8 September, 2004
Health fraudster must repay $5.4 million to Crown
A Managing director who fraudulently obtained $5.4 million by falsifying claims for medical diagnostic equipment has
been ordered to repay the money to the Crown.
In April 2001, Cavan Haines, Managing Director of NZ Diagnostics Ltd, and three associated accused, were found guilty of
conspiracy to defraud the Ministry of Health's subsidy-paying agency Health Benefits. This agency, now known as
HealthPAC, took the case to Court in conjunction with the Crown Law Office.
HealthPAC Group Manager Jeannie Bathgate says the Court heard that the fraud was carried out in two ways. Non-subsidised
medical diagnostic equipment, including blood pressure monitors, was supplied to medical practices but changed on forms
for subsidised items. Subsidised items, including peak flow meters and pregnancy tests, were supplied and falsified on
forms with claims that many more items had been delivered than was actually the case.
In total, NZ Diagnostics dishonestly obtained from Health Benefits $5.4 million. Judge C J Thompson said this 'was a
deliberate, sophisticated, long-term fraud for commercial and personal gain.' Haines was imprisoned on that basis.
The Wellington District Court was then asked to consider the matter of the fraudulently obtained money. This Proceeds of
Crime Act action was taken by the Crown Law Office on behalf of the Solicitor General and at the instigation of
HealthPAC.
"The Proceeds of Crime Act is based on the principle that a person who is engaged in criminal activity should receive no
benefit from it, and should be forced to part with any ill-gotten gains".
The case was heard in the Wellington District Court last month. In releasing his decision on August 24, Judge Thompson
ordered that Haines was liable for the full amount of $5.4 million. All of his assets must now be realised and paid to
the Crown.
Ms Bathgate says the decision demonstrates that fraudulent use of taxpayers? money will not be tolerated. Government
money assigned to providing health services will only be used for such services.
"Our Audit & Compliance unit worked hard to ensure cases such as this are exposed and the offenders brought to justice," she says.
"Although the great majority of health professionals are honest and ethical in their activities, this result should be a
deterrent to anyone contemplating a similar crime."
ENDS