Health Department
Directorate of Finance

4. The Unit will investigate both patient and practitioner fraud. Neil Billing, currently an Assistant Director of the Agency's Practitioner Services Division, will head the Unit. A Steering Group chaired by the Management Executive’s Director of Finance will oversee the Unit’s operation. The Group’s membership comprises representatives from the Management Executive’s Directorate of Primary Care, Directors of Finance and Primary Care from PCTs and IHBs, the HFMA Corporate Governance and Audit Group, and the Crown Office. The function of the Steering Group will be to ensure that the FIU has a uniform modus operandi for all PCTs and IHBs, and that consistent standards of fraud prevention and detection work are set and maintained for Scotland as a whole. A protocol outlining the roles and responsibilities of the FIU, which may require review in light of experience, is attached at Annex A.

5. Health Boards and PCTs will wish to note that the FIU has set up a telephone hotline on 0800 015 1628.

6. To encourage PCTs and IHBs to engage actively in FHS anti-fraud work, and to help meet the costs involved, the Management Executive is introducing new arrangements for the treatment of financial recoveries arising from the activities of the FIU. For these purposes, "recoveries" include FHS funds recovered from patients or from practitioners through criminal prosecution, civil recovery proceedings, withholding of payments following criminal proceedings, voluntary repayment or agreement to withholding of future payments. Details of the recovery retention arrangements are provided in Annex B.

7. FHS anti-fraud work needs to be supported at a senior level within each PCT and IHB with a senior officer, accountable for this purpose to the Director of Finance, given clear responsibility for all FHS anti-fraud work. This responsibility should include liaison with the FIU and regular contact with opposite numbers in neighbouring Trusts/Boards to share information on a confidential basis. The names of the designated officers should be forward to Neil Billing of the FIU at Stevenson House and copied to Senga Robertson at the Management Executive's Primary Care Directorate, Room 31A, St. Andrew's House. It is important that where there is a change in the designated officer the FIU and Primary Care Directorate are notified as soon as possible.

8. Circular 1989 (GEN) 3 provides guidance on the procedures to be followed in instances where there is cause to suspect that a criminal offence has been committed involving public funds. A revised and updated version will be produced in due course but, in the meantime, Annex C sets out a note of the requirements specific to investigations.

9. The Director of Finance is responsible for ensuring there are internal audit arrangements to review, evaluate and report on the effectiveness of internal financial controls against fraud and the extent to which FHS resources are safeguarded from fraud losses.

10. Health Boards and primary care NHS trusts are asked to note the following and ensure that they understand and fulfil their respective responsibilities in the areas indicated:

• the establishment of the FIU within the CSA;
• the roles and responsibilities protocol developed for the FIU;
• the existence of a fraud hotline number; and
• the new arrangements for the treatment of financial recoveries arising from the work of the FIU.

11. Additionally, island Health Boards and primary care NHS trusts are asked to nominate a senior manager, accountable to the Director of Finance, to take responsibility for FHS anti-fraud work (reference paragraph 7 above).

Yours sincerely

JOHN ALDRIDGE
Director of Finance

ANNEX A

2.3 Accountable Officers are required to have adequate arrangements in place for the prevention and detection of fraud. In line with central guidance, these arrangements should encompass robust systems of preventative and detective controls to reduce the risk of fraud, contribute to the promotion of an anti-fraud culture and, where fraud is detected, provide for the vigorous pursuit of the perpetrators.

2.4 In ensuring that all potential frauds are fully investigated, Accountable Officers at the PCT/IHBs will be responsible for fully utilising the specialised anti-fraud skills and capabilities of the FIU.

• The payment processes
• The range of checks and controls to be carried out
• The information to be provided to PCT/IHBs to enable them to monitor and analyse the payments by region, PCT/IHB, locality and practitioner
• The arrangements for the identification and investigation of suspected instances of contractor and patient fraud.

a) undertake the work necessary to prevent and detect patient exemption fraud on behalf of PCT/IHBs and to pursue vigorously all cases of suspected fraud to a conclusion

b) undertake the work necessary to identify and investigate, on behalf of the PCT/IHBs or jointly with them, potential cases of contractor fraud

c) act as a source of specialist advice to PCT/IHBs on anti-fraud measures, the identification of risk, and on the conduct of fraud investigations

Common Services Agency

2.8 The FIU is accommodated within the CSA.

2.9 The General Manager of the CSA is ultimately responsible for the management of the FIU, for the adequacy and quality of its work as defined in SLAs with PCT/IHBs, for ensuring value for money in its operation and for the maintenance of effective working relationships with client bodies.

2.10 The Head of the FIU is managerially responsible to the Director of Practitioner Services within the CSA. He/she also has a professional responsibility to the Accountable Officers of the PCT/IHBs for the conduct of investigations on their behalf and the provision of subsequent advice. Information concerning work carried out on behalf of a client body may only be disclosed outwith the confines of the CSA, with the express permission of the client body, except for disclosure to the Scottish Executive or the Crown Office. In cases involving more than one PCT/IHB, it may be appropriate for the CSA or the Scottish Dental Practice Board to act as the referring body in relation to disciplinary matters. The Head of the FIU also has the right of access to the CSA General Manager and Director of Finance on matters of probity, particularly if he believes that his advice is being overruled or ignored in relation to matters of substance.

2.11 The staff of the FIU are employees of the CSA. Senior appointments to the FIU will be made by the CSA, with representation from the Steering Group on appointment panels.

2.12 As the paying agent for FHS, the CSA will produce the statistical information required by PCT/IHBs on the payments made to contractors and on the activities supporting each claim. A common, minimum SLA should be drawn up and agreed between PCT/IHBs and the CSA covering:-

• The FHS payments process;
• PCT/IHBs’ information requirements and the format and timetables for their provision.
• The range of checks and controls to be carried out
• The arrangements for the identification and investigation of suspected instances of contractor and patient fraud.

• PCT/IHB monitoring processes
• FIU initiated patient exemption checks
• Third party information (e.g. "tip-offs")
• Application of CSA internal control systems
• FIU initiated investigation of statistical or other contractor data
• Roll out of PCT/IHB/FIU investigations

3.3.1 For all cases of potential fraud and irregularities, which following local investigation can be satisfactorily explained, PCT/IHBs will document the details of the investigation undertaken and its results, providing an explanation of the action taken.

3.3.2 All such cases should, at their commencement, be discussed with the FIU, and agreement reached as to the investigative approach to be adopted. The FIU should be kept informed of the progress and the outcome of such investigations.

3.3.3 PCT/IHBs will refer all cases of potential fraud and irregularities which, following local investigation, cannot be satisfactorily explained, to the FIU for advice and agreement on how to proceed.

3.3.4 The detailed procedures describing action to be taken by the FIU and its interaction with PCT/IHBs are shown at Appendix A of this protocol.

3.3.5 At the conclusion of all investigations, all cases where there is prima facie evidence of fraud require to be reported to the Procurator Fiscal by the relevant PCT/IHB as per Circular 1989(GEN) 3.

3.3.6 There should be regular, informal reporting of progress to PCT/IHBs by the FIU, supplemented by regular formal reports, in accordance with agreed arrangements.

3.4.3 The FIU will report, on a quarterly basis, the results/outcome of the detection work to PCT/IHBs, along with details of where the NHS (Penalty Charge) (Scotland) Regulations 1999 have been invoked, and the progress of the actions being taken in this regard.

3.4.4 In the instances where patient exemption fraud has been detected, it is anticipated that the relevant PCT/IHB will report this on an annual basis to the Crown Office and to External Audit.

3.4.5 If cases are uncovered of gross patient fraud e.g. on an organised basis or of patient/contractor collusion, these will be discussed with the appropriate PCT/IHBs by the FIU, and an appropriate way forward agreed, which may include a specific referral to the Procurator Fiscal or to the Crown Office.

3.4.6 Potential fraud relating to areas other than patient exemption, detected through the patient exemption checking process, will be discussed with the appropriate PCT/IHB by the FIU, and the way forward agreed in accordance with this protocol.

3.6 Potential fraud identified through application of the CSA Internal control systems

3.6.1 Where the CSA identifies potential fraud through the application of its internal control systems, it will discuss the case with the appropriate PCT/IHB, and determine the way forward in accordance with this protocol.

3.7 Potential fraud identified through FIU initiated investigation of statistical or other contractor data

3.7.1 Where the FIU identifies potential fraud through the investigation of statistical or other contractor data, it will discuss the case with the appropriate PCT/IHB, and determine the way forward in accordance with this protocol.

Action to be taken by FIU on receipt of cases referred by PCT/IHBs

1. Having received a case referral from a PCT/IHB, the FIU will discuss the circumstances of the case with the PCT/IHB to define its scope, and then reach agreement on the grade to be allocated to the enquiry. Case gradings will fall into one of three classifications, namely:-

Category 1 cases

2. Which relates, in the main, to minor irregularities and will be those where the FIU role will normally be limited to providing advice and support to any PCT/IHB investigation

Category 2 cases

3. Where the FIU will propose joint investigative action with the PCT/IHB

Category 3 cases

4. Where, indications are such as to warrant a full and immediate investigation by the FIU
5. In arriving at a decision as to prioritisation of each case, the FIU, in consultation with the PCT/IHB, will take into consideration the following:-

- Value involved

- Potential exposure to risk regionally

- Complexity of enquiry

- Modus operandi employed

- Public interest

- Intelligence regarding the alleged perpetrators

6. Once a decision is reached, the FIU will formally notify the PCT/IHB Fraud Liaison Officer of the classification to be attached to the enquiry.
7. Each such notification will be by way of a numbered pro forma sent from the FIU to the Fraud Liaison Officer of the relevant PCT/IHB.
8. The PCT/IHB will sign the pro forma and return a copy to the FIU, as confirmation that it agrees with the classification.
9. The numbered pro forma will be the base documents on file at both the FIU and the PCT/IHB, and will be subject to inspection by auditors monitoring the progress of fraud enquiries.

Appendix 1

Page 2

10. Exceptionally, where agreement cannot be reached as to the proposed classification, the PCT/IHB is at liberty to refer the matter, along with a written justification from its Chief Executive, to the Chair of the Steering Group for a final decision to be made.
11. At the conclusion of each FIU conducted enquiry, a full report with recommendations will be forwarded to the PCT/IHB. This report will contain a view as to whether prima facie evidence of fraud exists, and will be copied to the PCT/IHBs external auditor. Where the FIU is of the opinion that there is prima facie evidence of the PCT/IHB will be under a duty to refer the case to the central NHS Discipline Committee or to the NHS Tribunal (depending upon the severity of the cases(s)), and will also be required to refer the matter to the Procurator Fiscal.
12. In all cases, the PCT/IHB will be kept fully up-to-date with progress on a regular, informal basis. In appropriate cases, interim or abbreviated reports on individual cases will also be submitted to the PCT/IHB. In any event, a quarterly report will be submitted to the PCT/IHB.
13. It should be noted that all cases of potential/suspected general medical practitioner fraud, involving fraudulent claims for services provided, may require to be the subject of joint investigation, as only the PCT/IHB Medical Director has access to patient notes.
14. For those cases involving investigative work by the PCT/IHB alone, the progress being made should be discussed with the FIU on a regular, informal basis, and the results of the investigation should be both documented and discussed with the FIU before any final conclusions are drawn or decisions taken.
15. The PCT/IHB must then decide whether or not there is prima facie evidence of fraud, and consequently whether the matter requires to be reported to the Procurator Fiscal, as per Circular 1989(GEN) 3. In any event, the PCT/IHB shall formally notify the FIU of what action has been taken and of any further developments thereafter.
16. For those investigations jointly undertaken by the PCT/IHB and the FIU, the FIU will be responsible for documenting the enquiry, and for formally reporting the outcome of the investigation to the PCT/IHB. This report will contain a view as to whether prima facie evidence of fraud exists, and will be copied to the PCT/IHBs external auditor. Where the FIU is of the opinion that there is prima facie evidence of fraud the PCT/IHB will be under a duty to refer the case to the central NHS Discipline Committee or to the NHS Tribunal (depending upon the severity of the cases(s)), and will also be required to refer the matter to the Procurator Fiscal.

SEHD
May 2000

ANNEX B

1. This Annex sets out the method by which the financial recoveries arising from the activities of the FHS Fraud Investigation Unit (FIU), in respect of both patient and practitioner "irregularities", will be applied.

2. The Scottish Executive Health Department (SEHD) has produced a protocol that outlines the roles and responsibilities of the FIU and Primary Care Trusts (PCTs)/island Health Boards (IHBs). It recognises that potential fraud and irregularities can be identified by PCTs/IHBs as well as the FIU. In either event the policy is that in all cases the FIU and PCT/IHB will agree which of them will lead in the necessary follow-up and possible cash recovery action.

3. At the macro level, recoveries will come from two sources, i.e. patients, in respect of unpaid charges and penalty charges; and practitioners, from wrongly claimed fees and allowances. The majority of the recoveries will have been due to or originally paid from non-cash limited resources and, thereby, fall to be returned to the SEHD. However, to provide an incentive to ensure that all recovery cases are pursued, PCTs/IHBs (even where FIU are acting on their behalf) will be able to retain a proportion of the recoveries.

4. The debt recovery procedures for patient related cases will be centralised within the Unit and the receipts remitted to the SEHD (as Appropriations in Aid) for redistribution to PCTs/IHBs as outlined below. For practitioner related cases the PCT/IHB will be able to retain a proportion of the amount they recover and remit the balance to SEHD as outlined in paragraph 11 below.

5. With debt identification and collection arrangements centralised, Health Boards and Trusts will have virtually no involvement in the process. Nevertheless they will receive a benefit from such recoveries. We currently have no indication of the likely levels of recovery so, in the circumstances, the initial policy will be 50% retention by the SEHD and 50% redistribution to the NHSiS after the deduction of any legal recovery costs incurred at the centre. This will be subject to review in light of actual recoveries.

6. Redistribution will be on a local Health Board basis, i.e. where the patient is resident will determine which Health Board area receives the benefit. PCTs will receive their dues by a direct payment. The Island Health Boards will receive theirs by way of a non-recurring allocation adjustment. For ease of administration, payments/allocation adjustments will be done quarterly or six-monthly.

• Initially, 50% of recoveries redistributed and 50% retained by the SEHD.
• Redistribution is based on the patient's Board of residency.
• Redistribution effected by non-recurring allocation adjustments and/or payments to PCTs.
• Adjustments/payments done on quarterly or six-monthly basis.

7. In the normal course of events any recovery following the conclusion of a case against a practitioner will be collected by the PCT or IHB involved, i.e. through Court action, deduction from future fee/allowance payments due, or voluntary repayment. In each case the PCT or Health Board will be entitled to retain all or a proportion of the receipt in accordance with the following Table.

8. Recoveries of legal costs following a successful outcome from either a civil or criminal case may be retained locally and excluded from retention calculation above. Where the costs were incurred by the FIU, they should be reimbursed accordingly.

9. If more than one PCT/IHB is involved in an investigation and/or a recovery it will be necessary for them to agree an appropriate apportionment between themselves within the single limits set above. SEHD should be informed of the apportionment so that any allocation adjustments can reflect the agreement.

10. PCTs and Island Health Boards will be required to provide the SEHD with regular reports (period and detail to be advised later) on the recoveries secured and the amount (if any) due for surrender to the Management Executive.

11. PCTs will remit the SEHD's proportion of any recoveries by OPG transfer. IHBs' recoveries will be treated as constructive advances with the Board receiving an allocation letter covering the retained proportion and the remainder being retained by the SEHD.

SEHD Finance Directorate
12^th May 2000

1. In the following paragraphs references to the ‘accountable body’ are to the primary care Trust or island Health Board in whose area the suspected fraud has taken place.

a. As soon as there are strong reasons for suspecting fraud, the accountable body should ensure that, in line with the FIU’s Roles and Responsibility Protocol, discussions are held with the FIU. If the grounds for suspicion arise from FIU investigations then they must contact the PCT or IHB. Once agreement has been reached on how the investigation will proceed, a numbered pro-forma outlining the agreed methodology will be sent to a fraud report is sent to the statutory (external) auditor. The FIU Roles and Responsibility Protocol outlines the responsibilities for the interim and final reporting of all cases. If prima facie evidence of fraud is established it must be reported to Procurator Fiscal by the accountable body.

b. Once there is firm evidence that a fraud has occurred and the associated losses can be estimated reasonably firmly, the accountable body should enter the gross losses in its Losses and Special Payments Register. If a group of losses can be firmly established, they can be entered in the Register even if it is likely that further related losses may be established at a later date.

c. Where more than one accountable body is involved every reasonable effort should be made to identify the separate losses involved for each of the relevant accountable bodies.

d. The accountable body should also include gross losses in its annual analysis of losses.

e. The accountable body should seek the NHSiS Management Executive’s approval before writing off losses in excess of delegated limits.

2. Where lost, stolen, counterfeited, or forged forms are used to obtain NHS prescription items, this gives rise to an extra statutory payment in accounting terms, in relation to both the cost of the item and the associated professional fees. The FIU will inform the accountable body or bodies of the losses involved. The accountable body should:

i. enter the losses in its Losses and Special Payments Register;

3. Losses arising from suspected fraud or evasions by patients who have incorrectly claimed exemption from FHS do not have to be recorded in the Losses and Special Payments Register nor the annual loss statement. However, the FIU and accountable bodies should keep records of unrecovered debt for management information purposes. In order to meet the conditions of Circular 1989 (GEN) 3 the FIU will be responsible for reporting annually all cases of patient fraud to the Procurator Fiscal.

SEHD Finance Directorate
12^th May 2000