Presented by Dale K. Forsythe, Esq. – [email protected]@waymanlaw.com Scott W....
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Fraudulent Activity Awareness and the Struggling Economy for Hartford National Webinar June 3, 2014 Presented by Dale K. Forsythe, Esq. – [email protected]Scott W. Stephan, Esq. – [email protected]1
Fraud by the Numbers In 2007 alone, fraudulent and abusive auto
injury claims added $4.8 billion to $6.8 billion in excess payments
to auto injury claims. Insurance Research Council, November 2008
2
Slide 3
Fraud by the Numbers The U.S. spends more than $2 trillion on
healthcare annually. At least three percent of that spending or $68
billion is lost to fraud each year. National Health Care Anti-Fraud
Association, 2008 3
Slide 4
Fraud by the Numbers The number of employees misclassified by
employers increased from 106,000 workers to more than 150,000
workers between 2000 and 2007. This is a conservative figure
because states generally audit less then two percent of Employers a
year. (U.S. Government Accountability Office, 2009) 4
Slide 5
Fraud by the Numbers Medicare and Medicaid made an estimated
$23.7 billion in improper payments in 2007. These included $10.8
billion for Medicare and $12.9 billion for Medicaid. Medicares
fee-for-service reduced its error rate from 4.4 percent to 3.9
percent. (U.S. Office of Management and Budget, 2008) 5
Slide 6
Fraud by the Numbers Arson and suspected arson account for
nearly 500,000 fires a year, or one of every four fires in the U.S.
Only 2 percent of arson or suspect arson fires result in
convictions. Arson and suspected arson are the largest causes of
property damage in the U.S. National Fire Protection Association
(1998) 6
Slide 7
Fraud by the Numbers Insurance fraud steals at least $80
billion every year. With $80 billion, you could pay... salaries of
2.2 million American workers for a year. all personal income taxes
for 7.4 million Americans for a year. tuition for nearly 15.6
million students at America's fouryear public universities for a
year. healthcare costs for nearly two out of every three seniors
aged 65 and over for a year. every CEO of America's 500 largest
companies for the next 16 years. Coalition Against Insurance Fraud,
2014 7
Slide 8
Fraud by the Numbers Victims: financial costs. Insurance buyers
pay billions of dollars in higher premiums annually by absorbing
fraud costs. Fraud, for instance, can add several hundred dollars
to a familys annual auto premium in some states. Insurance schemes
also cost victims their life savings. Swindled businesses also can
be weakened and even bankrupted, and may have to freeze salaries or
lay off employees. Victims: personal costs. Thousands of fraud
victims pay a steep personal price. People die and are injured by
swindles. They also suffer humiliation, despair, depression, lost
productivity and lower earning capacity. Families are broken up
when convicted fraudsters go to jail. Victims: societal costs.
Fraud steadily drains Americas economic vitality. Swindles also
erode our social order and sense of justice, reinforcing a
crime-pays mentality that encourages insurance fraud to become an
accepted way of moving up in life. This encourages more people to
commit fraud, thus threatening a costly upward fraud spiral.
Millions of young people and recent immigrants, who are looking for
role models of behavior, are especially at risk. Coalition Against
Insurance Fraud, December 2006 8
Slide 9
What is Fraud Elements of common law fraud: 1. A
misrepresentation; 2. A fraudulent utterance thereof; 3. An
intention by the maker that the recipient will thereby be induced
to act 4. Damage to the recipient as the proximate result Scaife
Co. v. Rockwell-Standard Corp., 285 A.2d 451 (1971), cert. den. 407
U.S. 920, quoting Newman v. Corn Exchange Nat. B&T Co., 51 A.2d
at 763; See e.g., Edelson v. Bernstein, 115 A.2d 382 (1955); Gerfin
v. Colonial Smeltin, 97 A.2d 71 (1953). 9
Slide 10
What is Fraud Fraud consists of anything calculated to deceive,
whether by single act or combination, or by suppression of truth,
or suggestion of what is false, whether it be by direct falsehood
or by innuendo, by speech or silence, word of mouth, or look or
gesture. Frowen v. Blank, 425 A. 2d 412 (Pa. 1981). To be
actionable, the misrepresentation need not be in the form of a
positive assertion. Shane v. Hoffman, 324 A. 2d 532 (Pa.Super.
1974). It is any artifice by which a person is deceived to his
disadvantage. McLellans Estate, 75 A.2d 595 (Pa.1950). 10
Slide 11
Insurance Fraud By Statute Pennsylvania 4117. Insurance Fraud.
(a) Offense defined.A person commits an offense if the person does
any of the following: (1) Knowingly and with the intent to defraud
a State or local government agency files, presents or causes to be
filed with or presented to the government agency a document that
contains false, incomplete or misleading information concerning any
fact or thing material to the agency's determination in approving
or disapproving a motor vehicle insurance rate filing, a motor
vehicle insurance transaction or other motor vehicle insurance
action which is required or filed in response to an agency's
request. 11
Slide 12
Insurance Fraud By Statute Pennsylvania (2) Knowingly and with
the intent to defraud any insurer or self-insured, presents or
causes to be presented to any insurer or self-insured any statement
forming a part of, or in support of, a claim that contains any
false, incomplete or misleading information concerning any fact or
thing material to the claim. 12
Slide 13
Insurance Fraud By Statute Pennsylvania (3) Knowingly and with
the intent to defraud any insurer or self- insured, assists, abets,
solicits or conspires with another to prepare or make any statement
that is intended to be presented to any insurer or self-insured in
connection with, or in support of, a claim that contains any false,
incomplete or misleading information concerning any fact or thing
material to the claim, including information which documents or
supports an amount claimed in excess of the actual loss sustained
by the claimant. 13
Slide 14
Insurance Fraud By Statute Pennsylvania (5) Knowingly benefits,
directly or indirectly, from the proceeds derived from a violation
of this section due to the assistance, conspiracy or urging of any
person. (6)Is the owner, administrator or employee of any health
care facility and knowingly allows the use of such facility by any
person in furtherance of a scheme or conspiracy to violate any of
the provisions of this section. (7)Borrows or uses another person's
financial responsibility or other insurance identification card or
permits his financial responsibility or other insurance
identification card to be used by another, knowingly and with
intent to present a fraudulent claim to an insurer. 14
Slide 15
Insurance Fraud By Statute Pennsylvania (8) If, for pecuniary
gain for himself or another, he directly or indirectly solicits any
person to engage, employ or retain either himself or any other
person to manage, adjust or prosecute any claim or cause of action
against any person for damages for negligence or for pecuniary gain
for himself or another, directly or indirectly solicits other
persons to bring causes of action to recover damages for personal
injuries or death, provided, however, that this paragraph shall not
apply to any conduct otherwise permitted by law or by rule of the
Supreme Court. 15
Slide 16
Insurance Fraud By Statute Pennsylvania (W.Comp.) 1039.2.
Offenses A person, including, but not limited to, the employer, the
employee, the health care provider, the attorney, the insurer, the
State Workmen's Insurance Fund and self-insureds, commits an
offense if the person does any of the following: (I) Knowingly and
with the intent to defraud a State or local government agency
files, presents or causes to be filed with or presented to the
government agency a document that contains false, incomplete or
misleading information concerning any fact or thing material to the
agency's determination in approving or disapproving a workers'
compensation insurance rate filing, a workers' compensation
transaction or other workers' compensation insurance action which
is required or filed in response to an agency's request. 16
Slide 17
Insurance Fraud By Statute Pennsylvania (W.Comp) (2)Knowingly
and with intent to defraud any insurer presents or causes to be
presented to any insurer any statement forming a part of or in
support of a workers' compensation insurance claim that contains
any false, incomplete or misleading information concerning any fact
or thing material to the workers' compensation insurance claim.
(3)Knowingly and with the intent to defraud any insurer assists,
abets, solicits or conspires with another to prepare or make any
statement that is intended to be presented to any insurer in
connection with or in support of a workers' compensation insurance
claim that contains any false, incomplete or misleading information
concerning any fact or thing material to the workers' compensation
insurance claim. 17
Slide 18
Insurance Fraud By Statute Pennsylvania (W. Comp) (4)Engages in
unlicensed agent or broker activity as defined by the act of May /
7,1921 (EL. 789, No. 285), (FN1] known as "The Insurance Department
Act of 1921," knowingly and with the intent to defraud an insurer
or the public. (5)Knowingly benefits, directly or indirectly, from
the proceeds derived from a violation of this section due to the
assistance, conspiracy or urging of any person. (6)Is the owner,
administrator or employee of any health care facility and knowingly
allows the use of such facility by any person in furtherance of a
scheme or conspiracy to violate any of the provisions of this
section. 18
Slide 19
Insurance Fraud By Statute Pennsylvania (W.Comp.) (7)Knowingly
and with the intent to defraud assists, abets, solicits or
conspires with any person who engages in an unlawful act under this
section. (8)Makes or causes to be made any knowingly false or
fraudulent statement with regard to entitlement to benefits with
the intent to discourage an injured worker from claiming benefits
or pursuing a claim. (9)Knowingly and with the intent to defraud
makes any false statement for the purpose of avoiding or
diminishing the amount of the payment in premiums to an insurer or
self-insurance fund. 19
Slide 20
Insurance Fraud By Statute Pennsylvania (W.Comp.) (10)Knowingly
and with intent to defraud, fails to make the report required under
Section 311.1. [FN2] (11)Knowingly and with intent to defraud,
receives total disability benefits under this act while employed or
receiving wages. (12)Knowingly and with intent to defraud, receives
partial disability benefits in excess ofthe amount permitted with
respect to the wages received. 20
Slide 21
Insurance Fraud By Statute Oklahoma Title 15. Contracts Chapter
1 - Nature of Contracts [J Section 58 - Definition of Actual Fraud
] Actual fraud, within the meaning of this chapter, consists in any
of the following acts, committed by a party to the contract, or
with his connivance, with intent to deceive another party thereto,
or to induce him to enter into the contract: (1)The suggestion, as
a fact, of that which is not true, by one who does not believe it
to be true. (2)The positive assertion in a manner not warranted by
the information of the person making it, of that which is not true,
though he believe it to be true. 21
Slide 22
Insurance Fraud By Statute Oklahoma (3)The suppression of that
which is true, by one having knowledge or belief of the fact. (4)A
promise made without any intention of performing it; or, (5)Any
other act fitted to deceive. 22
Slide 23
Insurance Fraud By Statute Florida Title XLVI 2013 Florida
Statutes 817.234 - False and Fraudulent Insurance Claims 1)(a) A
person commits insurance fraud punishable as provided in subsection
(11) if that person, with the intent to injure, defraud, or deceive
any insurer:1. Presents or causes to be presented any written or
oral statement as part of, or in support of, a claim for payment or
other benefit pursuant to an insurance policy or a health
maintenance organization subscriber or provider contract, knowing
that such statement contains any false, incomplete, or misleading
information concerning any fact or thing material to such claim;
23
Slide 24
Insurance Fraud By Statute Florida 2. Prepares or makes any
written or oral statement that is intended to be presented to any
insurer in connection with, or in support of, any claim for payment
or other benefit pursuant to an insurance policy or a health
maintenance organization subscriber or provider contract, knowing
that such statement contains any false, incomplete, or misleading
information concerning any fact or thing material to such claim;
24
Slide 25
Insurance Fraud By Statute Florida 3.a. Knowingly presents,
causes to be presented, or prepares or makes with knowledge or
belief that it will be presented to any insurer, purported insurer,
servicing corporation, insurance broker, or insurance agent, or any
employee or agent thereof, any false, incomplete, or misleading
information or written or oral statement as part of, or in support
of, an application for the issuance of, or the rating of, any
insurance policy, or a health maintenance organization subscriber
or provider contract; or b. Knowingly conceals information
concerning any fact material to such application; or 25
Slide 26
Insurance Fraud By Statute Florida 4. Knowingly presents,
causes to be presented, or prepares or makes with knowledge or
belief that it will be presented to any insurer a claim for payment
or other benefit under a personal injury protection insurance
policy if the person knows that the payee knowingly submitted a
false, misleading, or fraudulent application or other document when
applying for licensure as a health care clinic, seeking an
exemption from licensure as a health care clinic, or demonstrating
compliance with part X of chapter 400. 26
Slide 27
Insurance Fraud By Statute California California Insurance Code
1871.4 a) It is unlawful to do any of the following: (1) Make or
cause to be made a knowingly false or fraudulent material statement
or material representation for the purpose of obtaining or denying
any compensation, as defined in Section 3207 of the Labor Code. (2)
Present or cause to be presented a knowingly false or fraudulent
written or oral material statement in support of, or in opposition
to, a claim for compensation for the purpose of obtaining or
denying any compensation, as defined in Section 3207 of the Labor
Code. 27
Slide 28
Insurance Fraud By Statute California (3) Knowingly assist,
abet, conspire with, or solicit a person in an unlawful act under
this section. (4) Make or cause to be made a knowingly false or
fraudulent statement with regard to entitlement to benefits with
the intent to discourage an injured worker from claiming benefits
or pursuing a claim. For the purposes of this subdivision,
"statement" includes, but is not limited to, a notice, proof of
injury, bill for services, payment for services, hospital or doctor
records, X-ray, test results, medical-legal expense as defined in
Section 4620 of the Labor Code, other evidence of loss, injury, or
expense, or payment. 28
Slide 29
Insurance Fraud By Statute California (5) Make or cause to be
made a knowingly false or fraudulent material statement or material
representation for the purpose of obtaining or denying any of the
benefits or reimbursement provided in the Return-to-Work Program
established under Section 139.48 of the Labor Code. (6) Make or
cause to be made a knowingly false or fraudulent material statement
or material representation for the purpose of discouraging an
employer from claiming any of the benefits or reimbursement
provided in the Return-to-Work Program established under Section
139.48 of the Labor Code. 29
Slide 30
Insurance Fraud By Statute California b) Every person who
violates subdivision (a) shall be punished by imprisonment in a
county jail for one year, or pursuant to subdivision (h) of Section
1170 of the Penal Code, for two, three, or five years, or by a fine
not exceeding one hundred fifty thousand dollars ($150,000) or
double the value of the fraud, whichever is greater, or by both
that imprisonment and fine. Restitution shall be ordered, including
restitution for any medical evaluation or treatment services
obtained or provided. The court shall determine the amount of
restitution and the person or persons to whom the restitution shall
be paid. A person convicted under this section may be charged the
costs of investigation at the discretion of the court. 30
Slide 31
Insurance Fraud By Statute California (c) A person who violates
subdivision (a) and who has a prior felony conviction of that
subdivision, of former Section 556, of former Section 1871.1, or of
Section 548 or 550 of the Penal Code, shall receive a two- year
enhancement for each prior conviction in addition to the sentence
provided in subdivision (b). 31
Slide 32
Insurance Fraud Penalties Insurance fraud accounts for billions
of lost taxpayer dollars and results in increasingly high insurance
rates for everyone. The penalties are significant and typically
stepped to reflect the serious of the fraudulent claim and the
number of claims in the particular charge. Often, each act of fraud
is treated as a separate count, increasing the penalties even on a
first arrest. Possible Penalties Include Jail Time Significant
Fines Probation Parole Restitution Community Service See
http://criminaldefenselawyer.com/crime-penalties/federal/Insurance-Fraud.htm.http://criminaldefenselawyer.com/crime-penalties/federal/Insurance-Fraud.htm
32
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Insurance Fraud - Penalties Sampling of state-by-state
penalties: Fine Avg. Jail Avg. Prob. Other PA. $10,000 $200,000 5-7
yrs 3 yrscommunity service FL. $0 $25,000 10 yrs case by
caselicenses taken IL. $5,000-$50,000 1-5 yrs 3-7 yrs LA.
$1,000-$5,000 1 yr case by case general fine NC. Up to $2,500 up to
2 yrs case by case 33
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Insurance Fraud Penalties Sampling of state-by-state penalties:
Fine Avg. Jail Avg. Prob. Other NH $2,500- $10,.000 1.5-15yrs 5
yrscommunity serv. NY up to $15,000 case by case case by case OK
$2,500-$10,000 up to 5 yrs up to 2 yrs possible restn TX dep. on
val. of $20g case by case 34
Slide 35
Types of Fraud A. Fraud in the Application An attempt by an
applicant to procure insurance on false terms (i.e. an attempt to
prejudice the insurer in assessing the risk). Elements - a. a false
application statement; b. on a subject material to the risk to be
insured against; and, c. the applicants knowledge that the
statement was made in bad faith or was untrue 35
Slide 36
Types of Fraud A. Fraud in the Application Ramifications policy
void ab initio (premium must be returned) note: Evidence must be
clear and convincing 36
Slide 37
Types of Fraud A. Fraud in the Application Indicators a.
unsolicited new, walk-in business, not referred by existing
policyholder b. applicant walks into agents office at the end of
the day c. applicant neither works nor resides near agency d.
applicant gives post office box as address e. applicant pays
premium in cash and pays minimal amount etc. 37
Slide 38
Types of Fraud A. Fraud in the Application note: Line
representative is at the mercy of the agent most likely wont detect
fraud in the application unless there are other fraud indicators
present during the investigation of the claim 38
Slide 39
Types of Fraud B. Fraud in the Claims/Investigation Process An
attempt by the insured to recover the benefits on false pretenses.
Elements a. a representation by the insured which was false b. the
representation was made in bad faith or with knowledge of its
falsity c. material to the risk being insured 39
Slide 40
Types of Fraud B. Fraud in the Claims/Investigation Process
note - Issue of materialism in the investigations process
materiality is met if the false statement is relevant and germane
to the insurers investigation (i.e. would a reasonable insurer, in
determining its course of action attach importance to the fact
misrepresented note - Proven by a preponderance of the evidence
40
Slide 41
Types of Fraud B. Fraud in the Claims/Investigation Process
Indicators a. insured overly pushy for a quick settlement b.
financial hardship at the time of loss c. insured has had multiple
insurance claims d. inconsistencies in loss scenario or basic facts
41
Slide 42
Types of Fraud B. Fraud in the Claims/Investigation Process
Indicators e. recently purchased insured item f. recently increased
the insurance limits g. criminal background 42
Slide 43
Types of Fraud B. Fraud in the Claims/Investigation Process
note - Too many indicators present - an internal company decision
should be made to transfer to SIU. 43
Slide 44
Personal Injury Insurance Fraud Any act intended to cause a
carrier to pay on a non-existent, exaggerated or on
un-related/non-covered injury Soft/Opportunistic Hard 44
Slide 45
Malingers Hard to Spot Less long-term patient-physician
relationships Mental conditions mimicking the appearance of
malingering Faking symptoms is easy 97% of untrained people can
identify symptoms of major depressive disorder 63% can identify at
least 5 brain injury symptoms Easy online access of symptom
information Doctors desire to be supportive Dr. Stewart Patterson,
AMA Guides Newsletter, Cited at
www.amednews/article/20120910/profession/309109942/4/.. 45
Slide 46
Examples of Fraud Creating a Claim Staged Auto Accidents Waive
On/Drive Down Preexisting damage Swoop & Squat Sideswipe False
Reports - the Bad Samaritan Phantom Victim / Passengers 46
Slide 47
Examples of Fraud Creating a Claim Staged Slip and Falls
Foreign Object in Food Staged Homeowner Accident Possible Personal
Injury Schemes/Fraudulent Attorney 47
Slide 48
Examples of Fraud Exaggerating a Claim Exaggerating the
injuries Medical Mills Providers Inflating Billing or Upcoding
48
Slide 49
Medicaid Fraud What to look for:* Upcoding Providers bill
Medicaid using a code that describes the amount of time with
patient If provided bills Medicaid using a code that indicates and
hour long complex visit = UPCODING Unbundling Some codes are all
inclusive, e.g., for Lipid Panel, which has 3 component tests If
coded separately for higher reimbursement rate = UNBUNDLING *From
http://ahca.myflorida.com/Executive/Inspector_General/complaints.shtmlhttp://ahca.myflorida.com/Executive/Inspector_General/complaints.shtml
49
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Medicaid Fraud Other common schemes Billing for patients who
did not receive services Billing for service or equipment not
provided Overcharging Concealing ownerships/relationships in
companies Kickbacks for referrals Double billing for same service
Ordering tests/procedures not needed Using false credentials
50
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Handling claims / Investigation A. Reservation of Rights - on
all potential bases of denial within policy 51
Slide 52
Handling claims / Investigation B. Methods of Investigation 1.
Authorizations for financial records, phone records (land lines and
cell), medical information, etc. 2. Third party search services
(prior losses and financial information) 3. Civil and criminal
docket information 52
Slide 53
Handling claims / Investigation C. Adjustment Procure necessary
adjustment service companies, disaster relief companies and
forensic experts (origin and cause, forensic automotive, electrical
engineer, etc.) 53
Slide 54
Handling claims / Investigation D. Recorded Statements 1.
Conduct in person if possible to measure the demeanor of the
insured 2. Establish foundation of trust by explaining the process
and why the statement is necessary (i.e. there are certain
questions about the claim that must be resolved, and that you are
attempting to find evidence to exonerate the insured) 3. Do not
conduct in the presence of any other insured or potential witness
4. Company decision whether to confront insured with
inconsistencies or damaging evidence (forensic or other wise)
54
Slide 55
Handling claims / Investigation E. Adjusters Log / Claim
Handling Notes 1. Running notes of claims/investigation process 2.
Enter notes as if you are an impartial reporter or observer to
AVOID BAD FAITH (i.e. never inject you feelings of the claim or
insured) 55
Slide 56
Handling claims / Investigation F. Examination Under Oath 1.
Importance of counsel involvement 2. Claim representative should
attend to access demeanor) 3. Insureds Examinations should be taken
separately (most likely a right under the policy) 4. Company
decision whether to confront insured with inconsistencies or
damaging evidence (forensic or other wise) 56
Slide 57
Handling claims / Investigation G. Follow-up on new areas of
investigation uncovered as a result of the Examination process
57
Slide 58
Handling claims / Investigation H. Claim Recommendation by
Counsel 1. Should include a detailed summary of the facts of the
investigation 2. Should break down the elements of the fraud
defense a. Arson Incendiarism, Motive, Preparation and Opportunity
b. Auto Motive, Preparation and Opportunity (including findings of
forensic automotive expert) 58
Slide 59
Handling claims / Investigation I. Denial letter include all
potential bases for denial J. Report any suspected fraudulent claim
to the proper authorities 1. Immunity Acts 2. Role of NICB 59
Slide 60
Fighting Back (Medical Fraud) Know the Signs Issues with
Medical Treatment Frequently changes physicians/providers Requests
change of physicians/second opinions Reports not consistent with
appearance or behavior Pattern of missing provider appointment
60
Slide 61
Fighting Back (Medical Fraud) Know the Signs Issues with The
Worker/Patient Unstable work history History of subjective injuries
Lack of cooperation Recently terminated/demoted 61
Slide 62
Fighting Back (Medical Fraud) Know the Signs Issues with The
Worker/Patient In line for early retirement Making excessive
demands Calls soon after injury/presses for quick settlement
62
Slide 63
Fighting Back (Medical Fraud) Know the Signs Issues with The
Worker/Patient Moves soon after the injury Changes address to P.O.
Box or relative Seasonal worker /timing 63
Slide 64
Fighting Back (Medical Fraud) Know the Signs Issues with The
Injury No witnesses to injury Subjective /hard to prove Delay in
reporting Notice is from attorney or clinic 64
Slide 65
Fighting Back (Medical Fraud) Know the Signs Issues with The
Injury Widely differing medical opinions No medical support/full
recovery Disability exceeds norm Accident late Friday/early Monday
65
Slide 66
Fighting Back (Medical Fraud) Know the Signs Issues with The
Injury Accident at odd time / lunch Unusual location Not a typical
job duty Details vague/inconsistent with Notice of Injury 66
Slide 67
Fighting Back Tools / Methods Private
Investigators/Surveillance 67
Slide 68
Fighting Back Tools / Methods Analyze the Claims History /
Cross Checking 68
Slide 69
Fighting Back Tools / Methods Suspicious Loss Indicators from
NICB 69
Slide 70
Fighting Back Tools / Methods Social Media 70
Slide 71
Importance of Effective Investigation Conduct a prompt and
thorough conference with the insured to obtain the following
information: 1. Information regarding the incident a. Who was
involved b. How it happened c. Where it occurred/surroundings d.
Conditions weather, traffic, lighting e. Instrumentalities involved
products, equipment, etc. f. Why it occurred 71
Slide 72
Importance of Effective Investigation 2. Witnesses a. Identify
all the parties to the accident itself b. Identify
passengers/relationships c. Identify any third party witnesses
and/or disinterested witnesses d. Secure contact information
72
Slide 73
Importance of Effective Investigation 3. Document Investigation
A. Reports of incident 1. Secure official reports of incident a.
Police accident report b. Governmental agency reports where
applicable (OSHA, NTSA, etc.) 2. Secure accident and/or incident
reports prepared by store owner, property owner, employer, etc.
73
Slide 74
Importance of Effective Investigation B. Photos Secure or take
photos of: 1. accident scene / surroundings 2. vehicles involved in
accident if motor vehicle accident 3. road / skid marks if motor
vehicle accident 4. product or other instrumentalities involved 5.
videotape if warranted 74
Slide 75
Importance of Effective Investigation C. Records 1. Medical
Records / physician reports: secure authorizations (HIPAA approved)
for all hospitals, physicians or other health care providers and
secure records and itemized statements of medical bills incurred 2.
If appropriate, secure authorizations for and obtain: a. Workers
compensation claim file b. Social security disability claim file c.
First Party claim file d. Employment records e. Federal and state
tax returns 3. Determine if claimant involved in other accidents or
has pre-existing medical conditions secure appropriate records for
these 75
Slide 76
Importance of Effective Investigation 4. Surveillance A.
Determine if appropriate for case where physical activities do not
appear to correlate with injuries claimed B. Investigate claimant
information to determine if surveillance can be limited to most
likely times / locations of physical activities 76
Slide 77
Importance of Effective Investigation 5. Effective Recorded
Statements/Interviews of Witnesses* Focus on Details Start with
broad, open-ended question Look for obvious omissions Be wary of
evasive answers Follow up Insist on specifics *Acknowledgment for
much of this material to CLM 2014 Bad Faith/Coverage/Fraud
Mini-Conference, 2/28/14, Atlanta, GA. 77
Slide 78
Importance of Effective Investigation Compare with Other
Statements Other witnesses Insured Prior statements Subsequent
Statements 78
Slide 79
Importance of Effective Investigation Look for language clues
foreign language issues tone and phraseology unique words and
phrases deceptive language deceptive phrases nature of interaction
79
Slide 80
Reporting Fraud Work with: SIU HCFA AHCA Insurance Department
80
Slide 81
Reporting Fraud SIU Special Investigation Units 81
Slide 82
Reporting Fraud CMS/HCFA Centers for Medicare and Medicaid
Services (formerly Health Care Financing Administration) Federal
Agency / part of Dept. of Health & Human Services Administers
Medicare Program Administers Medicaid Program in partnership with
state governments Headquartered in Woodlawn, MD 82
Slide 83
Reporting Fraud CMS/HCFA 10 Regional Offices 1. Boston6. Dallas
2. New York City7. Kansas 3. Philadelphia8. Denver 4. Atlanta9. San
Francisco 5. Chicago10. Seattle 83
Slide 84
Reporting Fraud CMS/HCFA State by State Fraud and Abuse
Reporting Contact List / On CMS.gov.
http://www.cms.gov/Medicare-Medicaid- Coordination/Fraud-
Prevention/FraudAbuseforConsumers/Downloads/sm
afraudcontacts-october2013.pdf 84
Slide 85
Reporting Fraud AHCA American Health Care Association Non
profit federation of various affiliate state health organizations
Over 10,000 assisted living, nursing, developmentally disabled care
facilities Over 1.5 million elderly and disabled individuals
Fighting Medicaid Fraud 85
Slide 86
Reporting Fraud AHCA American Health Care Association
Pennsylvania Health Care Association / Center for Assisted Living
Management Stuart H. Shapiro, M.D. 315 N 2nd St Harrisburg PA 17101
PH (717) 221-1800 FX (717) 221-8690 Pennsylvania Health Care
Association / Center for Assisted Living Management Oklahoma
Association of Health Care Providers Rebecca A. Moore 200 NE 28th
Oklahoma City, OK 73105 PH (405) 524-8338 FX (405) 524-8354
Oklahoma Association of Health Care Providers 86
Slide 87
Reporting Fraud AHCA American Health Care Association Florida
Health Care Association J. Emmett Reed PO Box 1459 Tallahassee FL
32302-1459 PH (850) 224-3907 FX 850 681-2075 Florida Health Care
Association California Association of Health Facilities James Gomez
2201 K Street Sacramento, CA 95816-4922 PH (916) 441-6400 FX (916)
441-6441 California Association of Health Facilities 87
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Reporting Fraud State Insurance Departments 88
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Caution: Unfair Insurance Practices Act Pennsylvania (sample)
40 P.S. 1171.1 Unfair Insurance Practices Act Section 1171.5
defines unfair methods of competition and unfair or deceptive acts
or practices Subsection (10) provides that any of the following
acts if committed or performed with such frequency as to indicate a
business practice shall constitute unfair claim settlement or
compromise practices: . (ii) failing to acknowledge and act
promptly upon written or oral communications with respect to claims
arising under insurance policies; 89
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Caution: Unfair Insurance Practices Act . (iv) refusing to pay
claims without conducting a reasonable investigation based upon all
available information; . (vi) not attempting in good faith to
effectuate prompt, fair and equitable settlements of claims in
which the companys liability under the policy has become reasonably
clear; 90
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Caution: Unfair Insurance Practices Act (vii) compelling
persons to institute litigation to recover amounts due under an
insurance policy by offering substantially less than the amounts
due and ultimately recovered in actions brought by such persons;
(viii) attempting to settle a claim for less than the amount to
which a reasonable man would have believed he was entitled by
reference to written or printed advertising material accompanying
or made part of an application; 91
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Caution: Unfair Insurance Practices Act (xi) making known to
insureds or claimants a policy of appealing from arbitration awards
in favor of insureds or claimants to induce or compel them to
accept settlements or compromises less than the amount awarded in
arbitration; (xii) delaying the investigation or payment of claims
by requiring the insured, claimant or the physician of either to
submit a preliminary claims report and then requiring the
subsequent submission of formal proof of loss forms, both of which
submissions contain substantially the same information; 92
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Caution: Unfair Insurance Practices Act (xiii) failing to
promptly settle claims, where liability has become reasonably
clear, under one portion of the insurance policy coverage in order
to influence settlements under other portions of the insurance
policy coverage or under other policies of insurance; 93
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Caution: Bad Faith Statute Pennsylvania (sample) 42 Pa. C.S.
Section 8371 provides as follows: Section 8371. Actions on
insurance policies. In an action arising under an insurance policy,
if the court finds that the insurer has acted in bad faith toward
the insured, the court may take all of the following actions: 1.
award interest on the amount of the claim from the date the claim
was made by the insured in an amount equal to the prime rate of
interest plus 3%; 2. award punitive damages against the insurer; 3.
assess court costs and attorney fees against he insurer. 94
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Good Faith Audit Checklist A. Claims Handler Level Did you
undertake a thorough investigation? Did you avoid lulls or passive
handling of the claim? Does the file reflect consideration and
reconsideration of key facts as they develop and change during the
investigation? If a liability claim, did you report timely
developments to both the insurance company and the insured. 95
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Good Faith Audit Checklist A.Claims Handler Level (continued)
If a liability claim, did you advise the insured of all settlement
negotiations? Did you obtain a second opinion to help evaluate the
case for liability and damages? Possible second opinion from: -
experiences lawyers - retired judges and mediators; or - focus
groups and /or a mock trial Did you take the initiative in
mediation and / or settlement? 96
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Good Faith Audit Checklist A. Claims Handler Level (continued)
Did you consider the best time to try for settlement? Possible
times include: - before filing - right after filing and service and
before answering the discovery; - after or during discovery; -
after or before mediation; - during scheduling conference with the
judge; - during any motion in limine or motion for summary
judgment; or - during trial 97
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Good Faith Audit Checklist AClaims Handler Level (continued)
Did you check as needed with local claims-handling guidelines? Did
you make an effort to ensure that any coverage positions were
consistent with other positions taken by the company on that issue?
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Good Faith Audit Checklist B.Supervisors Level Did you ensure
that the claims handler had the appropriate amount of experience
for the claim involved? Did you ensure that the claims handler was
aware of internal company procedures and policies that might be
applicable to the claim? Did you maintain a level of oversight that
would permit you to describe, at lease generally, the status of the
claim at any particular time? Did you consider whether the claims
handlers procedures and coverage positions were consistent with
other positions taken by the company that you are aware of? 99
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Good Faith Audit Checklist C.Company Level Does the company
maintain appropriate best practices procedures for claims handling?
Do the best practices procedures require the claims handler to be
aware of, and conform to, all local claims handling statutes and
regulations? Does the company maintain an archive of any changes to
policy forms, best practices guidelines, and training? Does the
company have a means of retaining important historical information
(institutional memory) beyond the retirement of key individuals?
Has the company identified someone to oversee department production
and provide uniform responses to document requests and electronic
information requests? 100
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Disclaimer This material is prepared for
information/educational purposes only. It is not intended as legal
advice, nor should it be construed as or relied upon as legal
advice. You should consult with counsel before embarking on any
course of conduct or refraining from any activity that may entail
legal consequences. Although the above was prepared on the basis of
the state of the law of Pennsylvania or other states as noted, as
of the date of preparation, the law is subject to interpretation
and may change in the future. Therefore, absolutely no
representations are made relative to any specific legal situation
or the application of law to any specific facts. NO EXPRESS OR
IMPLIED WARRANTIES ARE INTENDED OR MADE. The foregoing is not
intended to be a complete and exhaustive review of each and every
reported or unreported decision issued by Pennsylvania Courts,
state and federal, on the issues presented. Rather, the foregoing
is intended as an overview of some of the recent and significant
decisions with respect to these issues. 101
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Wayman, Irvin & McAuley, LLC Founded in 1965, Wayman, Irvin
& McAuley, LLC, has earned its reputation for zealous
representation of clients in a diverse range of legal matters.
Concentrating in the area of insurance defense for over 45 years,
the firm has represented insurance carriers and their insureds in
all state and federal courts in Pennsylvania, Ohio and West
Virginia. We understand the insurance business and the unique needs
of the carrier, the broker and the risk manager. Please visit our
Web site, www.waymanlaw.com for a more detailed look at the firms
capabilities and staff as well as a wealth of resource materials.
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Wayman, Irvin & McAuley, LLC 401 Liberty Avenue 3 Gateway
Center, Suite 1624 Pittsburgh, PA 15222 (412) 566-2970 Fax: (412)
391-1464 www.waymanlaw.com 103