OAKLAND — A man who worked for a decade and a half at Kaiser Permanente faces a single count of mail fraud in connection with nearly $7 million worth of coordinated over-billing for investigative efforts, authorities said.
In a criminal complaint filed late last week in the U.S. District Court of Northern California, a Federal Bureau of Investigations special agent said Michael Quinn, a former senior claims examiner in the public and professional section of Kaiser’s legal department, conspired with three people who owned five firms “to defraud Kaiser through the submission of fraudulent vendor invoices for investigative services.”
Quinn, who joined Kaiser in 1998, was terminated in mid-July 2014, but the investigator said the conspiracy apparently began in 2008 and could go back as far as 2002.
Quinn’s job was to assess and resolve liability cases arising from care provided at Kaiser hospitals in an efficient and cost-effective manner. He hired the firms to assist with medical malpractice suits where Kaiser was a defendant to provide investigative services, including surveillance.
According to prosecutors, Quinn urged the firms’ owners to turn in falsified invoices seeking reimbursement for work not done or required. Some of those invoices sought payment for hours not worked, inflated expenses, mileage and lodging reimbursements.
He would then approve the invoices, asking Kaiser’s accounts-payable department to make good as soon as possible, and then receive a cut of the payment as a kickback.
A Kaiser employee grew suspicious after Quinn said “he owned two expensive homes and had recently purchased two high-end automobiles,” according to an FBI agent’s statement. An audit of 284 cases from 2009 to 2014 revealed vendor invoices for investigative services that totaled just over $7 million. That total stood out compared to Kaiser’s other claims examiners, who approved a total of $578,345.33 for investigative services over the same time.
A Kaiser-commissioned preliminary audit of the vendor services found that nearly $6 million in billing was unsupported by actual work, and $1 million was over-billed. Kaiser then opened an investigation of Quinn’s work e-mails, laptop and desktop computers and his local network drive, which revealed his financial ties to the firms.
In a statement obtained Thursday, Kaiser vice-president John Nelson said the charge against Quinn shows “we will not tolerate criminal misconduct.
“Mr. Quinn actively and skillfully concealed his criminal conduct from his supervisor and colleagues. Kaiser Permanente referred this matter to law enforcement for criminal prosecution and has been cooperating fully with the federal investigation. In addition, Kaiser Permanente immediately brought a civil suit against Mr. Quinn and his associates,” Nelson said.
Alameda County Superior Court records show that a loss-prevention job for Quinn at a major department store ended in an 2002 arrest on suspicion of embezzlement and a 2004 no-contest plea.
“Kaiser Permanente was unaware at the time of Mr. Quinn’s hiring that he had worked at Nordstrom or had been accused of or convicted of embezzling funds,” Nelson added.
“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.”
Quinn could face up to 20 years in prison and a $250,000 fine, as well as up to three years’ supervised release, if convicted.
Contact George Kelly at 408-859-5180.