Ethos guide to fighting fraud

TA BLE OF CO NTENTS

INTRODUCTION CHAPTER 1 -​Stats Can Be Scary Stuff CHAPTER 2 -​360-Degree Approach to Fraud CHAPTER 3 - ​Be Your Own Sleuth, but Don’t Cross the Line CHAPTER 4 - ​Seeing Red…Red Flags, that Is CHAPTER 5 - ​Data Support Services: Arming Yourself with Information CHAPTER 6 - ​IMI: The Investigation Evolution CHAPTER 7 - ​Should I or Shouldn’t I? The Surveillance Question CHAPTER 8 - ​Beware Clinic Fraud CHAPTER 9 - ​Fact or Fiction: Busting Myths Ethos-Style CHAPTER 10 - C ​ ase Law Defends Surveillance CHAPTER 11 - V ​ alue the SIU CHAPTER 12 - B ​ e Lucky and Good: Choosing the Right Investigative Firm CHAPTER 13 - G ​ ot Fraud?

CONCLUSION

I NT RO D UCTIO N My name is Ed Cotilla. I became a licensed private investigator in 1987 after watching my favorite television show, “Magnum PI.” True story. I had graduated college a semester early and like most people at age 21, I had no idea what I wanted to do for a career.

Staring real life in the face, I sat down on my couch in disbelief and wondered what I was going to do now that I needed an actual job.

So I turned on my television. (As I said, I was 21.) I tuned into my favorite show, and after watching Magnum solve another exciting caper, it hit me like a ton of bricks -- I wanted to be a private investigator.

For those of you unfamiliar with “Magnum PI,” it was, and in my opinion remains, the greatest television show ever wherein a private investigator’s life takes center stage. Magnum lived in a mansion in Hawaii for his wealthy unknown client, drove a red Ferrari, kept a butler named Higgins, and had a friend named TC who flew him all over the islands in his helicopter. Magnum investigated high profile cases while sporting a fantastic mustache and donning various Hawaiian shirts. He always solved his cases, got paid big bucks, and typically landed the ladies.

This plotline seemed very realistic to me back then, and I was positive that I could handle that lifestyle. So I opened the yellow pages (yes, they had phone books back then) and I called every private investigative firm in the states of Pennsylvania and New York. Long story short, I got laughed at by a lot of companies but ended up with two interviews that both turned into real paying jobs in the private investigative industry. What I thought was going to be a short dabble in a unique job evolved into a 27-year

career that is thankfully still going strong today.

It didn’t take long to learn that being a real-life private investigator had absolutely nothing in common with Magnum PI. I never got a red Ferrari, never worked for a mysterious millionaire, and never had a butler or even a friend with a helicopter.

I mention all this for one simple reason. Clarification. Throughout my long career in investigation and risk mitigation, from my roots as a field investigator to my current position as president of Ethos Risk Services, I’ve seen and heard enough industry information to fill a volcano.

Some fact, some fiction, and a ton of misinformation.

For example, fact or fiction? Investigators should always get video of the claimant.

Answer: Fiction.

Fact or Fiction? If a subject is not active, discontinue the investigation.

Answer: Fiction.

Do these seem inaccurate? Possibly.

Hence this publication.

On the pages that follow, I hope to dispel misnomers, educate those interested in learning, and hopefully enlighten anyone seeking advice in this oftentimes complex business.

The purpose of this publication is not to advertise. Look at this instead as a handbook to assist insurance adjusters, managers, and companies in their fight against fraud.

Fraud, as I’m sure you’ve guessed, is a problem as old as time. Or at least as old as money. Its motives, although varied, generally boil down to one element.

Greed.

People want more for doing less. In some cases, they want more for doing nothing. Trust me. I’ve investigated and managed thousands of insurance fraud cases. There is not much in this realm I have not seen.

• A female claimant with a bad back pole dancing at a gentleman’s club? I’ve seen it.

• A male claimant reporting two bum shoulders military pressing 200 lbs.? Seen that, too.

• A married claimant couple out of work with hip injuries running a 5K? Yep. Seen it. Two claimants busted for the price of one.

Although this background affords me an arsenal of anecdotes for cocktail parties, it’s also led me to one indisputable conclusion.

No matter how hard Ethos and other companies of our ilk try, fraud will never be completely eradicated.

However, we can play a major role in significantly reducing it.

There are many tools to combat fraud. Surveillance is perhaps the best known weapon, and honestly, it’s a big, powerful gun.

Yet, it’s just one of several at your disposal. Sometimes there are better, more cost-effective ways of dealing with your problem.

Discussed in greater detail later in this publication, they include, but are certainly not limited to, the following: • Internet Mining Investigation (IMI) - a comprehensive search that covers multiple aspects of the Internet to unveil information as it relates to subjects’ lives, both past and present.

• Claimant Profile Investigation (CPI) - a detailed investigation conducted prior to surveillance that provides relevant data on

a claimant’s employment status, fitness or sports involvement, and overall activity level.

• Activity Checks – a field investigation that involves discreetly interviewing a claimant’s neighbors to determine the feasibility of surveillance.

• Self-Sleuthing – a do-it-yourself approach to investigating your claimants using various Internet sites. Beware, though, there are legal ramifications to such searches.

As I mentioned, these are but a few arrows in your fraud-fighting quiver. Further details, additional options, information regarding legalities, and much, much more can be found in this booklet.

Before you read on, though, know this.

The allocation of adequate resources to conduct thorough risk mitigation efforts in the prevention, detection, and combatting of fraud is essential. Truth be told, as an industry we can do better. Fresh ideas, outside-the-box thinking, and new strategies need to advance from the locker room to the field of play.

I hope the pages that follow will assist you and your organization in that noble endeavor.

To educate and inform, that is the goal.

C H A PT ER 1 STATS CAN BE SCARY STUFF “It is the mark of a truly intelligent person to be moved by statistics” – George Bernard Shaw Ok, let’s just cut to the chase and dive right into the scary stuff.

There is no reason to sugarcoat it and it probably does not come to a shock for most people reading this booklet, but insurance fraud is an enormous problem that costs every sector of the insurance community billions of dollars per year. Okay, so the cat is out of the bag. Not so shocking, right? We have all seen the stories on television or in the newspaper of people ripping off insurance companies. It happens so often that many people become numb to it. Unfortunately, a fair amount of people have an apathetic attitude when it comes to insurance fraud. The truth that many people don’t understand is that the staggering costs associated with fraud are passed on to the honest consumers thereby raising insurance rates and even the costs of goods and services. Let’s take our hands away from our eyes and look at the problem.

- The Insurance Information Institute estimates that the annual cost of insurance fraud is between $85 billion and $120 billion a year. This translates to approximately $1,500 a year per family for the added costs of goods and services to make up for this fraudulent activity.

- Health care fraud costs Americans about $54 billion a year, according to the Coalition Against Insurance Fraud.

- Insurance fraud is reportedly the second largest economic

crime in America, exceeded only by tax evasion.

- The Journal of the American Medical Association reports that nearly one-third of doctors exaggerate the severity of a patient’s illness to help the patient avoid early discharge from a hospital.

-A study by the Rand Institute for Civil Justice shows that more than one-third of people hurt in auto accidents exaggerate their injuries. This adds between $13 and $18 billion to America’s annual insurance bill.

So what does this mean? If fraud were a business, it would rank as a Fortune 500 company.

Unfortunately, insurance companies do not have an unlimited reservoir of money. Like any other business, they cannot continue to operate if prolonged losses are incurred. As such, it is crucial to be pro-active in combating fraud before it eliminates certain types of insurance all together.

Who is responsible and who is at risk?

Studies show that health care, workers’ compensation, and auto insurance are the sectors most vulnerable to fraud.

America’s health care system is enormously vulnerable. The sheer number of patients and treatments plus the complexity of billing attract cons that are skilled at looting this overworked system. The pressure to control costs also encourages many doctors or health firms to cheat so they can recoup lost profits or meet rigorous treatment quotas.

The NICB says that insurance swindlers range from organized criminals to unscrupulous doctors, lawyers, and automotive body shop owners to ordinary people who buy insurance.

This makes it nearly impossible to profile or pinpoint a typical insurance scam artist. Insurance cheats do not fit the mold of one

particular class or socioeconomic group. They are not always the known criminal or con-man. They can just as easily be the little old lady who lives next door or the local doctor operating the neighborhood clinic. The bottom line is that all insurers are at risk and must be equipped to detect and investigate fraudulent activity.

Criminals constantly change techniques and schemes and will take advantage of new technology. For example, as the Internet allows for more streamlined processes for consumers to purchase insurance online, it will create opportunities for new schemes and deceit for computer savvy fraudsters.

Insurance fraud is a business for many people who spend their time and energy devising schemes to rip off the system. It is imperative that the insurance community remains vigilant in the pursuit of insurance fraud by remaining one step ahead of the criminals.

Insurance fraud may be classified as “hard” or “soft.” Hard fraud is a deliberate attempt to stage or invent an accident, injury, theft, arson, or other type of loss that would be covered under an insurance policy. Soft fraud, which is sometimes called opportunity fraud, occurs when a policyholder or claimant exaggerates a legitimate claim. One example of soft fraud is the car owner involved in a “fender bender” who pads the claim to cover the policy deductible. Another is exaggerating the amount and value of items stolen from a home or business.

Soft fraud may also occur when people purposely provide false information to influence the underwriting process in their favor when applying for insurance. To lower insurance premiums or increase the likelihood that the application for insurance will be accepted, people may under-report the number of miles driven, misrepresent where a car is garaged, fail to provide an accurate medical history when applying for health insurance, or falsify the number of employees and the nature of their work for workers’ compensation coverage.

Past, present, future Studies in the mid-to-late 90s strongly suggested that insurance fraud was for the most part acceptable to a majority of the American public. These studies showed that people had a tendency to overlook fraud and in many cases even justified fraudulent activity.

Fraud was described as a victimless crime and many people purported a general distrust of insurance companies. In one national study, many respondents indicated they felt even if fraud were completely eliminated that they, the consumers, would not see a decrease in their rates. Rather, they felt their rates would continue to escalate. In another study, respondents felt that they had a moral obligation to report fraud, but most said they wouldn’t report such activity for various reasons.

Another study showed that approximately six in 10 respondents agreed that people who commit fraud are only looking for a fair return on their past premiums, which they had already paid. I’m no math genius but that’s 60% of the respondents. Incredible and like I said, stats can be scary.

All of these studies exhibit the type of apathetic or self-justifying mindset of many people and clearly highlight some of the obstacles the insurance community faces when attempting to combat this fraud.

The good news is that through public awareness and the increased attention that fraud has received from the insurance industry, it appears that society’s indifferent attitude is changing.

Recent studies have shown that the public is becoming less tolerant of fraud. Through public education and efforts from the insurance community, society is now starting to see the huge effect that insurance fraud has on them as consumers.

In addition to the shift in the public’s perception of fraud, many states have made significant changes as well. The majority of

states now treat insurance fraud as a felony compared to the past when fraud may have been treated as a misdemeanor. This makes it more appealing for prosecutors to accept fraud cases and bring them to trial. Furthermore, many states are also providing immunity to individuals who report fraud. Immunity statutes protect the person or insurance company that reports insurance fraud from criminal and civil prosecution. Also, it helps reduce the fear from some people who may not want to get involved for fear of retaliation.

The increase of state fraud bureaus and Special Investigation Units (SIUs) have also been influential in this positive trend. This has been accomplished by enhancing the public’s awareness of these issues as well as increasing the number of fraud-related prosecutions. State fraud prosecutions have tripled over the last three years, according to a study of state fraud bureaus by the Coalition Against Insurance Fraud. In addition, according to the Insurance Research Council, fewer people believe it’s acceptable to inflate insurance claims by small amounts to recoup their deductible or premiums.

Even though the trends are encouraging, the insurance community still has a long way to go to further combat insurance fraud. Due to the large amount of money involved, fraud will always be an issue. However, if the insurance community and government entities remain vigilant in their pursuit of insurance fraud, the fraud trends and numbers should continue to decline.

Continuing to increase the public’s awareness of the effects of fraud will go a long way in this regard. Moreover, increasing the number of prosecutions on fraud criminals and passing stricter anti-fraud legislation in all states will continue to move the insurance fraud fighting community in the right direction.

C H A PT ER 2 THE 360-DEGREE APPROACH TO FIGHTING FRAUD “When every physical and mental resource is focused, one’s power to solve a problem multiplies tremendously.”

- Norman Vincent Peale In order to significantly impact fraud, it is essential to formulate a solid, comprehensive approach. After all, you don’t bring a knife to a gun fight. If you’re smart, you bring a bigger gun and maybe a hand grenade. When it comes to fighting fraud, we really need all the weapons we can gather.

I have an approach called the 360-Degree Fraud Program.

Personally, I think it makes sense to attack fraud in three segments: 1) Fraud Prevention – preventing fraud before it even happens.

2) Fraud Detection – identifying fraud in an efficient manner.

3) Fraud Defense – fighting fraud once you have the proper evidence.

These three components are critical to eliminating, or at the least, significantly reducing fraud. Quite frankly, without addressing all three of these areas you are limiting your ability to successfully combat fraud. All three facets of this approach need to be solid in order to come full circle—full circle as in 360 degrees.

As we have already learned, fraud costs the insurance industry

billions of dollars each year and it is simply not good enough to combat fraud without taking this three-pronged approach. The adage that you are only as strong as your weakest link certainly applies in this fight. This is how the 360-Degree Fraud Program works: Phase 1 - Fraud Prevention - Identifying potential fraud before it happens can save insurance companies millions of dollars. Dare I say, with a Dr. Evil voice, “Even billions of dollars.” Industry studies indicate that premium fraud is more prevalent than claimant fraud. Taking this into consideration, it makes sense to start with your underwriting department to ensure that you are writing reliable and costeffective policies. From a workers compensation standpoint, you should be verifying insured locations, ensuring each insured is utilizing correct employee classification codes, and identifying any potential underreporting of payroll. A thorough due diligence investigation can accomplish all of these things and much more.

From an employer’s or insured’s perspective, conducting thorough pre-employment screenings can significantly reduce fraud, yet many companies including Fortune 500s either don’t conduct such screenings or perform a very cursory search that is not beneficial in weeding out candidates who will ultimately rip them off. For example, the majority of people who engage in fraudulent workers compensation claims are recidivists, people who repeatedly commit the same offenses. Most of these people blatantly lie on their job applications when asked if they have filed prior workers compensation claims. In many states, a workers compensation search can be conducted on an applicant after they have been offered a job. If an employer discovers that the applicant lied on their application, they can rescind the job offer. There is a pretty standard profile of individuals who cheat insurance companies. Employers that are proactive in their hiring practices keep these people out

of their workplace, thereby mitigating future risk. It’s like keeping the fox out of the hen house. Everybody except the fox is happy.

Fraud Prevention is often overlooked because of a limited money-centric attitude. Many companies want more business, brokers want more commission, and shareholders want more revenue. Obviously, this is a short-sighted approach that will ultimately end with negative long-term ramifications. As Benjamin Franklin once said, “An ounce of prevention is worth a pound of cure.” Therefore, the best way to eliminate fraud is to avoid planting a corrupt seed. As stated, the first step in combating fraud is fraud prevention. Arguably, it’s the most important.

Phase 2 - Fraud Detection - Detecting fraud in your organization is paramount. And the earlier you detect it, the better. It takes effort and expertise to ferret out suspicious claims. The key is to have a good system in place to identify critical red flags or fraud indicators that typically point to fraudulent claim activity. Having a team of adjusters and claims managers thoroughly trained in fraud detection techniques will significantly improve fraud detection awareness. By identifying fraudulent claims early in the claims process, you save time, money, and aggravation.

Phase 3 - Fraud Defense – Now that you have caught the fraudster red-handed and collected evidence to support your case, it’s time to send a message. The third phase in this approach requires compiling solid evidence-based fraud referrals and submitting them to the respective state fraud reporting agencies. If submitted properly, you will see a dramatic increase in the amount of fraud prosecutions. It’s a great feeling when the system works and people violating said system are punished accordingly.

An added benefit of companies displaying diligence in their

pursuit against fraud is that they develop a reputation of taking fraud seriously. They will use whatever measures necessary to combat fraud. Trust me, the unscrupulous claimants who make a living submitting fraudulent claims are well aware of companies that take such an aggressive stance. Conversely, they also know the companies that are timid in the fraud fighting arena. Which companies do you think they target?

Beyond the above-referenced three phrases, it is recommended that you have some mechanism in place alerting you to potential fraud. Many insurance companies utilize predictive modeling software that can assist in identifying suspicious claims.

Additionally, a good investigative vendor should provide you with a fraud alert report that will assist in the fraud referral process.

Staying on top of these files and communicating effectively with the respective state fraud division is important in receiving a positive outcome. It’s also important to understand what truly constitutes fraud to make sure that you have ample evidence for a legitimate fraud referral. The criteria required for a fraud conviction will be discussed in a separate chapter later in this booklet.

In closing, having a well-rounded approach when dealing with fraudulent activity is absolutely essential. By attacking fraud from all angles - fraud prevention, fraud detection, and fraud defense - your company will definitely be a force to be reckoned with when it comes to dealing with fraudsters. You will see your fraud referrals/convictions increase exponentially, and even though every case will not be a fraud conviction, you will still be able to utilize critical investigative evidence to settle and close out many suspicious files.

C H A PT ER 3 BE YOUR OWN SLEUTH – BUT DON’T CROSS THE LINE “The truth. It is a beautiful and terrible thing, and must therefore be treated with great caution.” – J.K. Rowling Thanks to the Internet, there are thousands of informational resources available that, if you are so inclined, allow you to handle some of your own pre-investigative sleuthing. For example, a simple Google search on your subject may provide invaluable information regarding said subject’s employment status, hobbies, or sports-related activities. Checking someone’s Facebook or other social media sites typically reveals a slew of relevant information. There is a caveat though; you need to make sure you are conducting these investigations in an ethical manner. No false friending claimants on his or her social media sites. A good rule of thumb is that if information is available to the general public, then it is fair game. If the information is not available to the general public and you have to come up with a different way to gather the information, most likely you are stepping on the slippery slope of invading someone’s privacy.

At Ethos we have compiled a long laundry list of viable search engines that can provide a plethora of information on the subject you are researching. (For a complete list of useful investigative web sites, feel free to send an email to info@ethosrisk.com.)

Again we caution you to not push the boundaries. Rather, conduct all of your research in a professional and ethical manner.

My first boss once told me to do everything in the investigative process with the notion that at some point you will be in front of a judge explaining your actions. Great work advice, and probably great life advice. To reiterate, if you are doing everything in an

ethical manner, then you have nothing to worry about when searching on the Internet.

One final note on this topic: in my opinion it’s always best to let professionals handle things in which they are subject matter experts. It’s certainly reasonable to poke around the Internet here and there on a claimant or maybe even someone you know, but don’t get carried away. Let the experts do what they do best.

I understand that even though you are not a licensed private investigator, you did stay at a Holiday Inn. Unfortunately, that answer may not cut it in a court of law.

So what do you need for such a search? If you have a subject’s date of birth or Social Security number, you could almost write his or her autobiography. In most instances, even a subject’s full name can be enough information to initiate a thorough background investigation. Obviously, the more information you have on your subject, the better chance there is of obtaining relevant background information.

Those being said, proceed with caution.

There are privacy issues involved when retrieving certain types of information. According to the Fair Credit Reporting Act, you cannot conduct a credit check on a subject without their signed consent. Similarly, it is illegal to obtain medical records without a signed release form. There are information brokers out there who imply that banking and investment data is publicly available.

It’s not. Such information can only be obtained with a signed consent form from the account holder or with a legal subpoena.

Privacy has to be at the forefront when conducting any database or background investigation. Many states have adopted much stronger penalties for violation of privacy laws. In fact, the individual requesting the information can be prosecuted for ordering the illegally obtained data. As the public becomes more and more concerned with privacy issues, it is imperative

that investigators conduct all their actions in a legal and ethical manner. Investigators violating these laws are providing more fodder for the staunch privacy advocates, thus making it more difficult to obtain legitimate information, which is so beneficial in the investigation of fraudulent claims. There is much more on legalities later in this booklet, but I think you get the overall message. Proceed with caution and err on the side of being conservative.

Truly, this is a slippery slope. Our best advice? Tread cautiously.

C H A PT ER 4 SEEING RED…RED FLAGS, THAT IS “If you open your eyes very wide and look around you carefully, you will always see a lighthouse which will lead you to the right path! Just watch around you carefully!” ― Mehmet Murat ildan There’s an old mariner’s rhyme that goes, “Red sky at morning, sailors take warning; Red sky at night, sailors’ delight.”

Or something like that.

We’re not sea captains here at Ethos Risk Services, nor are we poets. Although, being half Irish I do know quite a few catchy limericks. That, however, is a much different story for a much different day… with a pint of Guinness perhaps.

Getting back to the lead verbiage, clearly this adage was a nifty way to forecast weather before meteorology became a recognized field of study and scientists invented a slew of weather predicting devices. Such instruments collect information including temperature, air pressure, humidity, wind speed, and rainfall to determine what weather lies ahead.

What does this have to do with risk mitigation?

Well, much like these forecasting devices, risk mitigation agencies gather suspicious data to determine if a claim is viable. We call these red flags.

Focusing on workers’ compensation, for example, there are a number of indicators, or red flags, that may determine if you have

a fraudulent claim on your hands. Before we get into specifics, though, please know that warning signs may vary from case to case, and there are no red flags that are infallible in uncovering fraud.

That being said, red flags are red for a reason. They define a strong probability or likelihood that your claimant may not be on the up and up. Risk mitigation is a game of odds, folks, and red flags help you improve your odds of successful outcomes with your investigations. Any business that declares ownership of a golden ticket offering 100-percent effectiveness in defining fraudulent activity is, for all intents and purposes, raising a red flag on itself.

We’re not trying to sell ourselves short here. We’re just being honest.

Now, on with the show.

A year or so ago, we received a call from an adjuster who was debating a surveillance assignment. The adjuster mentioned that his claimant reported a back injury on Monday morning. Said claimant had explained that he endured the injury late on Friday and thought he might feel better after resting on the weekend.

We told the adjuster that this was indeed a red flag, but asked for further details. After all, we do live in an innocent-until-provenguilty nation.

The adjuster further explained that the claimant offered no witness names to the injury (red flag # 2) and was relatively new to the company. In fact, this was the claimant’s third job in six months (red flags # 3 and #4).

Truly, this claim smelled of fraud and we recommended surveillance with one of our investigators. After running our requisite preliminary database search, we confirmed the claimant’s address, a landline phone number, and a registered

vehicle. On day one of surveillance, we observed no activity and could not confirm the claimant’s presence within the residence via phone. We updated the client, who mentioned that the claimant was indeed difficult to contact (red flag # 5).

On day two of surveillance, another four hours of inactivity left us frustrated but more determined to unlock this case. Our investigator initiated a neighborhood canvass in an attempt to gain further information regarding the claimant. A female resident residing next door reported that the claimant mainly kept to himself; however, she had seen the claimant performing yard maintenance on a weekly basis.

On cue, the claimant exited his residence through the garage while pushing a lawn mower and carrying a gas-powered leaf blower. Our investigator discreetly excused himself from the neighbor’s presence, returned to his vehicle, and obtained nearly 90 minutes of footage of the claimant mowing his lawn, bending at the waist while dumping grass clippings into a garbage bag, edging his driveway and sidewalk, and then blowing the excess debris into the street.

Our client was understandably thrilled with these results. Shortly thereafter, the claim was shut down.

The above example lists but a handful of red flags that exist in this field. Others may include a claimant’s usage of suspicious providers or attorneys; conflicting descriptions between the claimant’s explanation of his injury and the existing medical report; a claimant’s refusal to seek medical treatment; or multiple claims from one individual.

Of course, red flags apply to fraudulent business owners as well.

These may include the business being located in a different part of the state than its mailing address; inconsistencies between reported injuries and job duties; or a prior carrier dropping said business.

On the auto liability side there are numerous red flags as well.

Some examples include a person who has submitted a lot of claims during their lifetime (a quick ISO search will reveal that information); a claimant who adds or increases auto insurance coverage shortly before submitting a claim; or a claimant who submits handwritten receipts for repairs on a covered item.

In all sincerity, the number of red flags in this field could fill page after page after page in this publication. However, in the interest of keeping your interest, we tried to highlight the most prevalent warning signs to best arm you in your battle against fraud.

At Ethos we keep a comprehensive list of red flags related to every segment that we investigate. For a copy of our red flags, please shoot us an email at info@ethosrisk.com We will be happy to share this important information with you.

And remember, “Red flags in files, may bring you smiles.� (I told you we weren’t poets.)

C H A PT ER 5 DATA SUPPORT SERVICES: ARMING YOU WITH INFORMATION “Data! Data! Data!” he cried impatiently. “I can’t make bricks without clay.” – Sherlock Holmes Technology has become a critical component of almost any successful investigation in the Information Age. Databases and Internet sites provide a wealth of information that can paint a picture of a subject’s employment status, social activities, and hobbies. Such information, in the hands of a good investigator, can determine the best course of action for an investigation and end up saving you a lot of money in the process.

Data support tools include Internet mining/social media investigations, database investigations, background checks, locate services, and hospital/pharmacy/clinic canvasses. When properly utilized, these investigations can uncover a treasure trove of data to help you determine how to proceed in the handling of a claim. Success rates of investigations go up exponentially when data support services are properly utilized. Following are some examples of Data Support Services products that have proven to be valuable tools when making such important decisions: Claimant Profile Investigations – These investigations involve a series of thorough database searches and interviews to determine a subject’s employment status, fitness or sports involvement, and overall activity level. Multiple comprehensive public and private database records are analyzed to uncover potential information on a claimant’s employment status, hobbies, and overall activity level. A fitness center and sports

canvass is conducted to ascertain if the claimant is working out at a local gym or participating in a sporting event. In addition, information is discreetly obtained from sources in the claimant’s neighborhood and community relevant to the claimant’s pattern of activity. This information can help you decide if surveillance is likely to be beneficial and when and where it should be conducted. However, if it is determined that your claimant is apparently not very active, your investigative company should let you know that surveillance is not the best option.

Locate Investigations - If someone does not want to be found (for whatever reason), they can employ a variety of tactics to keep their whereabouts hidden. Typically, such folks will attempt to hide their tracks by using P.O. Boxes to receive mail instead of having it sent to their residence, staying with friends or relatives, cancelling or postponing scheduled medical appointments, and not putting any utility services under their name.

In such instances, a locate investigation may be just what the doctor ordered. By combing over database reports and discreetly inquiring with relatives, medical providers, neighbors, and other associates, an investigator can usually come up with a solid address for a subject. From there, you may plan your surveillance, subpoena, or document service accordingly.

Canvasses – Hospital, Pharmacy, and Image canvasses are an excellent tool to ascertain claimant’s pre-existing injuries and unknown treatment history. Typically, a canvass is started by conducting an address history search on a claimant and then contacting various hospitals or pharmacies in a pre-determined radius of the claimant’s current and prior addresses. Oftentimes, a canvass of area hospitals and imaging facilities will reveal treatment records stemming from previous claims. A pharmacy canvass can also reveal pre-existing injuries and help determine the frequency with which the claimant has prescriptions filled.

Some claimants with relatively minor injuries have shown a history of repeated narcotic pain relievers which is certainly a red flag of

abuse. Initially, a canvass will reveal only treatment dates or dates prescriptions were filled, which does not violate any HIPPA regulations. For copies of medical records, it is necessary to have a signed release form from the claimant. For soft tissue injuries, canvasses of local chiropractor offices, urgent care centers, and hospitals have proven to be very beneficial. Canvasses can also include medical specialists ranging from neurologists and orthopedic surgeons to podiatrist and pathologists. Finally, a canvass of local fitness centers and gyms will reveal whether or not the claimant has an active membership.

Pre-Employment Screenings - As the name implies, preemployment screenings are designed to provide you with relevant information needed to make informed hiring decisions. These screenings may include education and employment verifications, criminal history checks, record of litigation investigations, judgment and lien research, motor vehicle reports, multi-state sexual and violent offender registry searches, and personal reference checks that can make your decision to hire (or not) much easier.

Due Diligence Investigations - These investigations are a must if you are considering a new partnership, joint venture, merger/ acquisition, corporate restructuring, or financial investment.

When properly performed by a skilled investigator, due diligence investigations can ensure that you have the required information needed to make intelligent business and fiscal decisions. Due diligence investigations typically include extensive research regarding a company’s financial and operating history, backgrounds of key executives, litigation history, business reputation, and corporate culture.

As you can see, a good Data Support Services department can provide very important, useful information designed to help you make the best decisions possible for your organization. It is critical, however, that the department is staffed with highly trained, skilled investigators who are experienced in these types

of investigations. Finding information is one thing, but being able to properly interpret it and apply it for maximum benefit is another. Therefore, before assigning such work, you should talk to your investigative vendor to find out about their DSS department and how they operate.

C H A PT ER 6 IMI: THE INVESTIGATION EVOLUTION “I am ahead, I am advanced; I am the first mammal to wear pants, yeah. It’s evolution baby.”

– Eddie Vedder, Pearl Jam – Do the Evolution lyrics Evolve or die is a long-standing axiom in the business world, and the risk mitigation industry is no exception. Once anchored by investigators of the Sam Spade ilk, P.I. work has expanded to include both field know-how and technological savvy. Like it or not, computer expertise is every bit as crucial as surveillance proficiency.

Welcome to the Internet Mining Investigation age.

Over the last decade or so, the Internet has become an endless source of information in the investigative realm. A tool used to advertise, educate, and socialize, the Internet provides both inane and vital insight into the lives of its users.

The key, obviously, is to separate “Ho-hum” from “Holy cow!”

The Internet Mining Investigation, as it’s called by Ethos Risk Services, was designed to do just that. A comprehensive search that covers multiple aspects of the Internet to unveil information as it relates to subjects’ lives, both past and present, the IMI serves as both a supplementary tool as well as a stand-alone resource.

If, for example, you’re undecided about assigning surveillance, an IMI may prove to be an invaluable decision maker.

My favorite story involving this relatively new service involves a 40-something female claimant who complained of low back pain.

We’ll call her Jane. Known for her fitness addiction, a simple IMI search exposed both Facebook and Twitter posts revealing that Jane was teaching Zumba classes at an area gym. And just like a solid newspaper lead, said posts provided the who, what, where, and when of Jane’s Zumba participation. We sent a female investigator to the class on two occasions and sure enough, Jane served as the instructor. Two-plus hours of video later, Jane’s bad back claim was in serious question.

Of course, not every IMI is so revealing. Nonetheless, by canvassing the vast, constantly expanding resource that is the Internet, if your claimant is active, there’s a good chance an IMI will at the least push you and your investigator in the right direction.

As with any service offered by different companies, not all IMIs are the same. However, similar to an Ethos Risk Services IMI, it’s likely that investigations will include social media, business media, localized media, search engines, meta-search engines, and the deep web.

Truly, and I apologize if this sounds overdramatic, it’s quite possible that a claimant will turn himself in on your behalf. As seen in the above-referenced example with Jane, social media is a great way for people to keep in touch while additionally offering the opportunity to promote or advertise a business venture. Moreover, these facets often offer valuable up-to-date information regarding the lives of individuals, their hobbies, activities, and day-to-day life. At Ethos, in addition to our Zumba claimant, we’ve used the IMI to obtain footage of subjects skydiving, running 5Ks, and dancing the night away at nightclubs.

Would we have caught these claimants without the IMI? In some cases, probably. But in other cases, most likely not. However, the IMIs certainly bettered our surveillance odds. Just as importantly,

they saved our clients money with not only specific dates and times, but documentation so valuable, you could almost hear the “cha-ching.�

IMIs are also relevant beyond the surveillance field. Information has additionally uncovered claimants who have taken work with new employers or even opened their own businesses. Plus, localized media searches have uncovered news stories involving subjects suffering accidents days before reporting an injury to an insurance carrier.

The Internet Mining Investigation has been proven to be a useful tool in discrediting subjects on a consistent basis. When used in conjunction with surveillance, the success rate increases exponentially. This cost-efficient service is able to determine the routines of individuals and assists in formatting a game plan for when and where surveillance efforts would be most effective.

With all due respect to Sam Spade, the IMI is here to stay.

C H A PT ER 7 SHOULD I OR SHOULDN’T I? That’s the surveillance question. “ In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” - Theodore Roosevelt Okay, so you find yourself with a claimant out on workers’ compensation and you can’t shake the feeling that something is rotten in the state of Denmark. (Incidentally, there’s a good chance Shakespeare didn’t write all those plays. A guy named Edward Devere did the work-- but we’ll leave that alone for now.

That’s an entirely different type of investigation.)

So this employee, let’s call him William, is claiming a back injury.

You think he’s exaggerating, you’d love to prove it, but you’re unsure if surveillance is the way to go. What to do, what to do?

• How about an IMI? Is spending money in a more efficient, effective manner on your list of goals? If so, you should certainly consider an Internet Mining Investigators. (In Chapter 6 we discussed Internet Mining Investigations in detail. If you skipped ahead, no worries. Just scan back and check it out.) If it’s determined William the claimant is house-bound, your investigative company will let you know that surveillance is not the best option, thereby saving you wasted surveillance dollars that could be allocated to a file that better warrants surveillance. On the flip side, if it’s learned that William plays in a softball league every Thursday night, rest assured-- with your approval-- there

will be an investigator in the bleachers with a camera in hand. With an IMI, your company could save hundreds of thousands of dollars per year in investigative costs.

• Are your red flags red enough? As we discussed earlier in the chapter on red flags, identifying red flags is an important part of the claims review process. When these indicators are present, quite simply, the risk of potential fraud is higher. The faster you identify the warning signs that a claim may be fraudulent, the sooner you can get the case investigated and work towards saving your company money. Let’s say we’ve learned through an IMI that William the claimant is coaching a Little League baseball team.

Certainly, with his aforementioned back injury, this could be deemed a red flag. However, it’s also quite possible that William has assistants who carry the equipment bags and warm up the team while he merely plants his can in the dugout and fills out the lineup card. So, being the savvy individual you are, you begin your efforts by assigning a background investigation. A background investigation is an excellent investigative tool that can provide invaluable information on a claim. It could reveal that your claimant has a history of workers’ compensation and/or liability claims, pre-existing injuries, current or previous criminal charges, or an occupational or business license. So you assign the background investigation to an investigator who specializes in this area. It’s determined that William has three prior workers’ compensation claims as well as two DUIs and an assault and battery charge. The flags are redder than a tomato patch. It’s time to assign surveillance • Is a preliminary database search really necessary before initiating surveillance? Well, to be honest, yes. And most good vendors use them. When seeking an investigative firm to handle your claims, details of which are discussed in a related chapter, it’s important to ask if they run preliminary database searches. Using specific databases and Internet queries prior to conducting surveillance, your vendor should be able to locate recent addresses, associated vehicles and

phone numbers, and more.

• Why is this important? Let’s say you have an address for William at 205 Atlantic Avenue, Allenwood, New Jersey. Through a database search, your vendor finds that William listed the 205 Atlantic Avenue address in July of 2011, but then reported an address of 160 Myrtle Avenue, Manasquan, NJ from June of 2012 through the present. In addition, a 2005 Ford Explorer, NJ tag # ABC123, is found to be associated with William at the Manasquan address. On day one of surveillance, the field investigator arrives at the residence in Allenwood but does not see a Ford Explorer.

It’s very early in the morning, so the investigator conducts a spot-check at the Manasquan residence. There he finds the aforementioned Ford Explorer and ultimately locates William the claimant, hopefully engaging in contradictory activity guaranteed to assist your claim. “A victory is twice itself when the achiever brings home full numbers.” -- Much Ado About Nothing Surveillance, when conducted properly, is an extremely effective investigative tool. I could cite hundreds of real life case studies where surveillance results helped our clients save large sums of money, settle files early in the claims process, and increase fraud referrals and prosecutions. The list goes on forever. I sometimes talk to professionals in the insurance industry who claim that surveillance has not been effective for them because they never seem to get results they can use. I always tell them the same thing: “You are not using the right investigative vendors.”

Obviously being the owner of an investigative company may jade my opinion, but honestly, I see the results of effective surveillance on a daily basis. If you are assigning the right cases and your investigative vendor is using effective surveillance techniques, then the amount of money you are saving as a result of surveillance should far outweigh your surveillance costs. So turning surveillance into an investment rather than an expense is paramount. That being said, there are several key fundamentals

that lead to effective surveillance results, many of which have already been covered in this book. Obviously, having a welltrained surveillance investigator is critical as is identifying red flags on suspicious claims. A thorough pre-surveillance investigation should be conducted on every file to obtain information that will assist in the surveillance process. From there it is extremely important for the investigator to create an effective strategy.

You wouldn’t build a house without a blueprint and you shouldn’t conduct surveillance without a solid game plan.

No two cases are ever the same; therefore, the approach to surveillance should not always be the same. For example, if a pre-surveillance investigation reveals that a claimant is more inclined to be a night owl who sleeps in the ensuing morning then it doesn’t make much sense to start surveillance at 6:00 a.m. Another important element when assigning surveillance is to tell your investigative vendor to switch up start and end times if there is no claimant activity. There is nothing more frustrating than getting a no-activity report from a vendor who conducted three consecutive days of surveillance, each from 6:00 a.m. – 2:00 p.m. As mentioned earlier, the coup de gras of surveillance is determining a claimant’s daily routine. Once you are able to do so, then obtaining excellent surveillance results should be commonplace.

Here’s a final thought. Despite a bevy of red flags and exhaustive pre-investigative efforts, please keep in mind that surveillance is not an exact science. There is no controlled environment guaranteeing a specific outcome. You may get a brief video clip or you may get the wrong person all together. However, you could end up with some incredible footage that buries the claim.

By choosing the right vendor and the proper files to investigate, your odds on the incredible footage result are greatly increased.

C H A PT ER 8 BEWARE CLINIC FRAUD “Things gained through unjust fraud are never secure.”

- Sophocles In recent years, clinic fraud has become a major concern, costing insurance companies and employers billions of dollars each year.

That’s not exactly chump change and each and every one of us foots the bill for these unscrupulous activities through higher insurance premiums. It seems that not a day goes by without a news story or two about someone trying to make a quick buck by scamming the system.

So, how can you take action if you believe that one or more of your claimants is involved in clinic fraud? One proven method is to conduct a clinic investigation in order to document the activities taking place at a questionable facility. Even though the folks who are involved in clinic fraud think that they’re smarter than the rest of us, a well-executed clinic investigation can quickly dispel such notions.

Here’s a quick real life case study on successful clinic investigations.

In September 2013, Ethos was assigned a clinic investigation in Tampa, FL. The assignment was referred by a large auto insurance carrier, and in fact, the clinic was under so much suspicion that two other auto carriers experienced similar issues and teamed up to split the costs of the investigation and spearhead the fraud referral process when the investigation was complete. Prior to initiating the investigation, we scouted the area to determine the best set-up for surveillance. The assignment called for a five-day straight surveillance from Monday through Friday to document

all activity at the clinic. Pretty standard for a clinic investigation.

These investigations are not for the weak of heart or mind as they require very long days of surveillance with virtually no chance to leave the area to use a bathroom or grab something to eat. Investigators need to be well prepared, fully focused, and ready to put in long workdays. Based on the set-up, we used three investigators for this clinic investigation--one investigator to cover the front of the clinic, a second investigator to cover the rear of the clinic, and a third investigator to document all the tags of the vehicles coming and going from the clinic. We were equipped with special cameras to run continuous video from the time the clinic opened until the time it closed and the last person departed the area. After five days of documentation we had ample evidence to prove this clinic was bogus. The evidence revealed the following: 1) various claimants showed up to the clinic and departed within 10 minutes of their arrival.

The insurance companies received invoices for an assortment of medical procedures that would have taken well over an hour if they were really administered; 2) many claimants never showed up at all, yet the insurance companies received invoices for treatment on these specific dates; 3) the clinic had one licensed physician who only showed up on one day the entire week. Invoices throughout that week indicated that the doctor performed all sorts of procedures when he wasn’t even present.

After the investigation the evidence was packaged and submitted to the proper regulatory authorities. Within a few weeks the clinic was raided by law enforcement and immediately shut down. The doctor was charged with fraud and undoubtedly will lose his medical license. The clinic employees were charged as accessories to committing fraud and numerous claimants were also arrested and similarly charged with fraud. The clinic scandal was picked up by all the local news stations and also appeared in the local newspaper.

Fast-forward one month. We were assigned another clinic investigation in the same city only 5 miles away from the above-

referenced clinic. Long story short, the investigation was almost identical and this clinic was shut down as well. As an added benefit, the doctor who operated this bogus clinic also was operating two other bogus clinics in South Florida. One of them was just a mail drop. The clinic didn’t even exist. The other one was raided and shut down as well. Good Guys 3 – Bad Guys 0.

Clinic investigations can help you get answers to the following questions: • Is a claim valid or not?

• Does the clinic exist or is it a mail drop or storefront?

• Is your claimant showing up at the appointments for which the clinic is invoicing you?

• Is your claimant being treated by a licensed physician, a licensed physician assistant, or possibly someone without a medical license?

• Are you being billed for the cost of a physician when an assistant or non-licensed employee is actually conducting the treatment?

• Is the clinic involved with “runners,” or unprincipled parties such as tow truck drivers, body shops, or attorneys who receive incentives to send patients to the clinic?

Regardless of the firm you choose to perform a clinic investigation, their game plan should include most, if not all, of the following: • Verifying the clinic’s physical location and inspecting the facility.

• Verifying all medical licenses of healthcare workers and medical directors.

• Conducting surveillance to determine the number of individuals entering/exiting the clinic.

• Reviewing of medical files by expert adjusters.

• Interviewing the claimant, the insured, and all medical staff on premises.

• Conducting full background checks on the owners of the clinic.

• Determining if treatment is actually being conducted and whether or not the clinic has equipment for which they are billing. • Investigating the process of the treatment and who is providing the treatment. • Determining if there is fraud and/or potential for a criminal referral.

When choosing a firm to conduct your clinic investigation, be sure to ask for referrals and documentation of their experience in such investigations. It is critical that the firm you select has the experience and know-how to perform the investigation in a discreet manner as many of the folks who participate in clinic fraud are well trained to be on the lookout for surveillance.

Experienced investigators will scout the location in advance of the investigation and identify the best positions to prudently document every person and vehicle coming and going from the clinic without being noticed. The last thing you want is for your investigator(s) to be detected while on-site as this will likely compromise the integrity of the entire investigation.

C H A PT ER 9 FACT OR FICTION: BUSTING MYTHS ETHOS STYLE “The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.” - John F. Kennedy Most avid readers have a favorite author. Mystery, fantasy, general fiction—whatever--said scribe magically weaves a web of words which wows his audience.

Much like music fans anxiously awaiting their preferred artist’s upcoming release, so, too, do this writer’s followers. Hence, when the author’s next literary work is published, it’s no surprise that his devotees rush to Amazon or Barnes & Noble to purchase the novel.

Unfortunately, at least one reader will be disappointed. The allure normally found within this writer’s pages was missing.

There was no draw. No charm. No hook.

Does this mean the author lost his touch? That he’s washed up?

That he needs to find a new career path?

Of course not. There are dozens of reasons the above-referenced reader didn’t connect with the novel. Perhaps the author chose a new direction or tone. Or maybe the reader’s taste changed.

Really, it could be anything.

Similarly, there’s a fallacy in risk mitigation regarding investigators who don’t obtain video documentation. So without adieu…

Fact or Fiction? Investigators should always get video of the claimant.

Answer: Fiction There are numerous reasons why an investigator might not get video during surveillance. First and foremost, there are cases where the claimant is actually injured. As a result, said claimant confines his or her activities within their residence. Truth be told, determining this genuine injury should be considered a positive outcome. Despite the guilty-until-proven-innocent mindset under which the risk mitigation system sometimes operates, there are hard-working claimants out there who are really injured. All such legitimate claims should be paid and handled professionally.

On the flip side, bogus claims should be shut down as promptly as evidence allows. And if red flags arise on such claims, the investigation should yield successful results.

I repeat: “Should.�

As with the aforementioned author’s novel, red flags are not 100-percent guaranteed. For example, you may have an incredibly believable lead only to learn, as mentioned above, that the claim is legitimate. Despite beliefs to the contrary, your claimant is truly injured. Again, this should be considered a positive. You can now discontinue the investigation and focus on other potentially bogus claims. And trust me. There are enough such claims out there that running into a few legitimate ones (even with red flags) should not discourage anyone.

Speaking of red flags, it is important to note that certain flags are, well, redder than others. And again, this can negatively impact video documentation.

I always ask clients why they suspect a claimant is exaggerating

their injury. Nine times out of 10, the answer makes perfect sense. However, in some cases the response is not exactly, shall we say, investigatively sound. Sometimes clients explain they just didn’t like the claimant’s tone over the phone or that the claimant was rude. As a result, the client really wants to “bust” this individual. While I certainly understand the emotional response, I try to explain that a claimant being a jerk does not necessarily mean they are committing fraud. Thus, as you see, case selection is of paramount importance and should be based on legitimate red flags rather than emotional factors.

Still, even with these legitimate flags, there are various obstacles that may prevent an investigator from obtaining video documentation. While extremely frustrating, they do exist. For example, a claimant may be observed carrying his trash cans to the edge of his driveway for pick-up. As soon as the investigator pulls up his camera, a school bus or delivery truck comes out of nowhere and parks directly between the investigator and the claimant. As soon as the bus or delivery truck pulls away, the claimant is entering the residence. Believe me, this is just as maddening to the investigator as it is to the client.

I recall a surveillance assignment that I worked years ago where I sat patiently and discreetly in a claimant’s neighborhood for approximately seven hours before the claimant was finally observed on the side of his property. I watched the claimant eyeballing a stack of cinderblocks on the side of his house and anxiously waited for said claimant to pick these blocks up and carry them elsewhere. I was in perfect position to obtain compelling videotape when suddenly a police cruiser pulled up behind me. The officer tapped on my window as the claimant, of course, started to pick up the cinderblocks and carry them to the rear of his property. I rolled down my window and frantically showed my private investigator license to the officer, explaining that I called the precinct earlier that day. This guy wasn’t having it, though, and asked me a litany of questions as the claimant continued to toil away. I answered as fast as possible; however,

by the time the interrogation wrapped, the claimant had disappeared behind his privacy fence and I had absolutely no video evidence.

Like I said earlier, “maddening.”

Another factor hindering video documentation is a claimant’s hermit-like lifestyle. While this is rare, it does happen. I once interviewed a claimant during a routine statement. He told me that his daily activities consisted of playing video games 12 hours per day. Honestly, the guy looked like a vampire. The mere exposure of his skin to sunlight could have been terminal. Sadly, and here I’ll only briefly note my personal bias towards America’s youth failing to exercise enough, the popularity of social media these days can strengthen the odds of a claimant remaining indoors, whether perusing social media sites or playing Mortal Kombat from sunrise to sunset. Painfully, from our standpoint, the claimant may in fact be injury-free. However, since they never leave the house, even the most elite of investigators cannot get damaging video evidence if the claimant never abandons his couch.

Fortunately, there are ways to improve the odds of video documentation. For Ethos investigators, preliminary investigations have proven to be dramatically effective. A preliminary investigation, in Ethos terms, consists of searching various databases and social media sites to glean information regarding a claimant’s activity level. This preliminary work, especially when combined with our Internet Mining Investigations, can be invaluable in gaining beneficial information that allows us to formulate an educated investigative game plan. Clearly, this is an excellent starting point. Determining when and where a clamant may be active prior to arriving in his neighborhood is always a huge boon.

In closing, there are times when obtaining claimant video is not in the cards through no fault of the investigator. However, as

we’ve discussed, if the right cases are selected for investigation, and said cases have both solid preliminary work and realistic expectations of surveillance results, you as a client should benefit with solid videotape evidence.

Fact or Fiction: Only lousy investigators get burned by claimants.

Answer: Fiction.

The quarterback sneak is clearly football’s most basic play. Snap the ball. Plow forward. End of story. Right?

Wrong.

In reality, the sneak features a multi-layered plan of attack dependent on a flawless center-quarterback exchange, a significant line surge amidst a world of 350-pound behemoths, and the ball carrier’s ability to remain patient for that critical nanosecond before plunging ahead. If any one of these elements fails, it could mean the difference between winning and losing.

Along those lines, to the casual observer the surveillance business may seem blandly straightforward. Investigator sits in car with camera. Investigator films claimant with said camera.

End of story. Right?

Wrong.

Just like the quarterback sneak, a successful surveillance depends on multiple factors, some of which are beyond the investigator’s control.

In reality, the only investigators who never get caught are those who don’t show up. While that may seem like a sweeping statement, folks, that’s a fact.

Check out these scenarios.

• The head of the neighborhood watch notices an unusual vehicle in the community and calls the police. Despite the investigator notifying law enforcement in advance, patrol cars arrive with their lights flashing and sirens blaring.

The claimant looks out his window, understandably, and watches the scene. While he may be unaware of the exact circumstances, that claimant will at least become cognizant of the investigator’s vehicle. Worse, in many instances the local officer will make known the fact that an investigator was on the street. This can sometimes be avoided by taking the police around the corner away from the claimant’s view.

However, it may still cause a big enough neighborhood stir to warrant suspending surveillance for a few days. As the client, however, the most disturbing ramification is that you might receive a call from the claimant informing you that the police ran off your investigator. Truth be told, claimants will often say this even though they’re unaware of surveillance in the area. In situations like the above-referenced, though, it can clearly lead to an uncomfortable conversation.

• The neighborhood in which the investigator is working might double as one of the many workers’ comp compounds dotting this country’s residential landscape.

Such neighborhoods are filled with convicted criminals, drug dealers, and of course, a number of allegedly disabled people. Most investigators have had at least one experience in which a claimant has confronted them on surveillance.

Sadly, the claimant doing the confronting is not always the claimant under surveillance. With so many claimants in a given area, the investigator was bound to end up on one of their doorsteps. Of course, regardless of whether or not the confronting claimant is being watched, you can bet he’ll spread the word that investigators are in the area. Again, this may prompt a call from your claimant demanding that you stop harassing him. And again, this was not necessarily the investigator’s fault.

• Possibly the most interesting scenario involving a “burned” investigator stems from claimant paranoia. Some claimants are so suspicious, they think the squirrels in the front yard are investigators. A recent case in Columbus, Georgia comes to mind. The claimant actually completed an affidavit describing how the investigator had been relentlessly pursuing him. Said claimant went into great detail describing the situations in which he confronted the investigator and told the investigator to leave him alone.

What makes this story interesting is that our investigator was not watching the claimant on the days in question.

Furthermore, the claimant’s description of the investigator’s vehicle was completely wrong. To be specific, the claimant stated that the investigator was driving a blue Chevrolet Camaro when, in fact, the investigator was driving a white Ford F-150 pickup truck. When the client contacted our offices, he was irate. However, after reviewing our records, the truth, as they say, set us free. Plus it gave everyone a laugh.

• Finally, there are occasions when the claimant directly makes the investigator. This may be the result of extensive moving automobile surveillance, an aggressive surveillance position, a hyper alert claimant with solid coaching from an experienced attorney, or unfortunately, investigator carelessness. (At Ethos, we like to keep that last one to a minimum.)

Clearly, the above examples illustrate how a “burned” investigator is not always at fault. Like a mishandled snap on the quarterback sneak, it’s an unfortunate reality in the world of surveillance.

Plus, in all honesty, the prevailing belief among investigators is that if you never get caught, you’re not being adequately aggressive. That belief is correct. To get results, investigators will need to take calculated chances. Of course, taking chances means that, on occasion, investigators will suffer a spectacular

failure or two. Still, if an investigator’s triumphs far outweigh his flops, that’s an investigator you want on your file.

One final note.

You hired the investigator because, on some level, you believe your claimant is dishonest. So why, if the claimant calls to say he’s being watched, would they suddenly become honest?

Granted, sometimes they’re right. Nonetheless, it’s important to remember that you and the investigator are on the same team.

You want the same results. You have the same goal.

Forgive the occasional fumble and you’ll be rewarded with a high-scoring surveillance.

Fact or Fiction: If a subject is not active, discontinue the investigation.

Answer: Fiction.

My favorite quote about dogs comes from Will Rogers.

“If there are no dogs in Heaven, then when I die I want to go where they went.”

Truly, I’m a big fan of man’s best friend. From childhood through my adult years, I’ve always had a devoted companion with fur and four feet.

One of my favorites, Roxy, was a bit of a barker. Whenever she crossed paths with a dog on a leash, she erupted in a woofing onslaught. The fact that she weighed 12 pounds didn’t seem to deter her from going after dogs 10 times her size. As you might imagine, this was not an enjoyable experience.

Fortunately, one day I came across a quick fix. While walking around the neighborhood, Roxy spotted a German Shepherd

coming our way. Before Roxy could start her tirade, though, I leaned down and covered her eyes.

Silence.

The German Shepherd and his owner walked past us without so much as a whimper.

When I removed my hand, in Roxy’s world at least, it was as if the German Shepherd never existed.

I mention this anecdote for one reason. The German Shepherd did exist, just as a claimant you don’t immediately see is still lurking about.

And this brings us to the gist.

I once worked an investigation where the client requested I discontinue surveillance if there was no activity after four hours.

From past experience, I knew that claimants’ activity patterns were unpredictable. For this reason, I have never supported limited surveillance blocks. Surveillance, after all, is a waiting game. It’s the patient investigator who often obtains the best results.

Anyway, back to the case, I had reached the four-hour mark and there was no movement. Having already confirmed the claimant’s presence within the residence, I was uncomfortable leaving early during my first day here. Call it a gut feeling, but I knew this guy wasn’t injured. Eventually he’d come out of his house. Fortunately, I had no other cases scheduled that day so I stayed on my own time to see what transpired.

Throughout the morning and afternoon hours, I could see the silhouette of someone, presumably the claimant, walking inside his residence. However, it was inside he remained. Trust me. There is nothing worse than an inactive claimant to push

the limits of agonizing boredom. Sitting in a hot car for eight or more no-activity hours can try the patience of the most stoic investigator. However, surveillance is a waiting game. It is not for the weak of heart or mind.

As of 2:00 p.m., there was still no activity. The minutes felt like hours, and I began questioning my decision. Maybe the client was right. Maybe my instincts were wrong. It wouldn’t have been the first time (and I’ve been mistaken once or twice since).

However, assuming the role of stalwart investigator, I opted to wait one more hour.

Lo and behold, at approximately 2:15 p.m., the claimant’s garage door opened. Lights. Camera. Action. The claimant emerged.

Better, he was observed loading golf clubs into the trunk of his vehicle. (And yes, the adrenaline charge that keeps investigators coming back day after day hit me upside the head.) The claimant pulled out of the neighborhood and I initiated mobile surveillance.

The claimant proceeded to a nearby golf course where he hit balls on the driving range before playing nine holes. I secured over three hours of video of the claimant swinging golf clubs, bending over repeatedly, and at one point throwing a club in anger. Sadly, I could relate to that meltdown.

Of course, I have since matured and accepted my golf game for what it is. As the Old Ball Coach Steve Spurrier said to one of his playing companions, “Son, you’re not good enough at golf to get angry at bad shots.” Point well taken, Coach.

Anyway, as an added benefit to my surveillance day, I got to golf behind the claimant and documented him throughout the entire nine. All the while, a quote from Mark Twain ran through my head: “Golf is a good walk spoiled.” Not on this day, Mr. Twain.

To the victors--and to the patient investigator—go the spoils.

The above story represents just one of many similar scenarios.

Folks, claimants are active at all times of the day. Therefore, your chance of obtaining video by conducting limited surveillance hours decreases exponentially, especially in comparison to working full days.

I am convinced that the key to productive surveillance is establishing a daily or weekly routine. Most people, as you know, are creatures of habit. They wake up at the same time, they work out at the same time, they grocery shop on the same days.

Claimants are no different.

Some claimants are active early in the morning while others may sleep late, emerging only during the afternoon or early evening.

Hence, it’s also a good idea to stagger surveillance times until determining a claimant’s schedule. Now, I completely understand that surveillance is expensive. And I know it may take two or three days to uncover a pattern. However, once you do, that claimant is ripe for the picking. And the subsequent surveillance results will give you an enviable bottom line.

In closing, block surveillance can actually be counterproductive.

Although less expensive, its odds of success are a longshot.

Believe me, unlike covering Roxy’s eyes to avoid a barking fiasco, there are no quick-fixes in surveillance.

C H A PT ER 10 CASE LAW DEFENDS SURVEILLANCE “Because of the public interest in exposing fraudulent claims, a plaintiff must expect that a reasonable investigation will be made subsequent to the filing of a claim.”

– Case Law; Tucker v. American Employer’s Insurance Co When considering surveillance, it is a good idea to have an understanding of the legalities involved in this type of investigation. Many folks, especially claimants, have a hard time believing that it is within the boundaries of the law for someone to document their activities without their knowledge.

While claimants and their attorneys may not like that surveillance is being performed, there are numerous examples of case law that indicate that surveillance is perfectly legal as long as it is performed in an unobtrusive manner with respect to privacy issues.

Courts have generally encouraged the use of surveillance in order to investigate suspected fraudulent insurance claims, especially those involving fraudulent or exaggerated personal injury, disability, or worker’s compensation claims. It has even been established in some courts that when a claimant files an action for damages that an investigation of their claim is certainly reasonable because the defendant has a corresponding right to “reasonably investigate and ascertain for himself the true state of the claimant’s injury” Pinkerton National Detective Agency, Inc. v. Stevens, 132 S.E.2d 119 (Ga. App. 1963).

To be legally sound, an investigation should be conducted

without treading into the following areas of concern: - Unreasonable Investigation - This includes acting with intent or malice to inflict distress on a subject.

No eavesdropping. No audio recording without consent.

- Invasion of Privacy – Subjects have a reasonable expectation of privacy while on their own property, unless their activities can be viewed from a public vantage point.

Investigators should never trespass in order to obtain documentation of a subject.

- False Pretense – During the course of an investigation, an investigator should never impersonate a law enforcement officer, a clergy person, a state official, or someone from an existing company in order to obtain information about a subject or to document their activities.

- Stalking – An investigator should never intimidate or harass a subject during a surveillance investigation.

In general, you can feel confident that your surveillance investigations will withstand legal scrutiny if you utilize investigators that are fully trained regarding the legalities and ethical considerations of surveillance. A well-trained investigator will know to avoid potential legal concerns.

If you would like a copy of case laws pertaining to surveillance, privacy, and other legal issues related to insurance investigations, please email us at info@ethosrisk.com

C H A PT ER 11 VALUE THE SIU “Very narrow areas of expertise can be very productive. Develop your own profile. Develop your own niche” -Leigh Steinberg Any investigative firm worth its salt possesses a knowledgeable and experienced Special Investigations Unit (SIU). Effective from activity checks to scene investigations and everything in between, a quality SIU department not only identifies fraud, it eliminates it through thorough field work and research.

Take, for example, the above-referenced scene investigation.

An insured driver files a claim contending he was the victim of a hit-and-run accident. Said claim raises a red flag, and the adjuster contacts their investigative vendor.

After examining the file, and depending on the insurance company’s request, the investigator may seek a police report.

Beyond that, the investigator checks the reported accident scene.

Scanning the area for skid marks, broken glass, plastic, etc., and damage to surrounding property, the investigator obtains photos documenting the area. He notes the layout of the scene including site lines, traffic lights/signs, and road conditions.

And that’s just the beginning.

The investigator then approaches neighboring residences and/or businesses in search of witnesses. Locating anyone with knowledge of the accident in question leads to detailed interviews and written or recorded statements detailing those

individuals’ recollections of the incident.

The investigator may also obtain photos of the insured’s vehicle along with paperwork from the body shop if repair work was already performed or estimated. Likely, if applicable, the investigator will interview the automotive technician to determine his opinion of the damage.

Finally, a complete report will be prepared and presented to the insurance company.

In our above-referenced hit-and-run scenario, which is based on a case we actually encountered, the insured claimed he was rearended. This caused him to veer off road and run head-on into a tree. Our client ordered a full scene investigation complete with witness statements and a recorded statement from the insured.

On site, our field investigator noted one set of tire marks traveling across a residential yard and ending at the aforementioned tree.

Damage to the lawn and tree was documented as were parts of the vehicle that lay untouched in the yard. The investigator noted an absence of skid marks or damaged vehicle glass or plastic on the roadway. Obviously, though, said remnants could have been cleared/washed away.

The investigator next interviewed residents in the area. Although the primary homeowner was not reached, his next-door neighbor distinctly recalled hearing a skidding car and then a single “bang or thud.” When the neighbor exited his residence, the insured driver was already outside his vehicle. The neighbor asked the insured if he needed help. The driver declined and called a tow truck from his cell phone. As this was a rural area with only three homes in the vicinity and the insured driver appeared to be okay, the neighbor did not press the issue. No police were called and no EMTs arrived.

The investigator then traveled to the insured’s residence to view the vehicle. The insured still had possession of the vehicle and permitted the investigator to take photos. The damage to the front of the vehicle clearly indicated a head-on collision with a tree or pole. The discrepancy involved the rear of the vehicle.

The damage that existed in that area lacked several identifiers which might have pointed to a two-car collision. There was indeed a dent, but it appeared too narrow to come from a vehicle. In addition, there was no differing paint color, meaning that either the insured was struck by a vehicle with the exact same paint color or the contact occurred in such a manner that no paint was imprinted. Highly unlikely.

This was a huge red flag for the investigator.

After photographing the vehicle, the investigator interviewed the insured. Regarding the lack of paint and narrow dent, the insured shrugged his shoulders and noted that he was not a “car guy.”

The investigator did not press. However, before departing the area, he conducted a brief neighborhood canvass. Sure enough, the insured’s neighbor had recently seen the insured strike the rear of his own vehicle with a baseball bat. The neighbor was an older gentleman and preferred to keep to himself. He thought this was an odd thing for the insured to be doing, but, as he said, “I don’t like to butt into other people’s business.”

Nonetheless, the investigator convinced the neighbor to provide a recorded statement, which, along with the photographic discrepancies was enough. The insurance company presented this information to the insured via legal counsel and, as you might imagine, things went downhill for the driver, who was apparently texting just prior to his car-meets-tree collision.

In all sincerity, not all cases are this cut and dry. Nonetheless, it represents a simple truth. Like it or not, some people will not hesitate to participate in fraudulent activity. Fortunately, a

quality SIU department has the ability to detect and prove such fraud.

Of course, the scene investigation is but one service an SIU department handles. Other popular services include: -Recorded Statements -Witness Canvasses -Alive and Well Checks -AOE/COE Investigations -Document Retrievals - Fraud Referrals - Fraud Training - File Reviews Truly, when choosing an investigative vendor, it is important to ask about their SIU department. Oftentimes, good surveillance investigators do not make good SIU investigators and vice versa.

In my opinion having a dedicated team of SIU investigators is the best method for a vendor to employ. A dedicated subject matter expert is who you want investigating your files, not a surveillance investigator who rarely conducts these types of specialized investigations. With the right investigators on your side, as noted in the hit-and-run case above, a simple investigation can lead to monumental savings.

C H A PT ER 12 BE LUCKY AND GOOD: CHOOSING THE RIGHT INVESTIGATIVE FIRM “Diligence is the mother of good luck.” – Benjamin Franklin In the investigative game, regardless of work ethic or knowledge, everyone will get lucky at one time or another. Conversely, there’s not an investigator alive who hasn’t endured a slump.

Over time, however, the results will favor those who take action, develop a positive attitude, and remain persistent on every case.

Those are the traits of a successful investigative company. But what else should you look for in a vendor?

• Experience and training: Ask your vendor about their investigators’ experience levels. Is it less than a year?

More than five years? Are they full time or part time?

And how does the training work? Does your vendor just hire an investigator and set him loose on the streets once his license comes through, or is there a program in place designed to assist and educate each investigator so he or she is ready once they enter the field?

For the best results, you should look for a firm whose investigators are employed full time as such personnel are more apt to take their jobs seriously. Your vendor’s investigators should also undergo a prescribed training class and know and understand all the company’s standard operating procedures. Moreover, all investigators should be educated in legal issues, client special instructions, and the techniques needed to become accomplished PIs. Regular training of all investigative personnel should be a must.

A firm’s investigators should also be diverse in background so they can blend into any neighborhood or scenario. In addition, they should have access to state-of-the-art equipment including covert cameras.

• Licensing: The majority of states in the U.S. require a private investigator to carry a license. Make sure your vendors are properly licensed and insured.

• References: Very simply, your investigative company should be willing to supply references.

• Hold Harmless Agreement: So you’ve found a firm with professional investigators who have gone through an extensive training program that emphasizes legal issues. However, troubles may still arise, especially if the investigation is conducted in an unethical or overzealous fashion. The best course of action is to have a Hold Harmless Agreement in place with all your vendors. In this agreement, you specify where the line should be drawn in terms of how far you want an investigator to go. This will show you’ve demonstrated concern for the right of investigated persons and asked that certain activities not be conducted by investigators in your employ.

Okay, now we’re going to revisit William, the claimant with the bad back from the “Should I or Shouldn’t I? That’s the surveillance question” chapter in this book. You’ve decided that William’s case is in fact worthy of surveillance. You shopped around, located a solid investigative firm, and assigned a surveillance budget. Now what? Should you just sit back and wait for the video results?

Please don’t.

The more you stay involved with a case, the better chance your vendor has to acquire information and footage beneficial to your file. So keep an open line of communication. Let your vendor

know what you’re thinking. Don’t assume you’re on the same page, verify you’re on the same page.

Follow these tips: 1. Provide complete information to your vendor. When making an assignment for investigative services, it is very important to provide as much information as possible on the subject and/or the nature of the claim. In today’s hectic claims environment, adjusters are busier than ever with stacks of open files demanding their immediate attention. However, taking extra time to thoroughly review a file and provide all relevant information will pay dividends in the long run.

In many instances, the ultimate success or failure of an investigation directly correlates to the amount of information provided at the time of the initial assignment. Even though investigators are skilled at obtaining information, the more facts they have from the onset of the case, the more likely they are to conduct an advantageous investigation. Furthermore, providing as many details as possible is very cost-effective as you will avoid paying an investigative vendor money to uncover information you already had in your claims file.

2. Develop a true partnership with your investigation vendor.

To be most effective in investigating insurance fraud, it is imperative that the insurance company and investigative vendor work in unison to accomplish the same goals. There has to be good rapport between both parties in order to obtain optimum results. As in most relationships, the key to success is open communication. Spend the time to discuss with your vendors the various policies and procedures important to you which will best benefit your files. Establishing this partnership in advance will ensure that both the insurance company and investigative vendor are on the same page from the onset of the investigation.

This partnership mentality is an essential ingredient in taking a pro-active approach in effectively combating insurance fraud.

3. Tell your investigative vendor about any medical appointments the claimant may have. Conducting surveillance at a scheduled medical appointment is extremely beneficial as it provides a great opportunity to clearly identify the subject of the investigation. This may avoid the embarrassment of potentially filming the wrong person and showing up to court with video of someone other than the claimant. Also, some claimants have been known to exaggerate the extent of their injuries while at the medical appointment. In an effort to embellish their injuries, a claimant may struggle into a medical provider’s office barely able to move. Video obtained of the same person moving about freely and unencumbered prior to and/or after the medical appointment is very damaging to their credibility. Judges and juries love to watch this contradictory video.

4. Clearly outline your objective when assigning a case for investigation. Make certain your vendor understands what you want to achieve with the investigation from the onset and ensure that said vendor is willing to abide by your specific special instructions. Be clear in explaining exactly what you are attempting to achieve by assigning the case for investigation.

Do you want to determine if the claimant is working a side job? Do you have reason to believe the claimant is engaged in contradictory activities? Are you interested in verifying if the claimant is really receiving attendant care? The more explicit the objective, the better prepared the investigator will be to achieve the desired results.

5. Combat the good day/bad day defense. This defense is most often used when the claimant is videotaped doing precisely what he/she said they couldn’t do. If surveillance is not performed on consecutive days, the plaintiff attorney will almost always assert a sympathetic plea that the claimant was feeling good that particular day but relapsed almost immediately after the activity. The argument will be made that the claimant cannot perform these types of activities on a regular or consistent basis and any attempt to do so immediately aggravates their alleged

injury. Unless surveillance is conducted on more than one day, this defense is viable. Consecutive or multiple days will refute this argument by showing a consistent pattern of activity.

6. Continue surveillance on active claimants. Obtaining video documentation of a claimant’s activities is critical in refuting an injury fraud case. Take advantage of the time the claimant is on the go and instruct your vendors to continue surveillance on active claimants in order to obtain as much evidence and video as possible. The additional cost of the investigation (if any) will be well worth it in the long run as you build your case.

7. Vary times and days of investigations. A key element in conducting effective surveillance is to establish a subject’s daily routine. Most people are creatures of habit and generally follow a similar schedule from day to day. In order to decipher that routine, it may be wise to have an investigator split up surveillance times throughout the course of the investigation. For example, it’s impractical (and expensive) to conduct three straight days of early morning surveillance if the subject is not active on any of the days. Perhaps the subject sleeps in all day and works or parties at night. In such a scenario, it may be appropriate to mix in a late afternoon/evening surveillance to improve your results.

In closing, and this may sound cliché, but every investigative company should offer the motto, “Help us help you.” Applied, it’s a truth you’ll find most rewarding.

C H A PT ER 13 GOT FRAUD? “Facts are stubborn, but statistics are more pliable.”

– Mark Twain In order to submit a fraud referral, it’s important to have good understanding of what fraud truly is. In some cases you may have a claimant abusing the system, but this does not necessarily mean they are committing fraud. Fraud is commonly understood as dishonesty calculated for an advantage. The Merriam-Webster dictionary defines fraud as “the crime of using dishonest methods to take something valuable from another person.” Fraud may also be committed by an omission or purposeful failure to state material facts. This nondisclosure makes other statements misleading. As it relates to insurance, there are various elements that need to be proven for a successful fraud conviction.

An easy way to determine if you have a case that meets the criteria for fraud is to think of the widespread milk campaign.

You have probably seen the print ads or television commercials wherein celebrities or athletes have a milk mustache and the tag line reads, “Got Milk?” So think of “Got Milk?” when dealing with fraud, and then use an acronym for milk to see if you have the four elements generally required for a successful fraud prosecution. Let’s take a look at the acronym and how it’s used to identify potential fraud: M-M ​ aterial misrepresentation I - Intent to deceive L -​ Loss: a loss or damages occurred as a result of the fraudulent activity K -​ Knowledge: the subject had knowledge that their statements or actions were untrue

Let’s look at each one of these in more detail.

Material Misrepresentation – A material misrepresentation is the deliberate hiding or falsifying of a material fact, which if known by the other party would most likely have altered or aborted a transaction. In other words, it is a lie that would induce a party to act in a different manner than if they knew the truth. It’s important to note that not all false statements are fraudulent. As stated, to be fraudulent a false statement must relate to a material fact. It should also substantially affect a person’s decision to enter into a contract or pursue a certain course of action. A false statement of fact that does not affect the disputed transaction will not be considered fraudulent. A few examples of a material misrepresentation follow: • A subject provides false information on an auto insurance application so important that, had the truth been known, the insurance company would not have issued the policy or would have issued it with a higher premium.

• On a life insurance application, an insured indicates that they do not smoke cigarettes; however, it is proven at a later date that they smoked cigarettes on a regular basis.

• A worker’s compensation claimant lies during a deposition, hearing, or while receiving benefits.

Intent - You must be able to prove that an insured acted with intent to deceive. There needs to be clear evidence that the act was intentional and not a mistake or oversight. Essentially, you need to show that the insured acted with a reckless indifference to the truth.

Loss - A loss or damages, typically a monetary loss, must be proven for a successful fraud conviction. This is typically very easy to prove in insurance fraud cases when you can substantiate the other three elements. A fraudulent act would result in the payment of benefits or the payment or reimbursement of expenses when the same are not warranted, or the affording of

insurance coverage or protection in exchange for the payment of an inadequate premium.

Knowledge - Finally, you must be able to show that the insured had direct knowledge that they were committing fraudulent activities. A statement of fact that is simply mistaken is not fraudulent. In other words, a statement of belief is not a statement of fact and thus is not fraudulent. To be fraudulent, a false statement must be made with intent to deceive the victim.

This is perhaps the easiest element to prove, once falsity and materiality are verified because most material false statements are designed to mislead.

As you have likely surmised, some of these elements contain nuances that are not easily demonstrated. In the abovereferenced material misrepresentation scenario, for example, you may have to conduct surveillance to prove that a claimant is lying in regards to his workers compensation claim. Therefore, it may take an investment on your part to reap an overall reward.

As such, it is important to analyze any suspicious claims.

What do state fraud departments look for when pursuing fraud referrals?

In my experience in dealing with fraud referrals, I have found that companies which compile the most comprehensive “fraud packages” have the most success with fraud convictions.

The truth of the matter is that most state fraud bureaus are understaffed and overwhelmed with work. Additionally, State District Attorney’s offices are also busy dealing with serious felony crimes. Oftentimes, fraud cases are pushed to the bottom of the pile. It stands to reason that assisting fraud departments or the DA’s office by providing them with a comprehensive fraud referral that clearly outlines all the elements of fraud and provides concrete supporting evidence will exponentially increase your chances of successful fraud convictions.

In speaking with state fraud investigators across the country, I have been told that to pursue an insurance fraud conviction, they always look for the four elements previously defined. They also want thorough irrefutable evidence and facts, quality video if the case involves a claimant feigning an injury, and consistency in activity to refute any potential good day/bad assertion by the claimant’s attorney.

How to increase your fraud referrals The key to successful claims investigations and ultimately successful fraud referrals is to build a solid case with as many pieces of evidence as possible. The better you package your evidence and submit all relevant facts to a state’s respective fraud reporting division, the better chance you have at a successful prosecution.

As discussed throughout this book, the keys to successful investigations are preparation, conducting effective due diligence or background investigations, gathering all available evidence, and utilizing tools that extend beyond surveillance.

Ethos recently submitted a fraud referral that resulted in a conviction. The case was a textbook example of the information provided above. The case involved a worker’s compensation subject who claimed severe neck and back injuries that required him to stay home all day with attendant care. The investigation revealed otherwise as the claimant was found to own a very active barbeque business. Surveillance efforts resulted in hours of documentation spanning several days as the claimant operated his business, thereby taking any good day/bad day defense out of the equation. The video evidence revealed a consistent pattern of employment and strenuous activity. To complement the video, we obtained an active business license showing the claimant as the owner of said business. We also retrieved various advertisements both in the local paper and on the Internet indicating that the claimant catered several events

after his date of injury. Additionally, we secured references from businesses that had used the claimant’s barbeque services. We had signed benefit checks from the claimant that included a statement on the back of the check where the claimant signed off that he was not employed. Moreover, we had a copy of the claimant’s deposition where he claimed he was not engaged in any employment-related activities. On top of all this, we also documented the claimant on his boat while fishing and drinking beer all day. As you can see, this is much more compelling and persuasive than simply submitting videotape evidence.

All four fraud elements were obtained: the claimant committed material misrepresentation when he signed benefit checks indicating he was not working and when he lied in his deposition; the claimant showed a clear intention to deceive when he lied to the adjuster about not working and requested attendant care benefits; the insurance company experienced damages by paying money to a claimant who clearly did not deserve them; the claimant clearly displayed full knowledge of his fraudulent activities based on his actions.

As you can see, each piece of evidence helps to solidify a case and increase the chances of a successful fraud referral. We put together this information in a clear, concise package which resulted in swift fraud conviction.

In conclusion, in determining if you have a fraudulent case it is important to identify the following key elements: • There is always a false representation – the lie.

• The lie must be intentional or knowingly made.

• The lie must be made for the purpose of obtaining a benefit the claimant is not due, denying a benefit that is due, or obtaining insurance at less than the proper rate.

• The lie must be material. That is, it must make a difference: “If the truth had been told, would you have done anything differently?”

Got Milk?

CON C LUS IO N WRAPPING THINGS UP SPRINGSTEEN STYLE “Because in the interest of all involved I got the problem solved.

And the verdict was guilty…”– Eliot Ness In composing the grand finale for this publication, I looked to authors more accomplished than I for the perfect verbiage.

William Shakespeare? Ha. I scoff at his unrhymed iambic pentameter. Charles Dickens? I can do without his ambiguous best-of-times-worst-of-times space filler. John Grisham? Okay. I get it. You can turn a two-hour courtroom trial into 330 pages.

Congratulations.

No, folks, I went straight to the top for inspiration. That’s right.

I sought The Boss. As usual, his lyrical words of wisdom did not let me down.

In Springsteen’s song “No Surrender” he croons, “We learned more from a three minute record, baby, than we ever learned in school.”

I actually got a detention for scribbling that lyric on a notebook in high school, but again, another story for another time. If you’ll permit me the opportunity to interpret, Bruce was not literally saying that he and his classmates were better educated by listening to music than their high school biology teacher. Well maybe he was but everyone has their own interpretations. The way I see it is that Springsteen was referring to the adjoining experiences he and friends enjoyed while hanging out and spinning some vinyl. Perhaps they were working on guitar chords or pick-up lines. Really, the details aren’t important.

The lyric’s spirit, like many of Springsteen’s songs, involves the act of living complete with highs, lows, and everything in between. Similarly, the previous pages in this book are torn from the novel of my professional life. I’ve seen those words in high def. I’ve been right. I’ve been wrong. Most importantly, I’ve been involved.

I composed this publication to impart my knowledge of the risk mitigation industry to others. Obviously, I would not be disappointed if this encouraged a few customers to use my company. However, that was truly not my intent.

I have been in this business for a very long time. I know what works. I know what fails. I know that something that should work sometimes fails, and something that should fail miraculously works. I know enough to say that risk mitigation is at times an inexact science. Yet, I also know that time has a way of separating lucky from good and innovative from uncreative.

The bottom line is that fighting fraud requires teamwork from all parties involved in the process. Getting involved, educating yourself on the laws/ethics, and taking a pro-active approach are paramount to significantly reducing fraud in all sectors. Be a part of the process. As Edmund Burke once famously stated, “The only thing necessary for the triumph of evil is that good men do nothing.”

If you learned one thing from this book, that’s great. If you learned a few things, that’s even better. My goal, simply, was to educate and inform.

I just wish I could’ve done it in a three-minute song.

ACKN OW L E D G E ME N TS

I would like to personally thank Jack McKenna, my first boss, an ex-Philly tough guy cop who unsuccessfully tried to hide how nice he really was. He took a chance and hired me as a private detective right out of college. He was an excellent mentor and teacher. Additionally, I’d like to recognize Erik Schmidt and Japhy Blackwell, two outstanding Ethos employees who offered their much appreciated editorial assistance in putting this booklet together. Finally, I’d be remiss to not thank all our loyal Ethos employees and clients. Without them there would be no Ethos, and for that I will remain eternally grateful.

Contact Information: Ethos Risk Services T: 866-783-0525 | F: 866-695-9645 email: info@ethosrisk.com P.O. Box 55246 St. Petersburg, Florida 33732 www.ethosrisk.com