The Insurance Information Institute estimates that the annual cost of insurance fraud is between $85-$120 billion a year. This translates to approximately $5,000 extra per year, per family for the added costs of goods and services to make up for this fraudulent activity. Studies and working experience show that workers' compensation is one of the sectors that is believed to be most vulnerable to fraud.
Insurance fraud is a full-time job for many people who spend their time and energy devising schemes to rip off the system. All insurers are at risk and must be equipped to detect and investigate fraudulent activity. It is imperative that the insurance community remains vigilant in the pursuit of insurance fraud by attempting to stay one step ahead of insurance criminals.
The way to protect your company from fraud is to be aware of the current warning signs and make sure that you are taking all the necessary steps in managing your cases. Here is a list of tips to help claim adjusters crack down on insurance fraud.
1. Be on the lookout for "red flags." Identifying red flags is an important part of the claim review process. When these fraud indicators are present, quite simply, the risk of potential fraud is higher, which may require added preventative measures in the form of additional investigative steps. The more quickly you identify the warning signs that a claim may be fraudulent, the sooner you can get the case investigated and work towards saving your company money.
2. Provide complete information to your investigation vendor. When making an assignment for investigative services, it is very important to provide as much information as possible on the subject and the nature of the claim. Taking some extra time to thoroughly review a file and provide all relevant information will pay dividends in the long run. In most instances, the ultimate success or failure of an investigation directly correlates to the amount of information provided at the time of the initial assignment.
3. Develop a true partnership with your investigation vendor. To be most effective in investigating insurance fraud, it is imperative that the insurance company and investigative vendor work in unison to accomplish the same goals. There has to be good rapport between both parties in order to get the best results from the investigation, and communication is key. Discuss with your vendors the various policies and procedures important to you and your organization. Establishing a partnership mentality will ensure that the insurance company and investigative vendor are on the same page.
4. Invest in a background investigation. Background investigations frequently unveil pertinent information about a claimant (i.e. criminal history records, questionable driving records, extensive litigation histories including injury and negligence claims, indications of financial distress including bankruptcies, habitual workers' compensation claim histories, etc.). Background investigations can also uncover signs of identity theft, false identification, or misrepresentation of personal information. Information of this nature will certainly be of interest in your claim investigations and will assist you in determining if a particular case warrants further investigation.
5. Tell your investigative vendor about any medical appointments the claimant may have. Conducting surveillance at a scheduled medical appointment is beneficial, providing a great opportunity to properly identify the claimant. Also, some claimants have been known to exaggerate the extent of their injuries while at medical appointments. In an effort to feign their injuries, a claimant may hobble into a medical provider's office barely able to move. Video obtained of the same person moving about freely and unencumbered prior to or after the medical appointment damages their credibility. Judges and juries love to watch this contradictory video.
6. Use the Internet as a resource. Take advantage of the plethora of informational resources available on the web. Conduct your own pre-investigative sleuthing to obtain preliminary information on your claimant. For example, a simple Google search may provide invaluable information on your subject's employment status, hobbies, or sports-related activities. For a complete list of useful investigative web sites, send an e-mail to [email protected].
7. Clearly outline your objective when assigning a case for investigation. Make certain that your vendor understands what you want to achieve with the investigation from the onset of the assignment and that they are willing to abide by your special instructions. The more explicit the assignment objective, the better prepared the investigator will be to achieve the desired results.
8. Combat the good day/bad day defense. This defense is most often used when the claimant is videotaped doing precisely what they said they couldn't do. If surveillance is not performed on consecutive days, the plaintiff attorney will almost always assert a sympathetic plea that the claimant was feeling good that particular day but relapsed almost immediately after the activity. Unless surveillance is conducted on consecutive days, this defense is viable.
9. Continue surveillance on active claimants. Obtaining videotape documentation of a claimant's activities is critical in refuting injury fraud cases. Take advantage of the time the claimant is on the go and instruct your vendors to continue surveillance on active claimants in order to obtain as much evidence and video as possible.
10. Vary times and days of investigations. A key element in conducting effective surveillance is to establish a subject's daily routine. Most people are creatures of habit and generally follow a similar schedule from day to day. Once you have a person's routine figured out, you can game-plan the investigation accordingly to provide the best possible results for your money.
Ed Cotilla is president of Ethos Investigative Services, Inc. He may be reached at 866-783-0525, www.ethosinvestigations.com.
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