Tag Archives: fraud victims

Health care fraud: up to 10% of your medical expenses


Health care fraud is hardly new. However, according to a recent report from BDO, an accounting and consulting firm based in the U.K., it is responsible for up to 10% of all health care costs in the U.S.  For Medicare specifically, fraud represents $60 billion, or 10% of annual Medicare expenditures.

$1 billion Medicare fraud case just announced

The Justice Department recently announced the largest health care fraud case ever brought against individuals in this country. Philip Esformes, owner of about 30 nursing facilities in Florida has been charged with defrauding Medicare and Medicaid of more than $1 billion.

Preying on the elderly: At the core of the fraud scheme, prosecutors maintain, was cycling 14,000 older men and women in and out of nursing homes and assisted living facilities–whether they needed medical care or not. Esformes is also accused of giving narcotics to elderly patients. That way, patients had to stay in the facilities even longer, to treat their addiction.

Esformes and two other defendants billed Medicare for medical care, medical equipment, and high-priced drugs that patients either didn’t need or never received. The scheme involved paying kickbacks to doctors, pharmacists, health care consultants and other medical personnel.

The amount of cash taken by Esformes over the last 14 years: more than $4 million. The money paid for a “$600,000 watch, the leasing of private jets and chauffeured limousines, and periodic trips with escorts to a Ritz-Carlton Hotel in Orlando,” as reported in the NY Times.

What you can do to help prevent health care fraud

Prosecutions for health care fraud have increased recently. But $100 billion in estimated annual fraud costs is still a huge number. As is the case with other types of fraud–such as identity theft and e-mail scams–each of us can help protect ourselves and others.

Here, from the Centers for Medicaid & Medicare Services, are the key types of health care fraud,  some key ways in which all of us can help prevent, stop, and report the fraud that costs us so much money, and contributes to steadily rising health care premiums.

  • Take notes: Keep track of the dates and times of your doctors’ appointments, what occurred, and what treatments or medications were prescribed during those appointments.
  • Check statements: If you–or your parents–are covered by Medicare, check every statement that comes in.  See if Medicare was billed for diagnostic tests or services that the doctor never provided; look for anything that seems unusual.
  • Say “No” to freebies: If anyone approaches you anywhere and offers free services, groceries, or anything else in exchange for your Medicare number, say, “No, thanks” and walk away.
  • Never give out your Medicare number on the phone: If anyone phones and asks you to participate in a  “health survey,” then asks you for your Medicare number, hang up.
  • Ask questions: If a doctor, other health care provider, or a supplier tells you that medical equipment or services are free, and that all you need to do is give them your Medicare number, be suspicious. Ask how the cost of the equipment or treatments will be paid. Then ask yourself if the answer seems reasonable.
  • If you suspect Medicare fraud of any type, call 1-800-Medicare.
  • If you suspect any other type of health care fraud, call 1-800-HHS-TIPS.

See more posts on how to protect yourself or your parents, from becoming fraud victims.

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Mom and Dad may be more at risk of fraud than you think

Fraud and its cost to seniorsYou know your parents are careful when it comes to taking common-sense safety precautions such as not opening the front door to strangers, or keeping doors and windows locked at night.

Unfortunately, they may a lot less careful when it comes to  their money. A surprising new survey by True Link Financial shows that your Mom and Dad may be particularly at risk of fraud if they are:

  • Extremely friendly–Members of this group are 4 times more likely to be defrauded, possibly because they’re more willing to give people the benefit of the doubt
  • Financially sophisticated–They’re used to moving around large amounts of money
  • Frugal–Thrifty seniors are 5 times more likely to be sucked into a scam because they’re always looking for bargains

The fact is, fraudsters have gotten much more sophisticated and last year tricked seniors out of a staggering $36.48 billion.

Danger to seniors is everywhere

Take a look at the chart above, which is adapted from the True Link report.  See how seniors are being victimized, and the amount of money they lose to fraud. Then consider warning your parents about the best ways to protect themselves. Among the most important:

  • Never open a link in an e-mail that comes from anyone you don’t know–Always check the return e-mail address to see if it’s from the Website address of the source it claims to be from. If you have any questions, contact the agency or business by going to their Website.
  • Never provide any personal information whatsoever in an e-mail. The IRS, other government agencies, Internet companies, banks, and reputable businesses never request personal information or confirmation of passwords by e-mail. In fact, the IRS only contacts people via U.S. mail.
  • Never give any personal information of any kind over the phone, unless you initiated the contact– Again, one of the biggest scams going on today involves a caller saying that he or she is from the IRS, that you owe money, and threatening you with jail or a huge fine if you don’t pay right now. Anyone who gets a call like that should hang up immediately. When in doubt about any IRS matter, call the IRS at 800-829-1040.

See more examples of how con artists are stealing money from seniors and how to avoid–or help your parents avoid–being victimized. Also see how we can protect you and your business from losing money to embezzlers and other fraudsters.

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When mail fraud kills

Danger-signOn September 21, 2015, Stewart Parnell, of Lynchburg, Virginia, was sentenced to 28 years in prison for having knowingly introduced mis-branded, salmonella-tainted peanuts and peanut products into interstate commerce.

The sentence was groundbreaking. It represented the toughest penalty ever handed down for a corporate executive in a food poisoning case.

Officially, the convictions of Parnell, his brother, Michael, and other executives of the Peanut Corporation of America (PCA), were mostly for mail fraud and wire fraud, as well as conspiracy to profit by introducing adulterated peanuts and peanut products into the food supply.

This particular consumer and business fraud resulted in more than 700 reported cases of salmonella poisoning. Nine of the victims died. According to the Centers for Disease Control and Prevention, the actual number of cases of salmonella poisoning cases linked directly to PCA probably exceeded 22,000.

Why mail and wire fraud?

What many consumers may not know is that both mail fraud and wire fraud statutes are key tools in the ongoing battle to keep all of us from being victimized by fraud–or in this case, being sickened or killed.  In fact, “mail fraud” has been called the federal government’s “first line of defense” against fraud. Here are the key differences between them:

Mail fraud–Mail fraud involves participating in a scheme to obtain money or property by means of false pretenses (among other possible means)–in which the scheme is carried out by sending fraudulent materials via the U.S. Postal Service, or any private or commercial interstate carrier, such as FedEx, or UPS.

Parnell and other executives of the Peanut Corporation of America, fabricated certificates of analysis (COAs) that accompanied shipments of peanut products. They falsely stated that the food they were shipping was free of pathogens. In fact, there had been no testing of some of the peanut products. Worse, a number of lab tests had showed that salmonella pathogens were present. The  COAs accompanying the shipments had been falsified.

The mail fraud statute, in particular, has been broadened in recent years. You’re now likely to see “mail fraud” and “wire fraud” included among the charges and convictions in dozens of types of crimes. Here, from the U.S. Postal Inspection Service, are 32 examples of common scams that fall under the heading of mail fraud.

Wire fraud–Wire fraud occurs when when the information used to deceive victims is communicated by phone, radio, TV, or the use of an e-mail server.

To cite just one of many examples of wire fraud committed in this case, Parnell received an e-mail from the plant manager that some of the peanut products about to be shipped to a customer were tainted. Parnell’s reply: “Just ship it.”

There’s no question that under the right circumstances, mail fraud or wire fraud can be used to mislead and steal from any of us.

Hopefully, now that Stewart Parnell and the others at PCA are going to jail, mail fraud involving food products that can poison or even kill us will be less common in the future.

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Don’t ignore warning signs of identity theft

Time-bombEach day, we hear new stories of large-scale data breaches that affect several thousand and sometimes many millions of people.

In addition to the risks of having had one’s private information compromised, there’s another risk facing many of us: developing a “So what?” attitude.

Since ID theft is so commonplace, many people may assume that corporations, healthcare, and financial institutions will take care of the problem. Translation: “I don’t have to worry about it.”

The reality is, you do. There isn’t a major corporation, government agency, healthcare company, or other large business that isn’t working hard to make their records more secure. However, in many cases, security is still largely a case of “whack-a-mole.” By the time holes in security are identified and plugged, new vulnerabilities have been found.

Moreover, by the time most data breaches are discovered, the bad guys have been in the computers for many months, or even a few years. That means that when a breach is announced, and if your information was compromised, your Social Security number, date of birth, address, employer’s name, and other personal information already could have been used by criminals.

Lurking in the shadows

Danger still exists even if you haven’t seen any evidence that you have been victimized. In the case of the recent IRS breach, for example, in which more than 100,000 taxpayers’ information was stolen, the data thieves broke into the IRS system via a feature called “Get Transcript.” They requested copies of previous tax documents, and then proceeded to file for more than $39 million in fraudulent refunds.

How did they get in? By using previously stolen identification.

Too little, too late

You’ve undoubtedly read that companies, government agencies, or other institutions usually pay for credit or identification monitoring for people who’ve been identified as victims of data breaches. However, for any one of us, that service could be similar to locking the barn after the horse is stolen.

Moreover, because so much attention is now focused on large-scale data breaches, we can easily lose sight of the fact that identity theft often occurs one victim at a time; it can happen when we take out money from an ATM or use a credit card in a restaurant.

We all need to be vigilant

Thieves don’t necessarily use stolen identity right away. So if someone has your ID, financial difficulties are always just around the corner. The sooner you spot and address any potential issues, the less likely you are to face costly and time-consuming problems down the road. Here are some key warning signs that you always need to follow up on immediately:

  • Missing or lost credit cards
  • Any transaction you don’t recognize on a bank or credit card statement
  • Questionable information on your credit report
  • Bills you don’t expect in the mail
  • Any credit denials you receive, especially if your credit is good

The IRS offers an excellent and comprehensive guide on identity theft and how to protect yourself. Also, be sure to check ways to keep your personal information out of the hands of people who commit fraud by e-mail; see our tips on how not to be victimized by fraudulent e-mails.

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Fraud in American business is becoming more common


You probably believe that your business is safe from economic crime–that there’s no way you’d ever suffer financial loss due to embezzlement or other types of fraud.

If you’re confident that you needn’t worry about fraud, you may find some new statistics a bit unnerving.

PricewaterhouseCoopers recently revealed the results of a survey on economic crime in the U.S.and around the world. The study showed that almost half of U.S. businesses, 45%, report that they have been victims of economic crime. Equally frightening according to the new PwC study, more than half of those who reported having been victimized, said the number of occurrences of fraud have increased.

Who’s most at risk? As the chart above shows, financial businesses and companies in retail and other consumer industries are most vulnerable. Following closely are businesses in the communications sector. However, looking at the same chart, it’s hard to ignore that the range of victimized industries is quite wide.

Interestingly, PwC noted, more than twice as much fraud is now being detected by external  measures than was the case in 2011.

Understanding the real likelihood of being victimized by economic crime is a good first step toward detecting and preventing fraud–and ensuring that your own company doesn’t become a statistic in the next survey.

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