Is this a form of insurance fraud? Provider charged us less than reported to insurance

Question

We needed an expensive genetic test for our daughter. UCSF hospital suggested a new lower cost provider, and sent the sample in. The provider called us and said they are "unique" in that they would bill insurance a different amount than we actually would be held to.

Indeed. We paid them $600. They billed insurance $910, $2549, and $1184 all of which were paid at a $0 rate since we're on a high deductible plan. As it sits we're out only $600, but our yearly deductible is nearly met according to UHC our insurance company.

Something seems fishy about this. I tried alerting UHC the insurance company, but I don't think they understood. Is this a form of fraud? If so who's making the money?

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Note: After the sample went in, the test provider immediately called with a series of high pressure sales people, telling us the price would be $2000, or we could apply for "special pricing", by submitting income data. They said "even if you make a million dollars" we'd be approved. It sounded really sleazy. We sent the data, and they dropped the price to $600.

They resisted putting this price in writing, but after several calls, eventually relented.

I won't name them in public, as I don't want to advertise their services even indirectly. If you're considering a cut rate genetic test however, you'll probably encounter them.

Answer 1

Most states have an insurance regulator with a hotline you can call if you suspect insurance fraud to talk with someone about whether your situation might constitute fraud.

Since you mentioned UCSF I am assuming you are in California. I'm sure they would be happy to answer questions like this regardless of whether you want to file a complaint.

California Department of Insurance Fraud division

Here is their guidance about what constitutes fraud:

Fraud occurs when someone knowingly lies to obtain a benefit or advantage to which they are not otherwise entitled or someone knowingly denies a benefit that is due and to which someone is entitled. According to the law, the crime of insurance fraud can be prosecuted when:

• The suspect had the intent to defraud. Insurance fraud is a "specific" intent crime. This means a prosecutor must prove that the person involved knowingly committed an act to defraud.

• An act is completed. Simply making a misrepresentation (written or oral) to an insurer with knowledge that is untrue is sufficient. The act and intent must come together. One without the other is not a crime.

• Actual loss is not needed as long as the suspect has committed an act and had the intent to commit the crime. No money necessarily has to be lost by a victim.

You might be careful though. If you were complicit in this scheme you might technically be considered as a perp and not a victim in this scenario.