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Rethinking Facility Inspections in Medical Investigations

As in many elements of a fraud investigation, timing is everything.

February 26, 2015 Photo

A physician is suspected of insurance fraud, so an insurer calls for a facility inspection. The investigator arrives unannounced at the clinic and is told to wait outside. A few minutes later, a disgruntled and agitated office manager comes to the door and tells the investigator that the physician is not available and that the investigator will have to call to schedule an inspection. The investigator goes home empty handed, and the suspect physician goes into overdrive, removing or adding items related to the investigation and prepping office staff and even patients in case they are called for recorded statements or examinations under oath.

Sound familiar? The use of facility inspections as a means to investigate medical provider fraud has long been advocated as a standard investigatory tool—and rightly so. There is a wealth of information to be discovered. However, to be successful, facility inspections must be well planned and calculated.

Perhaps the single most important element of a facility inspection is timing. Most companies are eager to schedule facility inspections at the onset of a major case. However, experience shows us that there is nothing more damaging to a major case investigation than alerting one’s adversary to the fact that a carrier is starting to ask questions. Likewise, writing a letter or simply showing up at the doorstep of a provider—especially at the onset of a case—will in all probability do nothing more than provide the physician with an opportunity to change direction, destroy or alter documents, and consult with counsel.

With that reality in mind, an inspection should not take place until there is some body of evidence already in the carrier’s hands. Doing so means that the inspection can be used to verify or substantiate the recorded statement or examination under oath, rather than serving as a basis for conducting one. As previously stated, once a medical provider believes that he is being investigated, his testimony and documentation often changes. Advocating for the facility inspection to take place toward the middle or end of the investigation will produce better findings and further act as a good faith basis to file affirmative litigation.

It’s important to note that the facility inspection is but one part of the whole investigation. While some fraudulent offenses are more blatant than others, most investigations take time to develop before moving into affirmative litigation. Simply conducting an inspection and running to court could be more trouble than it’s worth, depending on your jurisdiction. A better plan is to arrange joint meetings with the special investigations unit (SIU) and claims management to plan accordingly. Opening the lines of communication between SIU and claims management can help determine the tone and tempo of the investigation, putting the case and the inspection on the right track. Consultation and roundtable discussions with claims partners can only assist in bringing in a fresh perspective, which is always welcome from a strategic and planning standpoint.

Poor timing of the inspection may negatively impact a case from the outset. A case-by-case approach is a better option instead of a general protocol. After all, investigations into differing medical disciplines should not be handled similarly. Whatever path the insurer chooses, there are certain items or areas that should be focused upon once the investigator gains access to the facility.

The first and most obvious steps in inspecting a facility should be to obtain documentation and to ask questions as to licensure, identify the staff, and determine the location of file placement. While you are not guaranteed an answer, and perhaps will not get a truthful one at that, the fact remains that if you have the opportunity, you should take it and ask questions. Sometimes asking simple questions that you know the answer to can help determine the veracity of the party with whom you are speaking.

Securing photographic documentation when possible is valuable not only to the inspection, but also to any litigation that may follow. Photographs help corroborate any probative facts procured from a recorded statement or examination under oath. Securing photographs of equipment, serial numbers, and other applicable modalities will aid and assist in making an informed claims decision.

While hard documentation is preferred, it is important not to overlook the benefits of simple observation. For example, is there exercise equipment on the premises? Where is the facility’s durable medical equipment stored? Is there a certain room that is reserved for use by a traveling EMG/NCV physician? Is the facility space shared with an attorney or any other third parties? Simple and seemingly unimportant little details noted by the astute investigator can sometimes produce the missing pieces to the puzzle in a medical investigation.

Facility inspections in medical fraud investigations continue to be a useful tool in investigating medical provider fraud. When approached strategically, with considerations given to the timing of the inspection in light of other evidence already procured, they can be one of the most effective methods of combating medical provider fraud today. Looking at how we conducted investigations in the past will simply prepare us for a better future.   

About The Authors
Jeffrey G. Rapattoni

Jeffrey G. Rapattoni, Esq., is a shareholder and co-chair of the fraud/special investigation practice group at Marshall Dennehey Warner Coleman & Goggin. He focuses his practice on insurance fraud and SIU-related matters and is a member of the CLM’s Insurance Fraud Committee. He has been a CLM Member since 2012 and can be reached at  jgrapattoni@mdwcg.com

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CLM’s Insurance Fraud Committee identifies, analyzes, and offers education on emerging fraud schemes and tactics; monitors and reports on developments in case law, state fraud statutes and applicable regulations; collaborates with other anti-fraud industry organizations and associations; and seeks to provide amicus support in matters of importance in the fight against insurance fraud.

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