Top 2020 Fraud

This article describes some of the top insurance fraud schemes from 2020 that could have been detected by algorithm.

New Orleans Staged Truck Accidents

This fraud involved a very large group of criminals who purposely collided vehicles into semi-trailer trucks to sue for personal injuries. It is an amazing demonstration of the level of danger some fraudsters are willing to tolerate to earn a payday. One of the participants of the scheme decided to change sides and testify against the fraud ring. He was assassinated. Here is another account, another, and another.

Our algorithms work differently than most of our competitors. We have proprietary techniques that are looking for nonrandom behaviors. If our datasets contain enough of these fraudulent claims, we pick up the non-random effect and flag the claims for SIU teams to investigate. When the pattern is identified, we immediately flag subsequent claims fitting the profile so that the SIU team can begin surveillance.

Typically a ring like this, gets into a ‘rhythm’ of how they commit the fraud and it is these non-random patterns that our algorithms detect. These can involve a particular time of the week, location, set of doctors, set of lawyers, pattern of medical bills, etc. that are detectable to our algorithms. In this specific instance, the the location of the accidents is the key. The fraudsters chose a specific jurisdiction (New Orleans) where they felt that investigators and legal authorities would not catch them. Non-random factors such as the jurisdiction of these accidents are what our algorithms are designed to catch.

NFL Players Overbilled Insurance Companies

In this case, eight former NFL players were involved in submitting fake medical records. Ninety-two claims were submitted, asking for reimbursements totaling $723,826. You can read about it here.

This fraud ring is a great example of the type of fraud that our algorithms detect, as it highlights common behavior associated with medical bill fraud. While this case involved large sums of money with high profile “patients,” personal injury protection fraud schemes more commonly involve a very large number of smaller-value claims (each totaling $10,000 or less, for example).

What typically happens is a medical provider, working with “patients”, bills insurance companies for medical “treatment” that did not occur. In this particular former NFL case the “patients” were a poor choice for the fraud ring because they were high profile and high dollar and thus more likely to attract the attention of human medical reviewers.

What is less detectable, and more common, is for medical providers to recruit low profile individuals and submit small nuisance claims. Insurance company executives often believe that these small claims do not add up to large dollar amounts.

For a time, when I was the president of the 10th largest auto insurer in Florida, I believed these small claims were just a nuisance and a part of doing business, not realizing how frequent they were and how many dollars were siphoned off in this manner.

Fraudspotters has sophisticated algorithms that read all the medical bills, profiling the pattern of CPT codes used. Fraudsters often rely on the fact that insurance company executives are not willing to pay doctors to review every small nuisance claim. Indeed many executives feel they are making a good business decision to quickly settle these claims, not realizing that fraudsters may be behind hundreds of similar claims directed precisely at them! In fact, many insurance companies establish “fast track” payment methods whereby if certain claims meet the criteria, the claims bypass human review. Once a fraudster realizes which types of claims are fast tracked, they submit the same type of claim many times over. The individual reviewers who are just following “check box” routines for the fast track do not realize this is occurring, but our algorithms can. Unfortunately, insurance company executives often think they are following best practice by using services from our competitors who are “pinging” the patients against a database to see if they were involved in past fraud. If the “patients” are not detected in these fraud databases, and the claim is small and uncomplicated, the claim is fast tracked for review. Basically, all the fraud rings need to do is find people who are not already in insurance company fraud databases and fabricate small claims.

As I said above, this fraud ring was too high profile to avoid human inspection, but other rings are siphoning off billions of dollars undetected, essentially employing the playbook of this former NFL player fraud scheme but with lower profile claims.

Hudson “Runner”

Although not occurring in 2020, Luis Aguirre, the Hudson “Runner”, was sentenced in 2020. And, this situation serves to continue the narrative I established above with the NFL case about recurring medical fraud. This is exactly the type of scheme that insurance company executives do not realize is occurring and are in fact enabling with “fast track” payments for small claims where the claimant is not found in an insurance fraud database. This conspiracy took small claims which, while individually very small, added up to $3.5m.

I know for a fact that there are presently similar fraud schemes ongoing in South Florida. I know who is doing it and how to detect it. Ironically, there are even former Insurance SIU people who have created fake clinics to take advantage of the fast-track protocols.

Adjuster and Medical Provider Rack up $1.6m in Workers Compensation

In this scheme, an employee working for the company took advantage of the fast-track authority to continuously process small claims over a twelve year period, totaling $1.6m. This activity would have been very easy for our algorithms to detect. This is a classic scheme, and we have a specific algorithm exactly for this situation.

It is ironic that some insurance executives (such as I was myself) probably believe they are making good business decisions to fast track these claims, for a time I believed this too. But, what these executives need to do is run their claims through algorithms, such as ours, to screen for these patterns. This article is worth a read, and so is this one.

Other Relevant Fraud

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