Field of Schemes: Health Insurance Fraud in the Small Business Sector

This article uses case studies to investigate the theft of employee health benefits, a crime most prevalent in the small firm segment of the health insurance market. We argue that this phenomenon reveals new, emerging economic contexts for white-collar crime that need to be conceptualized. Conventional theories of white-collar crime typically focus on corporate settings in well-institutionalized markets. However, the wave of health insurance fraud has emerged in the wake of corporate retrenchment and other market shifts. We use network theoriesto explain how white-collar criminals can position themselves as brokers and exploit a market segment unsettled by several developments: labor market changes that left many workers desperate to secure jobs with benefits; a retrenchment of large providers and other shifts in the health insurance market that made it more difficult for small firms to obtain employee coverage; and the passage of new laws on employee health plans beset with ambiguities and loopholes. We conclude that unscrupulous brokers construct schemes that take advantage of structural and institutional gaps in this market segment. Moreover, we propose that these white-collar criminals' social skills and networks aid them in constructing these deceptions.