It doesn’t matter what area of life we’re talking about-most people are good and honest, but a few are out to get something for nothing.  Insurance companies deal with this reality every day.  It’s their job to review and then pay the legitimate claims of their customers, but that means they have to do their best to root out those claims that aren’t so legitimate.   The rest of us should be grateful that they do this, because insurance fraud is an $80 billion a year industry; it actually comprises about 10% of all health care spending.  That means that insurance companies have to charge a customer more in order to clear the profits they need to operate.

So whose job is it to root out insurance fraud?

1. The customer

If you’re filing an insurance claim, make sure all of your data is correct and that you have documentation to support your claim.  Receipts, estimates, work orders, doctor reports and photographs are good supporting materials.

2. The service provider

It is easy for a mechanic to include charges on an invoice for services he never performed.  Health care providers, often out of a sense of compassion, occasionally exaggerate or even falsify medical information in order to get services for a patient or to pad the amount the insurance company has to pay.

3. The local insurance agent

Every insurance agent has the responsibility to review materials and look for obvious discrepancies, and to follow up on gaps in information.  Usually this just means requesting a missing receipt or taking photographs for the company’s records.  However, it might mean getting to the bottom of a false report.

4. The insurance investigator

Insurance companies have agents whose sole job is to search out fraud.  If a claim raises red flags, the investigator looks into it.  They are also trained to spot patterns coming from a certain customer, provider, or area, and may investigate an agency, doctor, mechanic, or individual policy-holder.  Most claims are not paid if they are under investigation.

5. The prosecuting attorney

If an insurance company has reason to believe that fraud has been committed, they will likely have the fraudulent provider prosecuted.  Once all the case’s information goes to the district attorney, the DA’s office then must conduct its own investigation independently of the insurance agency.

Insurance fraud can happen in so many ways and at so many levels of the process that everyone must be constantly on guard for it.  The more people get away with it, the more honest people have to pay.  Those whose job it is to search out insurance fraud save the rest of us billions of dollars each year.