Health Care Attorney Daniel Schulte Answers Questions in the Journal of the Michigan Dental Association (November 2019) –
Question: I received a notice from a dental plan I began participating with a year or so ago. It is denying payment of several of my claims and seeking a refund of past payments. The explanation I received was that I used incorrect codes and should not have billed for treatment until it was complete. The dental plan representative keeps saying that I am committing fraud (even suggested that I may have committed a crime). I may have made a mistake but is that fraud?
A misunderstanding and/or misinterpretation of a dental plan’s billing requirements does not standing alone constitute fraud. In order for this dental plan to prove fraud, it would have to prove that you used the wrong code(s), billed at the wrong time, etc. Fraud also constitutes the following:
(1) you knew what you were doing incorrectly was a breach of participation agreement or a policy applicable to you;
(2) you intended the dental plan to rely on this information you knew to be wrong and misleading when you submitted your claim for payment; and
(3) the dental plan was damaged by either paying a higher amount or paying something when it otherwise would have had to pay nothing.
Obviously, you intend the dental plan to rely on the code(s) you use when determining the amount it pays and the dental plan would not be complaining if it did not feel it had paid a higher amount than it should have. I question whether the timing of the billing results in any damages since the dental plan would have paid you eventually. Even though there may be damages, to establish fraud the dental plan still must prove you knew you were doing the wrong thing and did so intentionally. The knowledge and intent requirements will be difficult to prove in the situation you describe where the billing procedures are unclear. It would be interesting to know whether you are the only participating dentist in this situation or if this dental plan has audited others who it claims have billed in the same improper fashion as you. If there are others it would tend to show that there is no fraud and instead the dental plan needs to issue clear guidance to prevent further misunderstandings.
Convincing a prosecutor or other enforcement agency to pursue a criminal action for fraud on the facts you describe would be even more difficult. In order to successfully prosecute an allegation under a criminal fraud statute, the government has the burden of proving that a knowingly false material representation was made. This is similar to proving a civil fraud case. The difference is that under the criminal statutes the government’s burden of proof is much higher. In a criminal case, the government must prove “beyond a reasonable doubt” that the false representation was knowingly and intentionally made. This is the highest standard of proof that the law requires. In a civil case the plaintiff must meet a much lower legal standard of proof – showing that a false representation was knowingly and intentionally made by “a preponderance of the evidence”.
Based on the facts, I doubt fraud can be proven. If it is true you did not follow an unclear contractual provision and the dental plan can establish to a judge or jury what that contractual provision is exactly, the worst that can happen is that you will be found to be in breach of the contract.
The article can be viewed in the Journal of the Michigan Dental Association, on page 18.
About the author:
Daniel Schulte has more than 25 years of experience helping clients solve tough problems and capitalize on opportunities that require a blend of business and legal expertise. His practice focuses on addressing the legal, business, licensing, and regulatory challenges of health care professionals, organizations, and facilities. Dan understands how legal issues impact business objectives and, as a result, offers his clients practical, results-oriented advice. He is a Certified Public Accountant, former managing partner and current executive committee member of the firm. Dan also serves as co-chair of the firm’s Health Care Practice Group.
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