Fraud and the people who perpetrate it come in all shapes and sizes. From worker's compensation claims that involve several thousand dollars, to large commercial claims involving millions, all of the fraudsters share one trait – they thought they could get away with it.
The most frequent fraud cases involve worker's compensation claims, health insurance, auto accidents or personal property claims. As the amount of fraud increases, so do the tactics used by insurance investigators to catch the perpetrators. Insurance adjusters and agents can watch for red flags that may indicate fraud or at least the need to investigate a claim more closely:
- Look at the claimant's claims history – Has he filed similar claims recently or repeatedly? Are there any recurring or unusual patterns involved?
- Look for "Suspicious Loss Indicators" – The National Insurance Crime Bureau has a list of suspicious loss indicators that can tip off an adjuster or agent such as hand-written receipts or a claimant who's too calm after filing a claim.
- Look at the claimant's credit history – Is she in debt? Does he live above his means? Are there major medical bills or recent unemployment?
- Check out the claimants on social media – If there are pictures of him surfing, his back may not be that badly injured. Did what she said about the car accident on Twitter match her description of the accident? Or did someone upload a video to YouTube that shows what really happened?
Here are some not so creative fraudsters who were caught red-handed. Some of the cases are still working their way through the justice system, while others have been closed and the perpetrators sentenced.
Medical Insurance Fraud
Vi Nguyen, Theresa Fisher and Lindsey Hardgraves were indicted on multiple counts of mail fraud by a federal grand jury in Orange County, California, for a scheme that involved billing insurers more than $50 million worth of cosmetic surgery claims. According to a report in the Orange County Register, patients were told they could have "free or discounted cosmetic surgeries" such as "tummy tucks," "nose jobs," or liposuction if they agreed to undergo other unnecessary procedures such as endoscopies and colonoscopies, which were then billed back to the insurers.
Workers' Compensation and Identity Theft
In Naples, Florida, as many as 146 employees of Fruit Dynamics, LLC (also known as Incredible Fresh or Collier County Produce) may have committed workers' compensation fraud, according to Florida Chief Financial Officer Jeff Atwater. Sixteen employees were arrested during a recent raid on the plant.
The investigation into the fraud began when a former employee sought medical attention using a fake identity and mentioned that some other workers had done the same thing. At least 27 employees were believed to have stolen the identities of individuals from as many as 25 different states. The owners of the identities said they had not given permission for them to be used by anyone. The investigation is ongoing.
Not So Charitable
In Texas, according to the Texas Department of Insurance (TDI), more than $10.3 million in insurance fraud was referred for prosecution in 2013. Two of their top fraud cases involved frauds perpetrated against elderly residents.
Leon "Randy" Sinclair, III, was a former insurance agent who successfully convinced more than 30 of his elderly clients to liquidate their assets and place them into charitable gift annuity accounts. It turns out that the only beneficiary of the charity was Sinclair himself, to the tune of $16 million which was misappropriated from the accounts. He was convicted following a 16-month TDI Fraud Unit Investigation and sentenced to 20 years in prison.
In a multi-jurisdictional case that involved the TDI Fraud Unit, the Internal Revenue Service and the Federal Bureau of Investigation, Christopher Purser and Robert S. Mills sold Shoreline Cruises of Lake George, N.Y., fictitious marine insurance. When the Ethan Allen, a cruise ship, sank killing 20 elderly tourists, the company found out it actually had no valid insurance coverage. Both plead guilty to federal charges. Purser was sentenced to more than 15 years in prison. Mills was sentenced to 10 years in prison and ordered to pay $2.45 million in restitution.
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