This Week in AML

Fraud - This Time It's Healthcare

This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff talk about FinCEN Advisory FIN 2021-A001 which focuses on health insurance and healthcare fraud. John and Elliot discuss the red flags in the Advisory and actions FIs can take to identify this activity and messages they can share with their customers to help them recognize these schemes.


Fraud – This Time It’s Healthcare Transcript


Elliot Berman: Hi, John, how are you today?

John Byrne: Hey Elliot. Good. I would say since our last conversation, there's been a lot of activity regarding potential for a domestic terrorism statute. There's been a lot of op-ed pieces and so more to come on that space. And so I just wanted to highlight that, but there's been a couple of things from FinCEN that came out this week and wanted to ask you about one particularly. There's one on PPP fraud, sort of FAQ's, and people can look at that, but there was another advisory that that I know you saw, we chatted about it, on healthcare-related fraud because of COVID-19. What were some of the things that jumped out at you there?

Elliot Berman: Well, what jumped out at me is, scammers are doing what they do. They look for flows of money, where they can get in, disrupt them, and redirect them to their benefit. What we're seeing and what FinCEN is talking about, is a lot of healthcare-related frauds that have occurred since the pandemic declaration. The fraudsters are looking to access federal funding, but also health insurance funding to pay for unnecessary testing, and other things like that. The release itself has 16 red flags - I think it would be valuable for folks to take a look at it. And as they are thinking about how they detect fraud within their customer base, and as they're looking at their transaction monitoring output that they add these topologies in and, really see if they have can focus their efforts toward these types of scams. The interesting thing that caught my eye was that you might think of these as potentially pretty small dollars, but as often happens in these FinCEN advisories, they also include several case studies from pending criminal actions, and things that have at least gotten to the indictment stage.

One of them is a $30 million scheme perpetrated in New York. Through taking control of small pharmacies and using those pharmacies to be the fraudulent billers. Another one was from California - it was a medical technology company that spun up a $69 million fraud. Again, we're not talking a hundred thousand here and a hundred thousand there...these folks are going for serious dollars, in one big swoop. But again, in both cases, they had something to do with testing or providing testing, fraudulent services that weren't required, or didn't really have anything to do with COVID-19, but were being billed through the government programs.

John Byrne:[John Sneezes]

Elliot Berman: Bless you!

John Byrne: [Ha] So that's a first for these.

Elliot Berman: Yes. And how appropriate when we're talking about healthcare?

John Byrne: Exactly. Exactly. Sorry about that.

Elliot Berman: That's okay! So, to me this is one thing where it's easy to say, "Oh, it's just a little more fraud," which I know our listeners don't do, but in an overwhelming environment, sometimes you do have to say, "okay, I'm going to try to go after the big ones".

These {FinCEN examples] are often big ones. Now in none of the cases that are talked about, have we seen financial institutions taking a loss, so I don't think this is about a risk to the financial institution, but it is about detecting suspicious activity - which much of the suspicious activity that the industry does detect, is not putting the industry itself at risk, but putting the financial system at risk.

And it was interesting - some of them - "I recognize this", "Oh, we've seen that fraud.." it just wasn't healthcare-related. The business being located in one place and all the clients appear to be located nowhere near them, so unless it's all tele-health, it's those people didn't all drive, 80 miles to get their COVID test kind of a thing.

John Byrne: Yeah. That all makes sense. The last thing I just want to mention before we close is, I noticed there was a bunch of crime that related to cyber. So, the use of personally identifiable information, whether it was a tele fraud scheme, or FinCEN also references identity theft, so they get personal information, then they use that to commit the fraud against the healthcare benefit program. So, as we know in the AML space, cyber is a connecting the dots, if you will, through everything.

And so, a lot of these frauds - obviously during a pandemic people, aren't in person - but more than normal, the use of technology to get personal information, to create false companies, create false clients so that they can book some of these billing schemes, [etc...]. So once again, it makes so much sense to pay attention to technology and not to give up your information.

Elliot Berman: Yes. And I know that many financial services companies work really hard to educate their customers. Again, including some of these examples, if you get a call from somebody about some health services, do your best to verify that they're the real deal and not just somebody trying to get your personal identifiable information.

John Byrne: Yeah. The last thing we'll mention is FinCEN always says in these advisories, "any of these indicators by themselves doesn't necessarily warrant a SAR", but obviously you factor that in your decision-making process.

Elliot Berman: Absolutely. Yeah. And before we close - so it's FinCEN 2021-A001 - so it's the first piece of official guidance on their website, right?

John Byrne: Exactly. And they have a link that you can go to a different website for additional resources to notify on healthcare fraud, waste and abuse within Medicare, Medicaid chip or the marketplaces. So they give me a lot of really good information in this advisory.

Elliot stay safe and thanks for all the information today.

Elliot Berman: No problem. Have a good weekend.

John Byrne: See ya.