Indiana Auto Injury Attorney

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					Fraud Control in Today’s
Insurance and Economic
“Wall Street legend Bernard Madoff
  arrested over „$50 billion Ponzi
            scheme‟” 12/12/08
  Bernard Madoff allegedly confessed to a massive
  fraud that will cost his investors at least $50
  billion, perhaps the largest swindle in Wall Street

“Money Manager fled as outside audit
           loomed” 1/29/09
   Federal regulators sued Arthur Nadel for fraud,
  saying he misled investors & overstated the value
  of investments by about $300 million.

“Grand Jury indicts lawyer eyed in $300M
               fraud” 1/30/09
  Marc Dreier, indicted on charges of conspiracy to
  commit securities & wire fraud.

“Ex-convict charged in Ponzi scheme” 1/31/09
  Nicholas Cosmo has been charged with operating “a
  classic Ponzi scheme” into which $370 million was

          “Everything‟s Gone” 1/31/09
  Joseph Forte a Philadelphia-area investment manager
  charged with defrauding investors of about $50 million.
Recent P & C Fraud Cases
       in the News
     O.C. Doc Sentenced 10 Years For
             Insurance Fraud
   Patients were paid up to $300 for colonoscopies and $1,200
  for sweaty palm surgery. While insurance companies were
  defrauded out of more than $9 million for these unnecessary

  TX/FL doc found guilty of health care
       fraud totaling $16 million.
  Ira Klein filed false claims by billing insurance companies
  for injections he never gave and improperly retailing drugs to
  his patients.

  Texas Woman Convicted of
  Insurance Fraud Among Bush
 Found guilty of concealing knowledge of a
 crime. The daughter of a Dallas doctor
 accused of medical insurance fraud, was
 convicted in connection with the doctor’s

Daschle withdraws in wake of
        tax controversy
2008 Insurance Fraud Hall of Fame

     Judging the judge: Appellate judge Michael Joyce
     collected $440,000 from auto insurers after lying that a
     5 mph bumper bender nearly crippled him. But the PA
     jurist got his pilot license and flew airplanes, was an
     avid golfer, went rollerblading and tried scuba diving.

     Burning with desire: Kenneth Allen led an arson ring
     that torched 50 homes and hauled in millions in bogus
     insurance claims in the Indianapolis area. Allen’s gang
     usually bought low-priced homes and loaded them with
     used furniture to inflate the claims.
                 Websites on How to …
   • Website on “How to increase Revenue to your practice
     through enhanced patient care”
   • How can I burn a car easily?
            Major areas of Property & Casualty
                    Fraud Escalation

•   Medical
•   Pharmacy
•   Disability
•   Property
•   Auto

    The Coalition for Insurance Fraud estimates that
    insurance fraud costs Americans over $80 billion
    annually. It is larger than Madoff’s Ponzi Scheme!
                  So what do we do???

•   Personal Lines Growth is flat or down
•   Expenses are very tight
•   There is tremendous pressure to reduce headcount
•   Workloads remain stable but there is pressure
•   Metrics are key

    Measure it, Communicate it & Leverage it.

–   Gross Fraud savings
–   Net Fraud savings (savings less ULAE and ALAE)
–   Number of referrals by adjuster by LOB
–   Number of referrals by Automated Detection System
–   Denials, Withdrawals, Negotiated reductions
–   Cost Containment metrics
     • Medical edits
     • Upcoding
     • Peer to Peer Savings
                 Tools & Techniques to
                    Combat Fraud

• Risk avoidance
  – Work with agents or sales staff to qualify potential insureds
  – SIU assistance in reviewing new business: Auto - Garaging, Foreign
    License, House Hold Members; high med pay limits or inconsistent
    limits; Low Mileage; Business Use; WC – Improper classification
    coding of employees

• Once a claim occurs identify Red Flags:
  – Electronic review of data via claim system or integrated system
  – Adjusters trained to identify Red Flags
               Tools & Techniques to
                  Combat Fraud

•   Controls
•   Computers/Internet
•   Confirmation of Suspicion
•   Communication, Collaboration & Calibration
Automatic Referral to SIU in the following situations:
 – Auto – All Thefts, fires, flooding and high value contents &
   stereo systems are automatically referred to SIU
 – Homeowners – All fire losses and content losses over
   $5,000 are automatically referred to SIU
 – Auto Liability – any claim where the injury isn’t consistent
   with the impact, phantom passengers
 – Medical and Workers Compensation – Friday/Monday
   Injuries, Company Layoffs, Doctor/Attorney relationships,
   refusal to return to modified work, medical edit of MBR
   kicks out bills
            Computers and the Internet

•   Google
•   Facebook
•   Licensing databases
•   ISO
•   NICB
•   State Insurance Department Databases,
    especially in e-med billing states
• Auto – theft, fire or flood losses – you need
  experts to confirm the facts. Ignition damage,
  excessive vandalism, accelerants
• Homeowners – fires – Cause & Origin expert,
  financial stability of insured
• Liability – Bio mechanic Engineers
• Medical and Workers Compensation –
  Surveillance when appropriate, IMEs, Peer to
  Peer Medical Management Programs to reduce
  medical duration times
             Communication, Collaboration
                  & Calibration
• Strong partnership between SIU and Adjusters
      • Same vision for combating Fraud (Fight Fraud at all cost or fight
        Fraud in a cost effective manner?) Calibrate to be on the same
      • Where is your focus: Individuals, Professional Rings, Both?
      • Same metrics

• Share information across Lines of Business
• Partnership with State Fraud Bureaus, Law
  Enforcement, State Insurance Departments and SIU
  Thank You


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