Thirty insurance companies are now scrambling to figure out how 15 chiropractors defrauded them out of hundreds of thousands of dollars in Southern California. The scheme involved illegal kickbacks and filing fake automobile accidents involving injuries.
Reading the felony complaint filed by the L.A. District Attorney’s office, it surprised me to see so many of these large insurance companies listed as victims. So, what’s the lesson learned here? It simply does not matter how large an insurance company you are. The organized fraudsters’ main goal is to steal money from your organization, and they’ll figure out how to do it.
One way to detect organized medical provider fraud effectively is to incorporate modern fraud technology within your claims operation. Traditional methods simply can’t keep up.
Here are four ways fraud detection could have caught these guys in their tracks:
- Anomaly detection: This can automatically identify outliers within a peer group. Using the example of the ill-disciplined Southern California practitioners, anomaly detection would have flagged these 15 chiropractors as outliers against the larger group of properly practicing chiropractors
- Artificial Intelligence/Machine Learning: While it took three years legacy detection to uncover this giant fraud, modern AI detection systems, capable of self-evolving, would likely have brought a situation like this to light much faster.
- Link Analysis: While one fraud case alone might appear legitimate, link analysis can easily represent well-connected fraud rings. In this case, each automobile accident would be visually connected to the larger, more organized scheme.
- Internal and external data sources: Matching against internal and external data sources such as sanctioned medical provider list, NICB ForeWARNSMand MedAWARE® , internal watchlist and prior claims history can assist in identifying potential fraudsters.
It’s not just about an insurance company’s bottom line. In this case, $6M in illegal kickbacks circulated through the crime ring. It’s clear to see how legitimate medical and insurance consumers feel the burden of organized insurance crimes, and we all have a duty to them to bring a sense of honesty back into the picture.
Though there isn’t a guarantee of catching every cheater every time, utilizing the right technology can certainly help in detecting, preventing and deterring individual fraudsters and organized fraud rings.
About the author
Jim Murphy has a specialized Master’s degree in Economic Crime Management and is a 30-year veteran of the insurance industry. After serving as a police officer in New England and spending years running a Special Investigations Unit analyst team, he’s now the Vice President of Products for FRISS, helping insurers fight insurance fraud and making insurance more honest.