Scam Alert: Stealing Your Health by Medical Identity Theft

Joe Ryan is a pilot in a tailspin. His business, providing sightseeing tours in his biplane, could go under. He has faced foreclosure on his home. His credit cards have been canceled, and by this summer, the Eagle, Colo., resident only had about $500 to his name—and owed thousands in bills.

Ryan’s free fall into financial ruin began after he placed an ad in the Centennial Aviation & Business Journal in 2003—and became a victim of medical identity theft. “The guy taking my ad said he needed my Social Security number and birth date to verify my check,” Ryan, 60, says. “And, like an ass, I gave it to him.”

It turns out that the magazine ad salesman, a career criminal on parole named Joe Henslik, needed colon surgery. And using Ryan’s identity, he got it at Littleton Adventist Hospital in suburban Denver. Months later, Ryan—who had no medical insurance—received a $44,000 hospital bill for Henslik’s treatment. Henslik died last December.

“When I went to the hospital ... I offered to take off my shirt to show them I had no scars whatsoever, to prove surgery wasn’t done on me,” says Ryan. “Still, they gave me a hard time.” He convinced hospital officials that his identity had been stolen, but because of federal privacy laws “the hospital wouldn’t even allow me to review the 3-inch-thick file in my name sitting on the desk, or even reveal the type of surgery I supposedly had.”

It took a year for the hospital to waive the bill. “I needed a loan for my business, and everyone was slamming doors in my face because of this black mark on my name,” Ryan says. “To get a loan, I had to pay the highest interest rate ... I have been destroyed.”

Stealing someone’s identity for medical care is another twist on identity theft, affecting about 250,000 Americans a year, says Pam Dixon of the San Diego-based World Privacy Forum, a consumer group that has studied this scam. (For the report, go to worldprivacy.org.)

“People 50 and older are at the greatest risk because they often have some kind of government-issued insurance, such as Medicare or Medicaid,” says Dixon. “That’s a big lure for the scammers, because the system is so large and automated that the government doesn’t really do medical insurance fraud alerts.”

With any type of insurance—or none at all—medical identity theft can mean more than financial devastation. You could get improper treatment based on an impostor’s health history—receiving prescriptions that could interact dangerously with drugs you take, or being denied a knee replacement because the impostor had vascular problems. You could have trouble buying life or disability insurance.

How does medical identity theft occur? “One common scenario, especially in Florida, California, New York and Texas, is that a health clinic is purchased—often by organized crime figures—and staffed with phony or corrupt doctors to lure seniors to get their insurance and personal information,” Dixon says. “If you ever see an unknown clinic offering free medical checkups, run away.”

Other ID thefts are pulled off by moles who copy patient files after getting hired unknowingly by legitimate medical practices. Scammers also get patient information by combing through the trash outside medical offices. Or they solicit victims’ personal data under the guise of selling health products online.

“Right now, selling someone’s medical file and insurance data on the black market gets top dollar,” Dixon says. Here are ways to protect yourself:

* Ask your doctors to make you copies (you may have to pay for them) of everything in your medical file; keep the files updated for a protective “paper trail.” Ask, too, for an “accounting of disclosures,” which shows who accessed your records.

* Review all correspondence from medical insurers, including those “This Is Not a Bill” statements. Look for any treatment you didn’t receive.

* Once a year, ask insurers for a list of all payments made in your name to uncover cases where a thief changes “your” billing address.

* If you note errors or suspect identity theft, immediately call the billing physician and request that your file be amended. Contact your regional office of the Centers for Medicare & Medicaid Services , if you receive those services, and your state attorney general’s office.

* Monitor your credit report with credit reporting bureaus Equifax, Experian and TransUnion, looking for reports of medical debts.

Sid Kirchheimer is the author of AARP/Sterling's Scam-Proof Your Life.