Insurance Claims Investigations: Detecting Fraud and Abuse

IRS Tax Audit. African Auditor Doing Debt Fraud Inspection
What is an Insurance Claims Investigation?

Insurance companies often conduct claims investigations to evaluate the legitimacy of a claim. The investigation process helps the claims adjuster make an educated decision about how to proceed with a claim. Insurance claims investigations are used to combat the prevalence of false or inflated claims. An illegitimate claim is unjustifiable or inaccurate, and by identifying it early you avoid paying potentially significant costs to a fraudster. Insurance claims investigations rely on evidence, interviews and records to conclude whether a claim is legitimate or illegitimate. There are several types of insurance investigations depending on the claim being made.

Types of Claims Investigated

Workers’ Compensation Claims Fraudulent workers’ compensation claims can be hazardous to the financial wellbeing of your business. To determine the legitimacy of a claim, an examiner will conduct a workers’ compensation claim investigation. The investigation seeks to determine two things: Is the employee as injured as they claim to be? Was the injury acquired while the person was working? For example, an employee who is injured outside of work Tuesday night but comes in the next day and files a claim indicating that the injury happened at work would be filing a fraudulent workers’ comp claim. Ideally, an investigation would uncover that lie.

Personal Injury Claims

Fraudulent personal injury claims can be equally as hazardous as fraudulent workers’ compensation claims. Personal injury claims can be filed against either a business or against another person. The claim becomes fraudulent when the victim actually fell on their own icy steps but staged the incident to look like it occurred in front of a company’s storefront.

Property Damage and Theft Claims

Insurance companies will also investigate property damage (e.g., fire damage, water damage or car accidents) and theft claims (e.g., theft, burglary, hijacking or robbery). Depending on the property and the claim, an investigator might call in an expert. For example, they might ask for someone to come in and evaluate the burn patterns to discover the origin and cause of a fire. The information gained through this process will help the examiner either confirm or deny that the claim is legitimate.

Healthcare/Medical Fraud Claims

These claims are investigated by private insurers and public ones, such as Medicare and Medicaid. Both the practitioner and the patient can participate in fake or inflated healthcare claims, sometimes together, to line their own pockets. According to the Legal Information Institute, statistics now show that 10 cents of every dollar spent on healthcare goes toward paying for fraudulent healthcare claims.

Claims Investigation Process

The claims investigation process is similar to other investigations. It involves many steps, such as collecting and reviewing documents, taking statements, locating and interviewing witnesses, inspecting and photographing the damaged property or accident site, conducting surveillance and analyzing social media accounts.