RMH scandal deepens with claims surgeons rorting WorkCover, private health insurers

New allegations have emerged that a handful of surgeons at the Royal Melbourne Hospital have been fraudulently billing WorkCover and private health insurers, amid claims the hospital was warned of similar rorts a decade ago.

The Sunday Age revealed last week that the Independent Broad-based Anti-corruption Commission was probing claims that a handful of Royal Melbourne Hospital surgeons were billing the Transport Accident Commission for medical procedures that were never carried out, as well as fraudulently claiming assistant surgeon fees.

IBAC is investigating allegations some surgeons at the Royal Melbourne Hospital billed the TAC, WorkCover and potentially private health funds for work never carried out.Credit: Greg Newington

The state’s billion-dollar compensation scheme for injured workers, as well as private health insurers, are also potential victims of the alleged billing fraud, this masthead has confirmed.

Four hospital sources with knowledge of the integrity probe, speaking on condition of anonymity because they feared reprisal, said IBAC was also investigating potential fraud involving the billing of WorkCover, the state’s workers’ compensation scheme, as well as privately insured patients who get surgery in public hospitals.

“They are looking at all compensable cases,” one of the sources said, referring to cases covered by compensation schemes such as TAC, WorkCover or private health insurance.

“From a financial point of view, they are all treated the same,” said a different hospital source aware of the allegations.

While the TAC is Victoria’s public insurer for transport accident victims, WorkSafe – the agency responsible for WorkCover – handles workplace injuries. Registered surgeons are able to bill either agency for work performed on relevant patients in addition to receiving their hourly rate from the hospital.

An IBAC spokesperson said the commission “does not comment on whether it has a complaint or investigation before it”.

A WorkSafe spokeswoman said the agency had established a new integrity unit in October this year.

“WorkSafe takes allegations of dishonest conduct seriously and uses every power at its disposal to detect and address fraudulent behaviour, including investigating and taking legal action where there is sufficient evidence to do so,” the spokeswoman said.

The country’s peak body for private health insurers has also asked IBAC to notify it of any alleged fraudulent billing involving privately insured patients treated in the state’s public hospitals.

Private Healthcare Australia chief executive Rachel David.

“I would encourage anyone with evidence of fraudulent or inappropriate billing of health funds to report it to health funds and IBAC,” said Dr Rachel David, chief executive of Private Healthcare Australia.

“This should include inappropriate billing for assistant surgeons. If this is happening, it is not a victimless crime. When you rip off a health fund, you drive up the cost of health insurance for everybody.”

David said public hospitals billed health funds millions of dollars a year, pointing to Australian Institute of Health and Welfare data that shows about one in 11 patients in Victorian public hospitals are private patients using their health insurance.

“This equates to 8.8 per cent of patients or 1390 hospital beds per day,” David said. “Just like TAC funding, this is a significant revenue stream that could be exploited.”

A spokesperson for the Royal Melbourne Hospital said the health service was not aware of any allegations involving surgeons overbilling WorkSafe or private health insurers.

“While it is not appropriate to comment on the work of regulators, the hospital regularly engages in continuous improvement initiatives to ensure we deliver the very best care,” the spokesperson said. “These programs have and will continue to drive important process changes at the RMH.”

The Sunday Age revealed last week that IBAC was looking into allegations that some surgeons at the Royal Melbourne were billing the TAC for medical procedures that were never carried out on patients, as well as fraudulently claiming assistant surgeon fees.

One whistleblower recounted that they had witnessed a surgeon – whom this masthead has chosen not to name – walking into an operating room, putting on scrubs, chatting to staff for a few minutes and then walking out. The source then noticed the surgeon had put his name down as the assistant on the operation report sent to the TAC.

The IBAC investigation comes after an internal hospital probe a few years ago by law firm K&L Gates.

Surgeons at the hospital attended a meeting with senior staff on Thursday following the revelations in this masthead.

Those present were told that a new committee would develop a consensus on what is considered appropriate billing. This would detail who is considered an assistant surgeon.

“They talked about billing and how we need to improve the quality of billing,” said one hospital source.

Another hospital source said there was no definition of who was considered an assistant surgeon, a billing item that attracts 20 per cent of the primary surgeon’s fees.

“We are left to our own devices,” they said.

The alleged fraudulent billing has been taking place for at least a decade.

A former surgical registrar at the hospital said they had raised concerns about egregious billing with senior staff a decade ago.

“I had very grave concerns,” the ex-registrar said. “They manipulated lists to prioritise TAC patients for personal financial gain.”

As a result of this complaint, item numbers for patients’ surgeries were displayed at team meetings. “The thinking was that it would improve transparency,” they said.

The source, now a specialist surgeon, said he was unsure whether this still occurred. The Royal Melbourne spokesperson refused to confirm whether item numbers were still displayed at team meetings.

A registrar is a fully qualified doctor pursuing training in a specific field.

Coalition health spokeswoman Georgie Crozier said corruption and rorting appeared to be rife in the public health system.

“These allegations have been known about for years but were never taken seriously by health executives, bureaucrats and the Labor government,” Crozier said.

“Victorians deserve a health system that is effective, efficient and ethical so that they can get the world-class care they deserve.”

A spokesperson for the Allan government said all Victorians would expect hospitals to uphold the highest standards of integrity and patient care.

“Anyone with concerns should come forward to the department’s integrity unit, or directly contact the Independent Broad-based Anti-corruption Commission,” the spokesperson said.

“As this matter is currently under investigation, it would be inappropriate to comment further at this time.”

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