Taking a “whack” at insurance fraud

Have you ever played the carnival game “Whack-A-Mole”? As the pesky little creatures pop-up from holes on the game board, the players holding a mallet in hand get points for how many moles they whack on the head before time runs out.

If you’ve played the game, maybe you were trying to escape work, but there really is a good comparison here. Fighting insurance fraud is amazingly similar to playing a game of “Whack-A-Mole.”

When a state insurance department, local law enforcement or insurers “whack” down a fraud ring or fraudulent service provider, the unsavory “creature” often soon pops back up from another hole. And the fraud game begins again.

We repeatedly see this with unethical medical providers simply changing a clinic name to secure a new tax ID number and popping up as a “different” entity. Meanwhile, nothing has changed “down in the hole” where the fraud occurs. Dishonest body shops do the same. Even disbarred lawyers “pop up” as “paralegals” in their former law firms.

On a larger scale when Florida began a more-serious crackdown on PIP automobile fraud, especially in South Florida, many medical clinics simply packed up and began popping up in and around Louisville, Kentucky. Why? Was it Kentucky’s great business opportunities? A rising population tide? Better weather? NO … a simple look at the “game board” holds the answer. Kentucky is the next state north of Florida with PIP auto coverage. The fraud game just picked up and moved to the next “hole” on the game board.

Any experienced fraud fighter has seen this game in action. Whether within a state, even a city or across the nation, fraudsters don’t give up. They often simply disappear and move on to “pop” out of a new “hole.”

So, what do we do? Giving up is certainly not in our DNA, or in our ethics. First, we must be aware of this issue, then do a better job of sharing more information — through sources like the Coalition, NICB and IASIU — of fraudulent activity so others are alert to watch out before the fraudsters “pop-up” somewhere else.

Next, insurer investigators need to notify their claims, SIU and both inhouse and panel counsel with the same information. Being informed, they can better watch for, and track, the spread of fraudulent activities and players.

Finally, we need to partner wherever possible with local, state and federal prosecutors. They have the power to “pull the plug” on the fraud game, and put the little varmints in a special hole covered with bars where they can’t pop out for a long time to come.

About the author: Matthew J. Smith serves as general counsel and associate director of government affairs for the Coalition Against Insurance Fraud.