Major Health Insurance Fraud in Utah

State goes after 'mind-boggling' insurance fraud

Salt Lake Tribune, The (UT)
March 24, 2004

To cope with the high cost of health insurance coverage, many Utah teenagers and young adults remain on their parents' policies after they marry. That practice, however, results in millions of dollars of claims that in recent years have contributed to a record level of insurance fraud in Utah, the state Insurance Department said Tuesday.

Investigators have opened 548 insurance fraud cases since the 2004 fiscal year began July 1, compared with 522 for all of fiscal 2003 and 175 for all of fiscal 2002, according to the department's fraud division.

"It's mind-boggling how much fraud there is out there," division director Joe Christensen said.

The division investigates fraud involving health, automobile, homeowners and workers compensation insurance.

But during the past two years, it has focused on health insurance because it is rife with illegal activity, Christensen said.

For example, even though children are not allowed to remain on their parents' employer-sponsored policies after they marry, the state has identified 36,000 Utah teenagers and young adults who have done just that, racking up an estimated $7 million in claims that should not have been paid.

The Utah Department of Insurance also has identified more than 17,000 cases and millions of dollars in fraudulent claims in which residents keep their spouses on their health insurance plans even after they divorce. Once a divorce becomes final, policyholders may not keep former spouses on their employer-sponsored health insurance policies.

It doesn't matter whether a court orders a policyholder to maintain health insurance coverage for a divorced spouse, said Alex Johnson, manager of external audit and investigations for The Regence Group, a network of BlueCross BlueShield providers in Utah, Washington, Oregon and Idaho. A policyholder must find coverage elsewhere -- typically at a much higher price.

High costs are what motivate many people to commit fraud, Johnson said.

Christensen said the state discovered the problem with married dependents and divorced spouses after comparing a list of dependents from health insurance providers with state marriage license records and divorce decrees.

People convicted of insurance fraud face fines of up to $10,000 plus restitution and up to 15 years in prison.

Another type of fraud committed by an estimated 1,800 Utahns involves a complicated insurance scam originating in California that led to more than $27 million in fraudulent bills submitted to Utah companies.

In that scam, Utahns with employer-paid health insurance coverage are offered an all-expenses-paid trip to California to receive an unneeded health-care service such as a colonoscopy.

Insurance companies are billed inflated amounts for the medical procedure.

Even after paying for all the perks given to the patients, those orchestrating the scam have plenty of money left over for themselves.

Dennis Harston, medical director of Altius Health Plans in Salt Lake City, received 160 bills asking for nearly $778,000. The company paid some before realizing they were fraudulent. "Now we have systems in place to ferret out these claims," he said.