To avoid detection, those who commit insurance fraud typically hide assets.  In August 2001 for instance, a father and son in Florida were charged with money laundering after fraudulently billing over forty health and insurance auto companies more than $1million dollars.  As part of their scheme, monies paid by insurance companies for blood tests were converted to cash via a Florida Bank of America account. This account had been opened in the name of a phony Miami medical laboratory (Biolab Clinical Inc.), which was actually just a rented mailbox.

More recently, a Westchester New York dentist and his wife were arrested for money laundering in connection with a $2.8 million Medicaid fraud.  The N.Y.S. Attorney General’s July 30, 2007 press release claimed that the two had submitted fraudulent Medicaid bills for dental cleanings, x-rays, and oral surgeries, and then made "…. financial transactions and fil[ed] false financial disclosure statements in an effort to hide assets from the courts."  According to the Attorney General, there was also an attempt to use the name of  the couple’s 18 year old son on an account at a foreign based bank with $828,817 deposited in it.

Because assets can be hidden in a wide variety of ways during an insurance fraud, I asked Stan Tice for a briefing.  Stan consults with the insurance industry about detecting and investigating insurance fraud through his New York  based  private investigation  firm.  Furthermore, he had: lectured annually about insurance fraud at New York’s College of Insurance, served as a deputy director of the Insurance Frauds Bureau for New York’s Insurance Department, and had even worked for New Jersey’s Insurance Department where he was the founding director of its former Insurance Frauds Prevention Division.

During my briefing, Stan mentioned how one policyholder had hidden his collection of Hummel & Lladr? figurines and then filed a property/casualty insurance claim for them, alleging a loss in the  hundreds of thousands.  According to the policyholder, debris from the figurines demonstrated that they had been accidentally destroyed.  Stan however submitted these remains to a forensic lab for testing– only to discover that they could not have originated from the policyholder’s figurine collection.  Because of Stan’s efforts, the policyholder was eventually criminally prosecuted for fraud and attempted grand larceny.

Given the fact that the insurance industry’s National Insurance Crime Bureau advises that 10% or more of all property/casualty claims are fraudulent, I wanted Stan’s opinion.  Stan then advised that since the above statistic was limited to just property/casualty claims, that the actual number of all fraudulent claims was likely astronomical.  This of course means that our insurance premiums are not going to be reduced any time soon.

Copyright 2007 Fred L. Abrams