Daniel Purcell explains how to recover losses as part of a counter-fraud strategy
The NHS Counter Fraud Service has transformed fraud response and prevention in the NHS. In measuring and minimising exposure to fraud, NHS bodies have achieved a remarkable success rate with criminal convictions, they have identified and removed fraudulent employees and contractors, they have “designed out” some patterns of fraud and they have increased stakeholder confidence, through media coverage, engagement and, occasionally, investigations.
Unlike criminal and professional disciplinary proceedings concerning fraud, it is not always necessary to demonstrate “dishonesty”, or a guilty state of mind, to prove a claim
However, the greatest challenge is sometimes in recovering the financial loss.
Objectives of fraud response
An NHS body that uncovers fraud is likely to identify two principal strategic objectives:
- recovering the sums of money fraudulently obtained;
- preventing a recurrence, both by this fraudster and through deterrence of others.
Criminal or professional disciplinary proceedings deliver a strong deterrent message, and a criminal prosecution can lead to recovery of part or all of the sums lost. However, this may not happen in every case, either because no prosecution is brought, or because it relies on a small number of sample cases, or because the court does not award compensation.
Therefore, civil recovery can be a key weapon in promptly recovering losses, and delivering a clear message that fraud will not pay.
Civil litigation offers key tactical advantages in fraud response:
Dishonesty Critically, unlike criminal and professional disciplinary proceedings concerning fraud, it is not always necessary to demonstrate “dishonesty”, or a guilty state of mind, to prove a claim. Often, a straightforward breach of contract can be enough to entitle an NHS body to recover losses.
Freezing injunctions Where there is evidence of a strong claim and a risk of assets being hidden or disposed of, a court will order a suspected fraudster to disclose their assets, and prevent them (and third parties, such as banks) disposing of assets up to the value of the fraud. This order is obtained at the outset of proceedings - without the knowledge of the fraudster - so denying them time to conceal their assets. This order gives some security to the NHS body, increases the pressure on a fraudster to settle the claim, and sends a clear deterrent message.
Disclosure There are a number of ways to make disclosure orders requiring information and documents to be provided in response to fraud, such as:
- through a court order, before proceedings have started, where this will help to determine whether a claim can or cannot be made, and against whom
- against third parties, where it will help identify whether fraud has occurred, and if so by whom;
- against the defendant, requiring disclosure of material undermining their case during the course of the litigation.
Settlement Court rules can be used to increase the risk of high costs for the fraudster, and so the pressure to repay the NHS promptly and without the cost and delay of a full trial.
Civil proceedings can be used as part of an overall strategy of “parallel sanctions”.
Criminal proceedings There is no rule that says civil proceedings must automatically stop when a criminal investigation or prosecution is under way. Although care must be taken to avoid “tipping off” a fraudster, civil proceedings can go ahead alongside criminal proceedings. The higher “standard of proof” in criminal cases means that a successful civil claim can be made even where there is no prosecution. A civil claim can often be resolved more quickly.
Contract enforcement NHS bodies can prevent repeat fraud by an individual perpetrator, where they are a contractor or service provider, by terminating their contract or registration. Primary care performers can also be prevented from obtaining contracts with other bodies.
Regulatory action Professional disciplinary bodies can “strike off” those who defraud the NHS, even where no criminal conviction is obtained, which can be a powerful deterrent in parallel with a civil claim.
Litigation is often seen as a last resort for NHS bodies, due to the costs it might face. The risk can be managed in a number of ways, including:
- Planning and management Early evaluation, strategy formulation and budgeting can ensure that litigation remains on track and within projected costs.
- Conditional fee agreements The NHS can enter into contracts with its solicitors under which fees are either discounted or deferred pending a successful outcome, in which case the defendant is liable for the costs.
- ATE cover NHS bodies can take out insurance against liability for an opponent’s costs, for which the premium is recoverable from the defendant at the conclusion of the case, if successful.