Since 1988, a computer at Blue Shield of California has been spitting out suspicious health-insurance claims for referral to its special investigations department.
Interestingly, many of the claims--more than $2.6 million worth so far this year--are simply repackaged versions of bills that the company had already rejected months or years earlier on suspicion of fraud.
For the Record
Los Angeles Times Tuesday May 22, 1990 Home Edition Business Part D Page 2 Column 1 Financial Desk 1 inches; 27 words Type of Material: Correction
Fraud--A headline on a story Sunday about medical fraud misstated charges against six San Diego defendants. They were charged with submitting false claims to health-insurance companies.
Unwilling to overlook a dime of potential profit, some entrepreneurs have been bundling up their contested claims and selling them as "investments." When the investors pass the claims on to Blue Shield for payment, the computer kicks them out and adds them to the special investigations department's growing workload.
The rebillings allegedly are a new manifestation of a complicated kind of health-insurance fraud that took hold in Southern California in the mid-1980s. Despite some federal criminal convictions and a successful civil racketeering suit filed by a group of insurance companies, the scheme refuses to die.
Indeed, it evolves: While insurance investigators cope with the rebillings, they say another group--working primarily in Los Angeles and Orange counties--has copied the original scheme and is busy trying to milk the system in its own way.
Health-insurance fraud is a $60-billion-a-year problem for insurance companies, by the estimate of Aetna Life Insurance Co. But, as a major force driving insurance premiums and general health costs skyward, it is also a menace to consumers. Harry S. Miller, Blue Shield's vice president for consumer affairs, said fraud may account for as much as 5 cents of every health care dollar.
Such fraud takes many forms, as clever criminals strive to stay a step ahead of the science of fraud detection. This story concerns just one type of scheme, but insurance officials say it is responsible for millions of dollars of losses and provides a glimpse of the state of the art of fraud in Southern California.
This recent contribution to the annals of health-insurance fraud is something that insurance companies have dubbed the "rolling labs" scheme. It is so called because it involves creating scores--even hundreds--of medical clinics that never seem to stay in the same place more than a week or two.
Telemarketing techniques are often used to recruit patients, particularly the elderly, with offers of "free" medical tests. Only those with health insurance are targeted, because seeking reimbursement from the insurers is at the heart of the scheme. The clinics generally perform only routine, non-invasive procedures such as heartbeat and blood-pressure measurement.
