Consistency in claims handling can allow an adjuster to investigate a claim before a fraudulent claimant is aware the adjuster has questions about the claim.(Photo: iStock)

Why consistent investigation procedures matter

No one will ever be able to successfully deny every fraudulent claim. Sufficient proof may not be found to deny the claim, or a judge may decide to overlook what the adjuster thinks is solid evidence of fraud and make an award to the claimant anyway. However, adjusters may have more success or be able to limit the payment amount if their company has developed strong investigative guidelines for all claims that are followed on a consistent basis.

Consistency is a critical requirement because an adjuster can investigate a claim before the (fraudulent) claimant is aware the adjuster has questions about the claim. The adjuster should get the required information quickly before it is lost, forgotten or rearranged, and before the claimant obtains legal representation, if he has not already done so.

Related: How to tell if your insured is being honest with you

Some of the key requirements of these investigation procedures include taking several steps. They should be followed quickly, and anomalies should not be left uninvestigated. Getting preliminary information, resetting the diary for 30 days, and doing nothing in the meantime is a formula for failure.

1. For a motor vehicle accident, promptly request a copy of the police report, but do not wait for it before investigating the claim. If it takes several days or weeks to obtain the police report, then a successful outcome is unlikely.

2. Always begin the investigation process at the first contact with the insured and the claimant, which should happen within one workday of receiving the claim.

3. Be prepared to take recorded statements at this initial contact. Do not re-schedule the interview and recorded statement for a few days or weeks later, but take the statement before the parties have more time to consider their answers and proof. Some will argue that recorded statements are worthless, and this is true on some fronts. However, claimants are still less likely to change or embellish their stories later if they know it has been recorded.

4. Include the names of all witnesses when recorded statements are taken and contact them immediately after the policyholder's or claimant's recorded statement. Recording a negative statement from an objective third party who was at the site at the time of the alleged incident is rarely taken these days, but sometimes this individual can dispute that the accident could not have occurred as initially reported. This individual could verify that the claimant specifically stated he was not injured at the time of the incident, that only two people were in the car and not three as later claimed, and other facts that are not based solely on eyewitness accounts of the incident.

5. If the date and time of the claimant's next medical appointment can be confirmed, the adjuster should immediately refer the case to a field surveillance expert. While it may not be cost-effective to keep a claimant under surveillance for days at a time, it is often easier to locate the claimant and observe him without his knowledge if you know where he lives and that he has not been anywhere besides home immediately prior to the appointment. This may also be a good time to initiate a social networking review, which includes a look at the claimant's social media network, as well as friends and relatives who may post comments or photographs of the claimant.

6. Promptly follow up on responses from the claims indexing system. While this includes reviewing any prior injury claims, adjusters frequently only check to see if the same body part was previously injured. They often do not follow up to determine how the earlier claims were presented, whether questionable circumstances existed in those earlier claims, and how they ended if other parts of the body were involved. Furthermore, the claimant may add other body parts to the current claim as time passes, in which case knowledge about the prior claims is critical.

7. Obtain the medical reports as quickly as possible and review them closely to confirm that the alleged dates of injury and the parts of the body allegedly injured are consistent with what was reported in the claim. Medical records typically reveal the patient's account of how he or she was injured and the circumstances of the incident. If the information in the medical report does not match the information reported and provided during the recorded statement(s), then it should be investigated further.

8. Have a field investigator go to the scene of the incident to determine if the incident as described is consistent with the scene and the surroundings. For example, if someone states that their vision was blocked by shrubbery, is that shrubbery actually there? If the claimant alleges that there was a broken section of the pavement or sidewalk, was that raised portion there at the time of the alleged incident?

9. Review local codes, statutes and case law to evaluate the probability of successfully denying a claim with the right amount of proof. If you as an adjuster do not have ready access to that information, speak with your legal department or defense counsel to get their input.

A full investigation should proceed immediately if the incident has been reported, there is substantial property or bodily damage, and a property claim is likely to be filed. (Photo: Shutterstock)

Application to public entities

These recommendations pertain not only to claims submitted against corporations or individuals, but also those submitted against public entities. Adjusters for public entities sometimes wait for the claim to be presented formally as a specific code requires, even if department representatives or others have notified the public entity's risk management department of the incident and resulting injuries or damage.

Some claimants do not pursue claims arising out of these incidents, and an adjuster does not want to create a claim by contacting the claimant before the formal filing. However, if the following conditions are met, it is recommended that the full investigation proceed immediately:

1. If the incident has been reported, and

2. There is substantial property damage or bodily injury involved, and

3. It is probable that the claimant or his/her legal representative will file a properly completed claim.

If the public entity does not want to contact the claimant, it can still perform the balance of the investigation while the information is still fresh.

The point of the prompt and consistent investigation is important because:

1. The claimant is unlikely to be as guarded or defensive when approached if it appears the investigation is standard procedure for similar claims (e.g., auto liability bodily injury claims, workers' compensation lost time claims).

2. The claimant does not know the validity of the claim is being questioned and the adjuster may be able to communicate with him and others while there is still some sense of cooperation.

3. The adjuster may be able to place certain claims management personnel and tools in place at the most opportune time. For example, a workers' compensation adjuster may be able to assign a medical case manager to the case early, which may help reduce the impact of the alleged injury if it is ultimately accepted. A liability adjuster may send an appraiser to inspect a claimant's vehicle, providing information on the extent of the injuries arising from the impact.

If the adjuster believes the suspect claim must be accepted after these steps, then the adjuster and claimant remain on cordial terms, which should help to reduce the overall cost of the outcome. If the adjuster believes the information is sufficient to deny the claim, then the adjuster will be better prepared for the legal defense based on the work completed. This will also help reduce defense costs for defense counsel.

Gary Jennings, CPCU, ARM, ([email protected]) is the principal consultant at Strategic Claims Direction LLC.

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