02 Jan Insurance Fraud
The $30 billion disaster
Billions of dollars are picked from American pockets each year by what many people consider a “victimless” crime. Most people don’t even know it is happening. But it’s costing the average Arizona family $300 a year in increased insurance premiums. Of that $300 amount, fraud is adding $180 to the average annual auto insurance premium.
How serious is the insurance fraud problem?
To the insurance industry and its policyholders, insurance fraud has destructive capabilities that exceed even Hurricane Katrina, the costliest disaster in United States history.
According to the National Insurance Crime Bureau (NICB) insurance industry studies indicate 10 percent or more of property/casualty insurance claims are fraudulent. Add it up and insurance fraud costs Americans an estimated $30 billion each year. It is the second most costly white-collar crime in America behind tax evasion. Not only does fraud cause higher insurance rates, but it also raises our taxes and inflates prices for consumer goods.
Who pays for insurance fraud?
Insurance companies, policyholders, taxpayers and the general public pick up the tab through increased insurance rates, higher taxes and inflated prices for consumer goods and services.
Ultimately, you pay the price of insurance fraud.
Who commits insurance fraud?
Unlike the western movies of yesteryear, insurance fraud perpetrators are not as easily identifiable as bank robbers and stagecoach bandits. They don’t wear masks, or carry guns or safe cracking equipment. They can be members of complex organized fraud rings who purposely cause accidents, then receive medical treatment for injuries that are either non-existent or are greatly exaggerated. Further insult to honest insurance consumers occurs when these professional thieves sue innocent victims for “pain and suffering.”
Another tier of fraud perpetrators may be your next-door neighbors who illegally pad claims to cover windshield or repair deductibles. Some even say that damages that occurred to their vehicles months or years earlier was the result of their most recent accident.
What is a Medical Mill?
A medical mill consists of medical professionals – at times working with legal professionals and recruiters – who rip off patients and insurance companies through unethical and fraudulent billing practices. The degrees of fraudulent involvement in a medical mill often depend on the amount of risk a medical professional is willing to take.
In this type of medical mill, everything from the doctor to the bills to the office itself is a fraud. Since patients with bogus injuries are often recruited, these offices contain little or no medical supplies, and actual treatment is rarely prescribed.
This type of medical mill does provide medical services, though the methods of treatment are often questionable, excessive or redundant. Patients are occasionally overcharged for services or, in some extreme cases, billed for services never rendered.
Typical fraud-related injuries involve soft-tissue sprains and strains like backaches, neck sprain and headaches. Injuries that are often difficult to verify. Medical mill patients rarely spend any time in the hospital.
Medical and legal providers are among our most trusted professionals. Instead of healing the sick and protecting the innocent, a handful of providers are abusing the public’s trust by “doctoring” insurance bills.
Unscrupulous Legal & Medical Providers
Dishonest attorneys purposely funnel patients to corrupt doctors or knowingly represent accident victims who are filing false or padded insurance claims. Participants often include personal injury attorneys, legal clerks and law office managers.
Cappers or Runners
Third-party middlemen recruit insurance fraud perpetrators and befriend legitimate accident victims for medical mills or dishonest law firms. Favorite targets include laid off individuals, the chronically unemployed and immigrants.
Insurance Fraud Perpetrators
Pseudo patients often fake or exaggerate injuries before visiting a medical mills. Common schemes include staging auto collisions, slipping and falling, and faking injuries at work.
Legitimate Accident Victims: In addition to being used as pawns in elaborate insurance fraud schemes, legitimate accident victims may be subjected to poor treatment or services by unqualified medical providers.
What’s Being Done To Combat Insurance Fraud
Special Investigative Units at insurance companies, the NICB and the Arizona Department of Insurance continue to scrutinize, arrest and prosecute individuals who participate in insurance fraud crimes. Ordinary citizens, like you, have been of great assistance by notifying authorities of suspected fraud.
What You Can Do
If you suspect insurance fraud, contact your insurance company, the NICB (800-835-6422) or the Arizona Department of Insurance Fraud Unit (602-912-8418 or 800-325-2548). You can also express your views to elected officials by encouraging them to toughen fraud laws and penalties.