TO REDUCE THE LOSSES ATTRIBUTABLE TO MEDICAID PROVIDER AND CLIENT FRAUD, NEW YORK DEVELOPED A STATE MEDICAID FRAUD AND ABUSE UNIT (NYSFAU). THE OBJECTIVES OF THIS UNIT INCLUDE THE DETECTION OF FRAUD THROUGH THE USE OF A SOPHISTICATED COMPUTERIZED SYSTEM, THE DEVELOPMENT OF A COST-EFFECTIVE SYSTEM CAPABLE OF MONITORING INTERPROGRAM FRAUD AND ABUSE, AND THE INCREASED EFFECTIVENESS OF CIVIL AND CRIMINAL INVESTIGATIONS. THE APPROACH TO DETECTION OF PROVIDER FRAUD INVOLVES USE OF 'ERROR-PRONE PROFILES' WHICH CAN ALERT STAFF TO POTENTIAL ABUSERS AT THE TIME OF CERTIFICATION AS MEDICAID PROVIDERS. HOWEVER, THE NYSFAU METHOD FAILS TO EXAMINE ANY FEATURES OF THE SYSTEM THAT MAY CONTRIBUTE TO THE OCCURRENCE OF FRAUDULENT PRACTICES. AN OVERVIEW OF THE THEORETICAL BACKGROUND OF THE NEW YORK PROJECT REVEALS THAT WHITE COLLAR CRIMES ARE MORE LIKELY TO OCCUR WHEN INDIVIDUALS HAVE A DIFFUSED RESPONSIBILITY AND ARE PROVIDED WITH RELATIVE ANONYMITY THROUGH ASSOCIATION WITH A LARGE GROUP OR BUREAUCRACY. DISCUSSION OF THE ZIMBARDO MODEL OF DEINDIVIDUALIZED BEHAVIOR INDICATES AN ALTERNATIVE APPROACH FOR THE STUDY OF MEDICAID PROVIDER FRAUD. BY THIS MODEL FEATURES OF THE GOVERNMENTAL AND BUREAUCRATIC SYSTEM MAY BE EXAMINED FOR ANALYSIS OF FACTORS WHICH CONTRIBUTE TO CRIMINAL ACTIVITY. THE DEINDIVIDUATION CONCEPT PREDICTS THAT SYSTEM ABUSERS WOULD COME FROM LARGER PROVIDE AGENCIES WHEN A DIFFUSION OF RESPONSIBILITY MIGHT OCCUR AND VIEWS WHITE COLLAR CRIME AS A STRUCTURAL PROBLEM WARRANTING SYSTEM CHANGES. REFERENCES ARE PROVIDED. (TWK)