Claims Are Being Filed

This isn't a problem that will take time before it develops; the claims are already coming in.

A recent minimal-impact loss involved claimants who reported they saw a chiropractor six times; however, the carrier was billed by the provider for 30 visits. In addition, a clinic inspection by a special investigations unit's (SIU) investigators found no office personnel, no patients, and none scheduled.

The National Insurance Crime Bureau (NICB) investigated and found that the doctor in question had purchased a $400,000 home to live in, and another $400,000 home that was under construction. He paid cash for the homes, furnishings, and several vehicles as well. The NICB found that he had billed one health insurer for $2 million. In all, he had billed just under $14 million, mostly to health-care providers.

When he was caught, investigators learned that this was only the second automobile claim in which he had been involved. The reason? It was easier than dealing with the new health-care reform.

Here are some other disturbing statistics about the ballooning rate of medical claim fraud. The Insurance Research Council states that auto insurance fraud and claim buildup added between $4.8 and $6.8 billion to closed auto-injury claim payments in 2007.

The Insurance Information Institute (I.I.I.) estimates that in New York alone, fraud and abuse in the state's no-fault auto system cost $229 million in 2009.

The NICB recorded 85,000 questionable claims in 2009, up 14 percent from 2008. The largest portion of these claims were staged and caused accidents, which were up 43 percent from 2008. Estimates are that 18 to 32 percent of all medical claims have some degree of fraud.

Minor impact, low-speed collisions are the most common and numerous cases for claim and SIU employees to handle and investigate. This type of claim has risen to epidemic proportions across the country, due to the fact that many people feel that if they are struck in an accident, they are automatically entitled to a large personal injury protection, bodily injury, or medical payment settlement. It becomes incumbent on the claim staff to recognize these fraudulent claims so they can properly investigate and handle them.

What About Staged and Caused Collisions?

Generally there are two types of fraudulent collisions: staged collisions and caused collisions. In both cases, they are intentional acts that are intended to cause no real loss or injuries to the claimant driver or passengers.

The “collisions” are reported to police on some occasions so that a police report can be made to help support the fraudulent insurance claim. In other cases, the claimants will claim that they attempted to call the police, but none ever arrived. Some claimants, despite the absence of any apparent injuries, insist on being transported to a hospital by ambulance in order to establish the “legitimacy” of their claims.

There are also important differences between staged and caused collisions. A staged loss is one in which both vehicles are participating in the intentional act. In a caused loss, however, only one of the vehicles is directly involved in the crime, where it targets a “victim” vehicle. The driver of this victim vehicle is usually the lone occupant of the car and oftentimes a female or elderly driver.

Staged losses are preferred because it places all of the variables in the hands of the participants. They are able to set up the circumstances to fit their needs and know that all parties will help support the reported loss without casting suspicions. In a caused loss, those variables are outside the control of the claimants. There are also documented cases where the caused losses, regardless of intent, led to fatalities.

Learn the Eight Steps for Prevention

Regardless of the type of loss, the handling adjuster still needs to take some of the same initial steps as they do in all other reported losses. Here are eight things to cover.

Conduct an inspection. An insurance company does not want to insure vehicles without ever inspecting those covered on the policy. Therefore, it is important that someone conduct an inspection or vehicle identification number (VIN) background check to determine prior carriers, salvage history, and the possibility of pre-existing damage. Often times in staged accidents, the same vehicles are used in multiple claims through various carriers.

Take initial statements immediately. It's important that the initial statement be taken as soon as possible to get the parties locked into a fact pattern. Any subsequent statements obtained by SIU or through examinations under oath (EUO) can be compared to the initial statement to identify any glaring inconsistencies. If the parties involved are making multiple claims through various companies, it will sometimes be difficult for them to keep all of their stories straight from one carrier to another.

Check out treatment facilities and treatment schedules. Initially, it may not be known where the parties will be treating, if at all. It is important for the claim timeline to find out when the treatments began and where. How soon and where the treatments take place following the collision can help to identify a staged accident or if runners or other persons are being used to facilitate the claim.

Obtain background information on all parties. Along with the accident facts, obtaining the identification of the parties involved is probably the most important part of the process. A name with no other identifying information can be a black hole for the SIU investigator. Backgrounds are difficult to establish if investigators cannot properly identify someone. Always obtain information such as address, phone, social security number, date of birth, and so on.

Examine and photograph involved vehicles. The sooner an adjuster can examine and photograph the vehicles in question, the better. This ensures that there is at least a minimum of information prior to the vehicles being either shipped off somewhere or destroyed for salvage. When prior claims involving the same vehicles are known, it is also important to try to obtain photographs from those previous losses to see if it is the same damage being claimed in the current loss. Oftentimes when the vehicles are involved in multiple claims, the damages are not repaired from one collision to the next, even after several months.

Share information with other insurers. If the vehicles are being inspected by different adjusters, it is also important for those adjusters to communicate with each other to see if the damages are consistent. When they compare the damages, adjusters will find that the accidents couldn't have occurred the way that they were described based on the damages present on the vehicle.

Verify prior carriers and past claims. Many claims are filed when an accident occurs prior to coverage being in place or when there is a long lapse in coverage. Therefore, it is imperative that the examiner verifies any prior carriers so that the SIU investigators from both companies can verify that the insured has not made an identical claim.

Get signed medical authorization. During the initial stages of the injury investigation, the examiner should request a signed medical authorization form from either the claimant's attorney or from the claimant. In the event the authorization has not been requested or the claimant has not returned it, the SIU investigator should make every attempt to obtain a signed copy during the face-to-face recorded statement interview.

Some medical providers have taken the position that the file belongs to them and the insurance company has no right to view the original. Consequently, they send only the portion of the medical treatment record they want insurers to see. Also, they claim doctor-patient confidentiality. The medical release form was created to overcome the confidentiality issue. After all, the file also belongs to the patient; it's his medical record. The main reason for not allowing us to gain access to the file is to limit or hinder our ability to investigate the merits of the claim.

What Should You Be Looking For?

Once a medical authorization is obtained, there are several things adjusters can look at in the medical records other than just the billed amounts. Does it appear that the records were completed at one setting or are they using template notes? There is software available to providers that allow them to just fill in dates and names and the diagnoses and symptoms are already pre-set. Is the treatment progression logical? Patients should be constantly reevaluated and if the treatment isn't working, the treatment plan should be changed. Are the providers reluctant to release the full history or notes? When those notes are received, adjusters should carefully read them.

One final area of focus for these types of investigations is on-site clinic inspections of the medical providers. These will be routinely done by the investigator and there are several things for them to look for even before they step foot inside.

Note the building location, maintenance, directory, and signage. Does it look like a medical office and does the activity at the location support that? Once inside, look at the patient waiting room. Are there chairs for patients who are waiting? Are there magazines or business cards throughout the office or sign-in sheets at the desk?

Ask to speak to the office manager and state the purpose for your visit: to review the original medical documentation and to complete an on-site clinic inspection to verify the licensing of employees and the certification of the medical equipment. All of the above tips will obviously only apply when you actually find a medical facility. The more you attempt on-site inspections and visit the addresses listed on bills, you will find that many times those locations are post office box drops and not an actual business.

It's becoming apparent that as health care changes, those in the fraudulent-claim industry will change the means and methods they use to file fraudulent bodily injury automobile claims. If we've learned anything in this business, it's that the bad guys are continuously on the hunt for new and better ways to ply their trade, and health-care reform may be just one more possibility for them. Today, the good guys have to be sharper than ever to stay one step ahead of them on a shifting playing field.