Date: 09/22/2010 Regarding: Questionable Medical Claims Report 2008, 2009, and 2010 (1 st Half) Prepared By: Joel McCloskey, Senior Strategic Analyst

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1 Date: 09/22/2010 Regarding: Questionable Medical Claims Report 2008, 2009, and 2010 (1 st Half) Prepared By: Joel McCloskey, Senior Strategic Analyst This ForeCAST (SM) Report analyzes questionable medical claims; the medical related referral reasons included: Duplicate Billing; Faked/Exaggerated Injury; Solicitation (Chasers and Cappers); Staged/Caused Accident; Excessive Treatment; Inflated Billing; Provider/Facility Improperly Licensed/ Incorporated; Jump-in; Prior Injuries; Billing for Services Not Rendered; Slip and Fall; Unbundling/Upcoding; Suspicious Foreign Object in Food; Malingering; Medical Provider/Attorney Relationship; Medical Provider; Duplicate Billing; Claimant Fraud; Premium Fraud; Disability; Inflated Medical Billing; False Loss of Wages; X-Mod Evasion; False Mileage Reimbursement; False SSN; False Loss Statements; Material Misrepresentation on: Fraud Warning Form; Material Misrepresentation on: Employment Application; and Prior Injury/Not Related to Work; Working While Collecting. The data included in this report is for questionable medical claims submitted in the calendar years 2008, 2009, and 2010 (1 st half), and was retrieved from the NICB Questionable Claims data. This report analyzes the 28,553 questionable medical claims for 2009 to the 25,945 questionable medical claims for 2008 by: Referral Year; Loss State; Loss City; Core Based Statistical Area* (CBSA); Loss Type; Policy Type and Referral Reason. Each section charts the top 2009 QC rankings in comparison to its corresponding 2008 QC information. The 2010 (1 st Half) corresponding QC information is also provided as a snap shot to its previous annual totals. * A Core Based Statistical Area is the official term for a functional region based around an urban center of at least 10,000 people, based on standards published by the Office of Management and Budget (OMB) in Executive Summary: In 2009, questionable medical claims increased 10 percent from The top four states in 2009 (Florida; California; New York; Texas) accounted for 50 percent of all 28,553 questionable medical related claims. Of the top 10 loss states in 2009, New Jersey (45 percent) and Massachusetts (36 percent) had the largest percentage increases of questionable medical claims when compared to their 2008 totals. Of the top 10 questionable medical related questionable claim loss cities in 2009, Tampa, FL (166 percent) and Las Vegas, NV (70 percent) had the largest percentage increases of questionable medical claims when compared to their 2008 totals. Additionally, in 2009, the top questionable medical claim loss type (Bodily Injury) accounted for 45 percent of all questionable medical claims. Of the top 10 questionable medical claim loss types in 2009, Slip & Fall (37 percent) and Other Auto (23 percent) had the largest percentage increases and Collision (-20 percent) had the largest percentage decrease when compared to their 2008 totals. The top questionable medical claim policy type (Personal Auto) accounted for 71 percent of the total questionable medical claims. Of the top 5 questionable medical claim policy types in 2009, General Liability (36 percent) and Commercial Auto (22 percent) had the largest percentage increases and Homeowners (4 percent) had the smallest percentage increase when compared to their 2008 totals. Furthermore, in 2009, the top questionable medical claim referral reason (Faked/Exaggerated Injury) appeared, as one of the 7 possible referral reasons, in 45 percent of all questionable medical claims. Of the top 15 questionable medical claim referral reasons, Staged/Caused Accident (44 percent) and Slip and Fall (34 percent) had the largest percentage increases and Unbundling/Upcoding (-24 percent) had the largest percentage decrease in questionable medical claim when compared to their 2008 totals. The overall trend from 2008 to the first half of 2010 showed a considerable increase of medical related questionable claim activity; and if the increase continues the first half 2010 totals indicate that there will be a 13 percent increase in medical related questionable claim activity in 2010.

2 Page - 2 of 8 Questionable Medical Claims Analysis: Questionable Medical Claims: By Referral Year In 2009, Questionable medical claims increased to 28,553 or 10 percent from the total 25,945 in As of the first half of 2010 there were 16,148 questionable medical claims. From this, the projected outlook for 2010 would be a total of 32,296 questionable medical claims or a 13 percent increase from the 28,553 total in 2009.

3 Page - 3 of 8 Questionable Medical Claims: By Top 10 Loss States In 2009, the top four states (Florida; California; New York; Texas) accounted for 14,293 or 50 percent of the total 28,553 questionable medical claims. Of the top 10 loss states in 2009, New Jersey (45 percent) and Massachusetts (36 percent) had the largest percentage increases of questionable medical claims when compared to their 2008 totals. As of the first half of 2010, for the top 10 questionable medical claim loss states, Maryland (47 percent) and Florida (27%) are projected to have the largest increases when comparing their 2009 totals to their projected 2010 totals. Loss State Percent Change 2010 (1st Half) FL 4,209 4, % 3,024 CA 3,903 4, % 2,018 NY 3,187 3, % 1,716 TX 2,183 2, % 1,177 IL % 542 NJ % 400 MA % 367 PA % 292 MD % 482 GA % 387

4 Page - 4 of 8 Questionable Medical Claims: By Top 10 Loss Cities In 2009, the top 10 questionable medical claim loss cities accounted for 5,776 or 20 percent of the total 28,553 questionable medical claims. Of the top 10 questionable medical claim loss cities in 2009, Tampa, FL (166 percent) and Las Vegas, NV (71 percent) had the largest percentage increases of questionable medical claims when compared to their 2008 totals. Furthermore, of the 2010 top 10 questionable medical claim loss cities, Tampa, FL is expected to have a 71 percent increase when comparing its 2009 total of 889 to its projected 2010 total of 1,522. Loss City Percent Change 2010 (1st Half) NEW YORK, NY * 1,702 1, % 900 TAMPA, FL % 761 MIAMI, FL % 405 LOS ANGELES, CA % 390 HOUSTON, TX % 377 ORLANDO, FL % 303 CHICAGO, IL % 227 LAS VEGAS, NV % 186 BALTIMORE, MD % 192 DALLAS, TX % 102 * Annual totals for New York City comprise the 5 borroughs (Brooklyn, Bronx, Manhatten, Staten Island, and Queens).

5 Page - 5 of 8 Questionable Medical Claims: By CBSA In 2009, the top CBSA of questionable medical claims was New York-Northern New Jersey-Long Island. Additionally, the majority of the 2010 top 10 questionable medical claim CBSAs were located in California; Florida; and Texas CBSAs. CBSA Losses CBSA Losses New York-Northern New Jersey-Long Island, NY-NJ-PA 2,836 Chicago-Naperville-Joliet, IL-IN-WI 808 Los Angeles-Long Beach-Santa Ana, CA 2,082 Orlando-Kissimmee, FL 753 Miami-Fort Lauderdale-Miami Beach, FL 2,011 Dallas-Fort Worth-Arlington, TX 624 Tampa-St. Petersburg-Clearwater, FL 1,106 Washington-Arlington-Alexandria, DC-VA-MD-WV 540 Houston-Sugar Land-Baytown, TX 849 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 525

6 Page - 6 of 8 Questionable Medical Claims: By Top 10 Loss Types In 2009, the top questionable medical claim loss type (Bodily Injury) accounted for 12,838 or 45 percent of the total 28,553 questionable medical claims. Of the top 10 questionable medical claim loss types in 2009, Slip & Fall (37 percent) and Other Auto (23 percent) had the largest percentage increases when compared to their 2008 totals. Additionally, Collision (-20 percent) had the largest percentage decrease in questionable medical claim loss types when compared to its 2008 total. As of the first half of 2010, the PIP loss type is expected to have the largest percentage increase (41%), in questionable medical claims, when comparing its 2009 total of 4,636 to its projected 2010 total of 6,544. Loss Type Percent Change 2010 (1st Half) BODILY INJURY 11,487 12, % 7,132 PIP 4,197 4, % 3,272 OTHER AUTO 2,016 2, % 1,476 WORKERS COMPENSATION MEDICAL 1,588 1, % 870 WORKERS COMPENSATION INDEMNITY 1,547 1, % 623 PROPERTY DAMAGE 1,447 1, % 773 COLLISION 1,578 1, % 670 MEDICAL PAYMENTS % 456 SLIP & FALL % 469 OTHER % 185

7 Page - 7 of 8 Questionable Medical Claims: By Top 5 Policy Types In 2009, the top questionable medical claim policy type (Personal Auto) accounted for 20,147 or 71 percent of the total 28,553 questionable medical claims. Of the top 5 questionable medical claim policy types in 2009, General Liability (36 percent) and Commercial Auto (22 percent) had the largest percentage increases when compared to their 2008 totals. Additionally, Homeowners (4 percent) had the smallest percentage increase in questionable medical claim policy types when compared to its 2008 total. As of the first half of 2010, the Personal Auto policy type is expected to have the largest percentage increase (21%), in questionable medical claims, when comparing its 2009 total of 20,147 to its projected 2010 total of 24,384. Policy Type Percent Change 2010 (1st Half) PERSONAL AUTO 18,761 2, % 12,192 WORKERS' COMP & EMPLOYERS LIABILITY 3,194 3, % 1,515 GENERAL LIABILITY 1,553 2, % 980 COMMERCIAL AUTO 1, % 880 HOMEOWNERS % 161 All OTHER POLICY TYPES % 422

8 Page - 8 of 8 Questionable Medical Claims: By Top 15 Referral Reasons In 2009, the top questionable medical claim referral reason (Faked/Exaggerated Injury) appeared (as one of up 7 referral reasons) in 12,895 or 45 percent of the total 28,553 questionable medical claims. Of the top 15 questionable medical claim referral reasons in 2009, Staged/Caused Accident (44 percent) and Slip and Fall (34 percent) had the largest percentage increases in questionable medical claim referral reasons when compared to their 2008 totals. Additionally, Unbundling/Upcoding (-24 percent) had the largest percentage decrease in questionable medical claim referral reasons when compared to its 2008 total. As of the first half of 2010, of the top 15 referral reasons, the Claimant Fraud referral reason is expected to have the largest percentage decrease (-13%) and Malingering (33 percent) and Medical Provider (30 percent) and are both expected to have the largest percentage increases in questionable medical claims, when comparing their 2009 totals to their projected 2010 totals. Referral Reason Percent Change 2010 (1st Half) Faked/Exaggerated Injury 11,564 12, % 7,030 Excessive Treatment 4,554 5, % 3,338 Staged/Caused Accident 3,355 4, % 2,947 Medical Provider 4,619 4, % 3,087 Prior Injuries 3,408 3, % 2,102 Billing for Services Not Rendered 3,436 3, % 2,164 Inflated Billing 2,834 2, % 1,584 Slip and Fall 1,542 2, % 996 Claimant Fraud 2,182 2, % 924 Medical Provider/Attorney Relationship 2,113 2, % 1,284 Jump-in 1,207 1, % 980 Unbundling/Upcoding 1,652 1, % 630 Solicitation (Chasers and Cappers) 1,101 1, % 708 Malingering 927 1, % 691 Provider/Facility Improperly Licensed/Inc % 403