Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
By Charles Pfeister
With the explosion of data sources available on the Internet, most investigators are aware of the great potential of online information as an investigative tool. However, as with any source of information, a critical understanding of the strengths and weaknesses of online information is vital to successfully incorporating it into your investigation.
Critics have warned that the Internet, far from being a provider of informational manna from heaven, may become a Tower of Babel, to use another biblical metaphor. The Tower of Babel refers to the chaos created when the seeker and provider of information speak different languages or have completely different expectations. Anyone who has surfed the Net knows that information provided on websites may range from scattered information provided by paranoid fabulists to full scale, accurately maintained and current databases of information that can be very useful to an investigator. However, an investigator must be cautious, even with a reputable source of information, until the scope and nature of the data is fully understood.
The Internet itself is far beyond the scope of this article. Most investigators have marked a few websites that they find useful. However, for most investigators, surfing the Net is a waste of time compared with the use of commercial online public records databases. Using these databases is not really surfing the Net. It is using a computer modem to obtain temporary direct access to a database that a company has created by purchasing computer files of public records.
However, investigators must carefully consider a number of issues when utilizing public record information obtained online. First, the information is a representation of the public record but it is not “The Public Record. “ Evaluating the quality and nature of online databases is an important skill for computer age investigators.
DATA QUALITY
Data quality is a term familiar to scientists and information professionals. Users of online databases would be wise to understand the basic concept of data quality. The following basic criteria should be used when evaluating the quality of a data source:
- Accuracy does the data faithfully reproduce the public record or original information?
- Completeness does the data include all aspects of the original data source in terms of full coverage and existing variety of information?
- Currency is the data up to date?
A somewhat broader term, information quality, refers to how effectively data flows and is utilized within an investigative organization.
A recent conversation with Mike Dores of Merlin Information Services, Catherine Aldrich, assistant vice president for Product Management at CDB Infotek (CDB) and Ted Wemhoff, Marketing Manager at DCS Information Systems (DCS) provided some insight into issues relating to information and data quality of online database records. Merlin is a producer of CDROM products, primarily of California public records, and now provides online information via a website. CDB may be the largest online public records provider. The DCS National Inquiry System(DNIS) is one of the premier online skip tracing tools.
According to Aldrich, it is a fundamental assumption that CDB, with its high volume public record information business, must provide high quality data or it would not be able to maintain its client base. CDB carefully checks computer files from original sources before adding the files to its online database. Basic checks are performed to make sure there are no obvious errors in the computer files. According to Dores, source tapes sometimes have “undocumented format changes,” which must be corrected before the data is compatible with previous data.
Once the data passes some basic checks, quality assurance personnel perform a variety of tests before the data is approved for customer use. The extensive quality control does not, however, mean that the result will be error free. Neither CDB, Merlin nor DCS attempt to change the content of public record data received. That means that misspellings and obviously garbled information will be passed on because that is the way it stands in “The Public Record. “ It is likely that from time to time there will be other errors since any system is fallible. But according to those interviewed for this article, accuracy is not a great problem for their databases.
What about currency and completeness?
Don’t think that the information will be stale after all this careful checking. Aldrich advises that most data received at CDB is available for online use within 24 hours! CDB maintains redundant computer systems that allow customers full access to databases while tests and updates are continually ongoing in another part of the system. Dores said that Merlin purchases information as often as they can from providers. Updated information is received from most jurisdictions monthly, although some provide weekly updates, according to Dores. According to Wemhoff, DCS is continually updating information, but major updates occur quarterly.
It is important for the user of public records products to realize how current information sources are. Public records companies usually provide options to indicate currency as the user accesses a particular database. Make sure you understand the meaning of currency information. Just because a database has been updated on June 1, 1997, does not mean that the information is current as of that date. There may be a time lag after the production, shipment, and processing of the original source data. Keep in mind that CDROMs take longer to produce, and when one is produced the currency of the source information may lag behind by weeks or months.
CDB and Merlin generally let you know currency of the source when you begin a public records search. The main DNIS database is a proprietary “gumbo” of many different types of public records and a single currency date could not be applied. DNIS combines voter records, driver records, credit report headers, and a variety of other data, such as National Change of Address records. According to Ted Wemhoff, DNIS currency dates, when appropriate, indicate the last update made by DCS. Some understanding of the source of the information can be important in evaluating currency. Some county assessor’s offices only update their property records once a year. Others may update quarterly. Indication of changes in property ownership might lag up to a year in some of the online “property” databases through no fault of the online provider. I have found cases in which a change in ownership is reflected in “buyer/seller” transactions given in an online property search, but the new owner is not yet shown as the “owner” and the property will not show up with a name search using the new owner’s name. Apparently the “owner” field is not updated as often as transaction data would permit.
In terms of coverage, you need to carefully consider the limitations of a search. Many public records providers offer “statewide” searches. However, in many cases information is not available from all counties. This situation seems to be generally true with “property” searches. Also, popular “Bankruptcy/Judgment/Lien” online searches are often limited to certain counties within a state. In some cases I have found it necessary to make a special call to a customer service representative to obtain a list of counties covered in these types of searches. Unless you pay attention to these limitations, you could draw incorrect conclusions after running a search.
At CDB one of the main areas of product development, Aldrich told me, is to increase the “completeness” of county and state area coverage of core public records, such as property records and U. C. C. statements.
INFORMATION QUALITY
Now we come to the overall quality aspects of your use of online databases. Information quality control determines how efficiently are you able to find information and utilize it into your investigation.
Searching Online Databases
You will not realize the usefulness of your online services until you become familiar with the best way to search each database. Part of the service provided by an online service is a search program or “engine” that is designed to help you find what you are looking for.
Merlin offers “text searching” in their databases as opposed to the more traditional “string searching. “Text searching software looks for matches between input search terms anywhere in the field being searched. Thus, as search for “John Smith” might bring up “John Smith,” “John Smith & Company,” and “Earl John Smith. “ Text searching is extremely useful when you only have partial information about a personal or business name. Merlin’s CDROM’S and website allow searching in virtually every field. Searching on an address may be very useful if you do not know a subject’s name or are interested in hidden business or personal relationships. Merlin’s CDROMs are valuable as a preliminary search tool when the investigator is not sure of a subject’s name or business connections. A series of CDROM searches that would be prohibitively expensive online can narrow down an investigation to a reasonable focus for online or onsite searching.
Catherine Aldrich emphasized CDB’s “cleansing” of raw data to make their search logic yield more consistent results for public records across all states. The cleansing process includes standardizing business and personal names and addresses and providing the records from different jurisdictions in a consistent form. Thus, the cleansing process would help insure that a CDB user could be confident that a nationwide search for a corporate filing, for example, would turn up any records under a specific company name no matter in which state records existed.
Ted Wemhoff indicated that DCS makes few if any changes in original data. Wemhoff indicated that DNIS was designed to allow users to perform searches in unique ways and to access and receive information as quickly and efficiently as possible. It is up to the DNIS user to interpret the results. Public records and other databases are added to DNIS to maximize the number of records that contain a full name and date of birth. About 85% of DNIS records contain a full date of birth, which according to Wemhoff, is almost as efficient in locating a subject as the social security number. Once you locate a subject, the strength of the DNIS systems is that you can push a single key to request further information, such as driver records, property information, or credit header information without having to enter a new menu for each additional type of search. DNIS also provides extraordinary flexibility in using partial information in search fields and offering search combinations not available elsewhere. For example, it is possible to search for records nationwide using only a first name and a full or partial date of birth.
The companies contacted for this article maintain most of their databases in house. However, some companies provide “gateway” service; that is, they provide you access to a database maintained by someone else. You should be aware that when you are using a “gateway” database, the characteristics of the database and the search technique may differ from the other databases.
Gateway access to databases derived from credit bureau information is probably where you will find the most errors of any type of online database service. According to Aldrich, the reason is that the ultimate source of the information is the creditor, not the credit bureau. If a creditor makes a mistake in data entry, the mistake enters the record. Names that unexpectedly turn up on social security number searches are seldom evidence of credit fraud. A more likely explanation is that, for example, a car salesperson incorrectly keyed a buyer’s social security number. Needless to say, extreme caution should be used in drawing conclusions from any credit bureau data. Wemhoff said that DNIS relies on credit header information for dates of birth only when other sources are not available. However, as with other information on credit headers, the date of birth is prone to error. For example, sometimes the date of birth of a spouse or someone else at an address is mixed up with that of the “head of the household” on credit headers.
Direct Public Records Online Access Online information professionals use the rule of thumb that the closer you can get to the original source, the better. Many levels of government now provide online users direct access to public record databases. PACER provides online access to federal court information, many states provide access to corporate filings online, and some counties even provide real property information online. By tapping into these sources, you may bypass the commercial gateway or online companies. However, you may have to pay a hook up fee of $100 or more for each of the agencies or jurisdictions providing the service. Also, be warned that each government jurisdiction will have different databases, with different formats, characteristics, and search logic. The investment of your time to become familiar with a database can be enormous. It will probably only be worthwhile to go directly to the source for public records you use very frequently.
Some states are beginning to make their criminal repositories available online. Such databases can be a valuable investigation tool, but I have found many limitations involved in the use of such databases. In some states there is variation in the types of charges and consistency of reports made by local agencies. In some databases states report arrest records; others report only convictions. It can be hard to discover what is actually in the database. When agencies provide direct online access, they usually do not provide the same level of customer support as commercial online services. Criminal repositories and other public agency databases may be maintained for the use of people with an agenda entirely different from that of a private investigator. Some of your informational needs may not be relevant to the design of the system.
Due Diligence
According to Aldrich of CDB, an online search is best viewed as a “starting point” for an investigation. The online search points you in the right direction by saving you time and money involved in the alternative pounding the pavement to do onsite searching. Even if you do not need formal due diligence, an online search may require an extra step to verify facts and confirm that the subject reported online is really the subject of your investigation. If you have used online or CDROM databases you probably have noticed disclaimers warning users about the use of the data. According to Mike Dores, the disclaimers are there for the purpose of “due diligence. “ That is, if your investigation must meet formal due diligence, you must verify your public records by examining them. The disclaimers are also there simply because the online companies have no control over the contents of the data supplied to them and may unknowingly pass on errors. Wemhoff said that DCS advises DNIS users to do three things to verify public records information: 1) examine the record for yourself; 2) examine the record for yourself; and 3) examine the record for yourself.
CDB plans to increase its document retrieval capabilities using modern imaging technology. According to Aldrich, in the future it will be more affordable and convenient for users to order public documents through CDB to complete the user’s due diligence when necessary. Many documents can be ordered through CDB and other online e-companies, which utilize court researchers to obtain the documents. Some investigators may find it worthwhile to maintain their own onsite researchers for public records sites used frequently.
Becoming familiar with your online services is not a substitute for being familiar with the original sources. If you have not paid your dues running around local courthouses and other government agencies, you will never really appreciate the information provided. Also, hands on experience will help you avoid certain pitfalls of online research. For example, unless you are familiar with a local court system your request for a civil search, whether online or onsite, may not yield the desired result. Some counties maintain separate civil indices for family and probate matters; others do not. If you just ask for a “civil search” you may or may not get the desired results. The representatives of public records providers I spoke with advised the user to “ask first” if you are not sure how a search will work for you.
Anyone who has searched the Internet for public records providers knows that there is a proliferation of small information brokers. From this article it should be clear that you should exercise some caution in using new information brokers. Maintaining data quality can involve a considerable commitment of resources, and it is possible that small providers may not follow all data quality procedures outlined above. Also consider what type of reliability you require. CDB is finishing a fully functional disaster recovery “hot site” that will allow full service operation even if a disaster struck its headquarters. If your company depends on online results daily, you may be interested in assessing such capabilities of your providers.
Charles Pfeister is a senior investigator with Triad Consultants in San Francisco, California. He can be reached at(415) 9946600.
WHAT TO EXPECT
Health Care Fraud: Emerging Trends
While the vast majority of health care providers are honest, health care is a big business; and big business without regulatory and legal controls may set the stage for fraud. At a time when health costs are rising relentlessly, it makes little sense to send a message of weakened resolve to voracious providers. New health care fraud schemes and new twists to old schemes are being documented every day. Medicaid Fraud Control Units (MFCU) targeting potential suspects would regard an allegation that a provider had stolen $100,000 from a private insurance payer or from Medicare as an indicator of potential Medicaid fraud.
THE TRANSPORTATION INDUSTRY
As a result of limited administrative resources, most insurers rely upon the basic integrity of the provider population, paying claims prior to review.
Virtually every state MFCU has found egregious examples of fraud by non-emergency medical transportation companies. For example, following numerous transportation company prosecutions, the Maryland MFCU looked at transportation companies, finding fraud or abuse in virtually every one. Many transportation providers had as their sole purpose the transportation of Medicaid passengers to and from methadone clinics. Most of those methadone passengers were able bodied men and women who had previously driven themselves or taken buses to the clinics but were now subjected to marketing pressures from the van companies, who learned that they could easily persuade the recipients to “purchase” a service that literally cost the recipient nothing. Van companies paid a finder’s fee to anyone who brought in new clients with eligible Medicaid cards. One enterprising owner agreed to pay for the recipients’ weekly methadone service at a private clinic in a faraway county, just for the privilege of billing Medicaid for the lengthy trip to and from Baltimore City.
Few of the van companies could resist the lure of easy money with virtually no prepayment audit, and it was not difficult for the Maryland investigators to locate ample evidence of outright fraud. Three van company owners were prosecuted for billing for recipients who continued to drive themselves, for allowing ineligible persons to use another recipient’s card and for paying weekly kickbacks to recipients who used their transportation services.
The general transportation program in Maryland virtually collapsed under the weight of fraud and abuse. In 1988, the program cost taxpayers only $4.5 million per year. Fraud, abuse, and aggressive marketing caused demand for program services to increase fourfold in four years, for a cost of $16.2 million in 1992, at which time it was abolished.
FRAUD AND ABUSE IN HOME HEALTH CARE AGENCIES
Already the fastest growing part of the Medicaid funded healthcare system, state and federal outlays in the home health industry have ballooned in the last five years. While the MFCU shave only just begun to scratch the surface of potential criminal activity, already a number of “mega larceny” Medicaid frauds have been uncovered totaling more than $8 million. Not only are these defendants charged with grossly inflating the number of hours their employees worked, but more importantly, in some cases, with recklessly sending untrained, unqualified and unlicensed aides into the private homes of thousands of critically ill and care dependent patients.
Home health care is an industry that contains all the components for disaster – it is unregulated in the traditional medical sense; multiple agencies are involved with large amounts of government money; and it is attractive to the consumer.
- In California, an elderly man who starved to death while lying in his own filth was locked in a room by his sons and daughter while they enjoyed Thanksgiving dinner in another room. They were his government paid home health care givers.
- Five individuals in Massachusetts were charged on a variety of Medicaid fraud charges as a result of the MFCUs investigation into Medicaid’s personal care attendant program which allows disabled individuals to remain in a community setting with th eaid of personal care attendants. Each of the defendants charged the State for services which were not provided and/or inflated billings made to the agencies.
- Five people in California were paid for up to a year for caring for relatives who had died. These caretakers were also recipients of other government programs. Both they and the program paying them failed to report the offsetting income.
- Similarly, in Washington State, two home health care providers continued to bill the Medicaid program after the patients had died. In one of these cases, the defendant continued to bill the state while living with the deceased patient’s widow.
- A certified nurse’s aide in Maine was sentenced to three years in jail and to four years probation for adding her name to a number of credit cards that belonged to the patients and making purchases on those cards totaling $7,196.13.
- The owner and billing clerk of a New York home health care agency were convicted of stealing more than $1.1 million, during a three year period, by fraudulently billing the state for professional nursing services rendered to thousands of homebound Medicaid patients by unqualified workers including illegal aliens from Jamaica and Ireland who were not licensed and often had no training whatsoever.
- A statewide audit of New York’s Care At Home Program (also known as the Katie Beckett Waiver Program) identified more than $2.4 million in Medicaid overpayments. The audit revealed that during a four year period, Medicaid was charged not only for services more properly payable to patients’ private insurance policies, but also for services billed via special codes that bypassed the routine prior approval process and resulted in substantial overpayments.
- In one county in California, there are no less than 74 home health service agencies, many of which line up, literally, at board and care homes offering competitive incentives for home health care business within the facility. These agencies are potentially turning board and care homes into health facilities that are virtually unlicensed, uncertified, unregulated and practically invisible.
HOME INFUSION TREATMENTS
One of the most rapidly growing segments within the home health care industry is that of home infusion treatments, currently estimated to cost about $4 billion. Originally intended to replace the hospital setting, these home medical therapies treat many serious illnesses, including but not limited to victims of cancer, HIV, Alzheimer’s disease, blood ailments and strokes.
Home infusion treatments include more than the actual medication. In addition to drugs and nutritional formulas, supplies such as tubing, syringes, alcohol swabs, bottles, gloves and needles, and expensive equipment such as pumps, nebulizers, glucose monitors and blood pressure kits are regularly utilized by the victims of these serious illnesses. All are billed on a regular basis. A large portion of the funds is spent in the area of home care services. Regular visits, frequently more than once a day, by an R. N., a nurse practitioner, a home health aide, a physician’s assistant or even a physician are required and reimbursed. Further, regular visits are fragmented: drugs are billed by the pharmacies, and the supplies used to assist in administering the drugs are billed by the DME provider.
The potential for fraud in this rapidly expanding and highly expensive industry is clear. Kickbacks to doctors to authorize medically unnecessary treatment, services or supplies, whether provided or not, is cause for MFCU concern.
THE GROWTH OF “COTTAGE” INDUSTRIES
The capability of MFCUs to detect and prosecute health care fraud has greatly increased as the tools have become more sophisticated and attempts at sharing information with sister MFCUs and with other law enforcement offices have proved successful. Unfortunately, the opportunity for unjust enrichment has increased equally as fast. The MFCUs have witnessed sophisticated cottage industries springing to life in response to recent legislation increasing federal requirements for certain treatment modalities. For example:
- The increase in nursing home based contract speech and rehabilitative therapy services sometimes rendered to patientswho are medically incapable of benefiting from them, and
- The proliferation of multilayered billings for pseudo rehabilitative therapy services, rendered by nonprofessionals in community rehabilitation programs for mentally disabled.
Although legislative changes in the above areas were enacted so recently that the MFCUs have not yet prosecuted a provider for fraud under the new laws, it is already apparent that millions of dollars are being expended on high profit services that have little or no value to the patients. To the frustration of both civil auditors and criminal prosecutors who are charged with policing fraud and abuse, there are too few controls over providers’ imaginations when it comes to billing ridiculously simple services at outrageous sums.
The rapidity with which a small, unethical segment of the health care industry adapts its infrastructure to new federal legislation is amazing if not frightening to those who attempt to prosecute, contain or stop provider abuse. Unscrupulous providers are increasingly likely to identify and exploit “gray areas” in laws and regulations. Aggressive marketing techniques, not traditionally associated with the health care industry, have increased costs by adding marginally necessary or totally unnecessary procedures to health care bills.
FRAUD IN MANAGED CARE
In an attempt to control exploding Medicaid costs and to provide better access to care, more and more states are turning to managed care programs. Recently, states are requiring greater numbers of the Medicaid population currently at about eight million people, or almost 25 percent of all Medicaid recipients to participate in their managed care programs. Certain problems have already been reported. These include poor quality of services, weak oversight of providers’ financial reporting, disclosure of ownership and solvency.
While many proponents of managed care believe that the very nature of the system prevents fraud, the experience of the fraud control units proves otherwise. At the request of the President’s Task Force on National Health Care Reform, the National Association of Medicaid Fraud Control Units prepared a paper which described the MFCUs experience with health care fraud in both the traditional health care delivery system and a system of managed care. Though the MFCUs recognize that it is impossible to critique any new health care delivery system and how it might be vulnerable to fraud, NAMFCU attempted to supply the President’s Task Force with common experiences, as well as possible remedies for program vulnerabilities.
The report concluded that no health care plan is immune to fraud; fraud will simply take different forms in response to the way the program is structured. The potential for quality of care problems is troublesome. While fee for service payments give providers the incentive to provide too many or unnecessary services, capitated payments offer the reverse incentive, to provide too few services. The panoply of health care related crimes is likely to continue regardless of any permutations undertaken by a new delivery system.
MFCUs have documented certain types of criminal activity in managed care plans: fraudulent subcontracts, fraudulent related party transactions, excessive salaries and fees to the entrepreneurs involved, bribery, tax evasion, kickbacks, rebates and other illegal economic arrangements and fraud in the administration of the program. Quality of care issues, such as the underutilization of necessary services, falsification or misrepresentation of professional credentials, and the use of unlicensed providers, may occur more frequently in managed care programs than in the traditional fee for service payment program. Further, instead of billing numerous unnecessary procedures for a few existing clients, physicians may legally increase their income by agreeing to provide care for hundreds or even thousands of clients for monthly capitation fees. The patients become a captive audience, and the physician has less incentive to find sufficient time to provide good care for his patients.
A Maryland case illustrates one kind of fraud and patient neglect that will be a problem faced by managed health care programs in future years. Ha Yong Jung, M. D., maintained a largely Medicaid practice in a poor neighborhood in downtown Baltimore. He had a reputation among drug addicts as a physician who would “write disability. “The Maryland MFCU received information that Jung was double dipping by billing both Medicaid and the Department of Social Services (DSS) for a physical examination of a disability applicant.
For reasons that appear to have been largely financial, Jung’s practice underwent a series of changes in the 1990s. In 1990,undercover MFCU investigators found a relatively normal physician’s practice and received a courteous, although somewhat brief, examination. By 1992, however, Jung’s billings to the Medicaid program had more than quadrupled. That year, MFCU undercover investigators found an office overflowing with as many as 34 addicts with disability papers in hand, who were shunted in and out of the physician’s examining room at two or three minute intervals. The investigators’ allegedly “comprehensive” examinations included a brief touch of a stethoscope and a blood pressure reading taken through rolled up shirt cuffs. No medical history was taken, and the visits lasted less than four minutes each. Records subpoenaed by the Maryland MFCU from Jung confirmed that he sometimes saw 100 patients per day, although he spent only six hours per day at his practice. The recorded blood pressure readings were “made up” and disability forms were filled in before the patients met with Jung. By courting addicts, Jung built almost over night a practice which was billing Medicaid at the rate of $340,000 per year, and DSS at the rate of $99,000 for medical services that were often so perfunctory as to be useless.
These costs to the welfare program, however, are minor when compared to the overall societal cost of keeping hundreds of able-bodied individuals on disability. Nor was the only cost to society a monetary one. During the period of Jung’s burgeoning so called practice, Maryland’s Medicaid program instituted a managed care or “gatekeeper” program. Recipients were assigned to a single primary physician of their choice who was responsible for coordinating their care. Those recipients who chose Jung astheir physician so they could get disability payments with ease found themselves without real medical care. Sadly, these addicts and alcoholics were the ones who most needed someone coordinating their care.
This article was reprinted with permission from Medicaid Fraud and Patient Abuse, a publication of the National Association of Medicaid Fraud Control Units. Individuals wishing a free copy of the full publication may request same from Barbara Zelner, National Association of Medicaid Fraud Control Units, 750 First Street NE #1100, Washington, DC 20002.
© Copyright 1997 Alikim Media