First, let us look at how fraud is defined:
- Fraud is both a crime and a civil law violation. In criminal law; fraud is the offense of deliberately deceiving another in order to damage them. To obtain property or services unjustly. Fraud can be accomplished through the aid of forged objects. It may be called “theft by deception”, “larceny by trick,” “larceny by fraud and deception” or something similar.
- A deception practiced in order to secure unfair or unlawful gain. Any act, expression, omission, or concealment that deceives another to his or her disadvantage; specifically, it is:
– A misrepresentation, omission or concealment of some fact material to a transaction.
– It is made with knowledge (or the reasonable expectation that the perpetrator should know) that it is false or is made in reckless disregard of its truth or falsity.
- It is made with the intent to deceive another.
- It is reasonably relied on by the other who is thereby injured.
Now that we all have a basic understanding of what fraud is, in terms of what you do every day, how can you determine if the claim you are handling is possibly fraudulent? Below are some key points to consider when evaluating your claims:
Rationalization + Pressure/Need + Opportunity = Motive
- Rationalization – This is a frame of mind or ethical character that allows person(s) to intentionally commit fraud. Look for the Background Investigation to reveal records of the persons/claimant having a pattern of criminal history; particularly convictions for fraud, theft, or dishonesty
- Pressure/Need – There may be pressure on a person(s) to commit fraud due to outside influences or unexpected expenses. Does the Background Investigation reveal an economic need? An example would be a claimant with a recent foreclosure, bankruptcy, judgment, or liens.
- Opportunity – There are circumstances that allow a person(s) to carry out fraud; a customer seeing or causing a spilled substance on the floor to fake a fall; an employee staging an injury/incident; the malingering of an injury; these are opportunities to benefit the claimant financially.
When investigating a claim, seldom is one particular piece of evidence or information sufficient to prove fraud; it is the totality of evidence/information together that typically leads to a designation of Suspect Fraud. That is why we recommend gaining as much information as possible in the onset of the claim; the CCTV video, statements, ISO Index Reports, medical records, depositions, SIU Reports (i.e. Background/Medical Facility Canvas, and etc.) Conducting a Surveillance Investigation early in the claim and periodically as the claim progresses will yield significant benefit to the overall successful resolution of the claim in the long run. Waiting until a claim proceeds into litigation before gathering this evidence is often too late and will cause the evidence gained previously to become stagnant. Remember, timing is everything!
The key element in any fraud case is INTENT. Did the claimant intentionally make false statements or misrepresent facts that were material to the claim? If so, could it be excused as a lapse in memory or a communication/language barrier? If intent cannot be proven, then there is likely less chance of a successful prosecution for fraud.
One issue that comes up time and time again is settling a suspected fraudulent claim for nuisance value, then seeking to have it prosecuted. Although the statutory elements differ from state to state, one thing is clear; Prosecutors are far less likely to prosecute a claim that has been settled.
The proper and efficient use of SIU services is the key to identifying fraud and mitigating financial exposure. The partnership between SIU Providers, Carriers, and Self-Insured’s is the foundation to the successful resolution of claims and fighting fraud, which equals cost savings.