Thousands of American Airlines employees unknowingly became the targets of a multi-million dollar insurance fraud scheme carried out by a father-son duo who claimed to provide the airline workers with free hearing aids for simply taking a test.
This week, a federal grand jury in American’s home base of Dallas indicted the duo on several charges related to the $16.7 million alleged insurance fraud scheme.
According to the indictment [PDF], 66-year-old Terry Anderson and his 36-year-old son Rocky Anderson worked together to carry out a hearing aid scheme that targeted American Airline workers because of their generous insurance policies.
The indictment claims that from Jan. 2011 until Nov. 2016, the pair devised and executed a scheme at their business — Anderson Optical and Hearing Aid Center — to defraud Blue Cross Blue Shield by submitting fraudulent claims for hearing aids on behalf of American Airlines’ employees, despite the fact the workers didn’t actually need the devices and sometimes never received them.
In order to lure in customers, the company offered BCBS subscribers a free pair of high-end sunglasses or a free pair of prescription glasses in exchange for taking a free hearing test. The men also allegedly offered the customers additional gifts — typically $100 gift cards — for referring family members and coworkers for the tests.
In some cases, the indictment claims the duo took their show on the road to the American Airlines’ Dallas Fort Worth employee break room, where tests lasted less than five minutes.
Once the test was complete, the defendants told customers that they had a slight to mild hearing loss and required them to sign an order for hearing aids in order to receive the free glasses. Anderson and Anderson allegedly told the customers that they would not be required to pay any applicable copayment, coinsurance, or deductible.
According to the charges, the defendants then submitted claims — sometimes of up to $13,900 — to BCBS for reimbursement for hearing aids. However, in many cases the hearing aids were never delivered to the subscriber, the indictment states.
Federal prosecutors claim that the duo targeted American Airlines employees for the scheme because of the generous BCBS plan offered prior to 2014. At that time, the employee plans had no maximum limit on the cost of hearing aids and allowed subscribers to obtain hearing aids once per plan year.
As such, the indictment claims, that in 2013 about 84.6% of Anderson Optical & Hearing’s total income came from BCBS and 99.7% of the BCBS payments were based on claims submitted for American Airlines employees and their dependents.
The scheme came to light in Nov. 2013 when BCBS conducted an audit of Anderson Optical & Hearing, requesting copies of patten records for certain American Airlines employees and their dependents. The following January, the Texas Department of State Health Services-Professional Licensing Unit conducted an investigation regarding a complaint it had received concerning the firm.
The indictment claims that when given the opportunity to respond to the complaint, Anderson Optical & Hearing provide patient records that included altered test scores, additional notations, and apparent forged signatures that were not present when the records were submitted for BCBS’ audit.
According to the indictment, Anderson Optical & Hearing submitted claims to BCBS for American Airlines’ employees totaling $27 million, of which BCBS paid Anderson Optical more than $16.7 million.
The indictment officially charges the men with one count of conspiracy to commit health care fraud, ten counts of health care fraud and aiding and abetting, and four counts of aggravated identity theft and aiding and abetting.
If convicted, each count of conspiracy to commit health care fraud and substantive health care fraud count carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine, according to prosecutors, while the aggravated identity theft counts carry a mandatory statutory penalty of two years in federal prison and a $250,000 fine.
Additionally, if convicted, the men would be required to forfeit a 300 acre ranch, three vehicles, and more than $3.1 million seized from financial accounts.