There is a growing interest in combating private medical insurance fraud, but it's going to take experience and cooperation. Claire Veares is on the case.
Private medical insurance is not as obvious a target for fraud as personal injury or income protection insurance. You can't claim for injuries you don't have or work when you're supposed to be unemployed. But estimates put the scale of the problem as high as £70m a year.
Robert Hangartner of Brett Cook Consulting says this estimate is fair - fraud levels are around 3.5% for general insurance, and the private medical insurance (PMI) market is worth £2bn.
Hangartner says the growing interest in combating this type of fraud stems from commercial insurers tackling a market traditionally served by provident associations. "They're used to dealing with fraudulent claims," he says.
Prevention rather than cure is the best strategy for PMI insurers, reckons Hangartner, as the greatest risk comes from repetitive frauds involving relatively small amounts.
Colin Jarry-Ryan, a dispute resolution lawyer with CGNU Group Services, provides an example of this sort of case. He tells of a man who ran up bills of £18,000 for a series of consultations. Suspicions were aroused and investigations revealed that he'd stopped going to the sessions and taken to forging signed invoices instead.
Hangartner says, in order to be able to examine a possible PMI fraud, it helps to be a medical professional. He says that the insurance companies need to be able to understand what the difference is between bad practice and trying to bill for things that were never done.
John Davies, benefit compliance manager at Bupa, agrees, citing the case of a consultant who would restitch his patients. Should this be interpreted as a case of the consultant trying to get a few hundred pounds extra for each patient or a question of the method of his work?
What is agreed is that there is no substitute for experience in detecting dodgy claims. Davies says: "Quite often, the claims clerks will notice something that does not look quite right, such as persistent claims for the same thing."
Patterns of suspicion
Jarry-Ryan says claims generally have patterns and when they depart from these, it will lead to an investigation. "Our suspicions turn out to be well founded in about 80% to 90% of cases."
As well as the need for good initial detective work is the need to share experiences within the industry. Hangarten says: "The controlled sharing of knowledge is vital to success, both within the organisation and with the counter-fraud functions of other agencies and companies.
"There are some excellent working relationships among healthcare insurers but it is clear that this is more developed within other classes of business."
Davies also looks forward to more cooperation among health insurers to crack down on fraud. "We're trying, but nothing has actually happened - yet," he says.
The prognosis is clear: with companies looking to control their costs, busting PMI fraud is going to head up the agenda.
The Padelis scam
The NHS will long remember the name of Dimitiri Padelis. Padelis is believed to have overcharged it by as much as £4m for the services provided by his agency, which supplied locum doctors to hospitals around the country.
Padelis got the extra money by invoicing twice for the same work, inflating the number of hours worked and submitting bogus expenses claims. He relied on hospitals' accounts departments being too busy to realise what he was doing.
He got away with this for four years, until an auditor in North Wales became suspicious. Padelis was recently jailed for four years.
The scale of Padelis's actions can be seen by current investigations being undertaken by the Directorate of Counter Fraud Services, which was set up in January 2000 to tackle fraud in the NHS.
It is investigating more than 500 suspects concerning frauds of around £18m in total. By far the largest group of people being investigated is GPs.
