IASIU recognizes excellence

award winnersThe International Association of Special Investigation Units honored a State Farm investigator, an ATF agent, an analyst and an NICB employee during their annual awards ceremony this morning. Each had a compelling story on how they are helping the fraud-fighting community advance our mission. Congratulations to all of them.

You can see a video of the presentation here.

Here’s the details on the award winners:

September 21, 2009, Palm Desert, Cal. – A successful investigation of a massive contractor fraud scheme arising from Midwest hail storms has landed top honors for an investigator with State Farm Insurance.

Tom Cockerill, a claims specialist in Indianapolis, Ind. Received the 2009 Investigator of the Year award by IASIU, the association’s highest award.

During an awards ceremony here today, delegates to IASIU’s 25th annual seminar heard about the successful investigation that lead to the honor. According to the awards presentation, the case developed after a major hail catastrophe hit the Midwest in 2006.

Cockerill was credited with digging into the background of the contractor who was a suspected “storm chaser” — going from one disaster to another to file inflated and fake claims.

“Many, many hours of reviewing hundreds of claims files, engineering reports and damage estimates painted a picture of a massive scam involving claim after claim where the purported loss was inconsistent with the severity of the hail storm,” according to the presentation

Digging deeper, Cockerill began the arduous task of assembling detailed evidence through statements taken from more than 20 adjusters, 10 engineers, several insureds, plus many neighbors and other witnesses. He also interviewed existing and former employees of this contracting firm, who were eager to lay out the details of this shady operation.

“Our investigator of the year confirmed that the owner not only intentionally damaged roofs but also taught employees how to create or even increase damage to simulate hail damage to roofs, roofing vents, siding and air conditioning units, according to the presentation.

Key to the case was a piece of damning evidence that our winner discovered — an e-mail message the owner sent to employees as the investigation heated up. He told them to lay low and stop causing intentional damage to avoid suspicion by insurance investigators.

As a result of Cockerill’s work, the state’s attorney general took civil action against this contractor, who now also faces a massive RICO suit filed by State Farm.

“Thanks to the dogged determination of this investigator, tens of thousands of dollars — and perhaps much more — have been saved not only by his company but by other insurers as well, said David Rioux, IASIU president. “The contractor had launched an efficient, savvy scam that likely would have milked insurers for years except for the detailed and professional investigation led by this year’s winner,” he added.

Other awards bestowed during the annual seminar included:

• Outstanding Service Award: Mike McGee of the National Insurance Crime Bureau, who was honored for his training of more than 2,000 investigator during the last two years and for his assistance in guiding three anti-fraud task forces,

• Analyst of the Year: Michelle Bergeron of Esurance, for setting up from scratch a fraud-detection program that helped to uncover a large organized staged-accident ring,

• Public Service Award: Michael Vergon of the U.S. Alcohol, Tobacco & Firearms agency for investigative work that led to the successful prosecution of on the largest arson rings in history in Indiana.

Law enforcement — the ‘only’ solution?

MuellerFBI Director Robert Mueller testified before a Senate committee on Wednesday and said this:

“. . . with health care expenditures rising at three times the rate of inflation, it is equally clear that the stakes are rising and that only a concerted law enforcement response will succeed in addressing this problem.”

I take issue with his use of the word only. Fraud is far too complex to have but one solution. We will never arrest our way out this crime. Prevention and deterrence too often are overlooked in favor of arrest and conviction.

Law enforcement obviously is key in combating fraud, but so too are insurers, providers and patients. All have an important role.

Mueller’s comments remind me of the saying that “when all you have is a hammer, everything looks like a nail.”

You can read his entire statement on health care fraud here.

Social media as an investigative tool

social mediaI’m in negotiations to buy a new home and have started gathering intelligence on the sellers to understand their motivations and gain an upper hand in our deliberations. Now I’m no great sleuth and don’t have access to many of the tools investigators use these days. But I do know my way around the Internet, so I start with Google and get some basic information on the young couple selling this house, such as their occupations, published writings, schools they attended, etc. Interesting, but hardly insightful.

Then I turn to Facebook. From checking up on long-ago girlfriends and long-forgotten college buddies, I know a lot of people keep their Facebook pages open — or just don’t know how to set the preferences to keep them from prying eyes. So I search on the husband’s name and get a quick match. Unfortunately, his page is restricted to his Friends.

Then I try the wife’s page and have better luck. It’s open for everyone to see. Perusing her page I get a sense of who she is, her likes, her friends and her hot buttons. And then a post from a couple months back hits me straight in the face — she announces to her friends she’s pregnant with her third child. Now this is a tiny house that must seem even smaller with two kids, let alone three. These are very motivated sellers and, with this nugget of information, I expect to buy this home at a very good price.

My little investigative endeavor pales against the exploits and successes insurance investigators are enjoying these days using social networking sites. An article in Business Insurance on Monday profiled several success stories on catching workers comp cheats.

Frank Pinder, head of GlobalOptions SIU, recently told us about a case of an injured worker who claimed he was too hurt to get out of bed, yet he had time to update his MySpace page and post upcoming dates and venues his rock band was playing. “When our investigator arrived at the gig, the drummer not only banged away for the entire set without pain, but showed no signs of injury when carrying his drum set and amplifiers on and off the stage,” Frank reported.

Another case involved a women who claimed fear of leaving home prevented her from working. Frank says it took a day for his investigators to check her Twitter page and her Tweets to learn about social events she was planning to attend including a friend’s baby shower.

With people in their 30s and 40s now dominating social media outlets, the Internet has become an invaluable tool for fraud investigators. If you have a clever example of using social media as an investigative tool, please share it with us.

Are fines enough to deter fraud?

PfizerOne of the interesting aspects of the blockbuster announcement out of the Justice Department yesterday was the $2.3 billion settlement with Pfizer involved not only civil accusations, but criminal as well. While criminal charges against corporations are not uncommon, the severity of the crimes outlined in the settlement are deeply troubling.

Not only was there a continuing pattern and practice of ripping off federal and state health care systems — plus private health insurers and workers comp carriers — but the actions by the individuals who ran this scam put many people’s health at risk as well.

The corporation is now out $2.3 billion — a nice chunk of change by any measure.

But . . .

• is any individual held accountable?
• does anyone go to jail?
• is anyone even put on probation?

“Unfortunately, the ever-escalating fines are unlikely to stop drug companies from continuing to bribe doctors because they represent just a fraction of drug company profits and no one has gone to jail.”

Does any manager or executive even lose a job over this? Perhaps get a bad performance review?

Pfizer’s stock price didn’t even suffer yesterday [see above chart]. It was down a dime on a down day in the market.

I’m not looking for revenge or scapegoats, but I’ve been around long enough to see settlement after settlement after settlement with apparently little or no deterrent effect. This morning in the Washington Post, Sidney Wolfe, director of Public Citizen’s Health Research Group, said:

I think he’s onto something there.

Combating fraud = health rationing?

Newt articleTruthfulness often is the first casualty of political warfare, and such casualties abound in the heath care reform slugfest. The latest illustration comes in the form of an opinion article in yesterday’s Atlanta Journal-Constitution penned by Newt Gingrich and an aide.

The former Speaker of the House laments that recent budget cuts by the Obama administration could leave some home-bound elderly without needed care. He writes:

“Congress may not have adopted a health reform bill yet, but the administration and Congress are already taking steps to ration cost-effective and life-saving programs such as home health care.”

A few paragraphs later, he writes:

“Rather than target the crooks that rip off the taxpayers to the tune of $80 billion to $120 billion annually in the current Medicare and Medicaid programs, the administration and Congress are turning their guns on the defenseless: homebound patients who need help feeding, dressing, taking their medication or even utilizing the bathroom.”

Here’s the paradox in Gingrich’s argument: The budget cuts he cites are part of Medicare’s aggressive attempt to stem the well-documented fraud in home health care. It plans to weed out fraudsters to the tune of about $37 billion over ten years. If anything, the cuts don’t go deep enough, considering one audit in Houston found fraud or inflated billings in 90 percent of the home healthcare cases reviewed.

So in essence, Newt is saying that instead of combating fraud, the administration should be combating fraud.

This is one of many distortions and myths about fraud that are being thrust into the public debate over health care. So far pro-reformers in the administration and Congress have been rather lame in rebutting them.