FSA Employer Rights

[Guest Anthony]

If a former employee is found to have submitted fraudulent expenses, ones they never paid for, but did receive reimbursement.

Is the Employer legally able to go after the exemployee for the reimbursed money received?

[Sandra Pearce]

A claim for a medical spending account must have been INCURRED by the person during the applicable period, and must not be reimbursable through another means (another plan such as a health or dental plan). The participant does not need to prove the expenses were paid for, only that the expenses were incurred.

[Guest Anthony]

The employee's "incurred expenses" were manufactured fradulently, The third party provider has no record of the expenses. Basically he stole the receipts from the provider.

[Guest MSMA]

Hah! You too? Only my person was an "art" teacher who took a receipt from an art supply store and doctored it up! (and then sent me a photocopy) Her only mistake was that I spent MANY years in the town that the alleged provider was located - and recognized the address immediately. And while the provider did exist, they were located in a completely different part of town and did not have any record of this person ever being there. When I questioned the claimant on the receipt she said - "Oh well, then don't bother then." I have other things I can claim!"

[Lisa Hand]

The sponsoring employer should make clear that their published policy on employee theft and misconduct extends to obvious fraud within these benefits. That is usually grounds for termination. Falsification of expenses is fraud and basically employee theft. The employer may not be able to recover the dollars, but can prevent further loss and obviously discourage the behavior in other employees in the future.

[Kirk Maldonado]

Here is a summary of a recent case that is contained in the current version of BNA's Pension & Benefits Daily:

A health plan beneficiary must reimburse the plan for over $50,000 the plan mistakenly paid to the beneficiary to cover her automobile accident injuries, the U.S. District Court for the Northern District of Illinois ruled Dec. 18, finding that the plan's reimbursement action was permitted under the Employee Retirement Income Security Act (Iron Workers Tri-State Welfare Plan v. Jaraczewski, N.D. Ill., No. 02 C 2596, 12/18/02).