Insurance Fraud: How to Catch Lawyers Embezzling Your Insurance Benefits

by Barry Zalma, Esq., CFE

Handwritten Insurance Claim Form with pen and calculator

Fred Schraeder, 61, A longtime Tulsa criminal defense attorney pleaded guilty in Tulsa County, Oklahoma District Court for his role in helping embezzle more than $1 million from clients. Schraeder entered a guilty plea to one count of conspiracy to commit workers’compensation fraud. He received a 5-year deferred sentence and will pay more than $36,000 in restitution, $500 in fines and a $100 victim’s compensation assessment. The Oklahoma Bar Association’s Clients’ Security Fund is also assisting in reimbursing victims. Schraeder must surrender his law license and isn’t eligible to re-apply while on probation.

In August, Schraeder’s accomplice, William Anton, received four consecutive sentences totaling 35 years, with 25 years suspended. He was ordered to pay $702,813 in restitution and surrender his law license. The Attorney General’s office filed charges against Schraeder and Anton, alleging they embezzled money between 2004 and 2009 from clients’ personal injury benefits, insurance settlements and workers’ compensation benefits. The defendants purportedly embezzled more than $1 million from 49 identified victims.

What can you do to address this type of fraud (which contributes significantly to the inflation of our workers’ compensation insurance and health care premiums)? Thanks to HIPPA (Health Insurance Portability and Accountability Act), you are entitled to ask for and get a copy anything in your medical file, including the billing statements sent to your insurance company.

  • Ask for a copy of the insurance billing from your provider’s office. Before your leave the office or hospital, ask for a copy of the statement(s) showing how they are going to bill your insurance company(ies). Ask them to explain any charges that you don’t recognize or understand.
  • Ask how much time is being billed. Overbilling for time spent with patients is one of the most egregious opportunities for fraud. Time spent with a patient is reflected in CPTs codes (Current Procedural Terminology) on the billing statement. Codes ending in “1” are for the shortest time increments, codes ending in “5” are for the longest. For example, if the doctor spent 10 minutes with you and the CPT code on the statement ends in “5”, they may be overcharging the insurance company for your visit.
  • Ask for a copy of your entire medical record if you have any questions about what has or is being done, especially if what is recorded on billing or insurance statements doesn’t make sense to you.

If you suspect fraud:

Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance issues including fraud. Mr. Zalma has also written a number of books and writes a free newsletter on insurance fraud.