Study: Medical identity theft is costly for victims

New report finds that it can cost tens of thousands of dollars if someone uses your identity or insurance coverage to pay for medical treatment.

Elinor Mills
Elinor Mills Former Staff Writer
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service and the Associated Press.
2 min read

When your wallet is lost or stolen, the first thing you probably do is call your credit card companies. You should also notify your medical insurance provider judging from the conclusions of a report to be released on Wednesday that finds that medical identity fraud can be very costly.

With identity fraud, most people think of criminals stealing Social Security numbers and credit card data to take out loans or make purchases that the victim is responsible for. But there is a growing amount of medical-related identity theft in which someone uses another person's identity or insurance information to get medical treatment or medicine.

About 9 percent of U.S. adults have been victims of identity fraud and, of those, nearly 6 percent are estimated to have been victims of medical-related identity fraud, which translates to 1.4 million people, according to survey results and population extrapolations from the National Study on Medical Identity Theft report from the Ponemon Institute. The report was sponsored by credit reporting firm Experian.

The average total cost to resolve an identity theft-related incident, according to the survey, came to about $20,000. More than half of the victims said they had to pay for the care they didn't receive out of their own pocket to restore coverage. Nearly half said they lost their health care coverage as a result of the incident, while nearly one-third said their insurance premiums went up after the event.

"We had a customer call this week who said he received a collections notice," said Jennifer Leur, general manager of Experian's ProtectMyID.com service. "Someone took a loan out from a bank to pay for several thousand dollars worth of surgery, used his name for the loan and the surgery... We got it removed from his credit file, but it changed his medical records and now he could face a lawsuit from the doctor who wants to get paid."

Fewer than 10 percent of survey respondents said that the matter affecting them was completely resolved and their identity restored, while 40 percent said they were not able to resolve the matter.

In many cases, the fraud is committed by a family member or friend of the victim, so the crime is often not reported to authorities, said Larry Ponemon, founder and chairman of the Ponemon Institute.

But don't doctor's offices and hospitals ask to see photo ID?

"That is not as common a practice as you might think," Ponemon said. "Some health care providers think that could be a violation of the consumer's privacy."