Claims Examiner’s Scam Allegedly Cost California Health Care Provider $7 Million

A former senior claims examiner for the Kaiser Permanente health plan in California was booked into jail last week on a mail fraud charge stemming from $7 million in invoices that he approved from five private investigation firms.

Federal prosecutors say 48-year-old Michael Albert Quinn was aware that the private investigators did little of the work for which they billed Kaiser. He knew that firsthand because payroll records show that he worked full-time for two of the firms while at the same time working at his full-time position with Kaiser Permanente in Oakland, according to a criminal complaint filed by the U.S. District Attorney’s Office for Northern California.

Quinn also was paid separately by the vendors — each of them located in Reno, Nevada and owned by individuals identified in the complaint as K.B., R.D. and K.R —- for surveillance and other work as a private contractor. All told, the vendors paid him $2.78 million from 2007 to 2014, according the complaint.

“Quinn also supervised these same cases as a Kaiser employee,” FBI Special Agent William J. Leoni stated in the criminal complaint. “In short, I believe Quinn received the equivalent of two full-time incomes for managing and purportedly investigating the same cases for Kaiser and the PI firms owned by K.B.”

Quinn was hired by Kaiser Permanente legal division in 1998 to investigate malpractice and premises liability complaints. Another Kaiser employee became suspicious in 2014 after Quinn told the employee that he owned two expensive homes and had recently purchased two high-end automobiles.

Kaiser initiated an audit and discovered that Quinn had authorized payment of $7 million in invoices for investigative work. By comparison, all of the other claims examiners had authorized a combined $578,345 in invoices from investigations firms.

The auditors discovered that the PI firms did now show any work product to support the amounts billed, according to the complaint. They did file some investigation reports, but they contained only biographical information that could easily be obtained through subscription-based research services.

What’s more, Quinn never contacted the attorneys assigned to his cases about the investigative work that had done. The auditors looked into Kaiser’s work-issued laptop computer and found invoices sent to the vendors by “Michael A. Quinn Investigations” and “Quinn Legal.”

Kaiser terminated Quinn in July 2014.

Quinn is the second Kaiser employee accused of a seven-figure swindle against Kaiser Permanente. In 2013, Asim Waqar was convicted and sentenced to 33 months in prison on wire fraud and tax evasion charges. Investigators say Waqar, while working as a software project manager for Kaiser in Oakland, paid the wife of a college friend in Detroit for work on technology projects, even though no work was actually done. He received $428,300 in kickbacks for his troubles, according to the U.S. Attorney’s Office.

The East Bay Times reported Friday that Alameda County court records show that Quinn had been arrested in 2002 on an embezzlement charge connected to his employment as a loss-control specialist for a major department store chain.

Kaiser Permanente issued a statement saying it filed a civil suit against Quinn and his associates and was not aware when it hired Quinn that he had been accused of embezzlement while working at Nordstrom.

“Since Kaiser Permanente hired Mr. Quinn more than 20 years ago, we have continued to improve our hiring process, which, of course, now includes various background checks that may not have been commonly used by companies two decades ago,” the company said.

Quinn was being held at the Glen Dyer Detention Facility in Oakland late Friday, according to online records. He faces a 20-year prison sentence and a $250,000 fine if convicted.