Problem
A Real-Life Incident of Healthcare Fraud
Healthcare fraud is not just hypothetical -- it happens. Take the case of Columbia/HCA Healthcare Corp., which was under investigation by federal prosecutors for more than a year. The government's case against the company had to do with an alleged scheme on the part of Columbia's managers to defraud the government and their attempts to obstruct a federal auditor's investigations. An indictment charged that the company misappropriated about $2.8 million in government funds. The alleged conspiracy largely involved a Columbia-run hospital in Florida and problems with its cost reports.
Prosecutors alleged that Columbia managers participated in a scheme to inflate the hospital's expenses, accounting for interest on the hospital's debt in such a way that it was 100% reimbursable by the government. In fact, only a portion of the debt should have been reimbursable. Federal investigators served the company with search warrants requesting documents on the company's Medicare billing and business practices, extended their investigations to six states, forced the CEO to resign, charged three midlevel executives with conspiracy to defraud the government, seized computer files and delivered an additional indictment.
Healthcare ARTICLE - Forensic Accountant Case Study: Healthcare Fraud & Other Financial Diseases. (n.d.).
Task: Which accounting practices that you learned about in this course to date could lead to fraud? Where would you look for fraud on a healthcare ledger? Web references to support your opinion.