Fraud is difficult to detect but there are ways to discover and deal with the culprits. While the money stolen is often almost impossible to recover, legal proceedings send a strong message to others tempted by fraud, says Peter Brewer
In a recent investigation, BBC’s Panorama said that fraud could be costing the NHS as much as £5bn – equivalent to 250,000 nursing posts – per annum.
The NHS budget is currently £100bn per year and it is one of the largest employers in the country. The vast majority of these employees are honest and discharge their duties and obligations in a proper way.
However, as with any organisation, there are bound to be those who behave dishonestly and criminally.
‘In any organisation there are bound to be those who behave dishonestly and criminally’
A prime example of such behaviour, as cited by Panorama, is the case of Joyce Trail.
Dr Trail was a dentist based in Birmingham. On the face of it she had a successful practice. However, it turned out that she had been submitting claims for treatment for non-existent and deceased patients.
The loss to the NHS was about £1.4m and as a result she was prosecuted successfully and sentenced to seven years in prison.
In addition, she was ordered to repay £1.4m to the NHS within those criminal proceedings.
- Department of Health to establish anti-fraud unit
- Tackling the hidden cost of fraud in the NHS
- Former trust finance chief jailed for £2.2m fraud
Finding and dealing with fraud
Fraud is very difficult to detect; however in my experience of dealing with culprits, it always begins on a small scale and then, as the perpetrator realises that they are getting away with it and becomes more greedy, the scale and sometimes the scope of the fraud grows.
It is therefore important to look for some of the following, in either practitioners you interact with or with colleagues you are suspicious of:
- sudden increases in financial claims that do not fit in with historic patterns;
- unusual and sudden changes in behaviour – maintaining odd hours, working substantial overtime when no one else is about or furtive behaviour; and
- apparent extravagance and appearing to live beyond an individual’s likely means, particularly if that change is sudden and unexplained.
If suspicions are felt to be justified, it is important that a thorough investigation of the activity is conducted, and a comprehensive bundle of evidence is compiled either by you or by NHS Protect.
Bear in mind that any evidence gathered may be used in subsequent legal proceedings.
Navigating the litigation
You then need to determine in which forum to bring any legal proceedings.
‘There are tools in the civil litigator’s armoury that can be deployed to make a recovery’
The starting point is probably to bring proceedings in a criminal court; if found guilty, the defendant is likely to receive a prison sentence and possibly an order requiring them to restore the sums that they have taken.
Typically, offences will be aggravated where the perpetrator has committed a breach of trust, particularly where they have held senior positions.
You need to also consider whether to bring civil proceedings. There are a number of tools in the civil litigator’s armoury that can be deployed with a view to making a recovery. These include:
- Disclosure orders: requires the perpetrator to disclose documents and information concerning their prior activities, their current assets and financial position.
- Search orders: allows the applicant to search the culprit’s premises to seek out and recover evidence.
- Freezing orders: effectively an injunction that prevents the perpetrator dealing with, realising or moving their assets without leave of the court.
- Proprietary injunctions: an injunction that bites against a particular asset of the offender, such as a bank account, car or house, and allows the applicant to recover it and realise its value.
- Recovery proceedings: claims for breach of contract, breach of duty – including fiduciary duty where the fraudster is senior – and/or deceit and fraudulent misrepresentation. These often follow on from any injunctive remedies sought by the applicant.
- Bankruptcy: in the event that the above remedies do not result in a full recovery then the applicant has the option of then making the fraudster bankrupt. This will result in a trustee in bankruptcy being appointed to realise the fraudster’s assets with a view to paying back their creditors.
There are therefore a number of options open to an organisation who is the victim of fraud.
‘Robust action sends a powerful message to others who are tempted by fraud’
However, I recommend some caution. In my experience perpetrators rarely invest their ill gotten gains in anything tangible – and therefore recoverable – preferring instead to live the high life on the proceeds of their activities by going on expensive holidays, staying in grand hotels and eating at the best restaurants. The cash expended on such activity is unlikely to be recoverable.
That said, robust action sends a powerful message to others who are tempted by fraud; it shows that their actions will have consequences and that the proceeds of their fraud will be transient as they will have to pay them back eventually.
Peter Brewer is an associate of Weightmans LLP