A valued and effective anti-fraud tool that benefits consumers would be hobbled under a misguided bill in Washington State. It’s called the examination under oath, or EUO.
Insurers interview claimants, who are legally bound to answer questions truthfully. Thoughtful questioning by trained investigators can expose lies and mistruths by claimants trying to hide suspected scams. Telltale clues often can be uncovered only by EUOs. This is why they’re crucial to exposing often well-hidden crimes.
Many fraudsters don’t even bother showing up for an EUO, which helps insurers halt suspected claim payments and close out bad claims.
Under the Washington bill, the statute of limitations for using EUOs would begin when a suspected scam happens, instead of when an insurer discovers it. This strict time limit imposes arbitrary legal handcuffs, regardless of the actual crime-fighting need.
The bill’s stated goal is to protect consumers from supposed insurer fishing expeditions — though where’s the proof of fishing trips? We’ve seen no evidence.
“This would set up a system where insurers would be forced to pay suspect claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote the chair of a subcommittee that’s vetting the measure.
Insurers use EUOs judiciously, only when clear red flags of possible fraud are uncovered first. Companies have neither the time nor budgets to conduct large volumes of EUOs on all claims.
The Washington bill thus would backfire. Insurers would be forced to pay suspicious claims because they wouldn’t have time to fully investigate for warning signals. More bogus claims means more crime and higher premiums for honest insurance consumers in Washington.
If an insurer is abusing the privilege of compelling claimants to appear at EUOs to answer questions, regulators and existing law have existing remedies to punish them. Curtailing this important tool across the board is not in the best interest of public policy.
The Coalition will publish a white paper on EUOs later this year. We will shed more light on how EUOs work, and why we need them to work effectively as anti-fraud tools.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.