victim of an overbilling scheme is bewildered at the fees he seesOverbilling is an intentional or unintentional increase in the amount charged for a particular service compared to the amount initially posted or agreed upon. In some cases, a simple human error or system glitch may be the cause of overbilling, which is typically resolved within a short period of time. However, some less reputable contractors may overbill intentionally with the hopes that their client will overlook the charge. It is important to understand whether you are the victim of an overbilling scheme or if the overcharge was collected by pure mistake.

What Are Overbilling Schemes?

An overbilling scheme is a form of consumer fraud in which an organization or contractor intentionally overcharges an individual. The victim of an overbilling scheme generally has no prior knowledge of the increase in price, and was not given a warning or explanation as to why the amount charged was greater than the amount agreed upon. In some cases, repeat instances of overbilling may occur over time if not properly dealt with by the consumer.

Industries Targeted For Overbilling Schemes

Construction: In industries like construction with slow payment turnaround times, overbilling can be a legitimate strategy for keeping projects going instead of stopping and starting due to accounting lead times. In this scenario, overbilling allows contractors to maintain the project’s timeline by staying ahead of the project cash runway and helps to avoid costly time delays. For these reasons, some contractors will seek to enter an understanding with a slow-paying client that accounts for overbilling that allows the project to stick to schedule and cost estimates. However, this unfortunately also makes it very easy for fraudsters to take advantage of these arrangements.

Healthcare: Overbilling in healthcare can occur when doctors fraudulently overcharge insurance providers and government healthcare programs, either by overstating actual care or services provided, or by outright falsifying procedures, services, or care that was never provided. One study seeking to examine the impact of overbilling on Medicare Part B found that “2,300 [of 600,000 physicians] submitted claims for service codes that would translate into more than 100 hours per week on services for Medicare Part B FFS beneficiaries alone… Six hundred physicians submitted claims that translate into more than 168 hours per week — which implies working 24 hours per day, 7 days per week.” — Detecting Potential Overbilling in Medicare Reimbursement via Hours Worked.

How Overbilling Schemes Work

mechanic explains to customer the charges to allay the customer fear of an overbilling schemeThere are a variety of overbilling schemes, ranging from simple to complex. At their most simple, overbilling schemes will seek to exaggerate or falsify labor or materials provided. While some may simply hope the invoices are not subject to oversight, other fraudsters may try to use documentation to hide their scheme, e.g., re-using past invoices in order to double bills for work already completed. Some most dangerous overbilling schemes are assisted by insider employees who receive kickbacks in return for being an accomplice to the scheme and allowing the scheme to operate by turning a blind eye.

Identifying Signs Of Overbilling

Multiple split purchases: Most organizations will treat small purchases and large purchases differently. While an employee may have discretionary authorization for a purchase of up to $100, anything past that requires additional review and approval. So if an employee wanted to purchase something that cost $500, they may split that one purchase into multiple, separate invoices, each for less than $100. Doing so allows them to bypass the regular approval process.

Inflated costs: Some contractors or service providers may seek to overbill by inflating the costs of goods or services rendered to the company, or bought on behalf of the company. By charging the company more than the actual cost of the good or service, fraudsters are able to pocket the difference. If charges for regularly purchased goods or services seem higher than they should be, investigate further into the going market rate and any historical pricing data your company might hold.

Miscellaneous: Overbilling can also occur in little bits and pieces, as employees or contractors tack on small “miscellaneous” charges to otherwise legitimate invoices or purchase authorizations. These are commonly disguised as things like administrative fees, overstated tax percentages, or other add-on expenses.

Sequentially-numbered invoices: Unless you are only issuing invoices to one party, it is extremely unlikely that an individual contractor will submit multiple, sequentially numbered invoices. If you see this happening, it is likely a sign that the fraudster got lazy and is simply counting to the next digit when falsifying invoices.

What Can Victims Of Overbilling Do?

  • Always pay based on an invoice
  • Verify dates and time periods to avoid duplicate billing
  • Check for overlapping invoice dates or duplicate invoice numbers
  • Separate responsibilities within your accounting department and/or establish checks and balances

Contact The New Mexico Consumer Fraud Attorneys

client meets with attorney to discuss the overbilling scheme lawsuitOverbilling schemes, like most forms of consumer fraud, can be a tricky, often complicated, process. Although businesses and individuals are protected by a number of consumer protection laws, there are still many opportunities for people to be taken advantage of by unethical professionals and corporations, meaning that working with an experienced attorney is not only a good choice but often the best choice.

If you live in New Mexico and suspect you may have been a victim of overbilling fraud, consider working with the experienced attorneys at Parnall & Adams. Our legal team can assist you in determining if you are a legitimate victim of bad business practices and help hold individuals, businesses, and financial and insurance institutions accountable for their actions. Give us a call today or request a consultation online to learn more about our comprehensive consumer fraud representation services! Our experienced attorneys are ready to help you get the justice and financial compensation you deserve!