In the recent high-profile busts in New York and Florida—twostates known for the most significant and costly proliferation ofPIP fraud in the country—investigators successfully dismantledorganized rings that siphoned close to $300 million (combined) frominsurers.

Thirty-six people were indicted in the New York sting, which hasbeen called the most extensive of its kind to date, while more thana dozen suspects, including a physician, were apprehended in theFlorida bust.

Intricate schemes involving bogus clinics, staged accidents anda tangled web of cohorts have been surfacing with increasingfrequency, illustrating the deep-reaching tentacles of crime ringsthat steal from P&C insurers with ruthless efficiency. Butsuccess stories of this magnitude also show that with the carefulcooperation of insurers and various local, state, and federalagencies, P&C insurers can quell current fraud while deterringfuture scammers.

“Insurance fraud is a continuous game of cat and mouse,”explains Jim Quiggle, director of communications, the CoalitionAgainst Insurance Fraud (CAIF). “Investigators build a mouse trap,but then swindlers build a better mouse. The industry's bestdefense is amassing field intelligence and analysis and thenthrowing that up against a ring.”

P&C insurers themselves play an essential role in anyinvestigation of a large crime ring involving PIP fraud or othercrimes. Investigators can tap into the treasure trove of claimsinformation provided by the insurers that are being bilked toidentify key players, methods, and participants.

Law enforcement may then employ undercover agents to ultimatelypenetrate rings, as was the case with both busts. To immobilize“Operation Whiplash,” for instance, suspicions about clinics' oddtraffic patterns gave way to a full-blown sting operation involvingundercover agents posing as willing participants to stage autoaccidents and then later file claims for injury and subsequenttreatment.

Predictive analytics also plays a huge role in breaking downcomplex patterns of suspicious behavior. Insurers can determine ifthe same names, social security numbers, and clinics keep croppingup. Are multiple claims originating from the same neighborhood?Does a particular clinic log a staggering number of claims comparedto the norm?

A Culture of Fraud Prevention

While detection and investigation have become far morescientific, the technology and methods are only as effective as thestaff utilizing them. Staff must be apprised of proper data miningtechniques, and the insurer must be willing to cultivate asystem-wide awareness of fraud at all levels of the company andprograms for identifying and disseminating clues to the SIU.

“Going after fraud simply doesn't fall on shoulders of SIUalone,” Quiggle explains. “There must be a companywide commitmentand training throughout all layers of the corporation. Informationthat may contain clues is coming from all directions, so adjusters,underwriters, and even customer service reps must all be trained infraud detection and uniform protocols to share that dataappropriately.” Mining social media forclues is now an essential investigative tool for insurers, as well.“People love to brag about their scams and don't know what they areup against—namely a sophisticated analytical force scouring theInternet for every possible clue for behavior,” Quiggle says.

Quiggle relayed one example where an insurance companyinvestigator came across a bicycle club to which a claimantbelonged. The avid cyclist bragged about a recent 50-mile ride, allwhile claiming to have been “flat on his back” because of an injuryat the office for which he was receiving workers' compensationbenefits.