Confronting the problem

Simon, a nurse in the gastroenterology department of a large teaching hospital, was highly respected by his colleagues for his competence and hard work. In need of money to keep up with his mortgage, he managed to secure a better-paying position at a trust in the same city. He was having leaving drinks with his team when a thought flashed through his mind: “Perhaps I can get some help with my mortgage from my old employer as well.”

As he walked home in the evening, the thoughts started racing through his head: “All I have to do is make photocopies of the timesheet, fill them in every week and drop them into the finance tray at reception. But what about the authorisation signature? Well that’s not a problem, I can write Kay’s signature better than she can by now. And no one checks these things anyway; they’re all too busy with their jobs.”

He dropped the first timesheet into the tray early in the morning of his first day at the new job, and for several months he kept going back, as the money flowed into his account. He hadn’t told anyone of course, and kept telling himself he would stop in a couple of months in case someone found out.

No harm done
Margaret had been manager of a high street GP practice since it was founded seven years ago. She was a close friend of the partners, who trusted her implicitly. They also admired her pragmatic approach, which meant all problems were sorted quickly and without headaches.

As they all stood outside court on a hot summer day, no one dared tell the others that perhaps they should have kept an eye on her, and that a check every now and again would have certainly done no harm. The reason they were in court was that soon after starting work at the practice, Margaret had found ways to sort out her own financial problems quickly and without hassle. At first she took to siphoning off money from petty cash: that made her £9,500 over the years, but this was not enough for her. She went on to divert £75,000 from the staff pension fund to her bank account, and finally gave herself a pay rise of £45,000 per year. No one noticed. And who could notice anyway?

Insider fraud
These are only two examples of fraud that can be committed by staff in the health sector – both are based on real cases. Staff fraud (sometimes known as insider fraud) is a growing problem across many industries, and employers are increasingly taking action against it. This article will focus on the threat in the healthcare sector and on what can be done to tackle it, both locally and on a wider scale. To do this it will draw on the experience of the NHS Counter Fraud Service (NHS CFS), which has lead responsibility for tackling fraud and corruption in the NHS in England and Wales. If you’d like to know how Simon and Margaret’s stories ended, please read on.

What is staff fraud?
Under the Fraud Act 2006, a person can commit the offence of fraud in three main ways: by making a false representation, by failing to disclose information when there is a legal duty to do so, and by abusing a position in which they are expected to safeguard another person’s financial interests. In each of these cases, fraud is committed if the person acts dishonestly and with the intention to make a gain, or to cause a loss or the risk of a loss to another. The intention is enough: no actual gain or loss needs to have occurred.

Staff fraud is, quite simply, fraud committed by a member of staff against their employer, whether they are employed directly or indirectly (for example through a recruitment agency). Some of the most common types of staff fraud are:
• using false documentation to obtain employment
• submitting false claims, eg timesheets or expenses claim forms
• diverting cash from employer/employee/customer accounts to own or third party account
• working while on sick leave.

Confronting the problem
According to reports published by CIFAS, a fraud prevention service with a wide membership across the financial services and other sectors, a sharp rise in cases of staff fraud and a growing awareness of its consequences has led employers to confront the problem more openly and energetically in recent years. This is understandable, as fraud by members of staff can not only have a considerable financial impact: it can also have a lasting effect on morale and mutual trust within the organisation, as well as on its reputation.

The healthcare sector is certainly not immune to the problem. Of the 482 cases taken up by the NHS CFS in 2009-10 (a figure which excludes cases investigated locally within NHS organisations), almost one fifth involved payroll fraud, which includes various types of staff fraud, from submitting false timesheets to using false documents in an employment application. As Margaret’s case illustrates, staff fraud can have a significant impact on the bottom line of the individual healthcare organisation, and recent cases involving larger organisations only reinforce this point. In March 2010, a former estates director at an Essex acute trust was found to have fraudulently earned over £245,000 as a result of making false claims about his credentials.

In healthcare, staff fraud is made even more serious by the fact that fraudsters appropriate resources, most often public resources, which are meant for patient care. Frequently the fraud is committed by people who have a professional duty to care for patients and have been entrusted with the resources for this purpose. In healthcare more than in other sectors, then, it is not only the employer or other parties immediately affected who pay for staff fraud: we all pay, as taxpayers and as patients.

A comprehensive approach
Employers across all sectors have found that staff fraud, like all types of fraud, is best tackled with a comprehensive approach. This includes not only a reactive element, responding to fraud when it is discovered, but crucially also a proactive one, addressing the root causes of that behaviour at the level of both the organisation’s culture and the individual employees’ incentives and motivations.

The NHS CFS has employed such a comprehensive strategy ever since its creation in 1998, and the same approach is used locally and at national level. Counter fraud work within NHS organisations is undertaken by Local Counter Fraud Specialists (LCFSs), trained and supported by the NHS CFS and reporting to their respective director of Finance. Nationwide, the NHS CFS develops policy and guidance, undertakes research on the nature and scale of fraud to build an evidence base for its work, and works directly on cases of fraud that are large, complex or require specialist knowledge.

Proactive measures
The first step in any strategy to counter staff fraud is creating a strong anti-fraud culture at all levels within the organisation. Ideally, Simon and Margaret should not even have contemplated committing fraud in the first place, because they saw fraud as entirely unacceptable and knew that everyone around them thought the same. However, if the idea of topping up their salaries by deception did cross their minds, they should have been held back by the thought of what might happen to them as a consequence. This is deterrence, the second part of
the strategy.

Both a strong anti-fraud culture and effective deterrence are achieved by promoting awareness of fraud, its unacceptability and its consequences among all staff through an active communication strategy. Media coverage of high-profile cases can also make an important contribution.

Unfortunately, there could still be some members of staff who are not impressed by the anti-fraud message or by the deterrents, and who decide to attempt fraud. For these cases, the counter fraud strategy has a third element, called prevention: putting measures in place to stop fraud from succeeding if it is attempted. Before Simon and Margaret decided to defraud the NHS, a lot of things could have been done that would have frustrated their efforts.

In Simon’s case, the health body could have checked timesheets against rotas to ensure that shifts claimed for had actually been worked. At Margaret’s GP practice, the partners could easily have spotted that something was wrong had an audit procedure been in place to check her activities. Looking at new and existing rules, policies and procedures to identify any fraud risks they may present, evaluating existing fraud prevention measures, and developing and introducing new ones if needed: all these are important elements of fraud prevention.

Both the NHS CFS and the network of LCFSs apply these in their daily work, affecting anything from the development of new national policy by the Department of Health to the design of timesheets in a hospital.

Reactive counter fraud work

Even with the best preventative systems in place, some members of staff will still succeed in their attempts to defraud their employers. It is vital to make sure that their actions come to light as soon as possible and are investigated quickly and professionally. The detection of ongoing fraud and its investigation are the first two steps on the reactive side of counter fraud activity and form another important part of the work of LCFSs and of the NHS CFS. But let’s see how our two stories unfolded.

Simon was right to think he might be found out. One day, a clerk in the finance department, while processing the week’s timesheets, did a random check of a few of them against the health body’s personnel records. It was easy to spot what was wrong: one of those employees had stopped working at the health body four months before. Unsure what to do, the clerk talked to his manager, who after a quick enquiry immediately decided to refer the matter to the LCFS: their investigation established that the trust lost over £15,000 in salary for hours that had never been worked.

In Margaret’s case, no one at her practice was checking what she did. It was only when NHS Pensions questioned why no payments had been received for some practice staff that the partners realised something was wrong. They called the NHS Fraud and Corruption Reporting Line, and the case was taken up by one of the NHS CFS’s operational teams, which normally investigate cases with a value above £15,000, or of regional or
national significance.

Both stories ended in court and resulted in criminal convictions. Margaret was sentenced to 18 months in prison. Simon was given a suspended prison sentence and ordered to pay back the salary he had fraudulently claimed. Securing appropriate sanctions, from a range of criminal, civil and disciplinary measures available, is the logical next step in reactive counter fraud work.

Recovering funds
The final part of the NHS CFS’s comprehensive strategy is seeking redress, i.e. the recovery of money lost to fraud. This can be done locally by LCFSs, using the administrative procedures of the health body or the civil law: in 2009-10, over £2 million was recovered by civil recovery or voluntary repayments. In the most serious cases, the NHS CFS can apply to the courts to make a restraining order or a confiscation order. In 2009-10, the NHS CFS recovered £2,666,067, bringing the total recovered since 1999 to over £65 million. This is all money that goes back to the defrauded NHS organisations and can be returned to its original destination: patient care.

At a time when the NHS is asked to achieve significant efficiencies in its use of resources, and at the same time bring the control of those resources closer to clinical staff and patients, it is more important than ever to guarantee that abuse of resources through fraud and corruption is reduced as much as possible. With robust arrangements set within a comprehensive strategic framework, comprising both proactive and reactive measures, this goal can be achieved.

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