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The U.S. Treasury Department warned financial institutions Tuesday to stay alert for fraud schemes against federally and privately run health care insurance programs amid the novel coronavirus pandemic.

After providing unnecessary or overpriced testing or treatment to individuals seeking COVID-19 screening, fraudsters may attempt to bill Medicare, Medicaid and other health benefit programs administered by private insurers and the departments of Defense, Labor and Veteran Affairs, the department’s Financial Crimes Enforcement Network warned in an 8-page advisory.

Unscrupulous firms and other suspects involved in COVID-19 scams may submit claims for coronavirus-related services that they typically do not provide or have not actually given, according to FinCEN. Others may offer kickbacks or bribes to health care providers “in exchange for ordering, or arranging for the ordering of, services and testing,” the bureau warned.

Financial institutions should determine whether the suspected scheme began before or after Jan. 31, 2020, when the Department of Health and Human Services declared a national emergency in response to COVID-19, and whether the services linked to the payments relate to the pandemic, according to the bureau.

A California-based medical technology company that paid physicians kickbacks to run the firm’s highly sophisticated and expensive allergy test on all of their patients before COVID-19’s emergence, regardless of need, exploited the pandemic by combining the same, unnecessary screening with a COVID-19 test, FinCEN found.

Federal prosecutors subsequently charged the company’s president with health care fraud for seeking nearly $70 million in insurance reimbursements for the bloated testing protocol, and also accused him of misleading investors and manipulating the stock market by falsely claiming his firm could provide “accurate, fast, reliable, and cheap” COVID-19 tests.

The bureau did not name the company or its executive by name, but the details of the scheme match those of a criminal indictment—apparently the first against a coronavirus-related securities fraud—that prosecutors in the Northern District of California filed in June against Mark Schena, the 57-year-old president of Arrayit Corporation.

Financial institutions should watch out for health care providers who receive insurance payments or other reimbursements in excess of their regular transactional volume or operational capacity, and beware of sudden submissions of claims from facilities that normally do not offer diagnostic services, FinCEN advised Tuesday.

Medical firms that accept insurance reimbursements during the pandemic but do not otherwise deposit low-value checks or cash from patients should draw suspicion, FinCEN warned.

Similarly, firms that do not pay fees to payment processers or other transactional proxies that typically handle patients’ co-payments also warrant scrutiny, according to the bureau.

Tuesday’s guidance follows at least five previous coronavirus-related advisories that the bureau has published since May in response to mounting attempts by hackers, fraudsters and other criminals to profit from the pandemic, the resultant economic crisis and the unprecedented volume of relief aid that the U.S. government has disbursed in response.

But the latest warning appears to push the boundaries in terms of the types of determinations financial institutions may need to make, including whether a particular service offered by a health care provider was medically necessary, Jeremy Kuester, a former deputy associate director for policy at the bureau, wrote in an email.

“This implies FinCEN expects an institution to conduct a commercially unreasonable amount of due diligence on a client, or have access to much greater investigative resources than most actually do,” Kuester, now counsel with White & Case, wrote. “That being said, there can be compelling policy interests for FinCEN to publish red flags that may not be easily detected.”

The bureau may, for example, have released the advisory to assist law enforcement in raising public awareness of a particular threat, or to fulfill its obligation to disseminate the latest typologies of suspicious transactions while leaving it to the institutions to assess whether they can use them in a tangible way, Kuester wrote in the email.

Contact Valentina Pasquali at vpasquali@acams.org