Tag 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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Three Jacksonville Residents Charged with PIP fraud

Florida Chief Financial Officer Jeff Atwater recently announced that three Jacksonville residents have been arrested for personal injury protection fraud. The suspects—Yolanda Vargas, Christian Vargas, and Willdelyn Rodgriguez—have each been charged with one count of committing a staged motor vehicle accident and one count of insurance fraud.

A fourth suspect by the name of Felix Vargas, who has not yet been located, is alleged to have recruited the three individuals to participate in the fraud scheme. He is believed to be connected to a New York identity theft ring, as well as to an IRS scam in which he directed payment of others’ tax refunds to himself.

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Chiropractor & Receptionist Connected to Operation Sledgehammer Get Prison Sentences

Convicted for their role in a massive insurance fraud ring involving staged accidents in South Florida, two more people were sentenced in Operation Sledgehammer last week.

Chiropractor Lawrence Schechtman from Parkland, whom we reported about on our FL-PIP Guide on December 19 when he pleaded guilty to mail fraud conspiracy and mail fraud, was sentenced to four years and four months in federal prison. In addition to his sentence, he was ordered by U.S. District Judge Kenneth Marra to pay more than $2.4 million in restitution.

According to federal prosecutors, Schechtman worked at clinics in Palm Springs and Miami, where he signed off on treatments for people who fraudulently claimed they were accident victims as part of the staged-accident ring which operated in several counties.

According to a story in the August 8 Sun-Sentinel, the 45-year old Schechtman, who suffers from heart and back problems, was granted a request to serve his confinement at the Federal Medical Center, a medical prison in North Carolina. Judge Marra gave the chiropractor two months to turn himself in and begin serving his term.

Another co-conspirator from Palm Springs was sentenced for her role in Operation Sledgehammer. Sircy Sacerio, also known as Sisi or Sircy Santos, received four years in federal prison by Judge Marra.

Under the terms of her sentence, the Palm Beach Post reported, the 31-year old reception and office assistant must also repay $1,146,824.26 and will have two years of supervised release following her time in prison.

She originally pleaded guilty to one count of conspiracy to commit mail fraud and five counts of mail fraud.

Part of the fraud activity in Operation Sledgehammer, which was recorded by investigators, included co-conspirators damaging vehicles with sledgehammers to give the appearance of a crash. The participants in the staged accidents would then go to clinics involved in the ring to receive bogus treatment which, according to the U.S. Attorney’s Office, brought in millions of dollar to chiropractors on false and fraudulent insurance claims. The scheme began around October 2006 and continued through December 2012.

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