Insurance Fraud

Objectives Definition of Fraud Types of Fraud How does fraud affect you? What you can do to protect yourself

What is “Fraud”? Fraud is deceit; it’s trickery; it’s cheating; it’s committed to cause a person or organization like an insurance company to give up property or some lawful right. MN IASIU

Basically, fraud is INTENTIONAL DECEPTION for the purpose of financial gain.

How Big Is the Problem of Fraud? Coalition Against Insurance Fraud Insurance Fraud Costs Americans an Estimated; $80 Billion Dollars a Year Cost to you; an estimated $1000 a year per family POINTS TO MAKE: (1) HOW SERIOUS A PROBLEM (FRAUD) HAS BECOME. (2) AS MANY AS THREE OUT EVERY TEN CLAIMS THAT ARE PRESENTED, COULD BE FRAUD. (2) TO UNDERSTAND HOW MUCH MONEY IS INVOLVED

What could your family do with $1000 a year? Insurance Fraud What could your family do with $1000 a year? The Reality of Insurance Fraud Reasons people commit insurance fraud 56% feel they can get away with it 32% feel they are paying too much for insurance 24% are making up for their deductible (Accenture Survey – 2004)

According to NICB: An estimated 3 out of every 10 insurance claims may involve fraud. Fraudulent claims account for 10 to 30 cents out of every claim dollar.

The Reality of Insurance Fraud Reasons people commit insurance fraud: 56% feel they can get away with it 32% feel they are paying too much for insurance 24% are making up for their deductible (Accenture Survey – 2004) The Reality of Insurance Fraud Reasons people commit insurance fraud 56% feel they can get away with it 32% feel they are paying too much for insurance 24% are making up for their deductible (Accenture Survey – 2004)

The Cost The extent of Insurance Fraud is difficult to quantify: Much of it goes undetected Health is endangered Innocent people are killed or maimed Employees lose jobs The Cost The Coalition Against Insurance Fraud The amount is a hidden tax of more than $900 per family each year on the costs of goods and services National Insurance Crime Bureau $30 billion/year 10 percent of claims The extent of insurance fraud is difficult to quantify because much of it goes undetected.

Insurance Fraud How else are you affected? Increase in cost of goods & services Increase in insurance premiums Increase in cost of medical care The Reality of Insurance Fraud Reasons people commit insurance fraud 56% feel they can get away with it 32% feel they are paying too much for insurance 24% are making up for their deductible (Accenture Survey – 2004)

Characteristics of people who are involved in insurance fraud:

Types of Fraud No-Fault Insurance Fraud Billing for services not provided Performing unnecessary and potentially harmful tests and procedures Worker’s Compensation Fraud Knowingly lie about work related injury or illness to receive benefits Altered Documents Knowingly lie about work related injury or illness to receive benefits

Types of Fraud Slip and Falls Premium Fraud Vehicle Thefts Property Claims Staged Accidents/Passenger Stuffing Caused Accidents Identity Theft Fraud Paper Cars and Vin Transfers Multiple Claims

Fraud Comes in Many Forms Life Insurance Fraud Faked death Murder for Insurance Health Care Provider Fraud

ARSON

Owner Give Ups

Organized Fraud Activity Auto Accident Fraud/Organized Ring Activity: Padding claims Caused or Staged Accidents Jump-ins/Passenger Stuffing Fake helpers/Accomplice witnesses

Organized Fraud Activity Cappers/Runners Professionals Medical Providers Lawyers Interpreters Staged Accidents All parties knowingly involved Passenger Stuffing Caused Accidents Targets-Innocent Parties Female drivers Expensive cars Buses, delivery trucks 18 wheelers CAPPERS OR RUNNERS - THE PEOPLE THAT MAKE THE FIRST CONTACT WITH THE POTENTIAL PARTICIPANTS. PROFESSIONALS - THE DOCTORS, LAWYERS, CLINICS, BODY SHOPS WHO ARE INVOLVED IN THE ORGANIZED ACTIVITY. SQUAT & SQUASH - THE CALIF. 18 WHEELER ACCIDENT, WHERE A PERSON WAS KILLED IN THE SQUAT CAR. ATTY. INVOLVED WAS TRIED AND CONVICTED OF MURDER. TARGETS - THEY GO WHERE THEY KNOW THERE IS MONEY.

Staged Accident Scenarios The Investigators: Counterfeit crashes By Andy Wise - bio | email MEMPHIS, TN (WMC TV) - One person's fender-bender might be a scam artist's fraud. Copyright 2010 WMC-TV. All rights reserved.

The Drive Down

The Freeway Swoop & Squat

The Panic Stop

The Swoop & Squat

Caught On Tape: Staged Accidents

What could happen if you are in an accident? Someone may come to your door You may receive mailings from doctors and lawyers You may receive phone calls

Organized Fraud Activity How to Protect Yourself: Health Care Provider Fraud Ask Questions about Treatment Review your doctor bills and explanation of benefits (EOB) form from your insurance company Be wary if doctor recommends any new, unusual or experimental treatment Be wary if doctor recommends specific attorney or if attorney recommends specific doctor

Organized Fraud Activity How to Protect Yourself: Auto Accident Fraud To avoid caused accidents, such as a “Swoop & Squat, don’t follow other cars too closely Look beyond the car in front of you while driving. Avoid distractions; cell phone, etc. If you are in accident you believe is staged, insist on calling the police and tell your insurance company

What Can You do to fight Insurance Fraud? Call Police Call your Insurance Agent-even if the accident is minor Take photos of damage and people Note plate # Note number of people in the car Do not leave the scene

Who Should Fight Insurance Fraud? Law Enforcement? The Government? Individuals? Insurance Industry? Answer: 90% of the public feel the insurance industry should be responsible for fighting insurance fraud.

What can you do to fight Insurance Fraud? 1-888-FRAUDMN 1-800-TEL-NICB

Fighting fraud is a team sport – we need everyone to win the game. Final Thoughts. . . Fighting fraud is a team sport – we need everyone to win the game. Fraud fighting is a team sport – we need everyone to win the game.

Questions? Thank you! Information gathered for this presentation was obtained through the Minnesota Chapter of the International Association of Special Investigation Units (MN IASIU) and outside sources.