This three-part series of articles examines the problem of insurance fraud, including its pervasiveness and general characteristics in the United States, the United Kingdom and the world. Insurance fraud is a widespread problem that requires real solutions and is often difficult to detect and combat.
Part One of the series, “What is Insurance Fraud,” provides an introduction to a topic that is important for any business leader, insurance professional, compliance agent or fraud investigator. Part Two, “How do Companies Detect Insurance Fraud,” details red flags of insurance fraud that help tip off investigators to possible illegal behaviour. Part Three, “Anatomy of an Insurance Fraud Investigation,” provides a look at case studies and reveals key tips for handling a successful investigation. To receive the next series subscribe to our monthly newsletter here!
Taken as a whole, this series is the perfect primer for any insurance fraud professional and companies looking to avoid becoming victims of insurance fraud claims. It provides the tools and knowledge needed to effectively combat insurance fraud.
Part Three: Anatomy of an Insurance Fraud Investigation
The insurance fraud epidemic is of serious concern to businesses, insurance providers and consumers worldwide. In Part One of this three-part series, we examined the scope of the problem, and discussed a few cases that illustrate the magnitude of insurance fraud. In Part Two, we looked at how companies can detect insurance fraud, including how to recognise the red flags that represent potential criminal behaviour.
In this final Part Three, we’ll examine the elements of an insurance fraud investigation, beginning with a case study that illustrates how CRI Group’s insurance fraud investigators exposed fraud schemes – saving its clients thousands of dollars.
Case Study: Health Insurance Fraud
A CRI Group client requested an investigation of a health insurance claim filed by one of their employees, “Mr. Jones.” Mr. Jones claimed that while on an official visit to UAE from the U.S., he felt sudden abdominal pain with nausea and vomiting lasting 18 hours. He was admitted to a clinic and stayed under observation for two days, which cost him around $4,000 (US).According to the claim, Mr. Jones (name changed) was discharged from the clinic, but then felt the return of his sickness, so he was admitted to another clinic for two more days. During this time, he was kept under observation. For this second clinic visit, he was charged nearly $1,000.
As part of CRI Group’s “experts in a field” approach, a local investigator visited both of the clinics involved in the claim. One clinic was located in Dubai, while the other was in Abu Dhabi. When he arrived at the Dubai clinic, CRI Group’s local expert immediately learned that the clinic deals specifically in cosmetic surgery for women. In fact, as advertised on the outside of the clinic, its services are only for women. The clinic’s administrator confirmed that the clinic is only in the business of providing cosmetic surgery for women.
CRI Group’s local investigator then visited the clinic in Abu Dhabi. This clinic also appeared to be in the business of providing cosmetic surgery for women. When the local expert tried to contact the doctor who was named as the treating physician for Mr. Jones, the doctor was hesitant to meet the expert. CRI Group’s expert showed the report to the doctor, and though it was on the official letterhead of the clinic, the doctor first denied involvement in the case.
Later, the doctor told CRI Group’s expert that while “we don’t treat that kind of illness,” the patient “was in such bad condition that we treated him on a humanitarian basis.” Yet the doctor was hesitant to accept that the bills came from his clinic (the expert had already learned that the doctor in question was also the owner of the clinic). Regardless, CRI Group successfully secured the evidence that the health insurance invoices were fake and Mr. Jones was making false claims to get money from his employer.
When it’s Time to Open an Investigation
When red flags of fraud are uncovered, it’s time to begin an investigation. As you can see from the examples above, CRI Group’s investigations are based on a thorough approach that includes site visits and leaving no stone unturned. When you work with CRI Group, this is how the process will typically proceed. CRI Group will:
- Assign the appropriate investigators with the right expertise in that area to investigate the claim.
- Contact the parties involved to gather all relevant details about the incident.
- Use all resources available, including police reports, court filings, database records and other means to establish the truth in insurance fraud cases.
- Make site visits, speak to witnesses, take photos and establish timelines as needed to create a full, truthful story of the incident.
- Uncover useful evidence, carefully documenting and preserving it in a way that is admissible in court.
- Present investigation findings to the client, with recommendations on how to proceed. Sometimes, legal action is warranted.
Working with an insurance fraud investigation company like CRI Group provides the advantage of having an independent, impartial and unbiased third-party collecting the facts you need regarding any case that might involve potential fraud. CRI Group has been safeguarding businesses for more than 28 years, and you will be assured of the quality, professionalism and discreet nature of all investigations conducted by our experts.
Our global presence ensures that no matter how international your operations are, CRI Group’s investigations have the network needed to provide you all necessary support, wherever you happen to be. We take great care to ensure that our trained and licensed investigators are the best at what they do.
3 types of insurance fraud investigations
1. Social Media Evidence
“Social media is an absolute gold mine” for insurance fraud investigations, according to Kelly Riddle, founder of private investigation company Kelmar Global. Many people think that setting high privacy settings on their social media accounts makes everything they post impossible to access. On the contrary, social media platforms usually hand over user information if they receive a subpoena for it.
Fraudsters often slip up online and post information revealing their fraud. For instance, someone receiving worker’s compensation for an injured foot may post a video of themselves playing soccer with their kids. Or, someone else may unintentionally expose their scheme, as is the case if friends and family tag the claimant in an incriminating post.
Fraudsters who are proud of their work may boast about it on social media, thinking they will never get caught. Make sure to search for alternate accounts as well as the claimant’s main social media pages to find as much of this type of evidence as you can.
2. Activity Check
In order to learn everything you can about the claimant, you need to see where and how they live. Good old-fashioned surveillance of their home or workplace can provide evidence. For example, someone who has claimed compensation for a shoulder injury leaving their home with a tennis racket, that is possible evidence for insurance fraud.
While you are in the claimant’s neighbourhood, canvass others in the community. Even if the neighbours don’t know the person well, they may have observed their lifestyle. Ask about the insured person’s financial situation, which can indicate if they are in need of quick money.
In property insurance fraud investigations, be sure to also ask neighbours if they have seen or heard anything out of the ordinary around the time of the claim. This can include moving trucks or more comings and goings than usual from the claimant’s home. They can also help you determine whether or not the claimant is actually living in their home.
3. Fake Documentation of the Claim
Just because a claimant has included all of the relevant documents in their claim doesn’t mean they aren’t committing insurance fraud. In fact, fake documentation is a very common way to pull off a fraud. Signs of false documents include:
- An unusual number of receipts.
- Falsified receipts.
- Fake affidavits.
- Photos or receipts used for more than one claim.
When studying accompanying documentation during an insurance fraud investigation, use a keen eye to spot signs of editing. Inconsistent lighting in photos and fonts that don’t match the rest of the document are some common examples. Be sure to also review the claimant’s history to see if they have claimed loss of the same items before
6 Keys to Successful Insurance Fraud Investigations
1. Follow the Law
Nothing can derail your insurance fraud investigation quicker than finding out you have conducted it in violation of the law. Every jurisdiction is different, and privacy laws are the major consideration in these types of investigations. Understand the laws regarding filming or recording a subject or a witness, as doing it without their consent might be a violation of their rights. This is where it is helpful to engage the experts. At CRI Group, our investigators are trained and knowledgeable about local laws and the importance of proper evidence collection. Avoid trying to collect information by deceptive means, such as “friending” a subject on social media.
2. Conduct an Initial Assessment
It’s important to gather the known facts of the case at the outset of your insurance fraud investigation: You need to have some idea of the who, what, when where, and how of the case. With your baseline facts in place, your investigation will proceed much more smoothly. Keep in mind that the subject of an insurance fraud investigation might work quickly to conceal or destroy evidence if they know they are under suspicion. You should make sure to immediately secure all documents and other evidence that you might need late in your investigation. If you are conducting the investigation for a client, make sure they follow proper security measures to keep evidence intact, especially when it comes to digital evidence.
3. Plan the Investigation Well
An effective investigation is one that is carefully planned. Failure to do so can cause problems from the outset, such as missing important details and evidence in the case, or running afoul of regulations such as reporting to FinCEN in the U.S. or FINTRAC in Canada. Before you start the investigation, think about questions like:
- Who should be interviewed?
- In what order should you conduct those interviews?
- What supporting documents do you need to collect?
- Are there any other allegations against the subject?
- Which entities need to be informed of the investigation and how should it be done?
Carefully document all the details and steps taken during the case to make sure your insurance fraud investigation stays on track.
When engaging with CRI Group, a fraud investigator will be allocated to your case. Read more about their skills and expertise in our article “The role of a FRAUD INVESTIGATOR.”
4. Perform Great Interviews
This is where being an effective communicator comes into play. Most successful investigations include subject and witness interviews as a critical part of the evidence-gathering process:
- You need to ask questions in order to find out the “how” and “why” an insurance fraud has occurred.
- The best interviews are those in which the interviewer is in complete control, yet the subject or witness feels comfortable and undistracted. Have some general questions prepared, but engage the subject in a conversational style, and don’t hesitate to go “off-script” to learn more information.
- Be friendly and establish trust and build rapport with the subject. Small talk is encouraged, plus warming up with some easy questions so that the interviewee feels comfortable talking to you.
- Don’t ask “yes” or “no” questions. Instead, ask open-ended questions, such as “tell me about what you did that morning” or “what happened that day?”
5. Understand Evidence
During an insurance fraud investigation, and when reporting the results, an investigator should take care to separate his opinion from the facts of the case. The investigator should let the hard facts of evidence speak for itself in the case, rather than engaging in speculation or providing opinions on guilt or innocence. This is why proper evidence collecting and examination is so important. Files, documents and other evidence should be kept secure and chain-of-custody should be maintained. Never alter or mark up original documents or files with your own notes, even if they seem relevant. Keep copies for your files and make sure nothing slips through the cracks.
6. Report the Findings
When your investigation has concluded, it’s time to report the results. Prepare a thorough, facts-based report detailing the evidence and your findings. A good investigation report should include the following items:
- Your understanding of the allegation (who, what, where, when, how)
- The steps taken in the investigation
- Copies of documents and other material evidence
- A list of interviewees
- A summary of interviews
- A conclusion as to whether the allegation was substantiated or not
Write your report in objective language, avoiding judgemental or inflammatory adjectives when describing details of the case. Use as many direct quotations as possible from interviewees or documents. Only include facts, not opinions or inferences, in your report.
This three-part series of articles is part of our “The Unseen Enemy: Insurance Fraud” e-book. The e-book contains actionable advise on how to protect your business from insurance fraud and much more. Download the FREE e-book here!
Who is CRI Group?
Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.
In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.