Health Plan disclosure of PHI to Employer: Termination of Participant for committing fraud agains the plan

[Guest BL333]

A participant in a self-insured group health plan has committed fraud against the plan by "doctor shopping" and filling multiple prescriptions for the same presciption pain meds at multiple pharmacies (and submitting claims for each).

The employer would like to amend the health plan to provide that a participant is terminated from the plan upon committing fraud against the plan.

The HIPAA portability regs seem to contemplate such a termination (as they provide that an individual is not an "eligible" individual for purposes of avoiding the pre-existing condition exclusion when obtaining individual insurance if the individual has been terminated from a prior plan for committing fraud against the plan).

My one concern is that the health plan will almost certainly disclose some PHI to the employer when the employee is terminated from the health plan. Where in HIPAA is such a disclosure of PHI permitted?

Many thanks!

[Ron Snyder]

I am not sure why this is "fraud". Submitting multiple claims is not inherently fraudulent. The claims administrator should not pay the extra claims either for the doctors nor for the medications.

This is not a case that calls for termination, but simply for proper claims adjudication. Proving of fraud would most certainly have to come down to a final judgment in a court of competent jurisdiction, an almost impossible task because either it is dependent on the criminal justice system or because it will cost more money that it is worth to go to court with the fraud allegation. And how do you get the employer on board without sharing PHI?

The solution here is not to change the plan but to make sure that the claims adjudication is done properly. Otherwise, you might consider getting the participant to execute a release of PHI form in lieu of prosecution of legal action.