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Legal Services

By Daniel J. Schulte, J.D.
MDA Legal Counsel
Published in the February 2006 issue of the Journal

Question: I have been billing an insurance company for certain procedures and examinations, using what I believed to be the proper billing codes. There is no clear-cut choice among the list of codes given to me by the insurance company for these procedures and examinations. The codes I have been using were based on what I thought were the most accurate, given the choices. The insurance company has been paying these claims. Recently, I received a notice denying payment of several of my claims and seeking a refund of payments previously received by me. The claims representative I spoke with said I have been using the wrong codes when submitting these claims and that I have committed a fraud on the insurance company! Can I be held liable for fraud for a misinterpretation and/or misunderstanding regarding this insurance company’s coding procedures? This seems very harsh and unfair to me.

Answer: It is not always perfectly clear what code(s) should be used when submitting a claim for payment. But a misunderstanding and or misinterpretation of an insurance company’s coding requirements does not, standing alone, constitute fraud. In order for the insurance company to successfully sue you and recover damages for fraud, it must prove that you used the wrong code(s) and that:

  • you knew you were using the wrong code(s);
  • you intended the insurance company to rely on the wrong code(s) when you submitted your claim for payment; and
  • the insurance company was damaged (e.g., it paid a higher amount than it otherwise would have if the correct codes were used).

The cases in which fraud is found to have been committed usually involve dentists either billing for procedures that were never performed, or dentists who are deliberately ‘‘upcoding’’ (billing for a higher level of service than that which was actually performed). In each of these cases, the dentist knows that the wrong codes are being used and is seeking payment of amounts to which he is not entitled, or that are in excess of the amounts to which he is entitled.

In the situation described in this question, no fraud has been committed, since it was unclear what codes were to be used to bill for these procedures and examinations. Due to this uncertainty, the insurance company will likely not be able to prove that the dentist committed a fraud on the insurance company.

In addition to the civil cause of action for fraud described above, there are several federal and state statutes describing conduct that would constitute the crime of fraud. To successfully prosecute a dentist pursuant to one of these criminal fraud statutes the government, like the plaintiff in the civil case, has the burden of proving that the dentist knowingly used the wrong code or codes. In addition, under these criminal statutes the government’s burden of proof is much higher than in a civil case. In a criminal case, the government must prove that the dentist knowingly used the wrong code(s) ‘‘beyond a reasonable doubt.’’

The legal standard of proof applied in a civil case is much lower. In a civil case the plaintiff must prove by ‘‘a preponderance of the evidence’’ that the dentist knowingly used the wrong code or codes.

The best practice is to avoid these situations altogether. When in doubt, call the insurance company and ask what codes should be used for a procedure or examination. Demand the answer in writing. Be sure to document the conversation, and include the name of the insurance company representative who gave you the information. Above all, choose the codes that in your professional judgment most accurately reflect the services provided — not those that result in the highest payment.

Posted in: Insurance

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