A federal grand jury in Chicago returned an indictment charging a former nursing home employee with seven counts of wire fraud.
According to court documents, the defendant, 44, of Chicago, devised a scheme to defraud her employer, a Chicago-area nursing home, of funds by falsifying records to generate payments to individuals who never worked at the facility (so-called ghost employees). The indictment alleges that, as part of the scheme, the defendant created false records to make it appear as though the individuals were employed as Certified Nursing Assistants (CNAs), when in fact they were not working at the nursing home.
The indictment further alleges that the defendant logged false hours for these “ghost employees,” which caused the nursing home to issue paychecks. According to the indictment, some “ghost employees” cashed the checks and shared the proceeds with the defendant.
The indictment further alleges that on other occasions the defendant forged endorsement signatures for the individuals and deposited the paychecks into her own bank accounts. As a result of the scheme, the nursing home paid out over $100,000 for work that was never performed.
“Individuals who fraudulently obtain funds that were otherwise intended to support the delivery of healthcare services unlawfully redirect valuable resources away from people in need of medical care,” said Special Agent in Charge Mario M. Pinto of the Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Region. “HHS-OIG remains committed to working together with our law enforcement partners to identify and investigate those who allegedly engage in fraud targeting our federal healthcare programs.”
Compliance Perspective
Issue
Ghost employee fraud is a type of payroll fraud which has become increasingly common in both large and small companies. Ghost employees can be former employees who are still on the payroll, deceased individuals, or people on the payroll who are not employed by the company. The last category typically shares the proceeds of the fraud with the perpetrator of the scheme. Whatever the method used, the result is the same: automatic payments to an individual not entitled to receive them. Fraud, waste, and abuse of federal or state resources is always illegal. Healthcare fraud harms the vulnerable in our communities, our healthcare system, and our basic expectation of competent, available care. It also contributes to rising healthcare costs. Those who engage in healthcare fraud are stealing from taxpayers while jeopardizing the health of Medicare and Medicaid beneficiaries. Curbing fraud is vital to conserving scarce healthcare resources and protecting beneficiaries.
Discussion Points
- Review the facility’s policies and procedures to ensure strong internal controls surrounding payroll, including employee verification, are in place. Ensure a system of checks and balances is being utilized to prevent the fraudulent approval of paychecks.
- Train appropriate staff on procedures for employee verification and processing payroll. Ensure they understand that it is their responsibility to immediately report any suspicion or knowledge of fraudulent activity to their supervisor, the compliance officer, or via the Hotline.
- Periodically audit staff to ensure that they are aware of what could be perceived as fraud, waste, or abuse of federal or state resources and the steps that they should take to report suspected fraudulent activity. Periodically conduct auditing and monitoring of the payroll system to make sure all who receive paychecks are employees who are entitled to receive them.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
