The Coalition Against Insurance Fraud publishes a list of the most “extreme” consumer insurance fraudsters, and the rundown is a an eye-opener.
Consider what the group calls the “barons of bleak who reveal the human face of insurance fraud.”
Exhibit “A’ is Mark Leonard and his girlfriend Monseratte Shirley, both residents of the tony Indianapolis neighborhood of Richmond Hills. The duo engineered a fire at their home to collect $300,000 in insurance to pay off credit card and gambling debts. The explosion set off to trigger the fire “incinerated” not only their own home, but their neighbors, killing the homeowner.
Or how about Mikhail Zemlyansky, a Russian ex-pat living in New York City, who masterminded a massive auto insurance false injury claim scam that netted $279 million? Federal agents only took the operation down after infiltrating the fraud ring.
Then there’s Gloria Lee, owner of the Prince and Princess Pet Boutique in Las Vegas, Nevada. To bail herself out of debt, Lee burned down her store, with customers’ pets inside. Fortunately, the ham-handed fraudster forgot about about the building’s sprinkler system, which quickly doused the flames. Lee also forgot about the shop’s security cameras, which caught her and an accomplice setting the blaze.
Would you report insurance fraud if you witnessed it?
No doubt, all of the above are solid — and real-life — examples of heinous consumer insurance fraud in action.
While the perpetrators were caught and face justice, all three scenarios beg a larger question: What if you witnessed insurance fraud in action? Would you — or better yet, should you — step forward and report the fraud, and potentially expose yourself to harm from sinister insurance scammers?
Some industry experts say, yes, you should report instances of insurance fraud — but with a safety caveat or two.
“We all have a stake in insurance crime,” says Brian Wakefield, director of claims at Elephant Auto Insurance, in Richmond, Virginia.
“Costing consumers millions of dollars in increased premiums each year, insurance fraud is hardly a victimless crime,” Wakefield says. “There are multiple ways consumers can act to help fight insurance fraud. In each instance, the reporter’s identity can be kept confidential.”
Wakefield advises contacting the insurance company you believe is being defrauded. “Most can be reached via phone, email or standard mail and have dedicated departments that specialize in investigating suspected insurance fraud,” he says.
You can also contact the National Insurance Crime Bureau at 1-800-TEL-NICB (1-800-835-6422) or contact your state’s fraud bureau. “Much like insurance companies, these departments are dedicated to investigating suspected insurance fraud,” he adds.
Why it isn't easy to spot insurance fraud
Other industry insiders say it’s difficult for regular consumers to recognize specific, more complex forms of insurance fraud — even when it’s aimed against them.
“Over the years, my firm has represented all types of health care professionals in insurance fraud,” says Todd A. Spodek, a New York City attorney who is currently defending a New York eyeglass merchant in a major financial fraud scheme. “My suggestion to potential victims is to be on the look out for the unbundling of medical services — where the service should be billed as one item, it is broken down into separate items and billed individually.”
Another common example is phantom billing in which clients are treated for services they did not request and/or receive, Spodek says. “Patients should reject summary bills, and ask for an itemized statement detailing the charges/costs. This way if there is any unscrupulous activity they can report it and avoid any personal liability.”
Americans have a stake in a $40 billion problem
The total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year, according to the FBI. “That means insurance fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums,” the agency states.
Since all Americans actually do have a stake in insurance fraud, it’s certainly helpful to report fraud instances if you witness or experience one.
But do so discreetly, and let the professionals handle the risky “nab the perp” part of the equation.