[New Insurance Fraud] Dental Clinic Hires Planners to Falsify Records... Over 100 Including Doctors Involved

Sophisticated Insurance Fraud at a Dental Clinic in Pyeongchon-dong Recently Exposed
Dentist, Counseling Manager, Insurance Planners, and Patients Swindle 300 Million Won
Sibling-Run Clinics Exchange Patients to Falsify Records

Editor's NoteInsurance fraud is becoming increasingly sophisticated. Practices such as overtreatment based on false medical certificates, hospitalization scams, and organized claims involving collusion between hospitals, insurance planners, and patients are spreading rapidly, marking a new dimension of insurance fraud compared to the past. However, due to institutional limitations such as the absence of a control tower and low levels of punishment, it is difficult to prevent insurance fraud in advance. Ultimately, this leads to a vicious cycle that increases the insurance premium burden on honest policyholders. Asia Economy has investigated what new types of insurance fraud are currently emerging in medical settings.

ChatGPT depicting a scene of dental insurance fraud. ChatGPT

"Please read the consent form for personal information usage and check the relevant items."

In 2021, a man in his 40s, identified as Park, visited Clinic A, a dental clinic located in Pyeongchon-dong, Dongan-gu, Anyang, Gyeonggi Province, on the recommendation of an acquaintance. The counseling manager at Clinic A asked him to fill out a consent form for personal information usage. The form also required him to indicate whether or not he had dental insurance, which was unrelated to personal information usage. When Park submitted the form with "No" checked, the counseling manager quietly closed the consultation room door and made him a tempting offer.

The counseling manager told Park that if he signed up for dental insurance and then received treatment, he would incur almost no costs, and offered to help him with the process. After Park agreed, the manager connected him with an insurance planner and actively assisted with the insurance enrollment process, including completing the contract and sending it by fax. The counseling manager also encouraged Park to pay in cash, emphasizing that there should be no dental treatment records prior to enrolling in dental insurance. The dentist at Clinic A, having received these instructions from the counseling manager, altered all the dates on Park's initial consultation and panoramic X-ray records to dates after the insurance enrollment. Park later submitted false receipts to the insurance company and received several million won in insurance payouts.

The organized insurance fraud at Clinic A was uncovered after fragments of evidence from a tip-off were traced by the Special Investigation Unit (SIU) for insurance fraud at Lina Life Insurance in 2021. The SIU obtained information that Clinic A was checking whether patients had dental insurance. Subsequently, through a whistleblower, the SIU obtained a copy of the consent form and began verification.

The SIU discovered that many patients who had checked "No" for dental insurance on the consent form were later signing insurance contracts with planners affiliated with a particular corporate general agency (GA) and then filing insurance claims. By cross-referencing the dates of insurance application forms, the locations where planners and policyholders met, and the fax numbers used to send and receive application forms, the SIU confirmed that Clinic A was deeply involved. Suspecting insurance fraud, the SIU requested an investigation by the Violent Crime Investigation Unit of the Gyeonggi Nambu Provincial Police Agency in September 2021.

Sophisticated and Meticulous... Falsifying Patient Records to Facilitate Insurance Payouts

The police investigation revealed that the fraud involving Clinic A was highly sophisticated and meticulous. Not only did Clinic A act as an agent for patients' insurance contracts, but it also collaborated with Clinic B in Beomgye-dong, operated by a family member, to falsify patient treatment records and facilitate insurance payouts. Clinic A even hired insurance planners involved in the fraud as employees. Patients, unable to resist Clinic A's proposals and thinking "just this once won't hurt," participated in the insurance fraud.

In one case, a man identified as Kim enrolled in Lina Life Insurance's dental insurance on April 10, 2020, and first visited Clinic A for dental treatment on July 20, 2020, subsequently filing insurance claims starting in September. From September 2020 to July 2021, Kim received insurance payouts totaling 3.2 million won over five claims. However, the investigation revealed that Kim had already received dental treatment at Clinic B on April 7, 2020, before enrolling in dental insurance, and had a consultation at Clinic A the next day. Clinic A and Clinic B were operated by siblings. Kim failed to disclose to the insurance company that he had received treatment at both clinics when enrolling in dental insurance, constituting a violation of the duty of disclosure and insurance fraud. In June of this year, Kim was fined 4 million won through a summary order.

In another case, a woman identified as Lee enrolled in dental insurance on July 31, 2019, and claimed to have received dental treatment at Clinic A starting February 23, 2021, filing insurance claims from May 2021. From May 2021 to January 2023, Lee received 2.32 million won in insurance payouts over three claims. However, the investigation found that Lee had already visited a hospital on July 9, 2019, and was aware that she needed dental treatment. She conspired with Clinic A to conceal this fact but was caught and fined 3 million won through a summary order.

The dental insurance fraud involving the dentist and counseling manager at Clinic A, three insurance planners affiliated with the GA, and 107 patients was exposed after four years of investigation. In June, the Gyeonggi Nambu Provincial Police Agency referred about 30 individuals involved in the insurance fraud to the prosecution with a recommendation for indictment. The confirmed amount of fraud so far is about 300 million won, of which 160 million won has been recovered. The director of Clinic A admitted to the criminal acts and promised to compensate for the remaining losses through subrogation.

Last year, the amount of detected insurance fraud exceeded 1.1502 trillion won, with more than 100,000 individuals identified, indicating that the damage caused by insurance fraud is worsening. Recently, hospitals and brokers (insurance planners) have increasingly teamed up to forge or alter medical certificates using ever more sophisticated methods. Those involved in insurance fraud can face up to 10 years in prison. For medical professionals, the maximum penalty is life imprisonment.

Kim Janghan, head of the SIU at Lina Life Insurance, said, "From what we see in the field, the most effective way to prevent insurance fraud is strong punishment," and added, "We should also consider imposing social penalties, such as registering confirmed fraudsters or repeat offenders as financial disorderly persons to restrict their access to loans and credit cards."