Combating Medical Fraud


Fraud costs the insurance industry billions of dollars each year. The Coalition Against Insurance Fraud (CAIF) estimates that insurance fraud is the second most costly economic crime in America after income tax evasion.

The Insurance Information Institute estimates that the total cost of all insurance fraud is between $85 billion and $120 billion a year. Some studies show that fraudulent claims account for 10 percent of all claim dollars; others suggest a much higher percentage.

Fraud must be detected and prevented by claim professionals because they are most familiar with individual claims. They must be able to identify fraud indicators and make the necessary referral to SIUs for review and action. Although a claim professional may suspect that a claim is fraudulent, he or she must behave ethically and in good faith at all times when dealing with insureds and claimants.

Insurers must maintain a balance between preventing and detecting fraud and treating policyholders with dignity and trust.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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