Not all fraud perpetrators are alike. Categorizing fraud perpetrators gives us a better framework for identifying opportunities for fraud, so we can create controls that will limit those opportunities. With each group, you’ll need different approaches to prevention, identification, investigation and prosecution. I categorize fraudsters into five groups who have different motives, opportunities and attitudes about risk: Avengers, Opportunists, Professionals, Dealers, and Organizers.
VictimsProviders, patients and employees may sometimes feel that they deserve more than they are getting, because they are victims of the system. Providers who think rates are too low feel justified in inflating their billings to get paid what they think they deserve. Patients participate in scams to get insurance to pay for non-covered services that they think should be covered, such as cosmetic surgery and fertility services. People lie about medical history, employment and income to obtain health insurance that they think they deserve. People who commit this kind of fraud usually don’t think of themselves as criminals. They see their actions as similar to speeding - sure, it is against the law, but if nobody catches you, what’s the harm.
OpportunistsMany people have easy access to information that would allow them to commit fraud. Providers, billing agents, claims processors, analysts, information technology staff, mailroom staff and many others may have ample opportunity to defraud. Most people do not succumb to the temptation to commit fraud even through they could. However, when somebody with the information and permission necessary to commit fraud faces a personal financial crisis, feels harmed by the organization or wants to live beyond their means, they may turn to fraud.
DealersFor years we’ve been aware of secondary markets for controlled substances. With the rising price of drugs, there is a huge incentive for secondary markets to develop for a wide variety of drugs. Just as Oxycontin tempted grandma to sell her pain medication to pay for all her other medication, other expensive drugs are creating new opportunities for fraud.
A secondary market can emerge for any drug or supply that is difficult or expensive to get legitimately. They occur whenever demand is intense enough that people are willing to break the law to get something that would otherwise be out-of-reach. Secondary market fraud schemes can involve beneficiaries, physicians, pharmacies, runners, dealers and purchasers.
In a simple form, a patient gets a legitimate prescription from her doctor and has it filled at a pharmacy, then sells some or all of the pills. She may sell directly to the person who will use the drug or sells to a dealer who gets drugs from various sources and resells them at a profit. I focus on dealers, because they are the ones who initiate the scam.
Dealers may have many sources for drugs, including buying from multiple patients, stealing prescription pads and beneficiary data, colluding with doctors or pharmacists, or stealing drugs.