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By John Garrison
There are two approaches to healthcare. Doctor Number One will treat the symptoms. A pill for this, an injection for that, surgery for the other thing. Doctor Number Two will concentrate on identifying and treating the cause, and by doing so the symptoms will improve on their own. And so it is with fraud.. It’s a disease; one that presents itself through many symptoms. The ultimate cure, if one exists, is a multi-faceted approach that begins at the root of the problem and then reaches outward.
It was no surprise that arson crimes radically increased in synchronicity with the 2008 plunge in home values. The harder the property cost hit was in a particular area, the larger the increase in fraud.
As employment opportunities have failed to keep up with the numbers of those looking for jobs, workers’ compensation claims have risen accordingly. Workers hearing rumors of a layoff take matters into their own hands to assure their own ongoing income. Disability pays more than unemployment, lasts longer and has the side benefit of massages and pain medications, and “ow, my aching back” is like the golden “you’re going to Hollywood” ticket awarded to the lucky few on American Idol.
As paychecks stretch to the breaking point, so do people. Crimes (like insurance fraud) used to be primarily perpetrated by criminals; now it’s no longer that simple. Ma and Pa America are being brainwashed by the constant airing of Dennis B. Dirtbag commercials on daytime television. “Call 1-800-JUST SUE and one of our fine attorneys will get you a piece of the insurance pie.” When Pa is laid off and the water gets shut off because he didn’t/couldn’t pay the monthly bill, it’s hard to treat a minor not-at-fault fenderbender as anything other than an opportunity to catch up on a few bills.
Risk to Value Ratio
Let’s face it, the ratio is miniscule. If 100 insurance fraud crimes are committed, less than five of them will result in actual prosecution. Even if all five of them proceed to the sentencing phase, let’s take a look at what sort of penalties are doled out.
An Armenian mob boss ran a massive Medicare fraud ring and stole $163 billion. He operated in 25 states, stole identities from patients and doctors alike, staged accidents and adversely affected thousands of people. He was sentenced to three years in “Club Fed.” He’ll get three meals a day, general lock down only, exercise time, card-playing, television watching, medical services, dental services — and if he needs an organ transplant, he’ll probably get that, too. What does that say?
Or the case of the guy who wanted to take some time off and get paid for it with workers’ compensation. Wearing a bullet proof vest, he shot himself right outside of a high school. The school went into lock down, as did nine other area schools. Dozens of officers were dispatched to comb the area for the assailant. The city spent $350,000 on the wild goose chase and another $58,000 for medical treatment of the injured … COP! (Yes, our bad guy was a police officer.) He’ll be out in four years. The city is suing him to recover what he stole from the system, and we’ll believe the money gets paid back when we see it in the public coffers. The message here?
Homeowners? Four players were involved in what would have been a flood claim if the owner of the house (#1) had Flood Insurance. Not having the coverage, she enlisted three others to help her turn it into what might fly as an insurable loss; namely storm damage. Players #2 and #3 bashed a hole in the roof, trashed the place, etc., and Player #4 was an unlicensed insurance adjuster who participated by submitting creative paperwork. They might have gotten away with it, too, except the Feds were wiretapping #2 in a completely separate corruption matter and recorded him bragging about the antics of the Band of Four. Sentences? Hah. #1 got four months in a halfway house and four months of home confinement. #2 will do six years at Club Fed, but he probably would have gotten that anyway because of the corruption case. #3 got two years of (just) probation and #4 will be in a halfway house for six months and on home confinement for six months. Shouting loud and clear.
In some areas of the Middle East, a thief loses his right hand. In China, a thief receives a firing squad bullet between the eyes and his/her family gets the bill for the bullet. In the US, the most common form of punishment, if any, is a slap on the wrist or a very light sentence. Ours is a treatment that is not working.
The global economic downfall has resulted in a fraud free-for-all. Desperate times, just like desperate illnesses, demand desperate measures. The diagnosis starts with recognition that we have a problem. It continues with qualification (what kind of illness) and quantification (how bad is it?), then examination of treatment options, a plan for the best outcome possible, implementation, and finally follow up care and continued monitoring.
[color-box color=”gray”]John Garrison, CPCU, earned his MBA at Ferris State College and climbed the latter from entry level underwriting to corporate Executive Management.[/color-box]
