Why is Fraud Rampant in the Medical Ancillary Sector?

2019 has seen an unprecedented number of medical sales representatives in the ancillary sector facing criminal charges for illegal activity.

During my first 8 years in the medical industry, I cannot remember a single incident, even anecdotal, of ANY medical sales reps getting in trouble with the law.

This begs the question, why do these incidents persist in the ancillary sector? Over the past couple of months, I have spoken with many successful industry veterans to find out their opinion. This is a summary of their answers, along with some practical steps to keep yourself on the right side of the law.

Large pool money +  low barriers to entry = BAD ACTORS


Let’s face it. Many people are attracted to this sector because there are a lot of healthcare dollars that flow through it. There is nothing wrong with being ambitious and striving to become financially successful, provided you do business in an ethical, legal fashion.

However, large amounts of money can also attract opportunistic people, some of whom are willing to gamble with their future in the hopes of making a big financial score.

Low barriers to entry

My introduction to medical sales was a pharmaceutical sales job with one of the big pharma companies. I had to make it through several rounds of interviews, go through a thorough background check, drug test, proof of college and graduate school degrees, and references checked.

They do this for two reasons: it’s a highly regulated market with stiff penalties if you violate the law, so they want to make sure you are not an unsavory character. Also, they are making a huge financial investment into you and they want you thoroughly vetted before they pull the trigger.

Medical ancillary vendors, on the other hand, typically pay on commission-only. This means they do not have a financial risk, so they tend to not do as much due diligence with their representatives.

I am honestly shocked at how many people I have come across in this sector that have felonies in their past. Because of this, they could never make it through the vetting process with any companies that are paying real salaries, so unfortunately, they have siloed into this sector.

People under financial stress are more likely to make bad decisions

The medical ancillary sector is stratified, from very successful people who earn $1M+ down to entry-level reps grinding out their first paycheck.

Most of the options in this sector are commission-only. For reps that have hit a run of bad luck or hit a cold streak, this can be incredibly stressful as they struggle to cover for their basic needs. This is not to condone illegal activity, but it wouldn’t be tough to imagine that someone who is in a more desperate financial situation is probably more likely to engage in this type of activity, if for no other reason than pure desperation.

Distributors exploit the ignorant

If you examine each of the most recent criminal cases involving Genetic Cancer Screening, they had one thing in common. In each case, the “distributor” was the tie that binds. While the labs, doctors and sales reps all share complicity, none of these parties on their own would have the idea to do this. In each case, “distributor groups” hired any warm body they could find to go out and find patients.

We have received calls from no less than 30 individuals who told us about this business model. In fact, we wrote a blog about it 6 months prior to the first arrest! [https://everyancillary.com/the-latest-scam-in-the-laboratory-sector/] The common theme that we noticed was that virtually none of the participants had ANY medical sales background, nor were they aware that our industry has its own regulations (HIPAA, Stark, AKS). They were all shocked to hear it and wondered why a distributor company would advertise for this?

Some distributors are fantastic and offer great support to their reps. Unfortunately, far too many exploit those who are ignorant of the laws in this sector.

What can you do?

First, don’t commit illegal activity! Seriously, don’t bother, even if you are an unsavory character. You won’t get away with it, and the price is too high to pay when you are caught. You would have better luck robbing banks.

The easiest answer is start by using common sense. If someone tells you that they discovered a billing loophole, or they found out a legal way to get around a law, don’t be tempted. This is how every conversation starts.

Also, avoid working though middlemen (distributors) as much as possible. Most distributors do not have any more experience than you do. They not only eat into your commission, but they are a huge layer of risk.

When in doubt, consult a healthcare attorney. A legal opinion is not terribly expensive, and it could end up saving you a fortune or your freedom down the road.

For more medical sales tips, visit everyancillary.com. There you will find dozens of training videos and resources on 50+ medical ancillary programs. You can also find vendors who are looking for distributors, and you can connect with them directly with NO MIDDLEMEN!