Alex Motamedi was an American success story. Starting with a small body shop, he built a chain of medical clinics and law firms from California to Florida that processed a total more than $10 million worth of insurance claims.
And he did it all dishonestly.
Motamedi, now a featured speaker at conferences on insurance fraud, is one of thousands who have skimmed illegal payments off insurers and cost policy holders $30 billion a year in premiums, according to the Insurance Services Office Inc (ISO).
The crooks slide under insurers' radar by filing small claims, often for fake or staged auto accidents, but also for workers' compensation, theft and other insurables; claims for $5,000 to $6,000 that are processed quickly, but in bulk make millions for scammers. They are helped by the cost of processing claims, which makes it easier for insurers to settle than challenge.
Insurers now fight back with an arsenal of computer tools run by the ISO, a Jersey City, New Jersey-based data centre for the industry, and the National Insurance Crime Bureau (NICB), a Des Plaines, Illinois company that fights insurance fraud. "They are the No. 1 key to unlocking fraud," said Stepen Perry, director of the District of Columbia Anti-Fraud Bureau.
Their data mining programs target the weakness in the scammers' model. Because they make only a few thousand on each claim, they do it again and again, each time upping the ante.
The computer cops fight back with "linkage" software, finding a common thread between multiple, seemingly-unrelated claims. Does the same lawyer or doctor's office do the billing? Do "victims" have a common phone? How many times has the same victim filed before?
This kind of investigation helped solve the case of the Nevada woman who allegedly found a finger in the chili at a Wendy's International Inc restaurant.
"We discovered that this woman had a history of filing similar claims for things like foreign objects in her food," said Denny Lynch, a spokesman for Wendy's.
She and her husband pleaded guilty and went to jail.
Computers are used to identify a pattern frequently seen in fraud. When four unrelated people are in the same car during an accident, it raises a red flag, as does the use of a mailbox rather than an address, said Ken Jones, vice president of Investigative Services for St. Paul Travellers Companies Inc. Even more suspicious is a claimant who files right after he has taken a policy.
These predictive models cannot convict felons, but they provide information to get a warrant and seize a doctor's records. Investigators "flip" the doctor and find the mastermind behind the scheme. Even more important, these red flags keep insurers from paying fake claims in the first place, choking off the scammer's source of income, said Randall Richardson, chief investigator for the California Divison of Insurance Fraud.
Criminals are aware of these tools and how to fight them. One plan is to spread the fraud so widely that there's no obvious connection. Recruiters, called "runners and cappers," will hit low-income areas and sell hundreds of "rent-a- patients" for a quick $1,500 each. In South Florida, a fraud ring helped Cubans immigrate to the United States if they would play the role of crash dummies for phony claims, investigators said.
The fake claims are spread out through an army of chiropractors, acupuncturists and outwardly legitimate businesses that fill out fake forms and pass them along. As many as 400 people may be involved, investigators said.
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