Top Ways to Scam Your Insurance Company

Posted in Health Insurance

December 28th, 2009

Have you been thinking about ways to scam your insurance company out of some money? Why not, everyone else is doing it, right? Wrong! In no way would we promote you committing illegal acts of insurance fraud to get money out of your insurance company.

There are plenty of people who have attempted some impressive scams, though. So if you’re looking at ways to scam your insurance company, here are the top ways to do it (just don’t try them!).

Faking a Disability

It’s heart-wrenching to hear stories of people who have been permanently disabled. Many people can really sympathize with them – that is, until it is discovered that the “disability” is really a sham.

This was the case with Denise Henderson, a woman who claimed she was permanently disabled from a car accident. She was supposedly so hurt that lifting a gallon of milk was agonizing. However, she wasn’t telling the whole story about her disability that granted her $2,200 a month. This woman in agony was not only able to tote heavy shopping bags around town, but also was well (and talented) enough to take the crown of a beauty pageant, partially due to a stunning dance performance.

After seeing her make more than 200 appearances as a pageant winner, a fraud investigator determined that she was pulling an insurance scam. And the result? She had to pay back $190,000 in benefits and serve a 46-month prison sentence.

Common Insurance Scams

Denise is definitely not the first person who has tried to pull off a disability scam by faking an injury. Here are a few others people have tried:

• Chronic dizziness: This is a problem that is often associated with inner ear issues. Since this problem can lead to impairment with walking, driving and working, many people try to use it as an excuse to secure disability payments.
• Mental illness: With this “disability,” many people try to “play crazy” to get their hands on insurance money.
• Chronic pain: Similar to the previous to scams, it’s tough to gauge the truth behind this disability, which is why many try to use it as an insurance scam.

While many people have gotten away with these scams, getting caught just isn’t worth it. Unfortunately, some don’t learn their lessons. Instead of seeing the mistakes others have made, they move on to other scams, like the workers’ compensation scam.

Workers’ Compensation Scam

In most states, workers’ compensation insurance is a part of a no-fault system. It generally relates to a worker who was injured on the job and needs compensation while unable to work. The trick to receiving this type of coverage is that the worker doesn’t have to prove that someone was at fault in order to receive benefits, quickly making it the fastest growing insurance scam in the nation. As you can imagine, this coveted title prompted many to try it for themselves.

For instance, a California corrections officer was charged with eight counts of workers’ compensation insurance fraud after making a claim that he was hurt while struggling with a county inmate. It turned out the injury he claimed he received on the job was actually treated by his personal doctor two days prior to reporting the workers’ compensation claim. As a result of his scam, he could face up to five years in state prison and $50,000 in fines.

But the corrections officer’s “hurt off the job” scam is not the only type of workers’ compensation scam out there. Some others include:

• Inflated injuries: Making a minor job injury seem much more severe than it is.
• Old injuries: Some try to claim that an old injury that never quite healed is an injury that was received on the job.
• Fake injuries: There are others who simply invent their injuries – hard to diagnose ones – to acquire benefits.
• Malingering: Those who malinger stay at home longer by pretending they’re still suffering from the injury.

As a result of scams like this, in 1991, the Workers’ Compensation Fraud Program was established and made this type of claims fraud a felony. According to the National Insurance Crime Bureau, $5 billion is lost in scams each year. But unfortunately, workers’ compensation scams haven’t slowed down. And neither has another major insurance scam, Medicare fraud.

Medicare Fraud

The government has discussed extensively just how challenging it can be to manage Medicare insurance fraud. But while Congress members have discussed ways to lower incidences of this type of fraud, it’s difficult to accomplish this goal when of the 4.4 million Medicare claims received each day, only three percent are reviewed.

One case of Medicare fraud involved three individuals from a clinic in Detroit, Mich. They admitted to asking Medicare beneficiaries to visit their clinic and sign documents indicating that they’d received services there. The clinic would then bill the Medicare program for medicine and services that were medically unnecessary or never provided.

The individuals were able to lure the Medicare beneficiaries to their clinic with cash and prescriptions for controlled substances. As a result of this scam, they pulled in a whopping $4.2 million. Now, they’re facing jail time and huge fines.

According to the U.S. government, between $60 billion and $2 trillion is lost to health care fraud each year – and this comes right out of taxpayers’ pockets. It is also costing the health care system royally and is said to be a major reason that health care costs are so high.

Now It’s Your Turn

Now that you’ve taken a good look at the top insurance scams out there, it’s your turn – to decide not to take this route. As you see in each example, those who committed these fraudulent acts were caught and are paying the ultimate price for their illegal acts.

Looking for an easy way to make money may seem more tempting than ever in this tough economy; however, saving your own money and looking for cost-effective insurance options is a much better way to go.