medically unnecessary procedures. There may actually be a patient and a doctor, but the procedures aren't performed and false bills are generated. And in those types of situations, patients can be recruited or doctors can be bribed or paid kickbacks to participate. So theft of doctor and patient identities is a big factor in some cases we see.

This can occur with durable medical equipment or ambulance companies that bill for transportation of patients that is medically unnecessary or which never occurred. We also see sophisticated schemes where nursing home facilities and hospice facilities billed for services not rendered to patients.

FHPAF: What can you tell us about organized crime's involvement in staged car accidents?

Pyne: One area that is solely a private insurance matter is the history of Eurasian organized crime involvement in staging auto accidents. In those scenarios, the accident can be purely fictional, or they can recruit people to fabricate a car accident. These patients can be recruited to act as victims and could be paid to participate. And private insurance companies are billed for medical tests that are false and fraudulent or for medically unnecessary treatments. Those schemes can have similarities to Medicare fraud, but they really target private insurers.

FHPAF: What can health insurers do to make it harder for organized criminals to access health insurance identification numbers of patients and providers (and thereby make it harder for criminals to get into Medicare and Medicaid in the first place)?

Pyne: Putting together patient health insurance numbers and provider numbers can facilitate large fraudulent billing schemes. We've seen organized crime cases where blocks of patient information have been stolen from hospitals and then used to generate bogus claims.

So insurers could evaluate safeguards they have in their own systems on patient health insurance numbers and provider numbers to protect these from being available through corruption of databases. Educate employees on safeguarding information as well as patients and providers about the importance of protecting those numbers. Both paper and electronic files can fuel fraud schemes if they fall into the wrong hands.

FHPAF: What role does data analytics technology play in this fight?

Pyne: With any healthcare fraud scheme, data analytics can identify unusual billing patterns, which could indicate possible fraud to investigate further. Large fraudulent billing schemes involving purely fictional claims may be picked up through finding unusual billing patterns.

Here are examples: A new provider appears with large volumes of patient claims. Or claims are generated from providers in unusual locations relative to a patient's home. Or there are unusually large volumes of tests or procedures for a single patient or unusual combinations of procedures for a specific patient.

FHPAF: What's your best advice for special investigations units to combat fraud by organized crime?

Pyne: Many schemes are difficult to unravel and require extensive federal investigation; but watch for unusual claims or provider conduct, and train employees to report irregularities they see in billings or in their contacts with patients or providers.

Educate patients to report irregular medical claims they see under their name. And refer potentially fraudulent activity to law enforcement investigators early. Sharing information is so important because these schemes can involve multiple insurance companies and Medicare and be widespread, affecting many different entities.

The U.S. Department of Health and Human Services and the DOJ have a public/private insurance initiative underway designed to share information and best practices. The goal is to improve detection and prevent payment of fraudulent healthcare billings by both public and private payers. The Healthcare Fraud Prevention and Enforcement Action Team website is a place to look for information and potentially become involved in that partnership.

But in general, keeping abreast of developments in your state and new schemes reported in the press can certainly be helpful. Even basic practices such as conducting internet research on suspicious providers can be fruitful. We've seen insurers discover that they are victims of a targeted billing scheme when they learn that their provider has been indicted on a scheme.

Editor's Note: This interview has been edited and condensed for clarity.