‘The scope of this fraud scheme is astonishing’

By LYNNE JETER

If you employ nurses with nursing degrees from Siena College, Palm Beach School of Nursing, or Sacred Heart International Institute, all located in Florida, it may be time to review their files for fraudulent activity.

The U.S. Attorney’s Office for the Southern District of Florida recently charged 25 individuals with wire fraud for selling fraudulent nursing degree diplomas to more than 7,600 individuals across the country. These individuals purchased the bogus diplomas to use as credentials to sit for their nursing board exams. Thousands of these individuals became licensed nurses, easily slipping under the human resources radar.

“The scope of this fraud scheme is astonishing,” said David Schumacher, a former deputy chief of the Health Care Fraud Unit for the U.S. Attorney’s Office for the District of Massachusetts, and co-chair of the Fraud & Abuse Practice at Hooper Lundy law firm. “The obvious victims are the patients who were treated by nurses who apparently didn’t have the training and qualifications that they had a right to expect. But hospitals and health systems and other organizations, who are desperate to find and replace qualified nurses, were also victimized by this scheme.”

David S. Weinstein, a former federal prosecutor in the Southern District of Florida and a partner on the compliance and white-collar defense team at Jones Walker LLP in Miami, said the trend emanated from the COVID outbreak.

“During COVID, as with many industries, both a shortage of potential employees and forced movement to online certifications proliferated the healthcare industry,” explained Weinstein. “As a result, unscrupulous individuals took advantage of the situation and created a scheme to profit from these events.”

Employers who hired these fraudulent nurses had little way to know about the bogus diplomas.

“As with all due diligence checks, you rely on the information that’s in the database,” said Weinstein. “If transcripts and diplomas are submitted as a requirement to sit for the licensing exams, unless the transcripts and diplomas are outright fraudulent in their appearances, it will not set off any red flags. Moreover, by the time a candidate applied for employment, they had already used the fraudulent transcripts and diplomas to sit for and pass their licensing exams.”

Schumacher also pointed out that all three nursing schools were accredited.

Human resources and compliance departments at health and hospital systems should review employment records from all nurses to determine if any of them listed diplomas from these three institutions, Schumacher said.

“If so, they should conduct an investigation to determine if the diplomas were legitimate or fraudulent, and if fraudulent, they should immediately terminate the nurses,” he said.

It’s critical that health and hospital systems take these steps to mitigate harm, Schumacher continued.

“It’s not inconceivable that health and hospital systems will have to answer inquiries from patients and families that were treated by nurses involved in this scheme,” he said, “and federal and commercial insurance payors could demand recoupment of any services performed by the nurses as well.”

The scandal doesn’t implicate staffing services. “However, the defendants preyed on vulnerable health and hospital systems that are having difficulty filling open nursing positions,” said Schumacher.

If convicted, the 25 defendants each face up to 20 years imprisonment.

Some state nursing boards are already taking action. For instance, the Georgia Board of Nursing has sent letters to at least 22 nurses who had diplomas from one of these schools, asking them to voluntarily surrender their nursing licenses, and the Atlanta VA medical center has removed three such nurses, said Schumacher.

“Boards of Nursing in other states will surely follow suit,” he said.

Moreover, if there are thousands of nurses out there who obtained their licenses under false pretenses, there could be years of collateral litigation, including additional indictments, nursing board licensure actions, and potential lawsuits from their employers and families, said Schumacher.

“What a mess!”