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Insurance Fraud

Knowing Insurance Fraud Detection

Knowing Insurance Fraud Detection

 

The insurance fraud detection system employed by most insurance companies is not necessarily as foolproof, or as rigorous, as one might hope, though it does the job better than likely any other practical system could. The problems of insurance fraud detection stem from one primary source: the torrent of insurance claims that any given insurance company receives in a single day.

To go through each and every claim and examine for signs of fraud would require hundreds of employees, and even then might not amount to much; there would likely not be enough information available on a submitted claim for a human to easily determine whether or not the claim seemed legitimate. Instead of this system, then, insurance companies start off the process of insurance fraud detection by generally using a computerized statistical analysis of claims.

This is still supplemented by human aid, most of the time coming from claims adjusters and insurance agents, if they believe that a certain case or claim needs a red flag. Help can also come in from tips, given by members of the public to insurance companies, or even to law enforcement or other regulatory organizations. But in general, most claims will only be run through the statistical analysis to determine if there is anything odd about them.

The computerized statistical analysis which constitutes the first part of insurance fraud detection can come in two different general forms, either supervised or unsupervised. Supervised systems essentially compare claims to known examples of both fraudulent and non-fraudulent claims, to see if the claim being checked matches up with examples of either type.

The system cannot detect new types of fraud, which have never been seen before and therefore would not be in the system, and the examples of non-fraud and fraud claims need to be absolutely defined as such for the system to work. The other type of statistical analysis insurance fraud detection system, the unsupervised system, simply detects abnormal claims, based on spikes in value or strange circumstance.

This kind of analysis does not perfectly fulfill the role of insurance fraud detection, if only because it only points out which claims require further investigation, instead of determining conclusively which are fraudulent and which are not. 

At this point, insurance fraud cases would be investigated further by claims adjusters and insurance agents, who would come to determine the facts of the case. Specifically, they will likely attempt to determine whether or not the fraudulent claims are soft fraud or hard fraud. In other words, they will try to determine if the claims are legitimate claims which have simply been exaggerated, or if they are outright lies, false claims for damages which did not occur. They would have a fraud lawyer to take legal action for these cases..

Depending on what type of claim it seems to be, the insurance company will deal with it, either by negotiating for the correct amount on a legitimate claim, or by outright denying the claim, and possibly prosecuting the perpetrators in court. In situations of particularly suspicious claims, insurance fraud detection might involve special investigative units to further look into the claim. These would likely be of particular importance to hard fraud cases, in which the claim has no basis in reality, and might be for excessive sums of money.

Guide to Reporting Insurance Fraud

Guide to Reporting Insurance Fraud

Reporting insurance fraud is very important, as it is not only the right thing to do, but it will also help to decrease the costs for insurance fraud spread out to all other policy holders. It will also ensure that fraudsters will be brought to justice for their actions, which is very important for ensuring that no one takes advantage of the system. Contact a fraud lawyer to acquire legal advice and assistance.

The best way to go about reporting insurance fraud is to contact your state's insurance fraud bureau. These bureaus are generally state maintained organizations specifically aimed at reducing and eliminating insurance fraud. Reporting insurance fraud to this organization will ensure that your information will reach the correct ears. Furthermore, these bureaus will generally try to protect those who report insurance fraud from any kind of repercussion or connection to the fraud. If you have any information for reporting insurance fraud, then finding out the number for your state's insurance fraud bureau is a good first step.

Unfortunately, not all states have insurance fraud bureaus. If you do not have such a bureau to contact, or even if you do have such a bureau, but you want to report insurance fraud to all the relevant agencies, then you would do well to next contact the insurance company suffering from the fraud itself. Reporting insurance fraud to the insurance company can sometimes help them to begin an investigation into the fraud, preventing any further wrongdoing. Some insurance companies may have toll-free hotlines specifically for this purpose.

The National Insurance Crime Bureau is another good source at which to report insurance fraud.  The Bureau is not a government organization, but is instead a non-profit, organized and run by the insurance industry, with its specific purpose being the reduction and elimination of insurance fraud. You can contact them with a number easily found on the Internet, and also by visiting their website at NICB.com.

If you find instances of fraud surrounding specific practices, then you would do best to get in touch with the regulatory body for that specific practice. For instance, if you find out about insurance fraud involving Medicaid, you would do well to report insurance fraud to the US Department of Health & Human Services, as they are the federal body most oriented towards protecting Medicaid.

Similarly, you can report insurance fraud attempts towards the Social Security system by getting in touch with the Office of the Inspector General, which is responsible for the Social Security Administration. You can report insurance fraud involving a health care provider to your state's medical board, which will likely be able to issue some kind of censure upon the doctor to prohibit him from practicing medicine as a punishment.

In general, when reporting insurance fraud, you should be ready and willing to provide as much information as possible. Without your help in providing information, it is likely that your tip may not amount to anything. Important pieces of information that you should strive to have when looking to report insurance fraud include the dates and names of those involved, any organizations that might be involved, the amount of money that you think might have been stolen in the fraud, and as many details about the nature and procedures of the scam as you can possibly provide.

Understanding The Methods Insurance Fraud

Understanding The  Methods Insurance Fraud

An insurance fraud investigation must be focused on determining exactly how the fraud was perpetrated, as understanding the method of the insurance fraud will also likely prove that insurance fraud did take place. A fraud investigator, then, will often focus his attention on examining the potentially fraudulent ways that the claimant might have manipulated events such that he could make his insurance claim.
 
 
Depending on exactly what type of insurance the claim is being made on, there could be any number of different methods for perpetrating insurance fraud. It's up to the fraud investigator to narrow down those methods, to find the one that was employed, or else to find that no method fits the incident, and there is no fraud.
 
 
Life insurance is one of the most obvious in terms of methods for insurance fraud, and the fraud investigation will likely be focused on the sole available route. The only way that insurance fraud can be perpetrated with life insurance is if the individual protected under the life insurance did not actually die, but instead faked his death, so that someone close to him could collect on the claim, and then likely share the money.
 
 
The fraud investigator, then, will be focused on trying to prove either that the individual is genuinely dead, or that he has faked his death and perpetrated insurance fraud. Such a fraud investigation is often difficult in the search, but it has quite a clear goal: if the individual in question is every discovered to be alive, then insurance fraud was perpetrated almost without a doubt.
 
 
 
Health care insurance fraud is far less clear cut than life insurance fraud, and fraud investigation into it will likely need to be much more nuanced, and much more penetrating. Health care insurance fraud is most often perpetrated by health care providers because those doctors will lie in order to get the best possible service for their patients.
 
 
Doctors can lie on billing, telling insurance companies that they performed one service, while in actuality they performed an entirely different operation, most likely because the insurance company will cover the service actually listed, but not the service actually performed. It is up to fraud investigators to determine whether or not the actually performed operation was the one listed on the bill. Other types of insurance fraud for health care insurance often involve significantly more mercenary aims, as doctors can perpetrate fraud in an attempt to get more money.
 
 
Performing unnecessary medical procedures and billing for them is one key way that this kind of fraud takes shape; prescribing medical help without any actual need for it is a common way for doctors to earn more money, either for themselves or associates. The only way for a fraud investigation to successfully out such practices is for the fraud investigator to consult with other medical professionals, in the hopes of discovering whether or not any given procedure was actually necessary.
 
 
Car insurance fraud takes form in a similar fashion to the more mercenary forms of health care insurance fraud. Claimants will sometimes attempt to make money by claiming that injuries not related to a car accident were actually caused by the car accident in question, so as to make some money for the injuries; or they will claim that the repairs on the car that should fall under the protection of insurance cost more than they actually did.
 
 
These forms of car insurance fraud are more common, and easier for fraud investigations to out, considering that records are likely to exist that will either prove or disprove the claim. Car insurance fraud can also involved staged accidents, however, or faking injuries from a car accident. These may be a bit harder to detect for a fraud investigator, not least because these types of fraud often involve a greater degree of care and precision in the perpetration. But nonetheless, a good fraud investigator will be able to find the truth through the deception, and will be able to prove that the claims are fraudulent.

Must Know Information About Insurance Fraud Penalties

Must Know Information About Insurance Fraud Penalties

Insurance fraud penalties are not uniform across the country, and are especially not uniform between different types of insurance fraud. Some types of insurance fraud are inherently more destructive than others, and therefore are met with harsher insurance fraud penalties. Generally speaking, soft fraud is met with less in terms of penalties than hard fraud, though this is not an absolute rule. 
 
 
As an example of one state's insurance fraud penalties, consider New Jersey's policy. For health care insurance fraud, the perpetrator would be facing a sentence of up to $150,000 in fines, along with a stay in jail of 3-5 years. If the perpetrator is actually a medical provider, then that jail time can be escalated to 5-10 years.
 
 
Unemployment insurance fraud, on the other hand, is treated as if it were a theft crime, with the punishment depending upon the exact amount of money stolen. A false insurance card in an auto insurance accident can cost a $10,000 fine and 18 months in jail, and attempting workers compensation insurance fraud can result in the same.
 
 
Simultaneously, in New Hampshire, there are different insurance fraud penalties. You can be charged with a Class A or B Felony, or a Class A or B Misdemeanor. A felony is much more likely to be applied to perpetrators of hard fraud, who likely planned out the crime, and based it on a more open deception. Soft crime, which is more an exaggeration of a legitimate claim, is likely to be termed a misdemeanor.
 
 
Class A Felony charges can have maximum terms of 7 and 1/2 to 15 years in jail, along with fines of $4000, or no more than double the actual ill-gotten gains of the fraud. A Class B Misdemeanor, on the other hand, will only hit the perpetrator with a fine of $1,200. The two middle charges span the two poles, setting up a spectrum of severity to be applied as insurance fraud penalties to any particular insurance fraud case.
 
 
In Michigan, a law was passed to impose significantly harsher insurance fraud penalties, to discourage would-be perpetrators from the crime. The law makes it a full-out felony to perpetrate any acts of insurance fraud, and those who are successfully convicted of insurance fraud can be sent to prison for a maximum of four years, and then have to pay a fine of $50,000. 
 
 
Unfortunately, the primary problem facing the implementation of all of these insurance fraud penalties is that of insurance fraud detection. Insurance fraud often goes completely undetected, whether because the values are too small to really attract the attention of any fraud-seeking systems, or whether it's because the insurance companies decide that it isn't worth it to pursue an investigation of fraud for this particular fraudulent claim.
 
 
Insurance fraud detection systems are not foolproof, and even when they do function correctly, it is possible that the insurance fraud charge will not be brought to law enforcement's attention, and thus, no insurance fraud penalties will ever be brought to bear.

Jail Sentence For Insurance Fraud At A Glance

Jail Sentence For Insurance Fraud At A Glance

Insurance fraud can include serious legal consequences. In fact, the rate of insurance policies has increased in recent years so that insurance companies can pay for the frequent cases of insurance fraud.
 
Individuals that are facing insurance fraud charges will be charged with separate counts for each claim made, even if the claims resulted from the same incident. In addition to jail time, insurance fraud can include fines, restitution, community service and parole.
Jail time for insurance fraud will depend on the specific circumstances and the jurisdiction. For example, the number of claims which were fraudulent will greatly affect the jail sentence, as will the type of fraud committed. The sentence is not reduced for first offenders, but may be increase for repeat offenders.

What Do If Your A Victim Of Insurance Fraud

What Do If Your A Victim Of Insurance Fraud

If a person is a victim of insurance fraud it is important to immediately contact their insurance company. The insurance company will help the individual through the process of proving that they in fact are the victim of insurance fraud. Often, the insurance company will either file a police report in the victims honor, or ask the individual to do so themselves. Either way, filing a police report is a key step to helping solve the insurance fraud issue.
 
 
In most cases, a person will have to appear in court to testify against the other individual and provide the court with necessary documentations proving their use of insurance. Since court is a high possibility, it is often advised to seek legal support and advice to help properly prove the case in court. In most cases, a person who is the victim of insurance fraud will receive reparations to help pay for the damages that the insurance fraud caused.
 

Soft Fraud Overview

Soft Fraud Overview

Soft fraud is the type of insurance fraud in which the perpetrator lies to the insurance company in a claim, but in a more subtle, sometimes more innocuous fashion. A prime example of soft fraud, is that of an individual who claims that he or she is sick, when he or she is not, and thereby manages to take the day off from work while receiving workers' compensation benefits.
 
 
Soft fraud would also cover those times when a claimant's property was stolen, but the claimant then goes on to lie about the actual value of that property when filing the claim with an insurance company, for example. Even though this seems to be something of a negligible "white lie," the point is that it is still insurance fraud, and it is still a punishable offense. Workers' compensation is actually one of the most common sources of soft fraud, as it is all too easy to exaggerate injuries or illness for the sake of receiving just that extra bit more money. 
 
 
Whereas hard fraud very often involves foresight and planning, soft fraud is much more often a crime of the moment, or of opportunity. When one realizes that with only a small bit of misrepresentation in monetary values, he or she can make some small sum of extra money, then he or she may do so, while thinking that it doesn't actually do much harm. As a result, soft fraud is far more common than hard fraud; since it doesn't need any planning, only an opportunity, soft fraud becomes tremendously more tempting to those who would never perform a planned crime, but might seize upon an obvious opportunity.
 
 
Soft fraud the form of insurance fraud that is most difficult to detect, because soft fraud inherently involves a legitimate claim at its core. A perpetrator of soft fraud is not lying about the fact that items were stolen from him, for example; that is most certainly true. But he is lying about the items' worth, or about exactly which items were stolen, sometimes even going so far as to say that certain items, which he never actually owned, were stolen. Soft fraud is also generally for smallish amounts of money, and the overall lie is not very large or easily detected; after all, if the item was stolen, there is no easy way to verify how much it was worth. As a result, soft fraud often goes uncaught.
 
 
Most members of the public view soft fraud as "victimless," in the sense that the only one who suffers from soft fraud is the insurance company, and any given insurance company likely has enough money to pay for such small counts of insurance fraud, anyway. But unfortunately, the picture is not so simple. Insurance fraud in general costs insurance companies money, which then pushes those companies to increase premiums. In other words, all insurance fraud makes buying insurance just an extra bit more costly.
 
 
Soft fraud, as not only the most common form of fraud, but the form of fraud that most insurance companies determine is less costly to simply let go and not investigate, is actually largely responsible for these price hikes. Insurance companies lose millions of dollars to soft fraud every year, and the only defense they have besides paying exorbitant sums by investigating every claim is to raise the price on premiums. As a result, then, every single insurance purchaser suffers somewhat from the perpetration of soft fraud.