If anyone wants to know how prevalent Insurance Fraud is, all they have to do is take a look at the recent arrests and convictions for it in New York, as reported by the state. Nothing much has changed since the last time we looked at them. Some schemes are dangerous; some are complex; some are straightforward; and some, simply, are silly. That people will go to great lengths to steal money is no surprise; it’s always been that way. The really surprising thing is that people think they can get away with some of this; greed doesn’t just cloud good judgement, it can blind it. Insurance Fraud Investigators, however, can use these examples to learn how to better spot Insurance Fraud and, maybe, carriers can use them to better learn how to prevent it.
One of the most dangerous, and hard to prove, Insurance Fraud schemes is back in the news. Eight people were arrested in May 2013, for their alleged involvement in staged accidents, where they allegedly caused accidents for money. Their idea was simple: rent U-Haul trucks and either intentionally strike another car or have another car strike them. The only saving grace was that, reportedly, the only people they hit, or that hit them, were co-conspirators. Many times unsuspecting people are targeted; cars will stop short in front of them or fail to stop behind them. Here, apparently, no innocent victims were involved, just paid participants.
The 8 people arrested allegedly made more than $2 million of claims, to recover for phony injuries, to insurers, including U-Haul’s insurer; the insurers paid out more than $1 million for treatment of non-existing injuries. As always, it looks like it took a lot of work to crack the scheme and bring the charges; fitting the pieces together, connecting the various people and accidents, through the car registrations, rental records, medical providers, and insurance companies, is no easy task. The fact that the claimants used rental vehicles with the rental company’s insurance, rather than their own, probably made it even more difficult. The large number of agencies involved in the investigation shows just how hard it is to uncover this type of fraud. The arrests were the result of a joint investigation by the U.S. Attorney for the Eastern District of New York, the New York City Police Department, the United States Postal Inspection Service, and the New York Insurance Frauds Bureau.
One of the most straightforward types of Insurance Fraud is also perhaps one of the least well thought out. A New York City Transit worker was arrested in May 2013 because he allegedly faked a disability. He was hurt in a car accident in February 2011 and claimed he couldn’t work until May 2012. It seems that if he couldn’t work he had a credit disability insurance policy that would pay his loans. Evidently the policy did what it was supposed to: it made $4,335.50 of loan payments for him. The only problem was that he allegedly did work, and worse, there were records of it. He evidently forgot that there was a record of every time he got paid for being a subway conductor, and those same records showed that he worked when he said he couldn’t. The investigator remembered, though, and the conductor was arrested. Paper trails and fraud do not mix.
Sometimes, even when you alter the records, you still get caught. A man was arrested in May 2013 after he submitted nine claims to recover medical benefits for services he said he received at four different hospitals. He even submitted statements from the hospitals showing they performed, and charged him for, the services. The statements were legitimate, at least when he first received them back in 2005. The only problem was that he tried to pass them off as being recent, and allegedly altered the documents in order to do it. Evidently the investigator from the Insurance Frauds Bureau didn’t accept the documents at face value, did a little legwork, and discovered they were phony. After all, the hospitals probably had the original billing statements or at least records of the original treatment. Sometimes all you have to do is remember to ask. Good record keeping is always difficult to get around.
Sometimes, people can’t leave well-enough alone. An upstate man allegedly drove his car into a guard rail, damaged it, and called his insurance company to find out whether he had collision coverage. When they told him no, he hung up and then called back a half hour later and added it. He then waited until the next day to report the collision and make the claim. Investigators from the Rochester Police Department and the Insurance Frauds Bureau figured this out and arrested him a few months later, in June 2013. Maybe next time, he’ll take no for an answer. There’s no indication whether he was called in for an EUO first, but maybe he should have been, at least if the carrier made a practice of keeping and checking its records on a given policy against claims made on that same policy. Make a claim on coverage a day after you added it because you just found out you didn’t have it; maybe that should demand a closer look.
What these examples point out is that sometimes all you have to do is pay attention, not accept everything at face value, and ask the simple questions; other times you have to do extensive, tedious investigation, using all the tools at your disposal. It all comes down to the circumstances of a particular claim. That’s why trained investigators are crucial. Their experience helps them know what to expect, understand what they see, and use the tools at their disposal to uncover the fraud or verify the claim. People commit Insurance Fraud and you need people to catch Insurance Fraud. And that will never change.