Insurance Fraud PRESENTED BY: James H. Cole, Esquire Jeffrey G. Rapattoni, Esquire of Marshall Dennehey Warner Coleman & Goggin

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1 Insurance Fraud PRESENTED BY: James H. Cole, Esquire Jeffrey G. Rapattoni, Esquire of Marshall Dennehey Warner Coleman & Goggin

2 WHAT IS INSURANCE FRAUD? The Criminal vs. Civil Distinction

3 Various Types of Insurance Fraud: Property Application/Underwriting Auto Medical/Healthcare Personal Injury Protection (PIP) Staged loss

4 Who Commits Insurance Fraud? Claimant Insured Contractors Body Shops Public Adjuster Doctors Organized Crime Attorneys

5 General Statistics Costs industry $100 Billion annually Average household pays $5000 each year in Premiums Increased costs of goods and services Most Americans think those who commit fraud never get caught

Premiums Increased costs of goods and services Most

6 I. Property Claims Common Fraudulent Scenarios

7 Real Property Arson Intentional damage Exaggeration Covering deductible Application Fraud

8 How Does an Insurer Establish- False Statement Knowingly made Material to claim Different than criminal standard

9 Liberty v. Land Video

10 Dime Spinning

11 Sample Arson Video

12 Arson Red Flags Insured in debt Foreclosure Multiple points of origin Pets removed from home Photos removed from home Multiple prior claims Pushing for quick settlement

13 The Arson Triangle Motive Opportunity Incendiary fire

14 MOTIVE Financial Marital discord Hide evidence Revenge

15 OPPORTUNITY Circumstantial evidence linking insured to fire Witnesses Timeline discrepancies Removing valuables/pets No forcible entry Cell/ EZ Pass records

16 INCENDIARY FIRE Expert necessary Fire Marshall Law enforcement Accelerants Fuel load Multiple points of origin Doesn t mean insured did it

17 Motor Vehicle Fraud Motive Finances Greed Drugs Divorce Mechanical Problems

18 Red Flags to Watch For Financial Transponder vehicle Key accountability Mechanical Set fire Nothing stripped Excessive vandalism

19 Inconsistencies Cell records Keys EZ- Pass Time-Line Mechanical records On- Star

20 Body Shop Give-ups Non accident related damage Intentional Damage Salvage vehicle

21 II. Medical Provider Fraud- Common Fraudulent Scenarios

22 The Courts have spoken Ignorance is no excuse- It is well settled that individuals that practice in highly regulated industries, such as physicians, are charged with the knowledge of the laws that govern their practice. Allstate v. Greenberg, 376 N.J. Super. 623 (N.J. Super. Ct. 2004). An insurer may properly deny payment based upon a healthcare provider s failure to comply with the administrative regulations governing the practice of healthcare in New Jersey. Allstate v. Schick, 328 N.J. Super 611 (N.J. Super. Ct. 1999).

23 A. Upcoding issues Most of your common medical fraud scenarios will be broadly defined as upcoding. Upcoding is charging for a more expensive service than was performed. This can occur in first or third party claim, PIP, workers compensation and routine medical claims. For example

24 1. Billing for services never rendered Common configuration of blatantly billing for service that never took place. This is most extreme scenario of upcoding. Example: billed for 10 treatments, 0 occurred.

25 2. Services rendered in part Provider sees the patient and performs limited treatment but bills for services that were not part of the visit. The key here is that they must bill for services that were not part of the visit. Example: Therapeutic exercises billed for every visit and seldom take place.

26 3. Billing for services not medically necessary Over-utilization of codes and treatments that were not medically necessary. Subjecting the patient to procedures that will not provide them with any relief or medical benefit. Example: (look for a pattern of repeat procedures) four MRI s of the same area, multiple injection therapies with no objective or subjective benefit

27 4. CPT code abuse Current Procedural Terminology (CPT) abuse occurs when the code is selected for a more serious condition than a patient has. The single most abused code is is a 45 minute, new patient examination. Generally, this code is wrong for auto cases. Use common sense. After speaking with insureds, the exam is never 45 minutes and they are never actually seen for over an hour. It is important to ask them what took place during this exam and get specifics. If it is out of place, then the provider is abusing the code for payment.

28 5. Code Stuffing Code stuffing is the insertion of fabricated diagnosis to receive higher payments. These are pre-fabricated diagnostic codes. Diagnosis will change care paths. Example: You will pay more for a herniation treatment and care path than a disc bulge. Look for patterns within medical practices. Do the same people read and interpret the films? Do they go to the same MRI facilities? Is transportation provided?

29 6. Billing for services not provided by a physician Billing for services performed by a doctor when they are performed by office staff. Example: Unlicensed office staff giving therapeutic massage and using CPT code Code inheritably provides that the greater the degree of the person rendering service, the higher the bill. A very common configuration across the board. It s easier for the Doctor to delegate these tasks than actually perform them. Note: billing the code is a representation by the provider that he actually performed the treatment, thus this is a misrepresentation every time it is billed. This can actually cause a physical harm to the patient depending on the underlying injury.

30 7. Medical Supplies (DME) Billing for unnecessary medical supplies to increase bills. More common with chiropractic practices. Example: All patients get cervical collar, pillow or home exercise equipment.

31 8. Unbundling Charging separately for services or parts of a procedure that should be billed as a group. Example: Needles, drugs, surgical equipment instead of the actual procedure. Seen commonly with injections and RF treatments. CPT (application of hot/cold packs) is bundled into the payment of services and shall not be reimbursed separately.

32 9. Fragmentation Services usually billed together at a set price that are billed separately at a higher price. Example: examination by a chiropractor and physician whereby each submits an individual bill. Seen in practices with mixed disciplines.

33 B. Specific Provider Issues Self-Referrals-It is illegal for a physician to refer you to another physician practice that he has a monetary interest in without disclosing the interest to the patient. Kickbacks: Providers providing monetary incentive for referrals. Fee-Splitting: Physicians split a patient s fee with and unlicensed person or company or a physician refers a patient to another physician and collects a portion of the fee.

34 III. Pre Litigation Options- For All Lines of Business

35 How you choose to litigate is just as important as what you choose to litigate. Your mistake may skew the judiciary and cause a negative impact for other carriers. Demand more from your counsel. Seek out new ways to solve problems. Be informed. Direct counsel accordingly.

36 Rule 4:11-1 Motion for Pre-Litigation Discovery Situations ultimately arise whereby subpoena power is needed to secure documents in advance of litigation. Rule 4:11-1 allows pre litigation discovery of items via motion. Elements: (1) that the petitioner expects to be a party to an action; (2) the subject matter of such an action and the petitioners interest; (3) the facts the petitioner relies upon; (4) the names or description of persons the petitioner expect will be opposing the application; (5) the names and addresses of the persons or things to be examined; (6) names and addresses of persons having control or custody of the documents in need of inspection.

37 DO NOT UNDERESTIMATE THE POWER OF AN EUO. Speak to your insured, it is your right to do so. Great tool for fact discovery in a pre-litigation arena. Utilized too infrequently across the board.

38 Who will be deciding your fate?

39 Managing your file (1) Pre-litigation Tactics - Paper your file - Request documents or proofs - Stay in contact with the insured - Request an EUO - File an Order to Show Cause - Provide the policy - Secure a recorded statement

40 (2) Litigation Tactics- Use venue where applicable. - Often times Federal District Court is better venue to litigate a true bad faith issue. - In order to remove you must have complete diversity and an amount in controversy over $75, Better case management but slower pace.

41 (3) Use counterclaims - With Liberty v. Land, it is easier to file an affirmative suit or counterclaim under the Insurance Fraud Prevention Act. - Preponderance of the evidence NOT clear and convincing. - Creates a moment of pause as both parties are finally on equal ground.

42 Thank You James H. Cole, Esquire Jeffrey G. Rapattoni, Esquire Marshall Dennehey Warner Coleman & Goggin

The state and challenges of insurance fraud

Grand Hotel Union 14. maj 2013 The state and challenges of insurance fraud James E. Whitaker Agenda 1. About ACFE 2. Statistics for insurance fraud 3. Insurance fraud schemes 4. Case study 5. Fight against