Though it appears that attitudes are changing and the anti-fraud atmosphere is becoming more intense, we have created an environment that is conducive to law-bending and breaking. Much of the current effort at stemming the well-organized scam artists, has been coming from the industry and from some insurance regulators who have established anti-fraud bureaus, such as those in New York and New Jersey. Realistically, however, the extensive incidence of fraud in insurance has not been curtailed that much.
Part of the blame falls on law enforcement authorities and prosecutors, who evidently do not place high priority on this kind of white collar crime, insisting that their limited manpower and financing is best directed toward violent criminals. Legislators, who normally move with the speed of snails, are not motivated to pass stricter regulatory statutes, perhaps because of misguided belief that the public will have more difficulty collecting on claims. They are reluctant to pass laws that will infringe on the ability of trial lawyers or claimants in dealing with insurance companies.
Consumers do not want anyone to have easy access to their private information. They do not wish for their lives to be put to the test because of scam artists that wishes to steal from them to make themselves richer. In today’s business world it is of utmost importance that business managers take every necessary precaution to protect their company from fraud, and also to protect their most valuable attributes, their customers. Without customers, running a business could be challenging.
Ensuring that privacy regulations are mandated is of absolute value to a consumer. If consumers feel that a certain company is going the extra mile to protect what is important to them, they will more than likely go with that company. Privacy regulations are evidently becoming more important to the average consumers, because they are concerned about their assets, and do not want to put themselves at risk. Every storefront broker in the Empire State, as well as company people, are well aware of the many scams being used by those who are cheating the system.
I am, nevertheless listing the most popular means in use to steal from insurance companies and not suffer any consequences. I am sure that some individuals will find this a tutorial on how to be a crook, get rich and still be a respected citizen. The most used deceptive practice is rate evasion. Vehicles are registered in territories with the lowest rates even though it is not the true address of the insured. This is nothing new, but of late, it has reached an alarming state, so ‘much so, that territorial rating can no longer be trusted.
Some, not all, of the rate evaders are out-and-out fraudsters. Insured’s have become very sophisticated and aware that the right territory can mean the difference between being able to afford auto liability insurance and going bare. There are countless motorists who need their vehicles to support themselves and their families. They will continue to use their cars with or without insurance. Nothing is going to stop them when the welfare of their families is at stake. The means that are used to get the “right” territory depends on the individual insured.
Some are more law-abiding than others. They all find lying acceptable and it is the degree of the untruth that is the determining factor as to the means being used to get a low premium. Some will change addresses to register a vehicle at the home of a relative, while others will use false identities or various other methods. CLUE (Comprehensive Liability Underwriters Exchange) reports are a help to the insurance companies, but not a cure-all. Someone seems to have discovered that using stolen identities is the easiest way to go.
Those who sell identities have become so adept in their profession that all that is needed is a Social Security number and from this they can get a driver’s license, credit cards and other means of identification. I don’t know how this is done, but I have seen it happen. The tree owner of the identity doesn’t become aware of what happened for a considerable period of time. Although manipulation of territories is a drain of premium dollars, this is a minor problem when compared to the hemorrhage of cash that is the result of exaggerated medical expenses and staged or non-existent accidents.
Accident victims are “steered” to physicians or other medical providers by lawyers or runners and it matters not if this practice is illegal or how great is the degree of liability. Lawyers, who send clients to a clinic, will always be guaranteed a fee from the medical provider. When the liability favors the attorney’s client, kick-back comes from the clinic. Lawyers in the accident claim business seldom tell their clients that there is no case. This insures that medical expenses will continue to build up.
Otherwise, patients would lose interest in continuing visits to the medial provider. The only time a lawyer’s client is told that there is no possibility of a recovery from the opposing parties, is when the PIP benefits are exhausted. This is accomplished by telling the client how much effort was put into the case. It’s no problem for the claimant, since there was no award the attorney is not going to charge a fee. The clinic will absorb the medical deductible. The medical providers are having a field day. For these often bogus facilities, it is a win-win situation.
Years ago, individuals who provided clients for attorneys, or the attorneys themselves, who make their presence known at accidents or immediately following accidents, were called ambulance chasers. The same term was applied to lawyers who aggressively pursued accident victims when it was illegal to do so. Things have changed somewhat. A new profession has been born. Individuals, or employees of these individuals, are called runners. They check accident reports, hospitals admissions, arrange with individual police officers to be informed of auto accidents and have connections with ambulance drivers to get steered to accident victims.
The going rate for pay-offs to cops was fifty dollars but the fee was raised recently to one hundred dollars. EMS people get several hundred dollars, depending on the injuries and the legal position of the injured party. Passengers in an auto where there is good liability are preferred clients of the runners and they are willing to pay more for this class. Insurance producers get at least four hundred dollars per case they recommend to a clinic. Lawyers can pay more if the case is a good one. Attorneys who pay the finders-fee up front, and not when the case is settled, are less generous to the runner.
Payment in advance is becoming the preferred form of reimbursement for runners who have found some lawyers can not be trusted to pay their debts. There is one lawyer in midtown Manhattan who is famous for not paying runners. Insurance company personnel have become another source of clients for lawyers and medical providers. There are not too many of these at this time but their numbers are growing. When an accident report is sent to a carder, the medical and legal people are advised and the victim is contacted. Runners who don’t run are becoming popular.
Contact with the accident victim is made by phone. The callers represent themselves to be from a not- for-profit organization that is operated for the benefit of the motoring public. A medical clinic is suggested and the wheels begin to turn in the direction of squeezing every dollar possible from the insurance company. The second task at hand is finding ways to deal with the health care providers and the distinct differences in coverage from patient to patient, and finally, to standardize the variances of employees’ ability to interpret the rules and standards of the hospital.
Improvements in these areas would surely raise the success level of the hospital. As anyone in a corporate environment knows, paperwork and red tape can be one of the most time consuming procedures of all. Any possibility of reducing the amount of paperwork will not only improve time management, but also simply help keep hourly wages and expenses down. Hospital’s cost per patient per day has increased approximately 11% within the last year. According to the New England Journal of Medicine, administrative cost has risen in excess of 38% per year.
If the administrative cost is controlled properly, this would have a significant impact on the revenue outcome. Insurance companies, with the exception of Allstate and Progressive, have just about given up fighting fraud. Even the Robert Plan has decreased the time and effort put into stemming the tide of lawlessness. It employs a small army of retired cops but they are not as productive as they could be with the help of prosecutors and lawmakers. Allstate and Progressive are not any more effective but they try hard even though the end result is negligible.
Many years ago, when the no-fault laws came into existence, it was thought that this was going to bring an end to exaggerated and fraudulent auto bodily injury claims. The trial lawyers’ association opposed anything that threatened their case loads, but they were not powerful enough to prevent enactment. It became part of the standard auto policy in almost every state in the country. Lawsuits were limited to serious injuries only. Minor ones were to be taken care of by the insured’s policy without the need of using a lawyer or bringing suit.
A few attorneys tried to bring an action even though the injuries were not serious enough to pass the test of a serious occurrence. Allstate was the first to deny these claims. Some of the other carriers thought it more economical to pay small claims rather than go through the expense of a trial. Several years passed and the requirement of bringing suits only for serious injuries was becoming more relaxed. The easiest way to make a minor injury a serious one was to build up the medical expense.
This was simple to do since PIP would pay for it anyway and the medical providers became aware that there was no limit to what the carriers would pay for treatments. This was the time that the medical clinics for auto accident victims were born. Physicians would lend their names to the business to give it a semblance of being legitimate. The regulators soon became aware of the problems created by PIP coverage’s. There seemed to be no solution although they tried to stem the tide of limitless medical procedures for claimants.
Regulation 68, in New York, put a liberal time limit for submission of medical bills after an accident. Prior to this insurance companies did not know an auto accident took place until notified by the parties involved. Notices of claim that were six months old were not unusual. This seemingly unlimited time to give notice, during which medical costs continued to build up, became the centerpiece for an amended Regulation 68 by the New York Insurance Department. The amendment contained a shortened reporting time, 45 days, which appeared to be fair to claimants and a reasonable compromise for insurers.
But it got challenged in court by a consortium, including the medical society which considered it too brief in light of reliable medical treatment. The court, as has been well-reported, rejected the amendment, not on substantive grounds, but on the holding that the department failed to follow required filing procedures. Although electronic forms and systems will help in letting the doctors, nurses, and administration know when something is incorrect or otherwise against the rules, this does not mean that it will solve the issues at hand.
Some people have a stronger need to preserve their moral instincts than to remember that it is a business environment. The electronic systems do allow management to know when procedures have been overlooked, thus allowing for appropriate action in a timelier manner. The hospital’s board of directors, among others, has spent their time and prior knowledge creating rules and regulations that would not only benefit the hospital, but the patients as well. This is something that must be reiterated and understood by the staff.
One of the possibilities to help with these issues is training to allow the staff to understand why the rules are in place to ensure that it is not taken as a “Because I said so … “rule. Medical Insurance fraud needs only some redirection in order to keep up with the changing times. The issues at hand have been brought forth which is a very difficult step in itself. Now there are only a couple of major decisions to be made which is the type of software to implement for steps to a paperless society, and who to conduct the training of the staff.
If changes are made at a moderate speed and not all at once, then any needed modifications can be made to ensure that all goes well. Perhaps someone knows the answer to the question of why the department appealed the trial court’s order instead of making a proper filing. The trial court seemed to be sympathetic to the department’s position on the time frame.
Works Cited International Association of International Supervisors: Risks to insurers posed by electronic Commerce, October 2002; http://www. iaisweb. org/04santiago. pdf Jing Tao Yao, E-Commerce Adoption of Insurance Companies in New Zealand,