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What the Financial Crisis Can Teach Us about Medical Identity Fraud

What the Financial Crisis Can Teach Us about Medical Identity Fraud

Information sharing is the key to prevention and detection

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Anndorie Sachs, a Utah mother of four, was confused when she received a call from Child Protective Services telling her that she was being investigated because her newborn baby had tested positive for methamphetamines. Sachs hadn’t given birth since her last child was born more than two years earlier and had never taken methamphetamines.

But CPS didn’t believe her and a long nightmare began for Sachs as her employers, family, and even her children were questioned. Sachs faced an uphill battle as CPS threatened to declare her an unfit mother and take her children away.

Eventually it came to light that Sachs' driver's license had been stolen by a pregnant woman struggling with a meth addiction who took it to the hospital and gave birth using Sachs's identity, leaving her with a $10,000 hospital bill and some serious allegations to fight. To prove the medical identity fraud, Sachs took a DNA test to prove she wasn’t the mother of the meth-addicted baby, but her troubles didn’t end there. Despite proof that she was not the patient, the hospital continued to chase Sachs for the bill and the fight to clear her medical records may go on forever.

A Growing Problem

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“Medical identity theft is the fastest growing identity fraud in America right now,” says Robin Slade, development coordinator at Medical Identity Fraud Alliance (MIFA). “It’s really escalating and it’s highly organized. We’re still trying to understand, and the research will help with this, the correlation between medical identity fraud and financial identity fraud. In a lot of cases it’s organized crime behind it,” she says.

Medical identity theft can include the theft of personal, insurance or medical information, which is used obtain medical treatment, buy prescription drugs, submit false insurance claims or even have elective surgeries performed. While insurance companies are typically the most common targets of this type of crime, individuals can also suffer damage, as Sachs can confirm.

Long-Term Effects

Victims of medical identity theft run the risk of future complications due to their medical records being altered to reflect the thief’s information. This can include blood type, allergies and underlying medical conditions, which could cause serious complications should they ever require emergency medical care.

In its annual study on patient privacy and data security, the Ponemon Institute has just reported that while healthcare organizations have made progress towards protecting patient information, the frequency, cost and impact of data breaches and medical identity theft continue to rise. As in previous studies, respondents expressed concerns about lack of staff and funding for privacy and data security efforts in their organizations.

A Possible Solution

Enter MIFA, an alliance of industry, technology service providers, associations, consumer organizations, law enforcement and government agencies, academia and research, whose goals include empowering consumers to protect themselves from medical identity theft and the resulting financial, physical and emotional damage it can cause. And part of the solution, says Slade, can be found by looking to the financial services industry.

“We saw a correlation between what financial institutions went through with the advent of e-commerce and what health care is now going through with the electronification of health records,” says Slade. “So there are a lot of best practices and steps that organizations can put in place and leverage from financial services.”

Information Sharing is Key

She cites an example of internal fraud in the financial services sector, where employees steal and sell data. “We did a pilot with three banks in one region of the country and saw a clear pattern where employees were being fired and rehired at the institution down the street. They weren’t being prosecuted because law enforcement can’t handle every case,” she says.

The answer was to develop an internal fraud database which financial institutions could check before hiring an employee, to ensure that he or she hadn’t been fired from another institution. “There’s something that can easily translate to health care,” says Slade.

“Information sharing is absolutely critical,” she says. “It’s what changed things in financial services.” And, with MIFA on track to launch in early 2013, it could change things in medical identity fraud as well.