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The NBA Health Care Scandal

By: David Ostrowsky

One person submitted paperwork for $48,000 worth of root canals and crowns on eight teeth at a Beverly Hills dental office--while he was living in Taiwan. Another individual filed a $19,000 claim for chiropractic services that he (allegedly) never received. And then there were suspicious invoices, filled in with (again, allegedly) fraudulent dates and account numbers, one of which was filed for services in a "wellness office" that specialized in "sexual health, anti-aging, and general well-being." 

We are talking about the recent multi-million-dollar health care fraud scheme in which eighteen former NBA players were charged with pocketing funds illegally by defrauding the league's health and welfare benefit plan. According to the indictment filed earlier this month in a Manhattan federal court, from 2017-2020 the NBA's health plan--funded primarily by NBA franchises--received phony claims totaling close to $4 million, of which the defendants received approximately $2.5 million in fraudulent payouts. Of the eighteen former NBA journeymen (none were prominent players), fifteen were arrested and face up to twenty years in prison, the sentence commensurate with conspiring to commit health care fraud and wire fraud.

This was not the first health care scandal to rock the sports world this year. Back in early September, several former NFL players pleaded guilty to defrauding the league's venerable Player Health Reimbursement Account Plan (they allegedly filed false claims for costly medical equipment they never actually received). But the NBA's was grander in scale and more befuddling considering the fact that, unlike the former NFL players, the defendants here reaped millions in guaranteed contracts while being active players. To the average person, it is simply unfathomable how formerly well compensated individuals can find themselves in such dire straits that they resort to bilking their former employer out of thousands of dollars.

How Do Sports Scandals Occur?

But the larger and more relevant point, of course, is how does such chicanery occur? How can a health care plan, especially a massive one such as the NBA's, protect itself from such corruption going forward?

Well for one, invoices should be inspected more thoroughly. According to court papers filed in the now-infamous NBA scandal, there were several fraudulent invoices and medical necessity forms that, upon closer review, stood out because they were not on company letterhead, contained unusual formatting, and had multiple grammatical errors. Clearly, the failure to detect such fraud was an administrative oversight that helped perpetuate the racket. 

Plans should make a more concerted effort to monitor the precise whereabouts of the claim filer at the time of service. The most egregious act of deception occurred when, as previously mentioned, one former player, Gregory Smith, submitted paperwork for dental services at a Los Angeles practice when he was playing basketball over 6,000 miles away. In an eerily similar case, former Boston Celtic Glen "Big Baby" Davis filed an invoice for dental work he purportedly received in Beverly Hills while in fact he was flying to Paris. Subsequent examination of GPS data, emails, and travel records indicated that the respective locations did not align, but more proactive work needs to be done so that such revelations don't come to light only after the fact.

Finally, health care plans need to have plan document language explicitly describing how participants can be terminated for fraudulent behavior. Certainly in this example the blatant acts of fraud would be grounds for rescission of coverage (the retroactive cancellation of the health care policy). In addition, a given healthcare plan can further protect itself from such burdensome financial losses by including a robust Recovery of Payments section that outlines the means for recouping lost funds.

As the NBA prepared for its first full-length season since 2019-20 (in front of packed stadiums, no less), the aforementioned scandal represented a dark moment in the league's history. In 2016, the NBA and National Basketball Players Association broadened health benefits for retired players as part of the collective bargaining agreement negotiations.  At the time, said initiative was a chief bargaining priority for the union as it strove to extend coverage for former players beyond the traditional pension in order to offset the exorbitant healthcare costs associated with being an ex-pro athlete. In short, the 2016 health care program was a means for current players to pay homage to their predecessors, many of whom played in the sixties and seventies when exorbitant salaries were not commonplace, by contributing more towards the retirement plan. Sadly, a year later, when the league's health care benefits plan started ballooning, a select few took advantage for personal gain.

Hopefully, other enterprises across America have tuned in and taken precautions because, surely, the NBA and NFL are not the only large-scale organizations susceptible to health care fraud.