Printer Friendly

Doomed to repeat our errors: fraud in emerging health-care systems.

Health-care reform, a major cornerstone in President Clinton's agenda, looked like a certain crowd pleaser. Americans consistently rated the delivery of medical services in their country as highly unsatisfactory, though, paradoxically, they almost invariably are pleased with their personal experiences with physicians. The United States is virtually the only industrialized country without a comprehensive system of state-financed health care (Roemer, 1991) and an estimated 39 million persons go through their daily lives without medical coverage. The country's infant mortality rate is unconscionably high (Boone, 1989) and other indices of death and disease from treatable ailments, compared to those for nations such as Germany, Japan, Switzerland, and the Scandinavian countries, make the United States, to use the appropriate vernacular expression, "look sick."

Yet things soon began to go sour for the president's plan, as health-care reform fell victim to a series of political miscalculations and blunders on Clinton's part and an effective lobbying campaign on the part of vested interests, whose fiscal oxen were in danger of being seriously gored by the reform movement. For one thing, Clinton scattered his seed almost promiscuously, fighting for programs on altogether too many fronts, rather than focusing on a very few highly significant matters. For another, he appointed his wife, rather than a noncontroversial person, to spearhead the inquiry into the best strategy for remedying the abominable state of health-care delivery. Though highly intelligent and strikingly articulate, Hillary Rodham Clinton was, as she would later grant, a naif in a political brawl whose trajectory she was unable to control.

Opponents of health-care reform, particularly the insurers, instilled fear in Americans, especially the elderly among them, that they would be deprived of their personal choice of doctor. The old rallying cry against "socialized medicine" was muted this time, but its contemporary equivalent, "government control," became a bugaboo. Fears of the cost of a new entitlement program in a period of frightening deficits also undercut support for health-care reform.

The Clinton administration failed to put its weight behind an understandable and attractive blueprint and to take its case forcefully to the public. The president proclaimed in grandiloquent tones that he would not sign any bill that did not guarantee satisfactory medical care to every American. In the end, he got no bill at all. The Democrat's subsequent loss of both houses of Congress in the 1994 election ended any early prospect of revamping the national health-care programs to provide universal coverage.

The Republican-controlled Congress is more likely to abbreviate Medicare than extend coverage. Not very long after the Clinton agenda for comprehensive health care became at least temporarily moribund, the new conservative regime, looking desperately for money to save, turned its attention to Medicare. An early blueprint floated by House Speaker Newt Gingrich sought to revive the defunct procedure of having copies of providers' bills sent to patients. Yet Gingrich had a new twist: he proposed that if Medicare beneficiaries "save the government money, they will get 10 percent" (Rosenblatt, 1995) - an approach that may be pragmatically effective (Geis, Huston, and Wells, 1992).

As this article goes to press, Congress is putting the finishing touches on a budget that eliminates the deficit on the back of Medicare and Medicaid cuts (Zaldivar, 1995). In an effort to soften the cuts, Clinton has called for aggressive prosecution of fraud, noting that "at least 10 percent of Medicare and Medicaid billings are fraudulent," costing an estimated "$31 billion a year" (Haas, 1995).

A trend toward individual state-reform programs, started under Clinton, is likely to gain momentum in the current political climate that favors decentralization. Seven states now have gained waivers from the Health Care Financing Administration (HCFA) to implement programs that differ from the federal Medicaid blueprint. Oregon's priority system was the earliest and most well known. Denied a waiver from the Bush administration and granted one under Clinton, it is the first-ever effort to ration health care and will be using managed-care systems. Hawaii, Tennessee, Kentucky, Rhode Island, South Carolina, and Ohio have all inaugurated systems that, in part, rely on some form of managed care. Tennessee is developing a managed-care system that utilizes contract providers (TennCare). Hawaii has the oldest and most comprehensive health-care financing system and has been touted as a national model. South Carolina is in the process of developing several new forms of health-care delivery, including a "partially capitated" program that combines managed care and fee-for-service elements. At least two other states have requested waivers from HCFA and more are on the way (Richardson, 1994). Other states, such as California, Arizona, Illinois, and Minnesota, long ago integrated managed care into their state Medicaid programs. In 1994, 7.8 million Medicaid recipients in 44 states were treated by some form of managed health-care system (NASO News, 1995).

This article focuses on fraud and waste as they have occurred in the past in the delivery of medical services and, most particularly, as they will occur in the quickly expanding health-care reforms. Though new delivery systems are being implemented at a rapid pace, only superficial attention has been afforded to the vulnerability of emerging programs to widespread illegalities that may dwarf the current extent of fraud.

Past patterns of fraud and abuse in health care that surfaced were strongly connected to the fee-for-service nature of most third-party payment programs. Physicians and other providers under this payment mechanism are compensated for each service or product they supply, which gives them a fiscal incentive to bill for as much as possible. This system gives rise to cases such as that of a physician who billed Medicaid for services that actually were sexual liaisons, and of a doctor who charged the program $3,000 for office visits while he was on safari in Africa. Another doctor billed for abortions on women who were not pregnant, including one who had had a hysterectomy. Ambulance services have requested payment for round-trip transportation for patients who died en route to the hospital (Jesilow, Pontell, and Geis, 1993). One doctor pied guilty to cheating Medicaid of $2.6 million by buying huge quantities of human blood drawn from chug addicts and other ill or poor people and then running unordered and unnecessary tests on the blood. He had purchased the blood for about $10 a vial and each pint yielded as much as $2,000 in billing for tests. In another fraud, mobile laboratories attracted individuals for free tests and then billed the patients' insurers for costly procedures. A General Accounting Office (GAO) report estimated that one billion dollars was fraudulently obtained in this single case (General Accounting Office, 1992).

Many government officials insist the new managed-care systems will decrease the extent of dishonesty. An important part of the belief structure that clouds thinking about crime in health-care reform is the idea that under managed care, "the fee-for-service incentive [for fraud and abuse] will disappear" (Richardson, 1994). In this article, we detail some of the factors that contribute to fraud in third-party payment programs and we discuss how these influences may be exacerbated in the future. Among other things, we point out that fee-for-service continues to exist as part of most managed-care schemes and that, in addition, the new programs will give life to fresh forms of fraud.

The information presented here is derived primarily from discussions with a score of high-ranking state Medicaid officials who attended the 1994 conference of the National Association of Surveillance and Utilization Review Officials (NASO) in Seattle, Washington. All informants were guaranteed confidentiality. As will become clear, in providing the information many were risking, at the least, the ire of higher-ups in their state governments. Material for this article, however, was also obtained from interviews conducted during the last 15 years with hundreds of enforcement officials (see Jesilow, Pontell, Geis [1993] for a discussion of the methodology used during these interviews).

The Existing Problem

The present health-care system and its enforcement apparatus grew in a haphazard manner. The possibility of widespread fraud and abuse apparently was not seriously considered either in the drafting of the Medicare and Medicaid legislation or in the congressional hearings and debates concerning it. For one thing, there was little warning from the private insurance companies that fraud would be a significant matter. These payers, such as Blue Cross, had given little attention to the issue because they could readily pass additional costs along to customers. Besides, sponsors of the legislation were wary of arousing new waves of antagonism from the American Medical Association by implying that physicians were other than scrupulously honest and perfectly capable of keeping their business dealings within the confines of the law. Congress also feared a wholesale unwillingness by disgruntled physicians to participate in the new programs. In addition, the government ignored fraud issues at the inception of the benefit programs because it needed to establish public confidence in the new efforts.

Numerous obstacles hinder the successful investigation, prosecution, and sanctioning of health-care providers who engage in fraudulent activities. The hidden nature of the offenses is a major problem. Insurance payers formerly mailed patients copies of bills that practitioners submitted, but this procedure turned up relatively few complaints and has largely been abandoned. If medical procedures were carried out when the beneficiary was unconscious, medicated, or otherwise distressed, there was no way to determine whether the service actually had been rendered. In addition, how could one know that an X-ray had been taken with no film in the equipment? Few patients examined the bill anyway and those who did often found it incomprehensible. Some doctors inveigled their patients into conspiracies against the insurance companies, billing the company for a procedure different from or more expensive than the one that had been done so that it would come under the payment guidelines or be reimbursed at a higher rate.

Computer programs can pinpoint "notable" deviations from the norm and flag them for further investigation. The high-volume providers, those with a large percentage of claims, tend to be the targets of computerized checks. Practitioners with small-benefit program practices rarely raise any concerns unless their few bills are far out of line. The computer screens are best at detecting apparently impossible situations, such as performing a hysterectomy on a male patient; otherwise, they provide few clues about possible wayward actions.

It often has proved difficult, even when fraud is uncovered, to obtain the cooperation of prosecutors, since their caseloads are likely to be heavy and the outcome of most health fraud cases is uncertain. Providers may fight back savagely; they usually have the resources to mount a formidable defense.

Undercover operations, which could be very useful for gathering probative evidence, are rare. Such "shopping" expeditions are prone to be regarded as entrapment by the courts. In addition, in small jurisdictions, the appearance of an outsider-patient provokes suspicion in the medical community. Shopping a geriatric specialist or a pediatrician, or investigating a practitioner whose practice focuses on a single ethnic group, call for a specific type of undercover agent. In addition, criminal prosecution of providers suspected of malfeasance is difficult because the state must produce evidence to meet the "beyond a reasonable doubt" standard. To do so can require multiple transactions by several operatives and backup personnel.

The very nature of medicine effectively limits the possibility of nabbing a criminally errant practitioner. To justify treatments, a physician need only set forth a diagnosis not wildly discordant with the patient's symptoms. The doctor's reading of the situation will not be questioned if it is reasonably similar to those of colleagues. If all doctors in a comparison cohort "overdiagnose," all put themselves within the norms and beyond reproach. Even if a handful overdiagnose, their activities can distort what should have been the norm. Note, for instance, a case involving a University of California, Irvine, medical school psychiatrist, who was charged with receiving $98,752 for half-hour and hour-long psychotherapy sessions over a 20-month period when in fact court documents maintained that he "generally spent less than ten minutes with each patient." The doctor's lawyer insisted that the charges were "ridiculous," the most "ill-founded prosecution" he had encountered in 18 years of practicing law. Why? Because what his client was doing was "common practice and accepted practice" among his colleagues and, beyond that, "they've [the prosecutors] got to prove intent, and they'll never prove it" (Los Angeles Times, 1995: B3).

What the Future Holds

Despite wishful thinking, fraud and abuse probably will be a larger and more significant problem under the evolving state approaches than they are in the existing Medicaid and Medicare medical programs. For instance, enforcement agents will face a sizable increase in the number of providers they are required to scrutinize and a small likelihood that they will be granted sufficient, if any, additional resources. A manager with one Medicaid enforcement unit, for example, reported that his staff had been cut because higher officials concluded that its services would be less necessary under the state's growing managed-care strategy. Accountability will remain problematic. Cameras cannot be installed in treatment rooms to ascertain whether doctors and other health-care practitioners are providing proper care. Prepaid programs will need strong and independent oversight mechanisms to override their basic structural weakness, some of which we will discuss below.

It appears that we are on the verge of repeating our follies at the beginning of Medicare and Medicaid. The budding plans leave until later the design of specific surveillance and utilization review duties "pending input" (Richardson, 1994). State enforcement chiefs who suggest that fraud may be a problem are told by health officials to keep their ideas to themselves (personal interview). As with Medicare and Medicaid, the new enforcement systems are poised to grow in a haphazard fashion.

Because of the power of those who control its enactment, the law often is incapable of criminalizing some exploitative tactics. There is a stated concern among enforcement officials that Congress, state legislatures, and state agencies are once again ignoring fraud in order to gain the cooperation of powerful forces. This time the opponents represent corporations as medicine increasingly is being pushed from the single-practitioner model to a form more like that of the industrial and big business firm (Starr, 1982).

A key issue in the health-care debate is the type and quality of services that will be supplied under the proposed managed-care plans (see, e.g., Banks, Kunz, and Macdonald, 1994; Congressional Budget Office, 1994; Ginzberg, 1994). Enforcement officials are concerned with finding a mechanism to detect irregularities. Program proposals at first failed to include provisions to have government enforcement units obtain data regarding services provided to patients. Since the government will be charged a flat amount per person enrolled in a care plan, corporations have no fiscal incentive to submit detailed data to the authorities. Lacking such information about services given (and, at least as important, not given) to patients, enforcement agents would have no sound method for monitoring the quality of care.

Under new provisions, limited data on provider encounters with patients (dubbed "encounter data") will be submitted to the government. One enforcement unit head noted that within his jurisdiction the state made numerous concessions to the corporate health-care plans regarding how much encounter data must be supplied. Further, although mandated, he still had not received complete data from the plans that were up and running in his state (personal interview). The use of encounter data, according to HCFA's Medicaid Bureau Chief, "continues to be an unsettled issue," with major differences existing "about whether states should be required to collect and use" it (NASO News, 1995).

Further concerns with health maintenance organizations (HMOs) are voiced by enforcement personnel. Insurance companies, under pressure to control costs, are utilizing the HMO model to regulate medical decisions. Today, hospitals and other health-care facilities are merging into larger and more powerful corporate systems. As corporate control comes to dominate U.S. health care, forms of medical fraud and abuse undoubtedly will alter.

Matters do not look particularly rosy for physicians and other medical professionals who have enjoyed the autonomy and the striking financial rewards of private practice. They will be forced to place themselves under the control of corporate enterprises and, in the process, to abdicate much of the personal power and personal responsibility that has been a hallmark of their trade since its inception.(1)

When doctors and other health-care professionals are salaried employees, they have a fiscal incentive to cheat if companies set production quotas that must be achieved or match salaries to production. For example, the Illinois Medical Fraud Control Unit (MFCU) found that incentive payments to physicians were common in HMOs, with practitioners receiving a portion of the funds that had not been used for hospital stays or for surgery (National Association of MFCU, 1993). In addition, tensions can develop between their professional imperatives and the government or corporate rules under which physicians are obliged to work. An example would be if the physician is convinced that a patient ought to spend a third day in the hospital, but the guidelines call for only two days, given a particular diagnosis. The tendency to alter the diagnosis - to fake complications or other qualifying conditions - undoubtedly will prove irresistible and admirable to some practitioners.

Another enforcement concern stems from the predicted demise of the fiscal incentive to overtreat. This prognostication ignores the manner in which many HMOs and other managed-care mechanisms work. A single HMO will never provide all services since the need for some of them is so rare that the corporation is precluded from funding such comprehensive staff and equipment needs. Kaiser Permanente, for example, hires fee-for-service providers for matters such as wheelchair repair. The evolving managed-care plans utilize fee-for-service providers to a much greater extent. Some are simply corporations that pay providers to handle their customers. They differ little from existing insurance companies, except that they choose the provider for the patient. In the best case, this is the provider who does the best job at any price; then there is one who does a good job at a low price; the worst scenario is the one where the provider does a poor job, but costs the least and may even kick back part of the fee.

The state health officials and Medicaid prosecutors who will be responsible for the integrity of the new programs recognize the potential for much fee-for-service generated frauds that involve contracted providers hired by the larger corporations to provide services (National Association of MFCU, 1993). The president of one health-care corporation that employs such contractors offered a personal illustration. His company had contracted with a physical therapy corporation to provide services to his customers. Subsequently, an employee of the therapy company sent him a letter informing him that the health plan was being billed for services that were never provided. The president's main concern was not with the crooked therapy corporation, but with the government. Receipt of the letter placed a legal obligation on him to inform the authorities of the situation. The government, he assumed, would ask for repayment of the funds his company had received for care not provided (personal interview).

In California, the plans have been "on their honor" to exclude crooks they uncover (Dandridge, 1994). Yet they have no fiscal incentive to uncover illegalities by the contractors; the management organizations may lose their government contracts if state authorities learn that fraudulent providers have failed to provide mandated services.

A true HMO system provides structural temptations to offer inadequate service to patients. The threat of tort suits by private parties may, in part, control some undertreatment, but unless a supervising government agency establishes guidelines on what must be done for which kinds of patients and enforces strong penalties for undertreatment, violations are likely to occur. In California, for example, 24 of 28 recently reviewed plans had deficiencies (Ibid.), and in Florida, state inspectors found deficiencies in 21 of the 29 plans doing Medicaid business (Pear, 1995).

Fear exists that some companies will discriminate among customers in an effort to enroll only the best medical risks. Corporations may arbitrarily exclude "expensive" patients, deny treatment requests, or make it unreasonably difficult for plan members to obtain services (National Association of MFCU, 1993). Past experience portends future behavior. HMOs have been discovered falsifying applications (Pear, 1995), enrolling persons who did not exist, and selecting for their rosters only persons with superior health. A California official told us of one such scam:

The entrepreneur would send two recruiters to the neighborhood. First, they would go to the door and say, "We're doing a survey on the health of your family - how many people are there in your family, how healthy are they, have you had any diseases?" Then, if it turned out that this was a family that statistically was not likely to produce medical problems, the next person who came through would sell them on joining the HMO (Geis, Pontell, and Jesilow, 1988: 34).

Additional worries are that plans will bill the government for nonexistent customers or artificially inflate overhead figures to justify per capita fees. The experiences of an experiment in Florida to shift Medicaid patients into managed care does not bode well for proposed health-care reforms. A report indicates that, although costs to the government were reduced considerably, "Florida officials are struggling to crack down on widespread abuses, including fraudulent marketing and lapses in care." The director of Florida's health-care agency warned that this experience should stand as "a huge lesson and a huge warning" to the rest of the country (Pear, 1995: C14).

A particularly strong possibility for fraud lies with the potential for bankruptcy among the managed-care plans and a situation akin to the savings and loan debacle may well emerge (Calavita and Pontell, 1994). Health-care corporations will be paid per enrollee by the government. Thousands of customers will translate into millions of dollars. A plan, however, might easily go "belly up" if the company provides extensive salaries and bonuses to its executives while making poor investment decisions or sweetheart deals that result in losses. The government would be forced to spend additional millions of dollars (or, more likely, billions of dollars) to cover the health-care costs for the bankrupt company's members. An official with one state agency responsible for auditing corporate fiscal soundness reported that numerous health plans in his state were near financial crisis (personal interview).

Managed-care organizations have already shown that criminally caused bankruptcy is possible. The best example is the failure of Miami-based International Medical Centers (IMC), which was the country's largest Medicare HMO in 1986, receiving approximately $360 million. The company failed, in part, because of large salaries and fraudulent activities. Following investigations by the Inspector General of HHS and the FBI, the founder of IMC was indicted by a federal grand jury for numerous illegal activities, but he fled the country to avoid prosecution (Abramowitz, 1987).

Criminal organizations may also move into health care and inaugurate a new form of the Ponzi scheme. Crooked managed-care companies could offer their health-care plans at attractively low prices. The initial enrollee funds are used to cover costs. When expenses begin to overburden the undercapitalized company, it enlists new enrollees by aggressively advertising and further lowering the cost of the plan. Eventually, the organization will go bankrupt, but not before its owners skim off millions of dollars (personal interview).

Some argue that the health-care plans will aggressively seek out fraud to keep their costs low. Competition, they argue, will force integrity. Such a faith, however, ignores the manner in which the health-care market operates. The belief that competition will force corporations to seek out fraud should be reflected in large, active fraud units in health-care insurance companies today. Small units do exist, but at such a level that they can detect and investigate none but the most blatant of crimes. Insurance companies have learned that when it comes to health care, people are willing to pay an additional premium in order to do business with established insurers. In addition, what economists call the "free rider" principle (Posner, 1986) is at work: the company that pursues fraudulent providers will benefit others besides itself, but only if it has done the work and laid out the money to track down the malefactor.

Today, insurers pass the unknown cost of fraud and abuse along to their customers. This situation is unlikely to change under the evolving managed-care schemes. Today's insurers will be tomorrow's health-care plans and the public will be willing to pay the difference between what they charge and the government pays.

Investigation and Prosecution

As Senate hearings have indicated (U.S. Senate, 1990a, 1990b; U.S. House, 1991, 1992), changes in health-care financing will also add to difficulties of investigation and prosecution. It is planned that encounter information will be supplied in the form of electronic data to facilitate analyses of the information while lowering administrative costs for both the plans and the government. As a result, many see them as desirable. Investigators, on the other hand, fear the coming of these billing tapes as they will likely remove the paper trail so necessary for prosecutors to prove criminal intent.

Analyses of the encounter information are unlikely to turn up many cases of undertreatment that result in prosecution. From the perspective of enforcement agents, fraud takes place when bills are submitted for specific services that are never rendered. It has been next to impossible to prove fraud beyond a reasonable doubt in cases of overtreatment and the same can be expected in situations where undertreatment is suspected. To exculpate itself from charges of undertreatment, a company need only show that treatments were not irresponsibly discordant with the symptoms presented by its patients. It is doubtful that a plan would become suspect unless its practices were profoundly unlike those of comparable companies with similar customers. However, if all plans in the cohort are undertreating, then all will fall within the norms and be passed over by the statistical programs that look for deviations. Indeed, if a scattering are undertreating, their encounter data can significantly misrepresent the standard.

Many problems that have plagued investigators will change little under healthcare financing reforms. Because the same disincentives that limit reporting of fraud in the current system will exist in the new schemes, patients are unlikely to be sources for leads. Attempting to build a case using undercover operatives in situations where referrals are universal creates difficulties that duplicate, if not surpass, those encountered in the current system. The privacy of medical records will remain a problem for investigators attempting to prove patient abuse. Investigations will continue to be time and cost intensive.

Prosecutors, too, will find no relief under managed care. If anything, they may learn that many of the legal tools they have been granted in their battle to successfully prosecute errant providers are no longer applicable. In addition, the health-care corporations will prove more formidable legal opponents than have sole practitioners. Corporations cannot be jailed and, for them, legal fees and fines are often merely the cost of doing business.

Conclusions and Discussion

President Clinton's much-heralded attempt to inaugurate a comprehensive health-care program based on a system of managed care ended in failure. That failure does not, by any means, indicate the end of such efforts. A conservative Congress already is bringing once sacrosanct medical programs such as Medicare under its scrutiny in an attempt to control costs. For the same reason, the practice of medicine increasingly is coming under the control of corporate organizations.

From the viewpoint of social justice, comprehensive health care, however offered, has an enormous attraction, though that appeal lessens if the care is marked by widespread cheating and further fiscal aggrandizement, this time not by the practitioners, but by their corporate bosses. The cost of fraud and waste in current and proposed medical programs inevitably contributes to the country's abject failure to fashion a satisfactory program of health benefits for all Americans. The new medicine will be earmarked by what Harold Barnett (1981) has identified as the "relationship of corporate crime to the state's primary functions of promoting profitable capital accumulation and maintaining social harmony." Put another way, the new medical corporations at first will be accorded considerable leeway by legislators, but the reins are likely to be pulled in when citizen unrest emerges and political incumbencies are placed in jeopardy.

Present-day fee-for-service arrangements have been plagued by fraud and abuse, though, as with so many white-collar crimes, no firm figures exist on the actual cost of such illegal practices. Investigators who work in the field are convinced that physicians and other practitioners bilk the programs to an unconscionable degree, and that only a very few, the most egregious and stupid, are ever apprehended (Jesilow, Pontell, and Geis, 1993). The health-care programs that sooner or later will emerge will also be vulnerable to serious forms of fraud.

As has been the case in earlier times, little planning has been or is being directed toward blueprints for the emergent health-care systems that adequately protect the public against fraud and abuse. However, the fact that medical care will be placed to a significant degree into corporate hands offers some promise that criminal laws seeking to harness the power for evil in the corporate world can serve to keep the organization of medicine more closely within the bounds of the law. In this regard, the most encouraging signs undoubtedly are those found in the state of the law regarding corporate criminal liability and recent guidelines for dealing with organizational offenders that were promulgated by the U.S. Sentencing Commission.

Because the power of corporations has been deemed to be excessively threatening if not satisfactorily circumscribed, courts have allowed the imposition of strict liability on corporate entities; that is, corporations cannot avoid liability by the use of an affirmative defense such as a claim of due diligence, good faith, or the absence of any inflicted loss, even if these were to be provable (Coffee, Jr., 1977). Corporations can be convicted criminally even if the illegal behavior was done by a low-level employee who had been warned not to do what he did. The law assumes that executives either knew, should have known, or should have taken effective steps to prevent the employee's criminal act (U.S. v. Hilton Hotels, 1972; see also Brickey, 1984). Managed health-care programs operated by corporate entities, therefore, are vulnerable to prosecution for criminal acts without the necessity of demonstrating criminal intent on the part of the perpetrators. This will make things much simpler for the government. "[P]roving that a corporate defendant committed the illegal act is in practice substantially easier than an individual prosecution," notes one commentator (Harvard Law Review, 1979: 1227). Another echoes this point: "[W]hile it usually is quite easy for prosecutors to establish the collective guilt of a corporation, establishing the guilt of individuals without violating due process is often difficult" (Baysinger, 1991: 354). Similarly, the new medical corporations will find themselves vulnerable to RICO prosecutions if they carry out a pattern of lawbreaking (Lacova and Nicoli, 1990).

Under the new federal guidelines established by the U.S. Sentencing Commission, corporations convicted of criminal wrongdoing can be targeted not only for tougher penalties, but also for a much wider range of other sanctions than ever before (Miller, 1993; Nagel and Swenson, 1993). Prominent among such sanctions is the imposition of probation, which allows, among many other dispositions, the appointment of an outside expert to oversee the operation of the guilty program (Gruner, 1988; 1993; Lofquist, 1993). Under such circumstances, the delivery of health care may, for the first time in its history, come under the careful scrutiny of persons without any direct obligation either to the medical profession or to its members, but with concern only for the patient and the public.

NOTES

1. Studies conducted in California and New York estimate that only about 10 to 13% of malpractice errors now result in a claim (Danzon, 1985; Harvard Medical Practice Study, 1990).

REFERENCES

Abramowitz, Michael 1987 "Collapse of a Health Plan: How Did Such a Good Idea Turn Out So Bad?" Washington Post (June 23): A1.

Banks, Dweayne, Kimberly Kunz, and Terry Macdonald 1994 Health Care Reform. Berkeley: Institute of Government Studies, University of California.

Barnett, Harold C. 1981 "Corporate Capitalism, Corporate Crime." Crime and Delinquency 27: 4-23.

Baysinger, Barry D. 1991 "Organization Theory and the Criminal Liability of Organizations." Boston University Law Review 71: 341-376.

Boone, Margaret S. 1989 Capital Crime: Black Infant Mortality in America. Newbury Park, Cal.: Sage.

Brickey, Kathleen F. 1984 "Corporate Criminal Liability: A Primer for Corporate Counsel." Business Lawyer 40: 129-158.

Calavita, Kitty and Henry Pontell 1994 "The State and White-Collar Crime: Saving the Savings and Loans." Law and Society Review 28: 297-324.

Coffee, John C., Jr. 1977 "Beyond the Shut-Eyed Sentry: Toward a Theoretical View of Corporate Misconduct and Effective Legal Response." Virginia Law Review 63: 1099-1278.

Congressional Budget Office 1994 An Analysis of the Managed Competition Act. Washington, D.C.: Congress of the United States.

Dandridge, James R. 1994 "Role of Audit in Managed Care." Paper presented at Annual Conference of the National Association of Surveillance and Utilization Review Officials, Seattle, Washington.

Danzon, Patricia 1985 Medical Malpractice: Theory, Evidence, and Public Policy. Cambridge: Harvard University Press.

Geis, Gilbert, Ted L. Huston, and Joseph Wells 1992 "Scrutiny on the Bounty: Business Rewards for Crime Tips." Business Horizons (November-December): 80-81.

Geis, Gilbert, Henry N. Pontell, and Paul D. Jesilow 1988 "Medicaid Fraud." Joseph E. Scott and Travis Hirschi (eds.), Controversial Issues in Crime and Justice. Newbury Park, Cal.: Sage: 17-39.

General Accounting Office 1992 Health Insurance: Vulnerable Payers Lose Billions to Fraud and Abuse. In U.S. House of Representatives, Committee on Government Operations, Subcommittee on Human Resources and Intergovernmental Relations (May). Washington, D.C.: Government Printing Office.

Ginzberg, Eli (ed.) 1994 Crucial Issues in U.S. Health Care Reform. Boulder: Westview Press.

Gruner, Richard S. 1993 "Beyond Fines: Innovative Corporate Sentences Under Federal Sentencing Guidelines." Washington University Law Review 71: 261-328.

1988 "To Let the Punishment Fit the Organization: Sanctioning Corporate Offenders Through Corporate Probation." American Journal of Criminal Law 16: 1-106.

Haas, Jane Glenn 1995 "Clinton Calls for Attack on Medicare Fraud." Orange County Register (May 4): A4.

Harvard Law Review 1979 "Developments in the Law - Corporate Crime: Regulating Corporate Behavior Through Criminal Sanctions." Harvard Law Review 92:1227-1137.

Harvard Medical Practice Study 1990 Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York. The Report of the Harvard Medical Practice Study to the State of New York. Cambridge: Harvard University Press.

Jesilow, Paul D., Henry N. Pontell, and Gilbert Geis 1993 Prescription for Profit: How Doctors Defraud Medicaid. Berkeley: University of California Press.

Lacova, Philip A. and David P. Nicoli 1990 "Vicarious Liability of Organizations: RICO as an Example of a Flawed Principle in Practice." St. John's Law Review 64: 725-751.

Lofquist, William S. 1993 "Organizational Probation and the U.S. Sentencing Commission." Annals of the American Academy of Political and Social Science 525: 157-169.

Los Angeles Times 1995 "UCI Psychiatrist Faces Theft, Fraud Counts." Orange County Edition (April 29): B3.

Miller, Emmett M. III. 1993 "Federal Sentencing Guidelines for Organizational Defendants." Vanderbilt Law Review 46: 198-234.

Nagel, Ilene H. and Winthrop M. Swenson 1993 "The Federal Sentencing Guidelines for Corporations: Their Development, Theoretical Underpinnings, and Some Thoughts About Their Future." Washington University Law Quarterly 71: 205-259.

National Association of Medical Fraud Control Units 1993 Health Care Provider Fraud: The State Medical Fraud Control Unit Experience. Washington, D.C.: The Association.

NASO News 1995 "The Richardson Letter." National Association of Surveillance and Utilization Review Officials 1,3 (Spring): 1.

Pear, Robert 1995 "Florida Struggles to Lift Medicaid Burden." New York Times (National Edition) (April 24): C14.

Posner, Richard A. 1986 Economic Analysis of Law. Third Edition. Boston: Little, Brown.

Report of the Harvard Medical Practice Study to the State of New York 1990 Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York. Cambridge: Harvard University Press.

Richardson, Sally K. 1994 "Health Care Reform in the United States." Paper presented at Annual Conference of the National Association of Surveillance and Utilization Review Officials, Seattle, Washington.

Roemer, Milton I. 1991 National Health Systems of the World. New York: Oxford University Press.

Rosenblatt, Robert A. 1995 "Gingrich Vows to Assure Solvent Medicare Future." Los Angeles Times (July 25): A1, A26.

Starr, Paul 1982 The Social Transformation of Medicine. New York: Basic Books.

United States v. Hilton Hotels Corp. 1972 467 F.2d 100 (9th Cir), cert. denied, 409 U.S. 1125 (1973).

U.S. House of Representatives, Committee on Energy and Commerce 1992 Subcommittee on Oversight and Investigations. Health Care Fraud and Waste (Part 2). Washington, D.C.: Government Printing Office.

1991 Subcommittee on Oversight and Investigations. Health Care Fraud and Waste (Part 1). Washington, D.C.: Government Printing Office.

U.S. Senate, Committee on Governmental Affairs 1990a Permanent Subcommittee on Investigations. Health Care Fraud and Revenue Recovery Firms (June 20). Washington, D.C.: Government Printing Office.

1990b Subcommittee on Investigations. Health Care Fraud/Medicare Secondary Payer Program (July 11). Washington: D.C.: Government Printing Office.

Zaldivar, R.A. 1995 "No Quick Remedy in Sight to Reduce Medicare Costs." Orange County Register (May 4): A4.

PAUL JESILOW is an Associate Professor in the Department of Criminology, Law, and Society in the School of Social Ecology, University of California - Irvine (Irvine, CA 92717). He is co-author with Harold Pepinsky of Myths That Cause Crime, a winner of the Academy of Criminal Justice Sciences' Outstanding Book of the Year award, and co-author with Gilbert Geis and Henry Pontell of Prescription for Profit (University of California Press), a study of Medicaid fraud by physicians.

GILBERT GEIS is a Professor Emeritus in the Department of Criminology, Law, and Society in the School of Social Ecology, University of California - Irvine (Irvine, CA 92717). He is a former president of the American Society of Criminology and recipient of that group's Edwin H. Sutherland Award. He drafted the white-collar crime section in 1965 for the President's Commission on Law Enforcement and Administration of Justice and has published many articles on the subject as well as more than a dozen books.

JOHN HARRIS is a graduate student in the School of Social Ecology, University of California - Irvine (Irvine, CA 92717). He is a former deputy district attorney in San Diego, California, and is co-author of a continuing medical education course on malpractice issues for physicians.
COPYRIGHT 1995 Crime and Social Justice Associates
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Jesilow, Paul; Geis, Gilbert; Harris, John C.
Publication:Social Justice
Date:Jun 22, 1995
Words:6404
Previous Article:Another lost war: the costs and consequences of drug prohibition.
Next Article:Rethinking White-Collar Crime.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters