Tax refund fraud scheme affecting health care professionals reported in multiple states

The Indiana State Medical Association (ISMA) has issued this e-report:

Based on reports from physicians and accountants, the ISMA previously issued several email alerts about physician identity theft and tax fraud at the federal level. The ISMA has now learned the Indiana Department of Revenue (DOR) has been investigating identity theft and tax return scams at the state level as well. The DOR confirmed the scam is impacting various health professionals, including physicians, nurses, dentists and oral surgeons, and noted a proliferation of such cases since March.

“The department has been catching and stopping hundreds of the fraudulent claims and saving millions of dollars,” said Bob Dittmer, DOR spokesman. Dittmer said the department hired eight new tax investigators whose only job is to uncover fraudulent claims. Some of the fraudulent claims were successfully identified by DOR before they were actually filed; others were not identified as fraudulent until after they were filed.

“The DOR is viewing this as a large problem and officials are very concerned,” said Julie Reed, ISMA general counsel, who spoke with the DOR investigation unit. “While their investigation has not yet identified the source of the presumed breach, they are tracking all the cases, looking for patterns, and actively investigating and pursing leads.

Reed also confirmed through the DOR that physicians from outside of Indiana have been affected by this scam. More specifically, the DOR identified cases in which the identities of physicians located outside Indiana have been used to file fraudulent Indiana tax returns.

Read more on ISMA.  Some specific cases in Indiana are cited in this news report today on WANE.

The newest ISMA report seems to be related to an item I posted recently about dentists in Michigan and other states reporting unexpected rates of fraudulent tax returns filed with their identity information. Other states where problems were being reported by dentists included Ohio, Indiana, Colorado, Maine and Connecticut. The Massachusetts Medical Society Blog says while they have received no reports from Massachusetts physicians, the problem “has impacted physicians in Maine, Vermont, New Hampshire, Indiana, South Dakota, Iowa, North Carolina and Puerto Rico.”   See also this report from Maine. It’s not clear yet whether reports of tax refund fraud affecting employees of the University of Pittsburgh Medical Center (UPMC), reported elsewhere on this blog, are related to these other reports.

Significantly, perhaps, in an earlier alert this month, IMSA had notified its members:

The ISMA has received multiple reports from members about an Internal Revenue Service (IRS) tax scam directed at physicians. According to the reports, someone is filing fraudulent federal income tax returns using physician names, addresses and Social Security numbers.

ISMA members have advised that some notices also include the name of an unknown person as spouse, and it appears this other name is that of a prior patient of the physician. At this point, no common link among the victims has been identified.

Multiple states and multiple health care professions? And the names of former patients, too?  What entity or entities got compromised? A national insurer?   A licensing or certification board that might have limited patient information if complaints had been filed against the professionals? The fact that patient names are involved seems a particularly significant clue – at least in helping rule out some possibilities. Of course, it might not be just one compromise and might involve a conspiracy of people who pay employees in various organizations to copy and provide personal information.

In any event, stay tuned, as I’ll keep watching for more info on this one.

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