Is it illegal to send a fraudulent billing statement?

Great Debates
1

I ask this in GD because ultimately it’s about US health care.

Over the past 5 years I’d have the opportunity to visit a handful of American clinics and a couple of ERs. The one thing they all have in common is a system of what I consider fraudulent billing practices.

The most egregious just happened this week. I received a bill from a physio clinic 5 weeks after my visit stating very clearly that I owe them $401.72*

*The asterisk then told me: “Your insurance company has processed this claim and has determined the amount you owe. Please contact your insurance company with any questions related to your balance.”

Well, I did just that, and you’ll be surprised to hear that my insurance paid them the full $401.72 weeks before the statement was issued. So I called the clinic’s billing department, and as part of the automated process they again reminded me that “if there is an asterisk, call your insurance company.”

The lady was polite enough, and after first telling me I owe $401.72 eventually told me that my balance was $0.00 and that insurance paid for it. She then apologized, saying that the system automatically generates a statement if insurance takes too long to pay.

This exact same scenario has occurred multiple times with two other clinics over the past year, as well as an ER.

Is there anything illegal in what they are doing? I have my car in the shop right now, in a few weeks can they send me a bill knowing full well that I already paid? And why does it take 5 weeks to send a billing statement?

I think what bothers me most is that asterisk. At least with a credit card statement they’ll say, “this bill is accurate as far as a certain date.” Other times a bill will say, “you may have already paid, if so disregard this notice.” But these guys went out of their way to suggest that I owe them money that I in fact did not.

Is there any legal recourse? Are they doing something illegal?

2

Do you not get an advice from your insurance company as well, indicating what they have paid or denied and what is your responsibility?

It is your responsibilty to insure you are paying only what you owe. Don’t just trust your vendors or suppliers. They make mistakes sometimes.

3

Yes, but when the statements conflict who am I supposed to believe? I’m also looking at three statements:

  1. From insurance 2 weeks after visit saying I owe $401.72
  2. From insurance 3 weeks after visit saying they paid $401.72
  3. From clinic 5 weeks after visit saying I owe $401.72 and that insurance hasn’t paid.

And yes, it is my responsibility which is why I waste an hour after every visit making sure I pay what is owed.

But you’re wrong about the last part, this is neither a *mistake *nor a sometimes. It is deliberate, and consistent.

A few months ago I had some glass work done on my car, paid for by insurance. Oddly enough, I received neither a letter from my insurance company, nor a bill from the glass company. Should I have expected a bill from the glass company 5 weeks later saying I owe them $200? Would we tolerate that as standard practice?

4

I don’t believe they are doing anything illegal.

What do you imagine would happen if you paid the bill, by the way?

5

He’d be twice as healthy.

6

They would happily enjoy earning interest and balancing their books. I assume eventually if I used their clinic again they’d send me a bill showing my payment as a credit, while showing that I again incorrectly owe them money. And I seriously doubt they’d include interest when they credit me back.

Does anyone know?

7

I knew a restaurant a few years ago that established the practice of adding a zero when running certain credit cards, so a $52.70 bill became $527.00.

It’s the kind of thing most people wouldn’t realize until their credit card statement arrives a few weeks later. The customer would call angrily, and the manager would apologize profusely for what was obviously a silly error.

But for a restaurant running in the red, the ability to float $500 for a couple of weeks was huge. It was at least 2-3 weeks before they got called. And they could take 1-2 weeks to return the money. But in the mean time it meant their books were a few grand heavier. Sort of a slow motion ponzy scheme. Eventually they got shut down.

8

I’ve paid a medical bill that I was sure the insurance would never pay (being slow as always) but they eventually did. I was told I could keep the surplus on account as credit, or they could cut me a check. No interest was ever mentioned (and honestly the idea seems absurd; they never claimed to be a bank).

9

The thing is you are responsible for all services and charges for those services, that the insurance company DOESN’T pay.

In my day you paid your bill and sent the receipts into the insurance company and they sent you a check.

I recall when I worked in a hospital in the early 80s, that hospital would bill people as they leave. The bill said, “You hae 30 days to pay.” You would give this bill to your insurance and they forked over. So there was no upfront costs there.

My doctor’s little card says “As a courtesy we will bill your insurance company so please provide the appropriate information.”

The fact is at the time the bill was issues you DID OWE the money to the doctor or hospital or whoever.

You have remember the insurance is a 3rd party. It’s up to YOU to make sure the 3rd party pays, not the medical provider.

10

I don’t really buy this, unless it was decades ago. I dealt with credit card processing and you get SLAMMED quickly by the company. I’ve been accounting managers in hotels and handled credit cards for decades, and the credit card companies would slam you quickly if this happened more than once or twice.

Companies look for fraudulent billing patterns and are quick to call you on it. I’ve been called out for having stupid desk clerks that couldn’t figure out how to run a charge. It also helps prevent fraud by the clerks.

Of course if you were doing manual billing say 20 years ago, you might be able to do this more than once or twice.

It’s like calling UPS or FedEx and saying you didn’t get a package. It’d work one or two times, then they’d get wise to you. If your billing patterns are always going up and down by a zero that fraud is so easy to spot by the credit card company and bank processing it

11

A big part of the problem is that medical insurance companies are ridiculously slow to pay. If a clinic doesn’t get paid for half a year, then it’s reasonable for them to want to get their money from the patient, I think.

12

Another reason the health insurance system is broken. A patient pays his premiums on time, but the insurance company doesn’t pay the provider promptly, and the provider sends the bill into collection. This happens millions of times a year, yet the free market has not weeded out the insurance companies that are defrauding both the patient and the provider. Why not?

Because there is no down side for insurance companies that pay slowly, or even not at all. For the vast majority of insured Americans, they are covered by group health insurance through their employer, and are prohibited by law from suing for punitive damages when an insurance company pays slowly or not at all. Even if the patient exercises their legal remedies, the insurance provider can only be compelled to pay the benefit they should have paid promptly to begin with. They are legally shielded from any punitive damages, so there is no reason for them to pay benefits promptly.

13

There isn’t anything fraudulent about the bill. You owed $401.72. The hospital sends out notices when payment hasn’t been recieved. If you have insurance, the hospital won’t do anything else until they establish that the insurance company won’t pay. The hospital would prefer to deal with the insurance company than you.
All of this is part of the high cost of healthcare. The shear volume of healthcare services requires a huge investment in accounting, billing, and collection services. It is much less expensive for the hospital and insurance company to deal with each other, trading masses of information, instead of dealing with each patient individually.

14

Mine likes to double bill me for my co-pay. They say they won’t see me without me paying them upfront for the copay, then ALWAYS send me a bill for the copay.

I’ve stopped paying them upfront because they can’t keep their billing practices straight. I’m not the only one, once you point out to them that the double bill, they don’t make you pay up front.

(medical practices are notorious for having horrible accounting).

15

It’s annoying, but each time I’ve overpaid for a doctor’s bill I’ve eventually been reimbursed or credited for it.

16

Must have been a hospital in Scotland…

17

I paid a bill from the doctor for my rotator cuff diagnosis for my co-pay of $100. A few weeks later, I received a notice from my insurance company that their deal with the doctor meant that the charge for my visit was the “usual and normal rate” of $72, and since that was under my co-pay, that’s what I owed to the doctor.

I’ll give you exactly one guess as to whether I have ever seen that $28 again. Now apply that to the OP and $401.72, and I believe your question is answered.

18

Yes, it was a decade ago, and yes they got busted pretty quick because what they were doing was fraud–after they did it a few times. It takes about 3 times before a pattern is established. I feel like I’ve had this happen enough to establish a pattern of fraud or at the very least willful negligence.

And I fully agree that it is reasonable for them to expect their money. I don’t have a problem with that. But if they have problems with insurance companies not paying, or being slow to pay, shouldn’t they then chose not to contract with that company? Why am I involved with that side of it?

I see nothing wrong with a re-reimbursement system, where I pay upfront, and then insurance pays me. But what I see here is not reasonable. They aren’t waiting 6 months, they sent the bill out after 5 weeks, even though they were paid within 3.

Which also ties in with the wording on the bill. If it was a courtesy letter saying “the charge for treatment was $400, they’ve billed my insurance, and will let me know if they fail to pay” I’d be fine with it. But with this letter they went out of their way to suggest my insurance wasn’t going to pay. Wouldn’t the reasonable thing be to let that part of the process work itself out?

I feel that if we follow your logic, they could reasonably send me to collections after a week because they’ve had problems with other people not paying in the past.

This wasn’t sent in error, the system is set up intentionally to do exactly what they did. If I go again in a few weeks the same thing will happen. When my wife goes for her physical next week, the same thing will happen. So when it happens over and over again, intentionally, it starts to look like fraud.

19

Maybe for a $20 co-pay, but $400 isn’t small change. And if they are doing this systemically, they are also sending out bills for $4,000 and $40,000. How much are you willing to overpay?

That money has value to me, I know that sounds strange to some people, but when I have it it earns me interest. When they have it it doesn’t.

Perhaps a more understandable version would be, what if you had to pay that using credit. You’d be charged interest while they held on to your money. If it happens by accident it could be overlooked. But this system is specifically set up this way.

20

For non-profit organizations that I’m Treasurer, I get fakes all the time:

  • from phone companies, for a Yellow Pages ad in some book I’ve never heard of. (Fine print somewhere on the ‘bill’ will say “this is not a bill, but solicitation for you to buy an ad” in their directory…)
  • from internet companies, billing for our websites. (Fine print somewhere on the ‘bill’ will say “this is not a bill, but solicitation for you to switch to them as your registrar”.)
  • from office supply companies, for supplies (usually paper). (Fine print somewhere on the ‘bill’ will say “this is not a bill, but solicitation for you to order paper from them”.)
  • from long distance companies. (Fine print somewhere on the ‘bill’ will say “this is not a bill, but solicitation for you to switch to them for your long distance billing”.)

Apparently this is not illegal – it happens all the time. Some of them are really legitimate-looking fakes. I have had such ‘bills’ sent to me by an employee with a note to “please pay this quickly”.