Corporate Fraud and the NHS: investigating corporate fraud and bribery against the NHS

By Dr Diana Johnson, University of the West of England and Professor Nic Ryder, Cardiff University

Background

As reported in the Sunday Times earlier this year, some private clinics paid by the NHS to deliver cataract operations face investigation by the Department of Health and Social Care (DHSC).  

The concerns relate to claims they have artificially inflated costs, performed unnecessary operations and provided incentives to high street optometrists to refer patients to them. The NHS Counter-Fraud Authority is said to be investigating billing irregularities in relation to cataract operations performed by some of these private eyecare clinics.  The private providers strongly dispute the allegations made about them. 

Here, we examine the potential legal aspects of the issues raised by the Sunday Times and also contained within the Centre for Health and the Public Interest (CHPI)’s research report into the outsourcing of NHS eye care, with a particular focus on the Bribery Act  2010 and the Economic Crime and Corporate Transparency Act 2023, which covers fraud (1).  

One key finding of the research is that the NHS paid £536 million to five eye care companies (2023/24), who have an average profit margin of 32% (2). If the NHS payments to private eye care companies have been increased due to fraud or bribery, then there is a clear public benefit to stopping and preventing this. We set out below our analysis of the law of fraud and bribery in this context.

Fraud

Fraud is the most common crime against individuals in the UK, amounting to over 41% of all crime (3). UK businesses also suffer fraud losses, with an estimated 64% of UK businesses being victims of fraud each year (4). If fraud against the NHS is taking place, there is an urgent need to address this to prevent the misuse of public money. 

The type of fraud that is said by the Sunday Times to be under consideration by the NHS Counter Fraud Authority is a practice known as ‘upcoding’ and is one of the most common types of healthcare fraud.

Here, it is the NHS practice to give the complexity of a patient’s treatment a code, which correlates to the amount the NHS will pay for the treatment of that condition.  In the context of NHS-funded cataract surgery, an operation coded as “complex” previously attracted an additional £400 compared to one which was coded as low complexity.

Data analysed by the CHPI found that there had been a 144% rise in complex surgery over a five year period, all of which had occurred in private clinics.  NHS England found that the rise in the number of complex cataracts could not be explained by changes in the complexity of the population (5).

Proving upcoding can be problematic. Demonstrating any false claims may ultimately require looking at individual patient records to identify any discrepancies in billing. And gaining a successful prosecution may ultimately depend on how the NHS contract and coding system was written; if the coding system allows for a broad interpretation of which patients fall into particular categories, this is likely to make it more difficult to demonstrate deliberate wrongdoing.

If the NHS Counter-Fraud Authority finds that there is evidence of upcoding, and to be clear, we have not seen any evidence to suggest that this is the case, there is the chance that any private clinics, which are corporate entities, could be prosecuted for corporate fraud, under the ‘identification doctrine’. This doctrine has recently been updated in the Economic Crime and Corporate Transparency Act 2023, which provides that a company will be liable for a crime committed by a senior manager (or director) during the course of his or her role. This law has been in force since 26 December 2023, so if any fraud has been committed by a senior manager since that date, that could make the company criminally liable. 

There is another corporate criminal liability offence which may be relevant to any alleged fraud against the NHS; the failure to prevent fraud offence (6). This offence applies to large organisations (companies and other entities) and will make the organisation itself liable if anyone working for it, including suppliers and other ‘associates’, commits a fraud which benefits the organisation (7). There is a defence to this corporate criminal offence; the organisation must have carried out ‘reasonable procedures’ to prevent the fraud (8). Depending on the size of the companies which are facing investigation, there is the risk of potential corporate criminal liability under the failure to prevent fraud offence if any alleged fraud continues after the offence comes into force later this year. 

Any successful corporate criminal offence would carry the threat of a criminal trial, reputational damage and an unlimited fine.  

Bribery

A further area of law which is relevant here is bribery.  Bribery is a financial crime under the Bribery Act 2010, and there is a specific offence which relates to corporate bribery, ‘failure to prevent bribery’ (9). 

The Sunday Times investigation revealed that a leaked briefing to Ministers from civil servants in the DHSC contained what appeared to be evidence of “financial incentives to refer patients” into a provider.

The DHSC said in the briefing that offering such “favourable commercial arrangements for referral” meant companies were able to “drive patient flow” to the businesses. 

It added that even allowing for efforts to clear the backlog in cataract surgery after the pandemic, cataract activity should have grown by about 3.5% each year. Instead, it soared 47% between 2019 and 2020 and  2023 and 2024. At the same time, the briefing noted, costs for the NHS increased 100% from £439m to £880m (10). 

In 2014, the Competition and Markets Authority (CMA) examined evidence that private hospitals were said to be offering a range of financial incentives to doctors to refer patients to them, which could be similar to those described in the DHSC briefing (11).

On the basis of this evidence, they introduced legal prohibitions outlawing such practices from the private healthcare market (12).  They also set out the legal test for determining whether a referral fee would be caught by the 2010 Bribery Act, stating: 

“the test of whether or not the payment of a referral fee is an offence under the Bribery Act turns on whether or not a reasonable person in the UK would think that such a fee represented an effort to induce performance which was contrary to good faith, partial, or in breach of trust”

This is the test which will need to be met if a successful prosecution is to be brought under this law against any private clinics found to be offering financial incentives to gain referrals for NHS patients.

If the financial incentives are deemed to be illegal bribes by the relevant authorities and again, we have not seen any evidence to suggest that this is likely to be the case, then the private eye care clinics offering the bribes may be prosecuted under the Bribery Act for failure to prevent bribery (13). A defence to this criminal offence is available; if a company can show that it took ‘reasonable precautions’ to prevent bribery, it will not be liable for the crime. However, if one or more of the private eye care clinics were to be investigated and prosecuted by the Serious Fraud Office, this would be likely to have a significant negative impact on their reputation, even if they are not found guilty of the offence. 

Conclusion

As a result of the concerns raised about upcoding and the fees paid to high street ophthalmologists for referrals of cataract patients to the private clinics, it appears that specific clauses were introduced to a recent agreement between the NHS and the private health care sector governing how they would work together in the future.

The agreement says that in the future, all private providers must accurately code the complexity of the care given to each patient (14) and that the private clinics must not provide financial incentives that distort patient choice (15).  When questioned about the concerns about the outsourcing of NHS eye care in Parliament, the Minister specifically highlighted these clauses as a way of preventing future abuses (16).

However, this agreement between the NHS and private healthcare sector is not legally binding and cannot be a substitute for taking action under the laws designed to prevent corporate malfeasance. The concerns raised with Ministers need to be investigated and, where appropriate, prosecuted by the Serious Fraud Office in order to protect the NHS.

(1) David Rowland, ‘Out of Sight – The Hidden Profits and Conflicts of Interest Behind the Outsourcing of NHS Cataract Care’ (Centre for Health and the Public Interest, 20 April 2025) available at <https://www.chpi.org.uk/reports/out-of-sight-the-hidden-profits-and-conflicts-of-interest-at-behind-the-outsourcing-of-nhs-cataract-care> accessed 15 July 2025.

(2) Ibid.

(3) National Crime Agency, ‘Fraud’ (NCA, 2025), available at <https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/fraud-and-economic-crime> accessed 15 July 2025.

(4) PWC, ‘Global Economic Crime Survey 2022: UK findings’ (PWC, 2022), available at <https://www.pwc.co.uk/services/forensic-services/insights/global-economic-crime-survey-2022-uk-findings.html#:~:text=In%20the%20UK%2C%2064%25%20of,end%20up%20counting%20the%20cost.> accessed 15 July 2025.

(5) NHS England, ‘2023/25 NHS Payment Scheme – A Consultation Notice’ (NHS England, 23 December 2022). Available at <https://www.england.nhs.uk/wp-content/uploads/2022/12/23-25NHSPS-Consultation-A-Policy-proposals.pdf> accessed 4 August 2025.

(6) Economic Crime and Corporate Transparency Act 2023, s.199. This offence will come into force on 1 September 2025.

(7) Ibid.

(8) Economic Crime and Corporate Transparency Act 2023, s.199(4).

(9) Bribery Act 2010, s.7.

(10) Shaun Lintern, ‘Private Cataract Clinics Investigated While Making Millions From NHS’, (The Sunday Times, 20 April 2025).

(11) Competition and Markets Authority, ‘Private Healthcare Market Investigation, Final Report’ (CMA, 2 April 2014). Available at  <https://assets.publishing.service.gov.uk/media/533af065e5274a5660000023/Private_healthcare_main_report.pdf> accessed 4 August 2025.

(12) Private Healthcare Market Investigation Order 2014 https://www.gov.uk/government/publications/private-healthcare-market-investigation-order-2014

(13) Bribery Act 2010, s.7.

(14) NHS England, ‘Elective recovery: a partnership agreement between the NHS and the independent sector’ (NHS England, 6 January 2025), para 4.3. Available at < https://www.england.nhs.uk/long-read/elective-recovery-a-partnership-agreement-between-the-nhs-and-the-independent-sector/> accessed 15 July 2025.

(15) NHS England, ‘Elective recovery: a partnership agreement between the NHS and the independent sector’ (NHS England, 6 January 2025), para 3.6. Available at < https://www.england.nhs.uk/long-read/elective-recovery-a-partnership-agreement-between-the-nhs-and-the-independent-sector/> accessed 15 July 2025.

(16) UK Parliament, ‘Eye Care: 10 Year Health Plan’ (UK Parliament, 6 May 2025). Available at:  <https://hansard.parliament.uk/commons/2025-05-06/debates/931C10C0-E7B9-45F3-9821-3143B54F6A91/EyeCare10-YearHealthPlan> accessed 4 August 2025.