Consumer information
Why fraud persists
Despite much progress in recent years, America’s fraud fighting still needs improving. Here are several holes in the system that fraud fighters are working to close:
Health system an easy target. America’s huge health insurance system is vulnerable. Swindlers can skillfully exploit computerized billing systems with large volumes of well-disguised claims. Low reimbursements and pressure to control costs also encourage many medical providers to cheat.
Low-Risk Crime. Insurance cheaters view insurance fraud as a low-risk, high-reward gambit. Even drug dealers have entered insurance fraud. They think fraud is safer and more profitable than working street corners.
Nine states lack fraud bureaus of any kind. Fraud bureaus are agencies charged with investigating suspected insurance schemes.
Court sentences often are light, limited to probation, restitution or short prison terms. Courts often reserve overcrowded prisons for people convicted of more-violent crimes.
Professional societies overseeing doctors, chiros and lawyers can be reluctant to revoke or suspend the licenses of peers convicted of insurance fraud.
Insurers sometimes back off. Most insurance companies actively fight fraud. But some insurers may pay suspicious claims, believing it’s cheaper than fighting in court.
Low legal priority. Prosecutors often give top priority to combating drugs, violence and other high-profile crimes. Though prosecutors have tried more fraud cases in recent years, many prosecutors still believe some insurance crimes are too complex or not serious enough to pursue.
Climate of tolerance. Though most people are honest, too many consumers think insurance fraud is a victimless crime, or that insurers won’t miss a few stolen dollars. Thus they justify defrauding insurers or not reporting other people’s scams. More troubling, people’s tolerance of fraud is growing, reveals research by the Coalition Against Insurance Fraud.
Weak public outreach. Most public outreach efforts by fraud fighters are poorly funded and may have limited effectiveness. This makes it harder to reverse people’s lax attitudes about this crime.
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