Smart Biz Connection

Ileana Hernandez of Manatt on Healthcare Fraud and the Covid-19 Pandemic

Unfortunately, criminals often see a crisis as an opportunity, and the Covid-19 pandemic is no different. As the pandemic reached its height, there was a spike in healthcare fraud claims and prosecutions. As a result, healthcare providers had more patients than they could treat and were overwhelmed by medical bills and expenditures. Additionally, increased demand strained existing resources. Fraudsters took advantage of these weaknesses and added paint to the suffering of people trying to recover.

Ileana Hernandez of Manatt, Phelps & Phillips Law Firm knows about these challenges firsthand. She explains why healthcare fraud is likely to increase during the Covid-19 pandemic.

Hernandez also shares information on how health insurers are dealing with the virus and why pharmaceutical companies are susceptible to similar challenges.

With the Covid-19 pandemic showing no sign of stopping, healthcare fraud has become an issue that preoccupies health insurer executives and attorneys alike. Although it is too early to determine conclusively if this is the case, Hernandez believes that healthcare fraud is likely to increase. She explains that “There are reports that during the height of the 2009 SARS pandemic there were spikes in healthcare fraud.” She believes that this type of criminal activity will continue for this reason.

Hernandez also notes that “The shortage of available beds and supplies is an opportunity for fraudsters to sell fake goods because people don’t have a choice where to purchase supplies.”

She notes that the use of “price inflation” – a term used to describe crimes such as billing for more expensive procedures or tests than those actually performed – is another criminal tactic. But, she says, “They know there are people who will pay whatever they have to because they want to get out of the hospital.”

Another area of concern in the pharmaceutical industry. Hernandez believes that these companies could be more susceptible than usual to criminal activity during this pandemic due to the concern over access to capital and credit. In addition, it is possible that “pharmaceutical companies [will] try to raise prices of their products to compensate for the loss of revenue from not being able to market.”

She notes that pharmaceutical companies are also concerned with their current state of affairs. As a result, “companies would not be able to price discriminate as easily, which means they will have less opportunity for revenue growth.”

Not only is the healthcare industry susceptible to criminal activity due to the Covid-19 pandemic, but it has also been targeted by criminals before. Just this year, the Oso Medical Clinic in Oklahoma was shut down after it was discovered that an employee had bilked Medicare of $3 million by faking patient records. In addition, a home health agency in Texas was fined $6 million for similar reasons.

A criminal case involving the state of Washington has led to robust legislation that makes lying about a pandemic to obtain financial gain or cause panic is a felony. In the case, the woman was sentenced to 30 days in jail and three years of probation after she falsely told people that there had been an airplane collision between two planes carrying the virus.

Hernandez concludes by noting that healthcare fraud is a perfect crime, explaining that it is hard to prosecute criminals because of the lack of evidence pointing directly at them. Although it will be difficult for law enforcement to prove this, increased healthcare fraud activity is likely as people continue to find themselves without options and ready to pay any price for medical treatment.

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