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In 2016, a BlueCross BlueShield of Tennessee member got a surprise in the mail: a filled prescription for lidocaine pain cream. Lidocaine is available over the counter, and the member hadn’t asked her doctor about any prescription.

Sensing something was up, she called BlueCross and reported the incident to the Compliance hotline.

What followed from that call became a multi-state investigation into a nearly $1 billion fraud scheme  targeting more than a hundred insurers, including BlueCross.

The landmark case, recently recognized by the National Health Care Anti-Fraud Association as the investigation of the year, finally closed in 2022 with sentencing. It revealed a plot that included fraudulent compounding companies, pharmacies, telemedicine companies, and hundreds of health care providers.

And the entire scheme was exposed thanks to one member’s tip and the award-winning BlueCross investigators who pursued it.

Just the facts about the SIU

The BlueCross Special Investigations Unit, or SIU, includes nearly a dozen specialists in tracking down fraud, waste, and abuse. From reviewing fishy-looking claims and related member complaints to following up on tips from employees and providers, the SIU helps fight wasteful, dishonest and even criminal behavior that ultimately drives up health care costs.

“A lot of the folks in [the Special Investigations Unit] are former law enforcement,” explains Norman Tidwell, director of the SIU. “So, there’s a strong commitment to fighting back against bad actors.”

Norman is quick to point out that most of the cases the SIU looks into turn out to be honest mistakes. Incorrectly typed diagnosis codes are the most common. An important part of their job is helping correct mistakes to reduce unnecessary waste or confusion for members. Every now and then, though, they find a real criminal scheme.

The price is wrong: the anatomy of a con

“A fraud this big has a lot of moving parts and individuals involved,” Norman says.  “This scheme was actually a collection of several smaller plots. They all fit into one very large con.”

First, bogus drug manufacturers marked up generic vitamins, pain creams, and other over-the-counter products with National Drug Code labels. The labels let them charge thousands of dollars for a bottle or tube of medicine worth less than five bucks. This was the first crime, a violation of the Federal Food, Drug and Cosmetics Act.

Next, fraudulent pharmacies bought those drugs. They then contracted with HealthRight, a company claiming to provide telemedicine. HealthRight’s job was to make up prescriptions for these marked-up drugs.

HealthRight pulled off a double fraud to make this happen. Using fake online ads, they tricked members into entering health insurance information. Then they used the info to generate a prescription, usually without the member’s knowledge.

All they needed to fill the prescription was a doctor’s signature. They got those signatures from providers willing to sign a prescription sight-unseen and no questions asked.

These were recorded as “telemedicine” appointments, but the providers never saw the patients they signed for, another violation of federal law. HealthRight paid the doctors a few dollars for each signature, and the pharmacies used those as the last step to file a claim.

In the end, they’d charge insurance carriers hundreds or thousands of dollars for a $5 tube of pain cream.

Confronting the bad actors

Ethics and Compliance Manager Don Provonsha has decades of FBI experience and has lent that expertise to BlueCross for 13 years. Don responds to Compliance Hotline requests, tips and concerns from members and employees alike.

When he took the call in July of 2016 from a member in the Chattanooga area, he had no way of knowing the scale of the case his team would uncover.

“This was an example of how effective our Compliance program is,” Don says. “This member called to tell us she received a tube of cream, unsolicited, with a prescription from a doctor she’d never talked to.”

This tip kicked off a follow-up analysis by Analysis Consultant Jennifer McCuiston in Professional & Ancillary Audit, and Ian Morris, a biostatistical research scientist in Information Delivery. Meanwhile, SIU reached out to other members who had received the same suspicious prescriptions.

With clues pointing to something bigger, Don turned next to the doctor who signed the first prescription.

On a rainy day in July 2016 he drove to the doctor’s office in Johnson City with BlueCross Senior Investigator Connie Gautreaux. A former member of Tennessee Bureau of Investigation and an Air Force veteran, Connie has interviewed numerous suspects and fraudsters over her career.

When the investigators met the doctor who signed the prescription, he brusquely informed them he only had 15 minutes to spare. After two hours of questions from Connie and Don, the doctor handed over names of the companies he dealt with,  contacts and other evidence.

“While we were talking to him, he was receiving calls on his computer for more prescription signatures.” Don remembers. “They were coming in that fast.”

“The doctor didn’t want to lose his home over this,” Connie adds. “I told him he should be concerned about someone being hurt by an adverse reaction to these creams.”

With testimony in hand, Connie and Don began turning evidence over to the U.S. Attorney’s office.

“We remained in contact with the U.S. Attorney throughout the investigation. We also learned from SIU teams in other Blue Plans about similar cases all over the country,” Connie says. “Within a couple of months, it became clear just how big this operation was.”

The multi-year, multi-state investigation would be dubbed HealthWrong. It saw 17 ringleaders convicted in 2022, with $100 million paid in restitution.

For their work in responding to and investigating the case, the BlueCross SIU has received the gratitude of members, federal agencies, and an important recognition from their peers.

The National Health Care Anti-Fraud Association honored the BlueCross team members who worked on the case at their annual awards event with Investigation of the Year for Operation HealthWrong.

“The recognition of Don and Connie’s work is wonderful,” Norman says. “But more important is the commitment it represents at BlueCross and in the industry as a whole to fight predatory behavior. Connie and I both came from the TBI. Their motto is, ‘Guilt shall not escape, nor innocence suffer.’”

“We try to make sure what we achieve protects members and providers as much as it brings criminals to justice.”