Sober home: Will we demand reform?

The largest Medicare-Medicaid takedown in history recently underscored the vast scope of America’s addiction epidemic — and the role insurance fraud plays as the deadly financier.

More than 400 people were charged with bilking health insurers out of $1.3 billion in bogus bills for addictive opioids across 20 states.

Corrupt sober homes are the newest discovery in the opioid crisis. Sober home owners routinely spoon drugs to addicts so they’ll keep relapsing. The homes, rehab facilities and drug-testing labs get more shots at inflated insurance billings.

Thankfully, the corruption is now wide out in the open. Investigative news stories have appeared in droves over the last few months.

We have to ask how so much fraud could’ve spread before anyone discovered the vastness of the crimes. Why did the safety net break down so badly, and how do we repair it?

The respected SunSentinel has done some of the best investigative reporting of sober-home fraud in South Florida. It believes:

“Shared responsibility also lies with insurance companies, who through incompetence or negligence seemingly have no problem pumping blood money into fraudulent schemes that feed a largely failed relapse industry by paying billions in insurance claims as if these were established medical procedures, which they are not, and which have, in fact, provided little in the way of sustained recovery for suffering addicts and desperate families,” the SunSentinel says in an oped.

Of course responsibility extends to lax policymaking, perhaps sleepy law enforcement and other corners of the safety net.

Once the drama of betrayed addicts and sleazy treatment dies down, will the story go away as just another news cycle? Or will we stay focused and keep up the pressure for workable solutions? Some of the hardest work lies ahead.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud

“Internet of Things” reveals new sources for detecting fraud

A court in Ohio this week gave the OK for prosecutors to use data from a fraud suspect’s pacemaker as evidence in his upcoming arson trial.

This is an interesting case, likely a first of its kind. Investigators obtained a subpoena to compel Ross Compton to sit so they could download the data from the device that keeps his heart beating. The data allegedly conflicts with Compton’s statements to investigators on how he escaped a fire in his home. He’s accused of burning down his home for insurance money.

Coalition members at the recent midyear meeting were briefed on this case by the prosecutor who brought the charges. He correctly predicted the court would allow the data to be used at trial.

This case is a reminder that fraud evidence increasingly will come from highly unusual sources as the “Internet of Things” picks up steam.

During another presentation at the June meeting, attendees heard about a case in Arkansas where investigators obtained audio recordings from an Amazon “Echo” device. Amazon fought the search warrant to turn over the evidence, but a court again sided with law enforcement.

These two cases  remind us that fraud investigators should creatively think beyond the typical sources to detect and investigate insurance crimes.

At the same time, fraud fighters need to follow legal and ethical lines to protect privacy and public trust. Consumer and privacy groups are rightfully concerned about how “Big Data” is used by government and business.

As expectations of privacy continue to fall, the landscape will be filled with court challenges and even attempts to legislate restrictions. Balance between proper use of data and privacy will be key.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Forward thinking: 3 things SIU leaders should consider

Special Investigation Units (SIUs) are key components of any healthy insurance company because of their ability to recognize and fight fraud. However, these units often operate today more or less on their own, separate from the general claims function within insurance enterprises.

Like much of the insurance industry, SIUs are finding ways to adapt to the technology-driven changes that are rapidly transforming the entire anti-fraud field. These units may not be first adopters of new technologies, and therefore may be at risk of losing their edge in the fight against fraud.

To meet these challenges, today’s SIU executives must come to terms with the insurance industry’s changing environment. So many opportunities might open up if claims leaders resolve to find solutions not only to adapt to the present, but to thrive in the future. To do so, it is helpful to break from departmental silos and create a fully integrated claims process with data science, updated analytics and a balanced workforce.

Keys: Data science, analytics

Technology and analytics continue to advance, and are key components to claims investigations. It is important that SIU leaders stay in front of this technology and drive it forward, rather than just try to keep up with current technology.

One suggestion to consider is developing in-house data science teams. They can provide custom support to claims, as opposed to purchasing off-the-shelf products to which other carriers have equal access.

SIUs have historically used rules-based anti-fraud models, or models that required manual combining and reviewing of data. Data scientists now can build predictive anti-fraud models combining claims, fraud and behavioral analytics. This approach can help better identify potentially fraudulent claims and criminal rings that target insurance organizations.

Having these analytics and data teams in-house could help drive SIUs to be more-effective and efficient.

Plan for a balanced workforce

Nearly 30 to 40 percent of the insurance industry workforce will be eligible for retirement in the next five years. To attract much-needed new talent, claims leaders should consider embracing diversity of thought by hiring individuals who “break the mold” of a stereotypical SIU employee.

Instead of only searching for candidates with law-enforcement backgrounds, leaders and hiring managers should think about targeting individuals with backgrounds in leadership, banking, data, security, customer service — and even military experience. A team with a diverse skillset is a team that is often well-equipped for a competitive market.

Become a millennial magnet

I would argue that most of the general public doesn’t know what SIUs do, or even what they are. Because SIUs often are lumped in with claims departments, job seekers may overlook opportunities in the field. SIU leaders should promote the unique qualities of our work — especially with the growing cohort of millennials looking for meaningful and rewarding work.

This would mean finding ways to position SIUs as attractive places to work for young adults, because that’s where our future talent lies. Leaders can do this by creating workplaces that allow for professional growth and educational opportunities. They should also work to develop strong management teams that stay focused on their people first.

When an industry undergoes major changes at a rapid pace, the next steps often are unclear. But like a puzzle, the picture becomes clear when you fit the right pieces in place. As claims leaders, we must challenge ourselves to seek the right tools that will enable SIUs to meet the fraud threats of the future. It’s up to us to make our workplaces more efficient and better equipped.

By staying ahead of technology, implementing data strategies and hiring the strong talent, we can ensure that claims and SIUs are well-positioned to handle the uncertainties of the future.

About the author: Keith Daly is Executive Vice President and Chief Claims Officer of Farmers Insurance.

Fraud of the Month: Flashy lawyer’s $550-million disability con disabled

Where’s Eric Conn?

The feds want to know. So do the Kentucky disability lawyer’s clients — hundreds, many stuck without disability money they desperately need to survive.

Conn engineered the largest federal disability ripoff in U.S. history — nearly $600 million in pilfered taxpayer money, plus a judge bribed to grease disability claims for Conn’s clients.

After pleading guilty, Conn slipped out of his ankle monitoring bracelet and disappeared while awaiting sentencing. He’s still on the run, facing up 12 years or more in federal prison.

Face plastered on billboards
Conn was something of a celebrity in Eastern Kentucky. He built one of the nation’s largest disability practices through quirky, outlandish and pushy self-promotion.

He styled himself as “Mr. Social Security,” plastering his face on billboards around the state. In a TV ad, Conn cruises around town in a Rolls-Royce, pulls up in front of a Lincoln Memorial replica, and banters with a young woman in a trench coat.

Then there’s his 3D commercial. A tiny computer-generated image of Conn frolics on the TV screen. There’s even a music video. The late bluegrass star Ralph Stanley and Amber Ettinger beg Obama to appoint Conn to the Social Security Advisory Board.

Weirdness worked. Thousands of people flocked to his office complex of five connected trailers — with a 19-foot replica of the Lincoln Memorial out front. They hired Conn to have them declared disabled and quickly get a lifetime of Social Security disability money. Some clients were in true pain. Some may have been healthy and just wanted free money for life.

Regardless, Conn made it easy. He bribed a local judge, psychologist and doctors to rubber-stamp claims for clients. Many weren’t even examined, and medical records often were dummied up so the claims would move quickly. Social Security was on the hook for nearly $600 million over the life of the ongoing claims.

Burned records in bonfire
Conn lived in a swanky mansion and relished frequent luxury travel from the legal fees he took in. Two principled federal workers finally reported him, thus starting his downfall.

Conn burned records in a two-day bonfire behind his offices as federal investigators closed in. He pleaded guilty and could spend 12 years or more in federal prison. He also must shell out more than $83 million in fines, penalties and other costs.

A lot of heartache ensued in Eastern Kentucky. Hundreds of clients lost their disability benefits after Conn was convicted. Social Security also is demanding that many clients repay up to $100,000 for disability money going back 10 years.

At least seven clients killed themselves, news reports say.

Slipped out of ankle bracelet
Conn may have bolted the U.S. after slipping out of his ankle monitoring bracelet, news reports say. The FBI is hunting him.

Meanwhile, hundreds of former clients are trying to have their canceled disability benefits restarted. “I’ve got to get these people money quick,” said their new attorney Ned Pillersdorf. “I’ve got 800 people going without, and it’s a real humanitarian crisis.”