Category Archives: Insurance Fraud

Bodily Injury Claims Costs Drop when Data Analytics Increases, Study Finds

A recent study by LexisNexis concludes that insurance companies incorporating more data into the claims process at an earlier stage can realize considerable benefits. According to the study, carriers incorporating third-party data and analytics into their initial claims process, preferably at first notice of loss, can realize greater efficiency, reduced costs, and increased customer satisfaction.

LexisNexis completed a study of more than 10 million features from A.M. Best’s top 20 personal auto carriers. The dataset utilized in the study included 400,000 third-party bodily injury features.

These features were separated by the availability of certain data elements immediately after completion of the claim reporting process and before assignment. “Less Data” features included a telephone number and only one additional data element or had no telephone number but all the other elements; “More Data” features included a telephone number and two or more other data elements.

Comparing bodily injury settlements between the Less Data and the More Data groups, it became clear that having multiple data fields earlier in the claims process resulted in lower average severity payments, expense levels, and cycle time.

For example, in the Less Data category, the average bodily injury loss was $7,359; having More Data reduced the average loss by 15%, to $6,255. Furthermore, the average duration of the claims process went down from 116 days to 110 days.

As insurance carriers face increasing pressures to reduce expenses, they will look closely at the efficiency and effectiveness of their claims function. Based on the results found in the study, the authors conclude that the solution is to incorporate real-time data and analytics throughout the claims process.

Click on the link for more information about the survey, titled “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling.”

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Adjusters Unsure about Questionable Claims Delve into Accident Data

In an earlier FL-PIP Blog post titled “Accident Reconstructionists assist Insurance Adjusters in Uncovering Staged Accidents,” we reported how insurance companies may hire accident reconstructionists to analyze car crash data from police reports, photographs, incident descriptions, and repair records to help determine whether car accident claims are real or if crashes were staged.

A recent article in Property Casualty 360° took a look at common scenarios where accident reconstructionists provide input to insurance adjusters. A summary appears below.

Car Accident Scenario #1

The driver of a vehicle said another car hit him from behind when he was slowing for traffic. The other car did not stop to exchange information.

The claims adjuster, who photographed the damage, was suspicious because he thought the damage looked old, the vehicle had recently been added to the policy, and the claimant received a check a few months earlier on a different vehicle but with a similar story.

The data that the accident reconstructionist researched for the different model years and their variants found that the top of the bumper of these vehicles was always at or below 22 inches. It was also determined that the damage showed no signs of paint transfer. Using this information, the accident reconstructionist was able to definitively conclude that the damage seen on the vehicle did not match the driver’s testimony. The claims adjuster denied the claim in full.

Car Accident Scenario #2

Minor contact between the rear of a Chevrolet Malibu and the front of a Hyundai Elantra was reported with the scuff on the Elantra noted to be consistent with a sliding motion. Further investigation was called in uncovering that the Malibu was in a previous crash severe enough to be sold with a salvage title. No other details, including repair records, were available. The driver of the Malibu claimed that in addition to a small dented area on the right rear corner of the rear bumper cover, there was damage to the Malibu’s trunk area, more prominent on the left side of the vehicle.

The accident reconstructionist had test data run on an Elantra from the same model from a 3-mile-per-hour corner impact test and was able to determine that the damage for the Elantra involved in the incident is consistent with a collision at less than 4.2-miles-per-hour. A Conservation of Momentum analysis was then performed and found that an impact resulting in a Delta-V (the change in velocity of the vehicle from its pre-impact, initial velocity, to its post-impact velocity) of 4.2 miles per hour for the Hyundai Elantra would result in a Delta-V of 3.5 miles per hour for the Chevrolet Malibu.

Test data was obtained from the Insurance Institute for Highway Safety (IIHS) for the Chevrolet Malibu and it was determined that the claim was for more severe damage than was sustained and that the damage was partially in an area that was too far away from the actual point of contact.

It was found that not all of the claimed damages to the Malibu could be attributed to contact from the Elantra, and the insurance company subsequently denied all costs associated with the underlying damages.

Every case is unique, and claims with injuries will be treated differently.

Click on the link to read the full article, “Is that auto accident staged? Here’s how to tell.”

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Filed under Fla. Stat. 627.736 (2008), Insurance Fraud

Accident Reconstructionists assist Insurance Adjusters in Uncovering Staged Accidents

In some cases, auto accident claims raise red flags with insurers. The damage reported may be clearly visible and no claim for injury has been made, but adjusters just can’t put their finger on it. Before insurers pay the claim, however, they can bring in an accident reconstructionist to help put the pieces of the puzzle together and hedge against fraud.

According to an article in Property Casualty 360°, accident reconstructionists are investigators familiar with questionable claims such as when the vehicle damage doesn’t match the claimant’s story. Frequently, they do their work based on the claimant’s incident description, police report, repair records, and photographs.

Accident reconstructionists delve into many different aspects of the accident including: comparing the damages to the claimant’s statement of the sequence of events; making sure damages match the police report; and verifying that the damages between the vehicles meet the shape and height of the vehicles involved.

Key to making a conclusion lies in geometry and patterns of the vehicles and the damage they sustained. Photographs of the vehicle, in addition to information about the specific make and model enable accident reconstructionists to obtain the vehicle’s specific damage dimensions for use in their analyses. Even so, every case is different and must be considered independently before reaching a conclusion.

Because the scope of assignments are very specific, accident reconstructionists often can quote a price for their work based on the nature of the claim, available evidence, and whether a verbal update or a written report is required.

Input from accident reconstructionists may be invaluable to insurers. They sift through information and provide the missing data necessary to determine whether an accident was staged or if a claim is fraudulent.

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Jeff Atwater, Facing Re-Election, Notes Success in Shutting PIP Clinics

Jeff Atwater has served as Florida’s Chief Financial Officer since January 4, 2011, and is up for re-election in November. He recently spoke with the editorial board at The News-Press in Naples about his accomplishments and priorities.

In a wide-ranging interview, Mr. Atwater emphasized Florida’s fight against fraud as an area of success. Some highlights from the interview follow.

“We have worked with sheriffs, the state attorney’s office, the FBI and locally with law enforcement, under the umbrella of financial literacy,” notes Mr. Atwater. “We are beginning to neutralize this. We are shutting PIP clinics and under-the-table transactions.”

Key accomplishments in the state’s continuing battle against fraud over the past three years include:

  • 5,000 insurance fraud arrests
  • 2,000 arrests in PIP fraud cases
  • $129 million in public assistance fraud uncovered

Atwater may run for governor or the U.S. Senate in four years, according to the article. He has served in public office since 1993, when he was elected Vice Mayor of North Palm Beach. He was elected to the House of Representatives in 2000 and the Florida Senate in 2002. In 2008 he was selected to serve as Senate President.

Click on the link to read the full article.

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Filed under Insurance Fraud

JFK Medical Center Target of Lawsuit Alleging Excessive Billing in PIP Claims

Two women injured in unrelated 2013 car accidents have filed suit in Hillsborough County Circuit Court against a holding company that operates several hospitals in Florida, according to an article in The Tampa Tribune. The women allege that HCA Holdings grossly overcharged for emergency room radiological services.

The plaintiffs claim that the alleged overcharging harmed them in two ways:

  • First, because PIP covers only 80% of emergency medical care, they were left to pay 20% of the inflated charge.
  • Second, the excessively high rates prematurely sapped their $10,000 PIP benefits, leaving them each to pay the remainder of the costs.

One of the women, Marisela Herrera of West Palm Beach, underwent CT scans and x-rays at JFK Medical Center in Atlantis following her traffic accident. (JFK Medical Center is owned by HCA; it is the only HCA medical facility specifically named in the suit). The images done at JFK allegedly cost Herrera nearly $18,000. Plaintiffs say Medicare would typically pay only $465 for the same number and type of images.

Florida’s PIP statute mandates that insurers pay 80% of all reasonable expenses. Such exorbitant charges, plaintiffs allege, are well in excess of this reasonable amount. These charges form the basis of the plaintiffs’ claim that they were victims of “unreasonable, unconscionable and unlawful pricing and billing practices.”

The lawsuit seeks reimbursement for the plaintiffs of the out-of-pocket expenses due to the “excessive and artificially inflated medical bills.” Plaintiffs also request that the court prohibit HCA from charging those fees and order it to stop efforts to collect outstanding emergency radiological bills. The lawsuit seeks class-action certification.

The case brought by Ms. Herrera is Herrera, Marisela v. JFK Medical Center Limited Partnership, Case No. 14-CA-008372, filed on 8/18/14 in Hillsborough County Circuit Court.

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Florida’s Third-Party Bad-Faith Laws are Costly to State’s Auto Insurance, Says IRC Study

More than $800 million in additional auto liability claim payments were made in 2013 as a result of Florida’s third party bad-faith lawsuit environment.

Those findings were revealed in a recent study—“Third-Party Bad-Faith in Florida’s Automobile Insurance System”—conducted by the Insurance Research Council (IRC). This translates to an average of $79 in additional claim costs for every insured vehicle in the state.

From 1995 through 2013, Florida experienced a striking increase in the frequency of bodily injury liability claims and a significant jump of 68 percent in average claim payments per insured vehicle, according to the report.

Compare that to other large no-fault states that do not authorize third-party bad-faith lawsuits against insurers, such as New Jersey, New York and Pennsylvania, where notable declines in liability claim frequency and much smaller increases or even declines in claim payments per insured vehicle were found.

A contributing factor in Florida’s growing problem with third-party bad-faith lawsuits is believed to be the “apparent failure of the no-fault system’s tort threshold to limit access to liability reimbursement under most auto insurance policies,” according to the study. Other no-fault states’ systems are designed to limit the number of liability claims that are filed for reimbursement for lost wages and medical costs.

In contrast, Florida’s tort threshold appears not to minimize liability claim frequency. In 2013, Florida’s bodily injury claim frequency rate was not only higher than most tort system states (states without no-fault coverage), but was higher than the U.S. frequency rate for liability claims.

“The virtually unrestricted ability to file a third-party bad-faith lawsuit against an insurance company poses a serious threat to Florida’s auto insurance system,” said Elizabeth A. Sprinkel, CPCU, senior vice president of the IRC. “The possibility of winning large bad-faith settlements and court judgments creates powerful incentives for potential claimants and their attorneys to file auto liability insurance claims that otherwise would not be filed.”

The IRC said that it will be doing more research related to the impact of Florida’s tort threshold and other important aspects of the no-fault system and will publish those findings later this year.

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Uninsured Motorists Declining but Still a Concern in Florida, New Study Finds

A new study released by the Insurance Research Council (IRC) found that the estimated percentage of uninsured motorists has been in decline since 2010. According to the organization’s latest report, “Uninsured Motorists, 2014 Edition,” 14.9 percent of drivers were uninsured in 2003, but that figure dropped to 12.6 percent in 2012. That’s about one in eight drivers on the road who are uninsured, according to the study’s most recent data.

The study’s numbers were figured based on a ratio of insurance claims made by individuals who were injured by uninsured drivers to claims made by those who were injured by drivers who had insurance.

Although there is an overall downward trend nationwide, the IRC has broken the percentages down by numbers for each state and discovered great variation. Nationally, the number of uninsured drivers peaked at 29.9 million in 2009 and moderately declined to 29.7 million in 2012.

In terms of states, Florida ranked second in the highest total number of uninsured drivers with 3.2 million. California ranked highest with 4.1 million, while Texas followed Florida with 1.6 million, the report found.

The study also revealed that Florida ranked high in terms of the estimated percentage of uninsured motorists per state. That number is highest in Oklahoma at 26%, followed by Florida (24%) and then, Mississippi (23%).

The “Uninsured Motorists” study also analyzed the total number of uninsured motorist claim payments and found that amount has climbed drastically in spite of an overall drop in the number of uninsured drivers.

Not counting fatalities and total permanent disability claims, the IRC estimates that $2.6 billion was paid in the U.S. on 2012 uninsured motorists’ claims. This is a 75 percent increase over the past 10 years, translating to $14 per insured individual in 2012.

According to Elizabeth A. Sprinkel, CPCU, senior vice president of the IRC, these numbers show that “responsible drivers who pay for insurance end up also paying for injuries caused by uninsured drivers.”

“The declining trend in the percentage of uninsured motorists is a positive development for consumers; however, the heightened levels of uninsured motorists and the rising claim payments involved still remain a concern for insured drivers, insurers and policymakers,” she said.

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