Insurance fraud involves the submission of insurance claims that are fictitious, inflated or misrepresented for the purpose of obtaining improper and illegitimate payouts.

Forensic accountants are often retained to assist in investigating allegations of health benefits fraud that occur at the workplace. It is one of the more frequent forms of insurance fraud. According to the CBC, it is estimated that fraudulent health claims in Canada paid out by private insurers amount to between $600 million and $3.4 billion annually. These costs are incurred by insurers, employers and employees. Workplace health benefits fraud can be carried out by:

  • Claimants with insurance policies
  • Vendors or Service Providers

The forensic accountants at nagel + associates are well-versed in identifying, managing and resolving cases involving allegations of health benefits fraud, as well as assisting with investigations that include other forms of insurance fraud.

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Benefits Fraud By Claimants/ Insureds

Benefits Fraud By Claimants / Insureds

A claimant or the insured (which are often, but not always, one and the same) can engage in health benefits insurance fraud by submitting claims that:

• Relate to goods or services that were never received or are not necessary
• Are based on legitimate claims, but the amount of the claim is inflated or exaggerated
• Involve forged or altered documentation
• Are based on false or deceptive representations

A health benefits insurance fraud scheme by a claimant or an insured can be carried out solely by the individual, or through an act of collusion with vendors or service providers.

Recent high-profile cases of significant stature that involve workplace health benefits insurance fraud have utilized an elaborate, far-reaching and persistent scheme that involved dozens of employees of the same employer as well as a wide network of healthcare providers, medical device suppliers and other third parties.

At nagel + associates, we can assist clients and counsel in resolving known or suspected cases of health benefits insurance fraud by:

  • Conducting financial motive reviews
  • Reviewing, analyzing and summarizing insurance policies, financial records and other pertinent forms of documentation
  • Quantifying losses to the insurer
  • Interviewing suspects and other relevant third parties
  • Identifying, co-ordinating and commissioning other specialists as needed, including computer forensics experts and private investigators

Red Flags:

  • Handwritten or suspicious receipts provided by the claimant
  • Delayed reporting of a claim or an injury
  • Claimant who refuses aid, then returns with a doctor’s bill that seems to be inflated when compared to the severity of the accident
  • Insured who appears calm, unemotional and unflustered when submitting a sizeable claim

By Vendors or Service Providers

Benefits Fraud By Vendors or Service Providers

Unscrupulous suppliers or service providers can engage in health benefits insurance fraud by submitting, helping or causing claimants to submit claims which:

  • Relate to goods or services that were never provided
  • Are based on legitimate claims, but the amount of the claim is inflated or exaggerated
  • Involve forged or altered documentation
  • Are based on false or deceptive representations

A health benefits insurance fraud scheme by a vendor or service provider can be carried out by them alone, or through an act of collusion with claimants/insureds.

In recent cases of prominence that have involved workplace health benefits insurance fraud, the scheme involved an ongoing and extensive plot that included dozens of employees of the same employer and a wide network of healthcare providers, medical device suppliers and other third parties.

At nagel + associates, we can assist clients and counsel to resolve known or suspected cases of health benefits insurance fraud by:

  • Conducting financial motive reviews
  • Reviewing, analyzing and summarizing insurance policies, financial records and other pertinent forms of documentation
  • Quantifying losses to the insurer
  • Interviewing suspects and other relevant third parties
  • Identifying, co-ordinating and commissioning other specialists as needed, including computer forensics experts and private investigators

Red Flags:

  • The vendor or service provider is not available during verification calls
  • Revised, copied, whited out, pre-dated or post-dated notes
  • Billing at the top of the daily limit threshold
  • Payments by the claimant made in cash for the products offered

Others Insurance Fraud

Others Insurance Fraud

In addition to health benefits fraud, there are many other common forms of insurance fraud, including:

  • Automobile insurance fraud (which can include falsifying or exaggerating damages from the result of an accident, false claims of theft and staged accidents)
  • Home insurance fraud (which can include fabricating claims of an arson, false claims of stolen possessions and exaggerating claims after weather-related damage)
  • Life insurance fraud (which can include unauthorized alterations to policies, false or misleading information provided as part of the application process and feigning deaths)

At nagel + associates, we can assist clients and their legal counsel to resolve known or suspected cases of insurance fraud by:

  • Conducting financial motive reviews
  • Reviewing, analyzing and summarizing insurance policies, financial records and other pertinent forms of documentation
  • Quantifying losses to the insurer
  • Interviewing suspects and other relevant third parties
  • Identifying, co-ordinating and commissioning other specialists as needed, including computer forensics experts and private investigators

Red Flags:

  • Delayed reporting of a claim or an injury
  • Refusing to involve the police
  • A history of filing legitimate or illegitimate claims,
  • Handwritten or suspicious receipts provided by the claimant
  • Injured person refuses aid, then returns with a doctor’s bill that seem inflated when compared to the severity of the accident

Insurance & Benefits Fraud Case Study

Tom Green worked for a large metropolitan city as the Director of Project Management. In recent months, the amount of Tom’s total debt had substantially increased. He decided that he needed to obtain another source of income to reduce this debt, foolishly opting to defraud the city’s health care benefits plan.Tom concocted a scheme whereby he would submit fraudulent health and dental benefits claims for services and procedures that he never received. To execute his plan of deceit, he would have to forge prescriptions, invoices and receipts from doctors and specialists. The insurer (the city’s health care provider) would then reimburse Tom for the fraudulent health care claims that he submitted. As is often the case with fraudsters who taste success, Tom continued to submit these fraudulent claims without the fear of being exposed. For the following two years, he would continue this scheme with unabated and reckless abandon, seemingly oblivious to its consequences.

During a routine year-end reconciliation and review of the city’s health care benefits plan, a city employee noted that for the previous two-years, Tom Greens’ claim submissions and subsequent reimbursements for health and dental claims were noted to be approximately four times that of the average city worker. The city’s human resource department requested a meeting with Tom to see if he had a plausible explanation for the inflated claim amounts. During the course of the interview, Mr. Green appeared agitated and defensive. As a result, the human resource department recommended that the city hire an independent forensic accountant to review and investigative Tom’s health care claim submissions.

The forensic investigator conducted two interviews with Tom. In order to acquire a greater understanding of the complexities surrounding this case, interviews were also arranged with his manager and two city employees who worked closely with him. Additionally, the forensic accountant performed a review and analysis of Mr. Green’s banking records, obtained relevant data from an email account and cellphone that were issued by the city and took a forensic image of Mr. Green’s desktop and laptop work computers.

The investigation uncovered findings of $64,550 in fraudulent health care claim submissions over a two-year period. Tom Green was immediately dismissed with just cause, and the forensic accountants report was turned over to the police, in support of the city’s criminal complaint.

Relevant Evidence:

  • Financial records
  • Health Care claims forms
  • Invoices
  • Doctor prescriptions
  • Forensic image of electronic devices
  • Interviewing the suspect and other relevant third parties

To determine whether your organization may be susceptible to insurance & benefits fraud, take the following brief survey: