INSURANCE FRAUD Flashcards

Question

Vehicle Insurance Schemes Vehicle Identification Number (VIN) Switch

Answer 1

VIN-switch fraud schemes are the work of professionals in which a wrecked vehicle is reported as repaired and subsequently sold. The vehicle is not repaired, but the VIN plate is switched with a stolen vehicle of the same make and model.

Answer 2

A person doesn’t need to own a vehicle to incur automobile fraud. There are several schemes that can be perpetrated using rental cars. The most prevalent involve property damage, bodily injury, and export fraud.

Answer 3

Property that is lost through fire is claimed on an insurance form. However, property that does not exist also finds its way onto an inventory of the property claimed. Property claimed may have been previously sold or never owned by the claimant.

Answer 4

A home or car that has been burglarised is the basis for filing a claim for recoveries of monies lost. However, as with items “destroyed” by fire above, the items never existed or were previously sold.

Answer 5

A claim is filed for a boat that sank, but actually never existed. It is not difficult to register a boat that is based on a bill of sale. After a period of time, a loss is claimed for the sinking of the boat. It is difficult to prove that the boat didn’t exist or wasn’t sunk intentionally.

Answer 6

To obtain reimbursement for life insurance, a death certificate is required. However, phoney death certificates are not that difficult to obtain. The person might be very much alive and missing, or the person might be dead, and the death is past posted. With small settlements, death claims are not closely scrutinised and are paid relatively easily.

Answer 7

A murder for profit scheme involves the killing (or arranging for the killing) of a person in order to collect the insurance. The death might be made to look like it was an accident or a random killing.

Answer 8

n a liability scheme the claimant claims an injury that did not occur. The slip-and-fall scam is the most common, where a person claims to fall as the result of negligence on behalf of the insured

Answer 9

* The claim is made a short time after inception of the policy, or after an increase or change in the coverage under which the claim is made. This could include the purchase of a scheduled property or jewellery floater policy, or more than one during the time before the loss. * The insured has a history of many insurance claims and losses. * The insured earlier asked his insurance agent hypothetical questions about coverage in the event of a loss similar to the actual claim. * The insured is very pushy and insistent about a fast settlement, and exhibits more than the usual amount of knowledge about insurance coverage and claims procedures, particularly if the claim is not well documented. * Pressure for speed of handling—claimant wants to stop by the office to pick up his cheque “as we’re leaving for vacation in the morning.”

Answer 10

• In a burglary loss, the claim includes large, bulky property, which is unusual for a burglary. • In a theft or fire loss claim, the claim includes a lot of recently purchased, expensive property, or the insured insists that everything was the best or the most expensive model, especially if the insured cannot provide receipts, owner’s manuals, or other documentary proof of purchase. • In a fire loss claim, property that would be personal or sentimental to the insured and that you would expect to see among the lost property—photographs, family heirlooms, or pets—is conspicuous by its absence. • A large amount of the property was purchased at garage and yard sales and flea markets, or otherwise for cash, and there are no receipts (the insured will usually be unable to recall exactly where these sales took place or by whom). • The insured cannot remember, or does not know, where he acquired the claimed property, especially unusual items, and/or he cannot provide adequate descriptions. • On the other hand, the insured already has receipts and other documentation, witnesses, and duplicate photographs for everything; the claim is too perfect. • Documentation provided by the insured is irregular or questionable, such as: − Numbered receipts are from the same store and dated differently or sequentially. − Documents show signs of alteration such as dates, descriptions, or amounts. − Photocopies of documents are provided, and the insured cannot produce the originals. − Similar handwriting or signatures—or the insured’s apparent handwriting—appears on different receipts, invoices, gift verifications, appraisals, etc. − The amount of tax is wrong, either for the price of the property or for the date appearing on the receipt. − Receipts, invoices, or shipping documents do not have “paid,” “received,” or other shipping stamps. − In a theft or loss away from home, the insured waits an unusually long time before reporting the theft to the police. − The insured is able to give the police a complete list of lost property on the day of the burglary or shortly after. − The amount of the claim differs from the value given by the insured to the police. − In a business inventory or income loss claim, the insured does not keep complete books, or the books do not follow accepted accounting principles. − The physical evidence is inconsistent with the loss claimed by the insured. − In a burglary loss, there is no physical evidence of breaking and entering, or a burglary could not have occurred unnoticed under the circumstances. − In a fire loss: ∗ The apparent cause and origin of the fire is inconsistent with an accidental cause and origin, or there is evidence of the use of an accelerant. ∗ The remains of the property do not match the claimed property. − The premises do not show signs of having contained the claimed property, or the amount of property will not fit into the space where the insured says it was − Physical damage to the insured’s car is inconsistent with its having been in a collision with an uninsured car The insured has discarded the claimed damaged property before the adjuster can examine it. The cost of the claimed property, over the period of time it was allegedly acquired, seems to exceed the insured’s financial ability to purchase it. The insured refuses or is unable to answer routine questions. The insured provides supporting evidence and documentation that cannot be corroborated.

Answer 11

• Information on a life insurance application is very vague or ambiguous as to the details of health history: dates, places of treatment, names of physicians or hospitals, or specific diagnosis. • Applicant fails to sign and date the application. • Pertinent questions on the application are not answered, such as income, other insurance carried, hazardous duties, or aviation or flying activity. • The insured has “excess insurance,” either shown at the time of application or developed through an underwriting report of database information. through an underwriting report of database information. • Earned income does not warrant the amount of insurance being applied for. • The applicant’s date of birth as shown on the application is much earlier than shown with other carriers or in previous applications or policies. • The agent is putting on a great deal of pressure to have the policy issued because of the large amount applied for, but is going over the underwriter’s head in order to do so (working out of the system). • The physician’s report is very vague on details of past medical history and does not coincide with the information shown on the application. • A death claim is presented in which the death has taken place outside of the country. • The signature on the application for insurance does not appear to be the same signature as shown on an authorisation at the time of the claim. • A claimant or claimant’s attorney attempts to limit the type of information to be related by a signed authorisation, which is a standard authorisation used by the company. • An attorney is immediately brought into a contestable death claim, attempting to interfere with the investigation and to withhold information required by the company. • A contestable death claim that is reported as an accidental death could possibly be a suicide (fatal accident involving only one vehicle, a hunting accident, an accidental shooting while cleaning a weapon or repairing same, etc.). • An autopsy report discloses a different height and weight than what is shown on the recent application (auto or house fire death). Dental records do not coincide with those dental findings as shown by an autopsy report. • Records are missing on a patient who was confined to a hospital, or records are missing on a patient from a physician’s office. • The death claim package sent to the insurance company is too well packaged and complete in every detail with supportive documents. Documentation that was not initially requested or required by the insurance company was voluntarily sent, such as newspaper reports, burial certificates, or reports on the shipment of the body from one country to the home country. • The routine audit of a designated insured group shows a significant increase of added employees whose names do not show up on the payroll. • Gunshot wounds or stabbings were inflicted by the insured as the aggressor or were self- inflicted. • Police accident reports were submitted by the claimant.

Answer 12

A series of prescription numbers from the same drug store don’t coincide chronologically with the dates of the prescriptions. • An automobile fire occurred in a very remote rural area with no witness, but the driver claims an electrical shortage in the engine compartment caused the entire car to be gutted by flames. • Preliminary information for a business fire loss or home fire loss indicates considerable financial difficulties and financial pressures being brought upon the owner, and the fire is suspicious in nature and/or origin. • An employee within the claims operations of an insurance company is known to have a drinking problem, drug problem, financial pressures, or is having serious marital difficulties or having an affair, and irregularities start to appear. • On burglary losses from a business or especially a home, the investigator observes that the remaining contents at the scene are of much inferior quality than that which is being reported stolen. There is no indication of indentation in the piling of the carpet where heavy items of furniture or equipment were to have been placed. There are no hooks or nails on the walls where valuable pictures might have been hung. Entrances or exits are too small to take a large item through without laboriously disassembling it. • Any information on a claim that has been filed if it is determined that there is deliberate cover-up or false statements contained therein. • A disability income protection claim is filed and it is determined that the claimant had recently purchased numerous expensive items on credit and had them all covered by credit A&H insurance coverage. • Public transportation accidents in which there are more passenger claims filed than there were passengers at the time of the accident. • A witness to an accident or incident deliberately tries to hide from investigators rather than come forth and tell the truth. • An official document of findings is in complete conflict with the facts in the case and there is no explanation for this conflict of facts. Photographs or other documents do not substantiate the reported findings.

Answer 13

Address Similarity Report Address similarity reports electronically compare multiple cheques going to the same address. They are extremely useful because they may show a cheque defalcation or funds going to another insurance company, broker, or fictitious payee. Electronic Confirmations Confirmations for mailed disbursements in force or lapsed premiums, change of address, etc., can verify that company records agree with policyholder records. Exception or Manual Override Reports Computerised reports can be produced that list all exceptions to normal electronic processing. All human intervention can appear on a periodic management information report and can be test-checked by management. It is imperative that management review on an ongoing basis all exception reports for possible frauds

Answer 14

premium fraud, agent fraud, claimant fraud, and organised fraud schemes.

Answer 15

misrepresenting information to the insurer by employers to lower the cost of workers’ compensation premiums: EMPLOYEE CLASSIFICATION UNDERSTATEMENT OF PAYROLL GEOGRAPHIC LOCATION OF THE INSURED’S OPERATION HISTORY OF PAST LOSSES CORPORATE GERRYMANDERING FORGED DOCUMENTS

Answer 16

POCKETING PREMIUMS | CONSPIRING TO REDUCE PREMIUMS

Answer 17

A claimant may misrepresent the circumstances of any injury or fabricate that an injury occurred. INJURY FRAUD SECONDARY EMPLOYMENT

Answer 18

The lawyer will entice the claimant into securing his services by promising a large settlement from the insurance company. Cappers, also known as runners, are used to recruit patients for the scheme. The doctor is used to lend authenticity to the scheme, and he is well compensated for his efforts

Answer 19

• Documents are obviously altered; white-out or erasure is evident. • Documents are improperly filled out; entries are in the wrong place; information provided does not make sense. • Claims are filed where the carrier indicated no record of coverage. • Poor quality photocopies of documents that should be original documents. • Small payrolls are reported for large contractors or employee leasing operations. • Payroll figures, reported to insurers, that disagree with payroll reported for other purposes. • Claims for employee injuries are inconsistent with that employee’s classification. • Industrial or construction enterprises with a work force are reported to be in low-rate categories. • “New” corporations are participating in ongoing jobs. • Most of the employees from an employer with a high experience suddenly become employees in a new business. • The agency employs large numbers of support staff and only has one licensed agent. • The agent only accepts cash or money orders for premiums. • No policy is received after an extended time. • No bill is received for premiums. • An employer review of the application indicates that it is inaccurate. • Individual employees are reclassified into a lower classification. • The employer begins to declare a smaller payroll. • Claimants: − Are disgruntled, soon-to-retire, or facing disciplinary action or layoffs. − Are involved in seasonal work that is about to end. − Take unexplained or excessive time off prior to claimed injury. − Take more time off than the claimed injury seems to warrant. − Have no witnesses to the accident. − Have accidents that occurred in an area where the employee normally would not be working (especially if it’s a high-risk area). − Delay the reporting of an accident. − Are new on the job or have a history of short-term employment. − Have a history of injuries. − Have inappropriate or a lack of medical treatment for injuries. − Are experiencing financial difficulties. − Change physicians when a work release has been issued. − Frequently change medical providers. − Have demands for quick or early settlement. − Are never at home after a “serious” injury or can only be reached by return telephone calls. − Are unusually familiar with workers’ compensation procedures. − Are consistently uncooperative. − Receive mail at a post office box or at an address different from employment or driver and vehicle licensing. − Have soft tissue injuries that are hard to prove. − Are incapacitated, but seen in activities that require full mobility. − Have independent medical exams that reveal conflicting medical information. − Have a history of self or family employment; have a trade or work in a cash business. − Have injuries that occur in an area where the employee would normally not be working. − Have injuries that would not normally be the type the employee should have. − Have injuries that occur on a late Friday afternoon or are reported on a Monday morning (if injuries are reported Monday morning, the injury could have resulted over the weekend). − Are actively involved in contact sports or physically demanding hobbies. − Have dates of disability or absences from work that do not coincide with the physician’s date of disability or dates of treatment. − Have unprofessional diagnostic terminology. − Have misspelled medical terminology throughout the medical report or hospital record. − Have a pattern of accident claims by an individual or family members. • Claimant repeatedly does not show up for his requested independent physical xaminations or is not home when the regularly scheduled nurse stops by for therapy. • The claimant’s attorney is known for handling suspicious claims. • Attorney reports his representation began on the day of the reported incident. • Same doctor and attorney are known to handle these types of cases. • Claimant complains to the insurance company’s CEO in order to press for payment. • The attorney threatens further legal action unless a quick settlement can be made. • The attorney inquires about a settlement early into the life of the claim. • Wholesale claim is handled by law firms and multiple class action suits. • Dates of the accident are vague or contradictory. • Treatment for the injury follows previous first-time visits to a provider. • Same provider always bills for extra time or extra consideration on a claim. • Provider is working through an attorney. • Provider is reluctant to communicate with the insurance company. • Provider shares the same patients with the same colleagues. • Provider refers patients to specific other providers. • Provider prescribes unnecessary supplies and/or care by a specific provider. • Medical records are “canned.” • Medical records are out of sequence and missing dates of service. • Different handwriting appears on documentation with same dates of service. • Records are reported as lost, burned, or stolen when requested. • Progress notes consistently reflect that the patient has a high degree of pain, yet his condition is improving or progressing as planned. • Diagnosis is inconsistent with the treatment rendered. • Provider bills on a holiday or Sundays. • The medical reports are conflicting. • Claims are photocopied. • Claims for other patients are identical. • The claimant bills or harasses the insurance company for payment. • The claimant’s address is different on the claim form than it is on the enrolment file.

Answer 20

• Review the application for coverage for completeness and accuracy. • If the business is claiming to be new, verify that it is indeed new and no mod factors have been established. • Review the underwriting of the application for suspicious activity. If the company is a large company and has a small payroll, verify the number of employees, as well as their classification. • Review claims to determine if they are consistent with the type of employment reported and the number of employees claimed. • Conduct an on-site audit of their payroll and related records for the policy period and determine where their principal place of employment is located. • Observe if there are too many clerical employees or other low risk occupations that make up the calculation leading you to believe that the records are misstated. • Analyse the financial statements, when available, to determine what payroll expenses actually are compared to what is reported. • Review accident and injury reports for suspicious activities. • Conduct surveillance as needed to observe and document various activities. • Document findings and report the results of the activity as required.

Answer 21

• In spite of the possible indicators of fraud, medical treatment must be secured immediately, but an investigation should be opened immediately if there is a suspicion of fraud. • The manager who is responsible for the area where the injury occurred should initiate an investigation on each reportable accident. • As soon as possible, the accident should be discussed with the employee. • A signed statement from the employee should be obtained as soon as the employee is able to do so. • In obtaining a signed statement, the following questions should be answered, as applicable: − What was the employee doing just prior to the accident, and after the accident? − Was he carrying out his regular duties and were they conducted in their normal manner? − Had the employee been properly instructed as to how to safely perform the duties? When, and by whom? − Did they work in accordance with these instructions? − Did another employee cause the injury? − Was the equipment or machinery used properly guarded and in good condition? − Was the equipment suited for the purpose it was being used? − Was the workplace properly lighted? − What were the housekeeping conditions in the area? − Did the work being done by the injured employee differ in any way from that being performed by other employees? − Is there a safer way that this operation can be performed? − Was the injured employee in good health when he reported to work on the date of the accident? Have an independent medical examination performed to document the illness. The person performing the exam should photograph the patient, obtain a copy of the patient’s photo identification such as a driver’s licence, and obtain the patient’s signature. The following questions should also be asked: • Are you disabled from working? • Are you now working part-time, full-time, or not at all? • What are your daily activities? • What is your activity level with regards to your ability to walk, jog, run, drive, swim, or participate in sports activities or hobbies?