Let us say that you and your partners operate a family medical practice. There are three physicians and a staff of 12 that includes two people who handle accounts payable and receivable.

With Mary and Joe as the focus, your office is currently under investigation for possible healthcare insurance fraud. What should you do?

A little background

Fraud is a white-collar crime that takes many forms: money laundering, embezzlement, credit card fraud, mail fraud, tax evasion and healthcare fraud, among others. While these are not violent crimes, they cost the public billions of dollars, and the penalties can be harsh.

How healthcare insurance fraud occurs

Healthcare fraud is extensive, and in a medical office, fraudulent activity may go on for years before anyone becomes suspicious. For example, Mary and Joe may bill a health insurance company like Medicare for services to patients that never occurred or bill a higher fee than necessary for a standard procedure. You or your partners could be under investigation, too, if, for example, you ordered tests that a patient did not need, then billed those tests to the insurer.

The New York statute

In the state of New York, penal code 176.05 defines insurance fraud and lists the penalty levels. For instance, insurance fraud in the fifth degree resulting in a loss less than $1,000 is a Class A misdemeanor. However, every fraudulent activity from fourth degree up to and including first degree is a felony. These felonies can involve many thousands of dollars in terms of loss.

Next steps

Now that you are aware an investigation has begun, explore your legal options promptly. At the very least, your employees Mary and Joe should seek legal representation without delay. An investigation into the possibility of fraudulent activity takes time. Meanwhile, work can begin to prepare a defense for the AR/AP team and anyone else in the office who needs legal assistance, including yourself and your partner.