A former scheduler of Certified Nursing Assistants (CNAs) at an Illinois nursing and rehabilitation facility pleaded guilty in federal court to fraud charges in connection with the hiring and payment of “ghost” employees who never actually worked at the facility.
In pleading guilty, the defendant admitted that, from approximately October 2017 through April 2019, she was employed as a CNA scheduler at a nursing and rehabilitation facility in Forest Park that provided medical benefits and services to patients. While employed at the facility, she planned, organized, and executed a scheme to defraud the facility by making it appear that at least five individuals were employed at the facility when they were not (the “ghost” employees).
The defendant submitted false time sheets and other documents, causing the facility to generate paychecks for these “ghost” employees. She then split the proceeds with the “ghost” employees or forged their signatures, signing over the paychecks to herself. As a result of the fraud, the facility paid approximately $103,094.01 for work that was never performed. In the plea agreement, the defendant agreed to the entry of a forfeiture judgment for that amount. In addition to the forfeiture judgment, she faces a maximum sentence of 20 years in prison, a maximum fine of $250,000 and three years of supervised release.
“Our agency is committed to ensuring that federal healthcare programs are protected from all types of fraud, waste and abuse. Providers who submit fraudulent records and bill for “ghost” services damage our federal healthcare programs and the beneficiaries they serve,” said Special Agent in Charge Mario M. Pinto of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to investigate any similar allegations of fraud.”
Compliance Perspective
Issue
Ghost employee fraud is a type of payroll fraud in which individuals who do not actually work for a company remain on the payroll. These “ghost” employees may include former workers, deceased individuals, or simply non-existent personnel. In some cases, the perpetrator splits the proceeds with these fictitious employees, often by forging signatures or diverting paychecks to themselves. This type of fraud can result in significant financial loss and is a serious violation of trust, especially in healthcare facilities that rely on federal programs like Medicare and Medicaid. Fraud, waste, and abuse of these resources can increase healthcare costs and divert critical funds away from the services patients rely on.
Discussion Points
- Review the facility’s policies and procedures to ensure strong internal controls surrounding payroll, including employee verification, are in place. Implement systems of checks and balances to prevent the fraudulent approval of paychecks. For example, requiring multiple levels of approval for payroll transactions and integrating electronic systems to track employee attendance can help reduce the risk of fraud.
- Ensure that employees responsible for payroll are properly trained on procedures for employee verification and processing payroll. It is important that they understand their responsibility to report any suspicion or knowledge of fraudulent activity immediately to their supervisor, the compliance officer, or via the hotline.
- Periodically audit staff to ensure they are aware of what could be perceived as fraud, waste, or abuse of federal or state resources and the steps they should take to report suspected fraudulent activity. Conduct periodic internal audits of the payroll system to verify that all individuals receiving paychecks are legitimate employees entitled to them. Consider involving third-party auditors to periodically review and test the integrity of payroll and employee verification systems.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
