P/C carriers, health insurers coming together

Doctor in jailThe big news in the world of insurance fraud this week is the announcement of the creation of the Consortium to Combat Medical Fraud.

The Consortium is a joint project of the coalition, the National Health Care Anti-Fraud Association and the National Insurance Crime Bureau. It’s the first time that property-casualty insurers and health carriers have come together in a meaningful way to better detect and investigate fraud by medical providers.

Activities underway include cross-matching data on suspected fraud cases, cross-training investigators, getting insurers comfortable with sharing information across industries and conducting research.

A joint education program last week drew more than 60 investigators from both sides. Many eyes were opened about the different approaches the two industries take to resisting bad claims, detecting fraud and dealing with fraudulent medical providers.

Case studies have made clear the advantages of sharing intelligence and developing joint investigative strategies. One obvious benefit is that prosecutors are more likely to take cases that cross industry lines.

A full story on this effort will soon be published in our quarterly newsletter, Fraud Focus, also available online.

In the meantime, there’s been a lot of good press this week about the announcement. But Sam Friedman, editor of the National Underwriter, writing in his blog, had one biting comment:

When we posted a news story yesterday reporting that “anti-fraud associations representing both the property-casualty and health insurance sectors will pool their resources to increase detection and prevention of health care fraud,” the first question that came to mind was, what took them so long?

He went on to answer his own question: I suppose I should not be surprised that the p-c and health-disability insurance sectors were off on their own all this time in trying to prevent fraud. While the public perceives the “insurance industry” as two sides of the same coin, the p-c and life-health groups have long operated as if they were two different currencies altogether.

He’s correct that the two sides of the industry have acted as if each has its own set of bad guys. As we have found, these fraudsters are equal-opportunity crooks.

This new effort should take a few more out of action.

Getting an “A” in insurance fraud

SifeInsurance fraud may be a dull, boring topic for some, but high school and college students increasingly choose it as a subject of research reports and term papers. At the coalition, we get a good deal of e-mail from students asking for assistance with papers, and we are always eager to help recruit young people into the fraud-fighting community.

A group of students at Centenary College has demonstrated exceptional leadership: They’ve created a website about insurance fraud and produced an anti-fraud public service message for radio.

These young fraud-fighters. enrolled in the “College Students in Free Enterprise” program, did an outstanding job of researching and writing about fraud and they’ve published useful information on their website. The radio spot is especially good, and hopefully it’s getting well-deserved airtime.

The students were aided by a few industry veterans who were delighted that kids are taking an interest in a topic dear to their hearts. Hopefully, this program will encourage other students and schools to examine the issue of insurance fraud.
And, if you ever have an opportunity to help students learn about fraud, do it.

Whether through a structured program like this one, speaking at your child’s school or just offering to be a source for a term paper, your interaction with young people may be your best chance to make a long-term impact on fraud.

Lie in Kentucky, go to jail

Kentucky jailApplicants for insurance in Kentucky have been put on notice: Lie and you may lose your freedom.

A woman who applied for a homeowners policy has been charged with failing to fully disclose her claims history. She faces five years in prison and a $10,000 fine.

Sadly, such cases are rare across the U.S. Fraud bureaus and prosecutors usually don’t consider them a priority. If more did, they would send a stronger signal that honesty is important. Underwriting fraud is basically a fairness issue. The cheats cause honest policyholders to subsidize the premiums of the dishonest.

Hats off to the Kentucky fraud bureau for taking this case. Details are below.

CORBIN WOMAN INDICTED FOR INSURANCE FRAUD
Allegedly falsified claims history information on application

FRANKFORT, Ky. (June 11, 2008) – A Corbin woman is in custody after being indicted on a felony count of insurance fraud. According to court documents, Christine V. Young filled out an application for homeowners insurance coverage with State Farm Insurance Company stating that she and other household members had no losses for the past three years. She also allegedly stated that no insurer had refused to issue or renew coverage during that time period.

An investigation by the Kentucky Office of Insurance (KOI) Fraud Investigation Division found that another insurer canceled Young’s homeowners policy due to misrepresentations on the application. In addition, Young was directly or indirectly involved in at least four fire losses and one major theft loss during the three-year period.

She was arrested by a KOI fraud investigator and the Corbin City Police and is being held in the Knox County Jail. If found guilty, she faces a maximum sentence of five years in prison and a $10,000 fine.