May K. Toney
07-09-2003, 09:13 AM
crime of the time
Seeing Through
False Bodily Injury Claims
By Tony Kulik, CIFI, FCLS, CFI, Special Investigations Unit, Chubb Group of Insurance Companies
Opportunistic bodily injury fraud occurs when there is a legitimate accident, but the injury has either been fabricated or exaggerated. It is a real dilemma for the insurance industry and it requires intense investigation.
For years, the insurance industry classified these types of claims as "nuisance claims." Plaintiff attorneys know this and therefore attempt to negotiate settlements knowing their clients are either exaggerating or fabricating their injuries. These attorneys know which insurance carriers are easy marks for negotiating settlements. To overcome this dilemma, insurance carriers need to have aggressive protocols in place to ensure that a strong preliminary investigation and a continuous follow-up investigation are conducted to suppress these types of claims.
The insurance carriers who implement a team process that will impact the results of denying or mitigating opportunistic bodily injury fraud will have a reputation on the street with plaintiff attorneys that they are no "easy target." Most plaintiff attorneys do not want to go to trial. They lack experience in trying cases not to mention the time consumed at trials. What they really want is the quick settlement from the insurance carrier. They are looking for the quick buck.
Auto injury claims can be complex and they take time to resolve. It is not a simple matter to determine whether a fraud has actually transpired. Red flags or fraud indicators can be used to detect suspicious claims, but the task of proving fraud generally requires intensive investigation that goes well beyond what is possible in the course of routine claim handling.
The primary purpose of screening claims is to reduce unwarranted losses. Achieving this goal requires a proactive mindset in which potential fraud is intercepted at the front end. A reactive posture is not suited to this objective. Improved decision making is another key. Management must recognize the need to thoroughly investigate these types of claims.
BENEFIT ANALYSIS
Insurers and their customers will reap the benefits of significant loss cost reduction and greater customer satisfaction. Productivity will be a natural by-product of improved decision making. The focus will be on making the right decision rather than just closing claims.
Insurers have been seeking ways to reduce unnecessary losses without impairing quality. The key is to improve the claim process by ensuring that the brightest adjusters handle these types of claims.
Claim processing requires that each claim will be viewed in terms of validity, exposure, investigation and defense costs. The handling of a claim will vary, depending on the characteristics revealed. Each claim has to be evaluated on its own merits to avoid bad faith.
FRAUD SCREENING
Early fraud screening is essential. Suspicious potentially fraudulent claims need to be identified quickly. It is not a simple task to determine whether a fraud has actually transpired. Fraud indicators only suggest which claims are suspicious or even highly suspicious. The task of proving fraud generally requires intensive investigation that goes well beyond what is possible in the course of routine claim handling.
Research has shown that fraud indicators cannot prove fraud, but they can be used to separate suspicious claims from non-suspicious claims. The suspicious claims can be directed along various appropriate resistance tracks. A claim denial or even prosecution may ultimately result. However, by responding early, it may be possible to deter or limit the fraudulent activity. The clearly non-suspicious claims can be expedited; freeing up resources currently expended on claims that possess minimal savings potential.
The primary purpose of fraud screening is to reduce unwarranted losses. Achieving this goal requires a proactive mindset in which potential fraud is intercepted at the front end. The traditional reactive posture is not suited to this objective.
SUGGESTED PROGRAM STRATEGIES
Identification
Investigation
Resistance
Disposition
IDENTIFICATION
Once a claim has been identified as meeting the characteristics of opportunistic bodily injury fraud, it is essential that the insurer immediately undertake efforts to investigate the claim and deter the claimant from seeking legal counsel and padding their medical treatment.
It is in the insurer's best interest to be aggressive and modify the claimant's behavior as early on in the claim process as is possible. The intent is to have a speedy response to the claimant before he/she is entrenched in a position to move forward in exaggerating and padding their medical treatment.
Early intervention will hopefully help in curbing unnecessary medical costs. If a claimant is educated that his/her efforts to defraud the insurer will be unsuccessful, through early intervention, he/she may forego needless medical treatment.
INVESTIGATION
The adjuster needs to intensify his/her efforts to determine the truth behind the claim. The intensified investigation should focus on the medical aspects of the claim, since this is where the opportunity lies. The investigation process can also contain elements that will further assist in the resistance process.
A thorough investigative process ensures an accurate assessment based on the merit and value of each claim. The extent of the investigation will differ depending on the circumstances of each accident and may change as the investigation continues.
As one investigates a suspected opportunistic claim, they should always be alert to claims that have characteristics of planned fraud. These claims should be referred to the SIU as early as possible in the claims handling process.
INVESTIGATIVE PROCESS
Attempt to substantially complete your investigation within the first 60 days;
Verify the identity of all claimants and witnesses;
Use medical authorization to seek information from a variety of sources (family doctor, employer, health insurer, HMO);
Take detailed recorded statements (get more details regarding medical treatment, injury and bio-mechanics of accident);
Seek out and obtain recorded statements from insured, witnesses, police, EMT's, tow truck operators, etc. with an emphasis on the claimant's activities at the accident scene, complaints of injury, etc.;
Verification to determine truthfulness of all attorney or claimant supplied information (including comparison of medical bills to medical records and comparison of detailed recorded statements with medical records);
Effective activity checks;
Use of IME's;
When no lost time is an issue, do an extensive investigation of the claimant's work-related abilities during time of treatment/injury.
RESISTANCE
If a belief exists that possible opportunistic fraud will occur, the written and verbal messages to a claimant or attorney should demonstrate that. Although it must be stated, that the claim will be properly and fairly adjudicated with close scrutiny.
RESISTANCE PROCESS
Extensive photograph and inspection of vehicle by the auto damage appraiser, with claimant present, if possible, will indicate potential of bodily injury damages;
Send photographs of the autos involved in the accident to the claimant or his/her counsel; these may show that the minimal physical damage in the accident could not have resulted in significant bodily injury damages;
Request from the claimant or claimant's attorney a medical authorization, a recorded interview and an IME. If the request is ignored, follow-up quickly with additional requests;
Frequent and continuing communication with the claimant's medical provider(s) assuming an authorization exists.
If the claim ceases to appear opportunistic, you can consider changing your investigative strategy to a more routine handling process
Seeing Through
False Bodily Injury Claims
By Tony Kulik, CIFI, FCLS, CFI, Special Investigations Unit, Chubb Group of Insurance Companies
Opportunistic bodily injury fraud occurs when there is a legitimate accident, but the injury has either been fabricated or exaggerated. It is a real dilemma for the insurance industry and it requires intense investigation.
For years, the insurance industry classified these types of claims as "nuisance claims." Plaintiff attorneys know this and therefore attempt to negotiate settlements knowing their clients are either exaggerating or fabricating their injuries. These attorneys know which insurance carriers are easy marks for negotiating settlements. To overcome this dilemma, insurance carriers need to have aggressive protocols in place to ensure that a strong preliminary investigation and a continuous follow-up investigation are conducted to suppress these types of claims.
The insurance carriers who implement a team process that will impact the results of denying or mitigating opportunistic bodily injury fraud will have a reputation on the street with plaintiff attorneys that they are no "easy target." Most plaintiff attorneys do not want to go to trial. They lack experience in trying cases not to mention the time consumed at trials. What they really want is the quick settlement from the insurance carrier. They are looking for the quick buck.
Auto injury claims can be complex and they take time to resolve. It is not a simple matter to determine whether a fraud has actually transpired. Red flags or fraud indicators can be used to detect suspicious claims, but the task of proving fraud generally requires intensive investigation that goes well beyond what is possible in the course of routine claim handling.
The primary purpose of screening claims is to reduce unwarranted losses. Achieving this goal requires a proactive mindset in which potential fraud is intercepted at the front end. A reactive posture is not suited to this objective. Improved decision making is another key. Management must recognize the need to thoroughly investigate these types of claims.
BENEFIT ANALYSIS
Insurers and their customers will reap the benefits of significant loss cost reduction and greater customer satisfaction. Productivity will be a natural by-product of improved decision making. The focus will be on making the right decision rather than just closing claims.
Insurers have been seeking ways to reduce unnecessary losses without impairing quality. The key is to improve the claim process by ensuring that the brightest adjusters handle these types of claims.
Claim processing requires that each claim will be viewed in terms of validity, exposure, investigation and defense costs. The handling of a claim will vary, depending on the characteristics revealed. Each claim has to be evaluated on its own merits to avoid bad faith.
FRAUD SCREENING
Early fraud screening is essential. Suspicious potentially fraudulent claims need to be identified quickly. It is not a simple task to determine whether a fraud has actually transpired. Fraud indicators only suggest which claims are suspicious or even highly suspicious. The task of proving fraud generally requires intensive investigation that goes well beyond what is possible in the course of routine claim handling.
Research has shown that fraud indicators cannot prove fraud, but they can be used to separate suspicious claims from non-suspicious claims. The suspicious claims can be directed along various appropriate resistance tracks. A claim denial or even prosecution may ultimately result. However, by responding early, it may be possible to deter or limit the fraudulent activity. The clearly non-suspicious claims can be expedited; freeing up resources currently expended on claims that possess minimal savings potential.
The primary purpose of fraud screening is to reduce unwarranted losses. Achieving this goal requires a proactive mindset in which potential fraud is intercepted at the front end. The traditional reactive posture is not suited to this objective.
SUGGESTED PROGRAM STRATEGIES
Identification
Investigation
Resistance
Disposition
IDENTIFICATION
Once a claim has been identified as meeting the characteristics of opportunistic bodily injury fraud, it is essential that the insurer immediately undertake efforts to investigate the claim and deter the claimant from seeking legal counsel and padding their medical treatment.
It is in the insurer's best interest to be aggressive and modify the claimant's behavior as early on in the claim process as is possible. The intent is to have a speedy response to the claimant before he/she is entrenched in a position to move forward in exaggerating and padding their medical treatment.
Early intervention will hopefully help in curbing unnecessary medical costs. If a claimant is educated that his/her efforts to defraud the insurer will be unsuccessful, through early intervention, he/she may forego needless medical treatment.
INVESTIGATION
The adjuster needs to intensify his/her efforts to determine the truth behind the claim. The intensified investigation should focus on the medical aspects of the claim, since this is where the opportunity lies. The investigation process can also contain elements that will further assist in the resistance process.
A thorough investigative process ensures an accurate assessment based on the merit and value of each claim. The extent of the investigation will differ depending on the circumstances of each accident and may change as the investigation continues.
As one investigates a suspected opportunistic claim, they should always be alert to claims that have characteristics of planned fraud. These claims should be referred to the SIU as early as possible in the claims handling process.
INVESTIGATIVE PROCESS
Attempt to substantially complete your investigation within the first 60 days;
Verify the identity of all claimants and witnesses;
Use medical authorization to seek information from a variety of sources (family doctor, employer, health insurer, HMO);
Take detailed recorded statements (get more details regarding medical treatment, injury and bio-mechanics of accident);
Seek out and obtain recorded statements from insured, witnesses, police, EMT's, tow truck operators, etc. with an emphasis on the claimant's activities at the accident scene, complaints of injury, etc.;
Verification to determine truthfulness of all attorney or claimant supplied information (including comparison of medical bills to medical records and comparison of detailed recorded statements with medical records);
Effective activity checks;
Use of IME's;
When no lost time is an issue, do an extensive investigation of the claimant's work-related abilities during time of treatment/injury.
RESISTANCE
If a belief exists that possible opportunistic fraud will occur, the written and verbal messages to a claimant or attorney should demonstrate that. Although it must be stated, that the claim will be properly and fairly adjudicated with close scrutiny.
RESISTANCE PROCESS
Extensive photograph and inspection of vehicle by the auto damage appraiser, with claimant present, if possible, will indicate potential of bodily injury damages;
Send photographs of the autos involved in the accident to the claimant or his/her counsel; these may show that the minimal physical damage in the accident could not have resulted in significant bodily injury damages;
Request from the claimant or claimant's attorney a medical authorization, a recorded interview and an IME. If the request is ignored, follow-up quickly with additional requests;
Frequent and continuing communication with the claimant's medical provider(s) assuming an authorization exists.
If the claim ceases to appear opportunistic, you can consider changing your investigative strategy to a more routine handling process