The Role of Investigations and Special Investigative Units in Defending Against Fraudulent Insurance Claims

Published on 5/22/2024 by Bar List Publishing


Insurance fraud is a persistent and costly problem, affecting the profitability and integrity of insurance companies and resulting in higher premiums for policyholders. For insurance defense attorneys, combating fraudulent claims requires a multi-faceted approach, where investigations and Special Investigative Units (SIUs) play a crucial role. Understanding the function and importance of these elements can significantly enhance the effectiveness of defense strategies in insurance litigation.

The Scope of Insurance Fraud

Insurance fraud manifests in various forms, from exaggerated claims to completely fabricated incidents. According to the FBI, insurance fraud (excluding health insurance) costs the average U.S. family between $400 and $700 per year in increased premiums. The Coalition Against Insurance Fraud estimates that fraud accounts for approximately 10% of property and casualty insurance losses and loss adjustment expenses each year.

The Role of Investigations

Effective investigation is the backbone of defending against fraudulent claims. Insurance companies employ a range of investigative techniques to uncover fraudulent activities. These techniques include:

1. Background Checks: Detailed background checks on claimants can reveal past fraudulent activities or criminal records that may indicate a propensity for filing false claims.

2. Surveillance: Physical and digital surveillance can gather evidence that disproves the claimant’s assertions. For instance, surveillance might show a supposedly injured person engaging in physical activities that contradict their injury claims.

3. Interviews and Statements: Conducting thorough interviews with claimants, witnesses, and other involved parties can help identify inconsistencies or falsehoods in the claims.

4. Document Analysis: Scrutinizing medical records, repair estimates, and other documentation for inconsistencies or anomalies can provide critical evidence against fraudulent claims.

These investigative methods help insurance defense attorneys build a solid case by providing factual evidence that disputes the fraudulent claims, thereby reducing the likelihood of unwarranted payouts.

Special Investigative Units (SIUs)

Special Investigative Units are dedicated teams within insurance companies specifically tasked with handling suspicious claims. These units consist of professionals with expertise in various fields such as law enforcement, medical examination, and legal compliance. The role of SIUs includes:

1. Identifying Suspicious Claims: SIUs use advanced analytics and red flag indicators to identify potentially fraudulent claims early in the process. These indicators might include inconsistencies in the claimant’s story, a history of multiple claims, or claims that closely match known fraud patterns.

2. Conducting In-Depth Investigations: Once a claim is flagged, SIUs conduct thorough investigations using a variety of methods, including those mentioned earlier. They leverage their specialized knowledge and resources to gather comprehensive evidence.

3. Collaborating with Law Enforcement: SIUs often work closely with law enforcement agencies to pursue criminal charges against fraudsters. This collaboration not only deters future fraud but also helps in recovering fraudulent payouts.

4. Training and Education: SIUs provide training to other departments within the insurance company to recognize and handle suspicious claims. They also engage in public education efforts to raise awareness about insurance fraud.

The Impact on Defense Strategies

For insurance defense attorneys, the information and evidence provided by SIUs are invaluable. These units deliver well-documented and credible evidence that can significantly strengthen the defense’s position in court. Key ways in which SIUs aid defense strategies include:

1. Providing Expert Testimony: Members of SIUs, with their specialized knowledge and experience, can serve as expert witnesses, offering testimony that supports the defense case.

2. Streamlining the Litigation Process: With thorough investigations conducted by SIUs, attorneys have access to a comprehensive repository of evidence from the outset, enabling more efficient case preparation and reducing the need for extensive discovery.

3. Reducing Litigation Costs: By preventing fraudulent claims from advancing to costly settlements or prolonged litigation, SIUs help in managing and minimizing legal expenses.

4. Deterring Future Fraud: Successful defenses against fraudulent claims, supported by SIU investigations, can deter future fraud by signaling the insurer’s commitment to combatting fraud and its capability to do so effectively.

The role of investigations and Special Investigative Units in defending against fraudulent insurance claims cannot be overstated. By employing a combination of investigative techniques and leveraging the specialized expertise of SIUs, insurance defense attorneys can effectively challenge fraudulent claims, protect the interests of insurance companies, and contribute to the overall integrity of the insurance industry. The collaboration between SIUs and defense attorneys forms a formidable barrier against the ever-evolving tactics of insurance fraudsters, ensuring that justice prevails and genuine claims are rightfully honored.