Tag Archives: Coalition Against Insurance Fraud

NICB Launched Online COVID-19 Resource Center Due to Surge in Insurance Fraud Schemes

The National Insurance Crime Bureau (NICB) has created a new page on its website called the “NICB COVID-19 Resource Center.” The page provides the latest information on emerging fraud schemes due to an influx of insurance fraud cases tied to the COVID-19 outbreak.

The Coalition Against Insurance Fraud (CAIF) recently sent out a statement regarding a surge of fake coronavirus health coverage schemes. It warned that robocalls, text messages, and email phishing attacks could fake insurance deals to consumers, asking them to pay for health or travel insurance premiums without delivering coverage.

Click here to read the article.

Filed under Fraud, Healthcare

Florida Public Adjuster Sentenced in $14M Insurance Fraud Plot

Corrupt public adjuster Jorge Fausto Espinosa recruited dozens of homeowners via his firm, Nationwide Adjusters, in an insurance fraud plot where he inflated insurance claims to the tune of $14 million.

Espinosa paid marketers to lure homeowners with free kitchens and remodeling jobs if they allowed him to manufacture damage to their homes. He earned around 30% of the insurance payouts he lined up for the homeowners. Espinosa earned payouts of more than $317,000 at times.

Insurers were pushed to pay overblown insurance payouts from claims resulting from rigged fires to water damaged. Espinosa hit at least 14 insurers with more than 50 inflated claims. He was sentenced to 20 years in state prison for racketeering and insurance fraud among many other charges.

Click here to read the full article.

Filed under Fraud, Property (Homeowners)

Pending PIP Litigation on the East and West Coasts Could Impact States In Between

PropertyCasualty360 published a report about pending automobile personal-injury litigation in California and New York that could have a lasting impact if the decisions spread to other jurisdictions. Courts will determine allowable evidence for suits involving these insurance claims.

East Coast

In New York, insurers investigated radiologist Andrew Carothers, a suspected illegal straw owner after he filed 20,000 lawsuits against auto-insurance carriers. After insurers refused to pay Carothers, he flooded the state’s courts with more than 20,000 lawsuits seeking collection for unpaid “services.” The civil cases were consolidated, and the jury agreed Carothers was fraudulently engaged in the corporate practice of medicine. The Appellate Division affirmed, so Carothers went to the New York Court of Appeals, where the case awaits a decision.

A favorable decision can deter scams like Carothers’ in other states that forbid the corporate practice of medicine. Fraudsters who often quickly expand operations to line their pockets in other states could be deterred. A decision is expected in 2019.

West Coast

Dave Pebley was involved in a serious vehicle accident, sought medical care and filed suit. He had health coverage but decided not to submit his bills for payment. That is because, under California law, the jury would only hear about the amount paid by his health insurer as the measure of his medical expense while Pebley was billed at the top rate for medical services by refusing to use his health insurance.

The insurer cried foul, asserting that such actions mislead the jury, and are fraudulent because medical providers never expect to receive such high payments. They argued the plaintiff may present the higher medical bills but must provide expert testimony to prove the charges are fair and reasonable. Similarly, the defendant or their insurer may present counter-evidence as to what the health providers normally accept for payment of those services.

The California Second District Court of Appeal reasoned that juries should be allowed to ultimately decide the appropriate charge for the medical services. Parties are lining up to support an appeal of the case to the state Supreme Court. If Pebley succeeds in California, potentially winning the $3.6 million he seeks, the strategy of refusing to use health insurance can be expected to spread rapidly to other states.

Click here for full article.

Filed under Fraud, Personal Injury Protection (PIP)

Palm Beach Post Receives National Recognition for Insurance Fraud Coverage

Washington-based policy and research group, Coalition Against Insurance Fraud, has awarded its inaugural journalism award for fraud reporting to The Palm Beach Post for its work on fraud in the sober-home industry. The award honored Post coverage dating back to 2015 when Post investigators Christine Stapleton and Pat Beall first wrote about how sober-home operators were defrauding insurers of millions of dollars for urine drug tests.

Sober homes were requiring residents to be tested every day, creating multimillion-dollar business empires. Palm Beach County treatment centers and affiliated labs were charging as much as $2,000 for urine tests that can be purchased for $25 at a drug store.

In 2016, a team of Post reporters and editors, including Stapleton, Beall, Lawrence Mower, Joe Capozzi, John Pacenti, Barbara Marshall and Mike Stuck produced “Heroin: Killer of a Generation,” a 12-page special section of stories about 216 men, women and teenagers who died of a heroin-related overdoses in Palm Beach County in 2015. One in 10 had died in a sober home.

The Post’s reporting played a role in the prosecution of sober-home operators Kenneth Chatman and Eric Snyder as well as the successful push to tighten state laws which have resulted in more than 40 people on charges related to brokering patients.

Congratulations to the Palm Beach Post on this national recognition for their work in fighting insurance fraud.

Click here for full article.

Filed under Uncategorized

Casselberry Residents Being Targeted by Windshield Replacement Scammers

Casselberry, Florida residents are victims of windshield replacement scammers. As reported by News 6, a Casselberry resident recently told police that two men came to her door claiming to work for the state government, insisting that a new law had been enacted that requires Floridians to replace their windshields every six months. As a result, the residents become victims, often times being exposed to an increased risk of a cheap windshield popping out and breaking during an accident. In turn, the scammers will contact the victim’s auto insurer and submit an inflated invoice for a service that was not necessary or properly done; potentially resulting in an increase in the victim’s auto insurance premium.

An increased premium is not the only risk insureds face with these scams, according to the Coalition Against Insurance Fraud, insureds could face possible fines and, even worse, jail time. Making a repair claim for a windshield you know is undamaged could get you convicted of insurance fraud.

Red flags should go up if someone shows up at your door or chases you down in a parking lot offering to fix your windshield for free. If you believe your windshield has sustained damage and needs to be repaired or replaced, call your insurance company for a list of rebuttable windshield repair/replacement companies.

For more information regarding the windshield repair scams and what you can do to fight back, visit http://www.insurancefraud.org/scam-alerts-windshield.htm.

Click here to read full article.

Filed under Uncategorized

Four Essential Ways to Prepare Insurance Data for Successful Fraud Detection

Insurers are overflowing with data, but that is only part of their challenge in being able to effectively detect fraud. In terms of information, their predicament stems more from being able to tighten the amount of data to gain access to the right information sources.

A recent report by the Coalition Against Insurance Fraud indicates that more insurers are using predictive analytics and other fraud detection technology to detect and deter fraud. The survey found that 95 percent of respondents use anti-fraud technology, an increase from 88 percent in 2012. However, difficulties in data integration and poor data quality, like spelling and transposition errors, were identified as major stumbling blocks to successfully implementing these new technologies.

According to a recent article by James Ruotolo that appeared in Information Week: Insurance and Technology, consolidating data can be tricky, but addressing data quality and integration issues up front are imperative to a successful fraud analytics model and will pay significant dividends in improved detection rates.

He recommends four key steps in preparing insurance data for fraud analytics:

  1. Integrate data silos. Core processing systems serve a specific purpose that often have nothing to do with each other or aggregated data analysis. For purposes of fraud analytics, claims, policy, application, billing, and medical data sources originating in different places need to be consolidated. Be sure to include legacy systems and other less formal “systems” like spreadsheets, watch lists, case-management applications, and shared file systems. Document the integration efforts and ensure that they are repeatable and auditable. This is critical when you enable fraud analytics scoring in production.
  2. Manage missing and erroneous data. If your systems contain Social Security numbers like 999-99-9999 or claim files with missing telephone numbers, for example, then you need to fix this information. Ignoring these errors can have a negative impact on fraud analytic results. Leading data quality tools can help identify, repair, and replace missing or erroneous data. In some cases, missing data is found in another system or can be inferred based on a combination of other sources. Also, standardizing formats for common fields like addresses will be helpful in the future.
  3. Resolve entities. Once data is aggregated from multiple systems, identify whether the same individuals, companies, or other entities exist in multiple places; for example, if one system uses name and Social Security number, while another captures name and date of birth. Entity resolution techniques can link these two records and identify them as the same individual. Best results involve more advanced analytical techniques to determine the likelihood of matching, especially if social network analytics or link analysis will be used in the fraud analytics solution. The ability to link one individual—who could have roles as an insured, claimant, witness, driver, vendor, and employee across multiple claims—is a powerful tool in detecting suspicious activity.
  4. Process unstructured text. It is estimated that up to 80 percent of insurer data is kept in text format with some of the best information captured in the loss description or claim notes fields. Managing this data can be complicated because abbreviations, acronyms, industry jargon, and misspellings are common. However, a text analytics solution containing a library of terminology specially designed for insurance data can address this issue. During this analysis, additional model variables can also be created expanding the scope of fraud analytics without having to include external data sources. Machine learning and natural-language processing techniques should be used to find and create useful variables for fraud analytic modeling.

Click on the link to read the article.

Filed under Uncategorized

Text Mining an Emerging Tool in Anti-Fraud Technology

Insurer use of anti-fraud technology is rising, according to a report released this month by the Coalition Against Insurance Fraud. The study reports that as of 2014 nearly all insurers (95 percent) said they use anti-fraud technology, compared to 88 percent in 2012.

Evidence that fraudulent activity is increasing bolsters the growing business need for technology-based solutions. More than half the insurers surveyed said that suspicious activity has risen over the last three years and that it flows through the entire claims cycle.

Fraud schemes today have not only increased in number, but shifted away from auto theft and more towards bodily injury and suspicious medical provider activity, according to the study. Insurers, needing to adapt to these tactical changes, are increasingly adopting advanced analytics to combat the evolving nature of fraudulent activity.

Advanced technological tools may help limit the rise in fraudulent activity, according to the report. The survey found that while 81 percent of insurers use basic technology tools, far fewer employ more advanced technology, such as link analysis (50 percent), predictive modeling (43 percent), or text mining (43 percent).

The most common challenge faced by 53 percent of insurers when considering implementing advanced anti-fraud technology is the lack of IT resources. Among other obstacles, SIU’s inability to process the large volume of potentially fraudulent claims was cited by 6 percent of insurers.

The increased presence of organized crime rings is a noteworthy development in the evolution of fraudulent activity. Text mining is one anti-fraud tool that can be utilized to expose these crime rings at the beginning of the claims process.

Text mining can connect information that is otherwise unstructured data buried in multiple, separate places, i.e., adjuster field notes, email, medical records, and police reports. By using text mining, insurers can explore this data to discover previously unknown concepts and patterns. For example, insurers use text mining to discover scripted comments in claims notes and call center logs, allowing them to notice incidences where multiple, allegedly unrelated, claimants say the same thing.

The study concludes that an anti-fraud strategy incorporating advanced technology and tools will result in a much higher fraud detection rate, thus ultimately cutting overall costs for insurers.

The report, titled “The State of Insurance Fraud Technology,” is published jointly by the Coalition Against Insurance Fraud and SAS. Click on the link to read more.

Filed under Uncategorized

States Propose Bills in 2014 to Combat Insurance Fraud

It’s no secret there’s a constant battle to find and prosecute people trying to get away with insurance fraud, which costs billions of dollars each year and drives up premiums for consumers.

As a result, there has been a concerted effort by several state legislatures and governing bodies to help thwart fraudsters and their crimes, according to a news release issued by auto insurance provider GEICO.

Nancy Pierce, GEICO regional vice president and vice chair of the National Insurance Crime Bureau’s (NICB) Board of Governors, said, “GEICO puts a lot of resources into investigating and stopping staged accidents, exaggerated injuries, inflated medical bills and other acts of insurance fraud that inflate costs for consumers.”

The company detects, deters and defeats insurance fraud and theft through its Special Investigation Unit.

“That said, there’s a lot that must happen in the fight against fraud at the legislative level, so it’s encouraging to see positive momentum in that direction this year,” she explained.

The Coalition Against Insurance Fraud said that six states in particular have proposed vital pieces of legislation in 2014 that would have a significant impact on deterring insurance fraud:

  • Colorado: Increasing fraud penalties to a higher-level felony is the subject of proposed legislation.
  • Maryland: Giving prosecutors greater flexibility in trial venues for fraud suspects is being supported by the state insurance administration.
  • Michigan: The creation of a state auto-fraud agency is proposed to strengthen the state’s no-fault law, identify questionable clinics and improve the fight against fraud.
  • Minnesota: A variety of new anti-fraud bills are under review by an anti-fraud task force, including greater sharing of fraud-related information between insurers and law enforcement. The imposition of civil fines in addition to criminal charges is also being considered.
  • New Jersey: Three new bills that will restrict outsider access to crash reports, expand fraud-fighters information exchange, and make it a crime for drivers to lie about where a vehicle is garaged are all under review.
  • New York: A multi-faceted anti-fraud agenda targets dishonest clinics, staged-crash networks, and fraudulent medical-equipment providers.

“While these proposals wouldn’t eliminate fraud entirely in these states, they would be significant steps in the right direction,” said Ryan West, vice president of GEICO’s claims home office. “We’re pleased that state bodies across the country are putting the fight against insurance fraud on the agenda and trying to implement changes that would result in lower premiums for consumers.”

Additional information and resources on theft and fraud awareness are available through the NICB.

Filed under Uncategorized

Social Marketing Effective In War Against Insurance Fraud

According to an April, 2012 report from the Coalition Against Insurance Fraud, social marketing, and directing marketing campaigns at those who commit “small crimes,” is an effective deterrent in the national insurance fraud battle.

According to the report, in Pennsylvania at least one third of fraud suspects prosecuted have no serious criminal history.  These investigations and prosecutions divert time and resources, and increase claim costs, where insurers and law enforcement agencies need every resource available to fight more serious and more organized criminal fraud rings.

The report authored by Ralph Burnham, executive director of the Pennsylvania Insurance Fraud Prevention Authority, addresses’s Pennsylvania’s insurance fraud concerns, but they are certainly applicable to Florida and other states experiencing increasing insurance fraud trends.

The full article is available here.

Filed under Uncategorized