- Dean Smith
Insurance Fraud in Relation to COVID-19 Expected to Escalate
According to Matthew J. Smith, Esq., Executive Director of the Coalition Against Insurance Fraud, and Property Casualty 360, history is expected to repeat itself, as prior economic recessions have produced a rise in insurance fraud scams, and we are ready for it. We will examine the most common types expected during this time below, as businesses face shut down and savings accounts disappear.
Motor Vehicle Scams:
Give-ups, fake thefts, torchings.
Late-model vehicles, expensive SUVs, hybrids, second family cars.
Sudden disappearances from grocery store parking lots, in front of homes.
Burned on rural roads, in wooded areas/forests, dark alleyways in cities.
Gone for a swim in the bottoms of lakes, rivers, canals.
Crooked body shops inflating claims/damage, “totaling” cars for a fee.
Organized auto schemes, bringing in a rash of fraudulent whiplash claims, and with telemedicine on the rise in the pandemic, this will add fuel to the fire.
Mortgages may become overwhelming, look for cooking and candle excuses.
Policy limit increases, then home burnings shortly after, or just prior to foreclosures.
“Partial” home burnings, such as only certain rooms of the house so to not raise suspicions that the intention was to burn the whole house down, but still collect insurance payouts.
Burning of “second” homes or residences that are not primary.
Smith writes, “Shuttered clinics may make inflated claims for real and phantom treatments to keep revenue flowing. Billing records may need to be carefully reviewed in comparison to mandatory closures, travel restrictions, or other similar COVID-19-related impacts to determine if services were actually rendered. Medical providers teetering on the edge of failure will be equally tempted to create an outflow of false claims, up-charges for treatments, or generate income from unnecessary or duplicative services.”
“As with fake whiplash claims, telemedicine could be exploited to mass-produce false claims. With calls for telemedicine to be expanded rapidly, expect an equal rise in those seeking to commit scams as new systems may be rolled out before adequate safeguards are in place.”
Staged inventory thefts/inventory spoliation
Businesses with vehicle fleets may be reporting thefts and/or collisions, stage crashes, and inflated injury claims.
Lifestyle and Luxury Items:
Influx of claims on boats, motorcycles, RVs, jewelry/watches, etc., whether by fake thefts, boat sinkings, fires, etc.
Changes in deductibles/coverage limits/etc. just prior to making a claim.
Workers’ Compensation – Fraudulent Injuries and Premium Fraud:
Smith writes, “Impending layoffs could invite anxious employees to set up fake or inflate workplace injuries just ahead of the pink slip. They can fabricate new injuries — or take care of pre-existing non-work injuries such as that wrenched knee that never fully healed after last fall’s weekend soccer game.”
“Expect an onslaught, as well, of potential claims never before seen in workers’ compensation. With employees ordered to work remotely from home, what is the new definition of a ‘workplace injury’? May an employee who trips on their rug at home while trying to get to a phone call or computer screen now claim they were injured ‘on the job’? Such claims, no doubt, will arise. Most will have no witnesses, surveillance cameras or other independent proof to determine if they are legitimate.”
Also keep in mind, for those that insure essential workers, an influx of claims for people who have allegedly contracted COVID-19 at work. There is no way to determine where or how the virus was contracted.
In regards to premium scams, Smith writes, “Financial stress could impel more businesses to lowball their payroll and staff size. Permanent and part-time layoffs regretfully will increase — possibly for months to come.”
“Falsified layoffs thus could seem more-plausible to workers’ comp insurers amid the turmoil, and thus easier to disguise and get away with.”
Leave it to criminals to prey on the weak, scared, and vulnerable. We are already seeing it; scammers selling fraudulent “corona insurance,” fake testing kits, and “cures,” in an attempt to ultimately steal Medicare holders’ personal information.
“Duty to Defend”:
Smith writes, “Expect a major increase in duty-to-defend requests involving individual and class-action lawsuits from COVID-19 exposures. Class action lawsuits are already being filed. They allege businesses failed to do enough to protect employees and consumers from exposure. Suits against hand sanitizer manufacturers claim they implied their products protected against COVID-19.”
“Expect more lawsuits to explode in the coming months. Some may be justified, but others may be nothing more than quick money grabs. Regardless, insurers will be asked to incur legal fees to defend these cases, seek coverage opinions, and perhaps make large unexpected payouts.”
Regardless of the countless uncertainties brought about during these unprecedented times, rest assured that ICU Investigations, as your strategic partner, is ready and available to help you combat the onslaught of fraudulent claims you may be faced with, as our staff is at full-force. We will succeed and come out stronger on the other side of this.