Most Common Types of Insurance Fraud

Workers' compensation insurance fraud occurs in simple and complex schemes that often require difficult and lengthy investigations.

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Insurance investigators and surveillance restrictions

When investigating for an insurance fraud, trained investigators with access to camouflage suits, cameras and other surveillance equipment, observe suspects over an extended period of time in order to document proof of fraud. Clients inform the investigating agency of insurance claimants who they suspect of fabricating or exaggerating injuries or material losses. The agency investigators move on to identify, tail and film the suspect, remaining in close contact with the clients to make sure that they are investigating the right person and to report progress.

These investigations can yield significant savings for insurance companies – every dollar spent in an anti-fraud effort returns an average of $6.10 in saved claims. Insurance fraud is the second most expensive white-collar crime in the U.S. (after tax evasion). Even if there is a small suspicion over an injury claim – it could either be repetitive, or the claimant may be defaulting on a loan and needs the insurance money – the funds saved from being fraudulently claimed almost always offset the cost of investigation.

Operation

Of course, these investigators cannot find proof of wrongdoing if the claimant is genuine, or if they are pursuing the wrong person. It is therefore important for the clients to furnish as many details about the suspect as possible – the appearance description, for example, should include eye color, scars, tattoos and any other details the client can recall.

It is also important to allow at least three days for an effective investigation to be conducted. This is because the information procured in the earlier stages is used cumulatively near the end of the investigation. This means that while most of the work is done on the third day, it could not have been done without the groundwork laid on the first and second days. Furthermore, as subjects are observed over a prolonged period, there are greater chances of them committing an error and proving the fraud – such as walking freely despite claiming to have a fractured leg.

Restrictions

As described earlier, investigations cannot “create” the crime, but an investigation may not capture any proof despite a fraud being committed. It is possible for the targets to simply be fortunate enough to not be observed for the maximum number of days ordered for investigation by the clients. Even when proof of fraud has been documented, the claimants may be able to wiggle their way out of a case by citing an unusually good/bad day for their slip-up. It is highly recommended that clients don’t stop their investigation after proof has been found, and to conduct multiple investigations to trap the fraudsters repeatedly, so that a “good day/bad day” defense does not hold in court.

Other limitations of the investigation are tied to the inability to continuously observe the target. It is difficult to discreetly follow targets, particularly in small towns and rural areas, where it becomes hard to blend in convincingly. Crime zones are difficult areas as well, because many people are on the lookout for law enforcement agencies. In certain areas, privacy laws legally prevent investigators from filming the subject. These restrictions should be kept in mind by clients before ordering an investigation.