12 Insurance Fraud Red Flags Every Agent Should Know

If you watched a lot of Seinfeld in the ‘90s, then you probably remember an episode where Kramer spills a cafe latte on himself while trying to smuggle it in to a movie theater. He sustains burns from the incident and then goes to attorney Jackie Chiles to litigate.

As things turn out, a balm he’s provided by the Maestro gets rid of the burn, yet he and Jackie move forward with their frivolous lawsuit.

What many younger viewers may not realize is that this episode was based on a real incident in which the victim really did sustain burns and ended up getting a settlement from McDonalds as a result. Now two decades later, a new litigant has made the news for similar reasons, but in this case, the injuries do not appear to be real.

From Insurance Journal:

“Selena Edwards, 38, of Victorville, Calif., was arrested and faces 21 felony counts of insurance and workers’ compensation fraud associated with an alleged fraudulent claim against McDonald’s for second-degree burns to her hand from spilled coffee.

“The charges also include submitting a fraudulent insurance claim, false statements and false evidence, according to the California Department of Insurance. … Edwards reportedly submitted an injury claim with photos of a hand with second-degree burns, but detectives discovered that some of the photos had been copied from a hospital website. In an attempt to exaggerate her injury, Edwards also reportedly submitted counterfeit documentation for treatment that she claimed to have received from a local hospital.”

The nature of Edwards’ claim highlights how much easier it is becoming to investigate and root out insurance fraud. For further tips on how to do just that, we turn to the Nebraska Department of Insurance, which recently shared some insurance fraud red flags. Pay close attention to these factors if you suspect someone is trying to file a fraudulent claim:

  1. Medical diagnosis inconsistent with treatment.
  2. Reputation of similar claims or representation.
  3. Pattern of relationships with lawyers or cappers.
  4. “Similarities” of reports or evaluations of specific or several patients.
  5. Vague medical reports and/or records, missing information and inconsistent information.
  6. Double-billing for the same service.
  7. Improper CPT coding for treatment.
  8. Change in or unusual billing pattern.
  9. Indications of altered or manufactured document.
  10. 10.Similarities in “doctors’ notes” regarding office visits or
  11. Signs of excessive treatment or referrals.
  12. Unbundling and billing of services.

Something else that you may consider is enlisting the help of your clients. Many companies offer rewards for information that leads to the successful prosecution of insurance fraud cases. Letting your customers know about these incentives is a great way to start a conversation about insurance fraud and about how the rates of the Innocent are too often affected by a few bad apples. Vigilance and community can go a long way in solving this problem, once and for all.


In Summary

While tracking insurance fraud is not the primary responsibility of the agent, it’s definitely an area where one can make a difference, and it can affect your bottom line. If you suspect insurance fraud, then keep the suggestions listed above in your toolbox.

Share this Article
Farmers - The Hartford - State Farm - Kemper Direct - Nationwide - Allstate - New York Life