Preparing a State Insurance Fraud Referral

As a private investigator, you may focus your business on insurance and claims related work. If that’s the case, have you ever submitted a state insurance fraud referral? If you said no, your not alone by any means; however, being able to do so will certainly set you apart from your competition.

Every state has their own way of doing things but the general idea remains consistent, identify the state statutes that were violated, determine the elements of the statute and match them to your case, and pull out all of the evidence from your investigation and the claims file to support your belief that fraud was committed. It’s no different from what a detective in a police department does with crimes he/she may be investigating.

This need for private-public cooperation in the battle against insurance fraud has led to the enactment of state fraud reporting laws that facilitate insurance fraud referrals while affording insurers a measure of insulation from civil liability for defamation or bad faith. However, these laws sometimes referred to as “immunity acts”, do not create an impenetrable shield to insurers who provide evidence of suspected fraud to law enforcement. A finding that an insurer or investigator acted with malice or bad faith during the referral process can completely undercut any immunity and lead to costly litigation. Simply be professional and act in good faith at all times and the state immunity laws will provide adequate protection against frivolous lawsuits.

Got MILK? Got FRAUD!

Who would have thought the word milk would have so much relevance to the world of insurance fraud? I’ve always told people, if you have MILK, you have fraud. No, no, not the liquid milk, the acronym M.I.L.K.

• Materiality – was the activity in some way material to the case?
• Intent – was the activity done intentionally?
• Lie – did the subject lie about something for the purposes of concealment?
• Knowledge – did the subject know what he was doing was wrong?

If you can prove these four elements, you most likely have a solid case of fraud and can prove it.

Who do I submit my state insurance fraud referral to?

Although the governing authorities vary by state, most states have an organized insurance fraud bureau; the investigators there will be your first point of contact. This doesn’t mean that you won’t speak with other people during the process, it’s just where you’ll start. You will most likely discuss the case with a state attorney who will use you to get up to speed on what happened and what you’re alleging.

There have been times when I feel I have a solid case but the investigator assigned from the fraud bureau just doesn’t see it my way. Because I’ve reported so many of these, I know what state attorneys are looking for and in some narrowly tailored situations, I’ll take my case right to the Assistant State Attorney (ASA) to review the salient facts and generate some interest in the case. I recommend not doing this too often you want to develop a good working relationship with the state investigators. Going to the ASA on every case they say no to will certainly anger even the most patient of investigators.

Keys to a Successful Fraud Prosecution

• Know and follow the requirements and limitations of applicable fraud statutes.
• Limit company representatives involved in referrals. Insurance fraud referrals and responses to requests for information from law enforcement should only be handled by designated special investigations units or claims personnel.
• Document, document, document. The importance of documenting everything sent to or received from law enforcement or prosecutors and maintaining that documentation cannot be overstated.
• Provide the good, the bad and the ugly. If it’s material, report it.

How do I prepare the actual referral?

Now that you know fraud exists, you have to express it to someone else in a written referral. It’s like the longest school project you’ve ever been assigned! You’ll have to answer the who, what, where, when, and how of the case.

In this post, I’ll break down the most important topics and the sequence you should submit them in the final referral.

General Information

The general information section basically covers the “who” is involved in the referral. Here you will provide information on the subject or suspect, the insurance company, and any involved agencies, such as the police, the fraud bureau, or even the state attorney.

This is important because whoever is working on the file may be duplicating efforts, or worse, stepping on another agencies toes.

Statement of Facts

This section will most certainly be the most voluminous. In this section, you will document every fact that has led you to the conclusion fraud was committed.

Facts can come from many different places. For instance:

• Investigation Reports
• Claims Notes
• Depositions and Statements
• Medical Records and Medical Professionals
• ISO Reports (Claims History Report)
• Database Searches
• Witnesses
• Co-workers

Seeing all of these possibilities, you can see why it’s so important to outline the fraud in a documented referral. Giving the ASA a solid case that they don’t have to do too much with will go a long way in whether or not they accept the file. The days of slamming a huge box of paperwork in an ASA’s office and saying, “…there is fraud in that box” are over.

Material Misrepresentation

Within the Statement of Facts, you’ll be including a section called Material Misrepresentation. In this section, you’ll outline where, when, and how the suspect committed fraud. Address how the suspect misrepresented himself, his injury, or anything else he may have intentionally misrepresented during the claim process.

Current Status of the Claim

The people reading your report will want to know where the claim stands currently. Is the claim denied, still active? Is the suspect still getting paid, or not getting paid?

In most cases, the claim will have been denied but there still may be medical expenses that need to continue being paid.

Date of Discovery of Suspected Fraud

Pretty basic. What date did you determine fraud existed?

You’ll write something like, “Potential fraud has been established as of April 10, 2014.”

Some people make the mistake of using the date of loss as the date the fraud was discovered. The date at which point restitution can be ordered is the date the fraud was discovered and that could be years into a claim.

Applicable Statutes

A statute is a written law enacted by a legislature. The statutes you will deal with most frequently regarding insurance fraud, are state-level statutes. Keeping in mind, there may be other statutes, other than just insurance fraud, that is applicable to your referral.

For instance, if the suspect lied during a deposition, he may have committed purgery. Insurance fraud is theft, so if you have a situation where the restitution you’re requesting is greater than a certain amount of money (usually $500 or so), your suspect may have committed grand theft, or conspiracy to commit grand theft.

You must research the laws and determine what statutes are applicable to your case. Once you determine the statutes you’ll be using, it’s important to determine what degree of the crime is applicable. For instance, in Florida, an offense will be charged as Grand Theft in the First Degree if the property that was stolen is valued at $100,000 or more. An offense will be charged as Grand Theft in the Second Degree if the property that was stolen is valued at $20,000 or more, but less than $100,000.

For instance, in Florida, an offense will be charged as Grand Theft in the First Degree if the property that was stolen is valued at $100,000 or more. An offense will be charged as Grand Theft in the Second Degree if the property that was stolen is valued at $20,000 or more, but less than $100,000.

Based on what you’re asking for in restitution, that could change the statute you want to use significantly, and in turn, will also change the prevailing penalty. FindLaw has an excellent website that goes over all of the insurance fraud statutes by state.

Loss and Restitution

In this section, you’ll be defining how much money was allegedly bilked from the insurance company and what you would like to see in restitution be returned back to your client.

These amounts may vary greatly, some over $100,000, some just a few hundred dollars. No matter the amount, it’s important that you don’t lose sight of the fact the reason you’re submitting the referral isn’t just punitive in nature. You want your client to be made whole again and get the money back they lost.

Why not just sue them and get a judgment? Good question. Because insurance fraud is stealing and against the law. Also, if you are able to tie the restitution to their possible conviction and sentencing, even if the sentence is just probation, you will have a much greater chance of getting the money back than if a civil court issues a judgment. If they default on payments during the probationary period, they violated the terms of their probation and may have to serve the original sentence in its entirety.

Are you aware, on a national level, if insurance fraud was a business, it would be a Fortune 500 company, according to national reports? It is, by all accounts, the second largest economic crime in America; only tax evasion exceeds it.

Witness List

You will be required to submit a list of prospective witnesses. A witness list is comprised of the players involved in the case. It’s proper to provide their names, addresses, and contact information, along with what role they played in the claim.

If either party desires the testimony of a given witness, that party must take the appropriate steps to obtain the witness’s presence at an appropriate time and in an appropriate fashion. Failure to include a witness on the required witness lists may result in that witness’ testimony being prohibited at trial or other sanctions. Court rules vary, so requirements in your jurisdiction should be consulted.

Exhibit List

An exhibit is a document, record or another tangible object formally introduced as evidence in the court. Your exhibit list is a list of such Exhibits a party wants to produce before the court to prove a case.

It’s best to label each Exhibit first, then produce a reference sheet (Exhibit list) to add to your referral. Trying to label and record the Exhibits as you go can get confusing and will take much longer.

Remember, as you collect the evidence you may require a chain of custody form.

Conclusion

Here’s my typical conclusion, “Based upon the foregoing, it is respectfully requested the findings are made as set forth above.” No reason to be wordy here as you’ve already outlined your entire case in detail throughout the referral.

Final Thoughts

I’ve submitted close to 100 insurance fraud referrals in my time and I still learn new things simply because there are so many laws, so many variables, and things are ever-changing in this environment. Once you get the first one under your belt, the rest became easier and easier and it’s rewarding to follow these assignments through to the end.

If you have any questions, or I can be of assistance, email me at info@crosstrax.co.

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15 Types of Evidence and the Elements to Look For

There are two things to consider when contemplating the admissibility of different types of evidence, relevance and materiality. Evidence must be relevant and material to the issue(s) at hand or it could be deemed inadmissible. That said, while not admissible in court, there are still many types of evidence that can be valuable in an investigation. For instance, some evidence that is not admissible on its own may be admissible in tandem with other forms of evidence.

The law of evidence governs what can be presented in a court of law.  It applies to the use of oral or written statements, such as an affidavit, exhibits, or any other documentary material which is admissible in a judicial or administrative proceeding. Therefore, an investigators ability to gather, analyze, and track evidence is a critical competency. Even though evidence may not be direct proof of an event or claim, the direction of any case can change directions just based on the types of evidence identified.

Types of Evidence You May Run Across

1. Physical Evidence

Real evidence, physical evidence, or material evidence is any tangible object that plays some part in the issue that gave rise to the lawsuit, introduced in a trial, intended to prove a fact in issue based on the object’s evident physical features.

2. Exculpatory Evidence

Exculpatory evidence is evidence advantageous to the defendant in a criminal trial that absolves or tends to exonerate the defendant of guilt. It is the opposite of inculpatory evidence, which tends to prove guilt. Because of its extreme value to the defense, prosecutors and police are required to disclose to the defendant any and all exculpatory evidence when it becomes available.

3. Forensic Evidence

Forensic evidence refers to scientific evidence, such as DNA, trace evidence, fingerprints or ballistics reports, and can offer factual proof to determine a person’s guilt or innocence. Generally considered to be strong and reliable evidence, forensics role in exonerating the innocent has been well recognized. Due to cost and resources, forensic use in private matters is generally limited to serious cases that will most likely end up in court.

4. Direct Evidence

One of the most powerful types of evidence, direct evidence is a form of evidence such as eyewitness testimony. The evidence alone is the proof that something occurred or didn’t occur.

5. Analogical Evidence

There are times where the main issue is “cutting-edge” or generally under-researched.  Analogies come into play when you don’t have data to refer to or other sources on the matter to reference. Because there is a need for information to draw an analogy and you have to get your evidence from somewhere, analogical evidence, or comparative analysis, is the natural next step.

6. Anecdotal Evidence

Because it’s often dismissed as unreliable and worthless, anecdotal evidence is one of the more underutilized forms of evidence.  Anecdotal evidence is evidence that is based on a person’s observations. When used in conjunction with other types of evidence, it can actually be very useful for refuting generalizations because all you need is one example that challenges a claim.

7. Character Evidence

Character evidence describes any testimony or document presented for the determination of proving that a person acted in a certain way on a certain occasion based on the character or disposition of that person. Three factors classically control the permissibly of character evidence, the purpose the character evidence is being used for, the form in which the character evidence is offered, and the type of proceeding (civil or criminal) in which the character evidence is offered

8. Circumstantial Evidence

Circumstantial evidence, also known as indirect evidence, requires an inference regarding something that is based on a series of facts detached from the fact the dispute is trying to prove. It requires a presumption of facts from other facts that can be proven. While not considered to be overwhelmingly strong evidence, it can be relevant in a private matter, with a lesser burden of proof than “beyond a reasonable doubt”.

9. Demonstrative Evidence

Evidence in the form of a representation of an object and is considered to be demonstrative evidence when it directly demonstrates a fact. This could be photographs, video and audio recordings, charts, etc.

10. Digital Evidence

In recent years, the use of digital evidence in trials has greatly increased. Digital evidence can be any sort of digital file from an electronic source. This can include files, documents, emails, text messages, instant messages, the contents of a hard drive, electronic financial transactions, audio files, and video files. Digital evidence can be found on any server or device that stores data, including some lesser-known sources. It is important to think outside the box and don’t discount some unorthodox means such as home video game consoles, GPS, sport watches and internet-enabled devices. Additionally, digital evidence is often found and cataloged through internet searches using open source intelligence (OSINT).

11. Documentary Evidence

Documentary evidence can be and usually is introduced in the form of documents, such as an invoice, a contract or a will. In recent years, the term can include any media by which information can be maintained.

12. Hearsay Evidence

Hearsay is an out of court statement, that is made in court, to demonstrate the truth of the matter proclaimed. In other words, hearsay is evidence of an utterance or statement that was made other than by a witness while testifying at the hearing in question and that is presented to demonstrate the truth of the matter stated. Hearsay evidence is generally not admissible in court; however, it can be of interest and value in a private investigation where the burden of proof, if there is one, is less vigorous than in court.

13. Prima Facie Evidence

Latin for “at first sight”, prima facie may be used as an adjective meaning “sufficient to establish a fact or raise a presumption unless disproved or rebutted”. Typically presented before trial, this evidence is generally enough to prove something until it is disproved. Also referred to as “presumptive evidence”.

14. Statistical Evidence

Evidence that uses numbers (or statistical data) to back a position is called statistical evidence. This type of evidence is based on information gathering such as surveys or polls.

15. Testimonial Evidence

This is either oral or written statements given by a witness or authority under oath. It can be assembled in court, at a deposition or through a written affidavit.

Benefits of Knowing

Sometimes just keeping in mind what the various types of evidence are will help you identify them as evidence during an investigation. Remember, a small piece of evidence can change the course an ultimately the outcome of a well performed and maintained investigation.

Any tangible evidence must be cataloged and tracked until it’s proper disposal. Use the CROSStrax’s Chain of Custody Template to track the possession of evidence during your next investigation.

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