The F Word

When I was an adjuster, I was taught that we don’t call something Fraud until it’s proven in a court of law. Calling something fraud before it has been proven as fraud in court could be grounds for defamation.

Instead, we were taught to use the term “red flags”. Using this term does two things: 1) it indicates further investigation is needed, and 2) we can’t be sued for libel or slander for the use of the term “red flag”.

For those who have never worn the claims adjuster hat, you should know that it is very, very, VERY difficult to prove that someone has committed fraud. Part of the reason is that people think a lie, in and of itself, is fraud. I’m going to hold your hand when I tell you this: the lie is only one of the four requirements.

Let’s review the others:

Intent: In addition to having proof of a lie, you must also prove that the lie was made with the intent to gain benefits that would otherwise not be due to the claimant if the lie hadn’t been made.

Material: Not all lies are created equal. Did the lie have a material impact on the outcome of the claim? A claimant telling the adjuster they weigh 150 pounds when they weigh 220? It’s a lie, but it may not be material.

Knowledge: Do they have awareness of the lie? If someone submitted a mileage claim for reimbursement, but they were already paid for that mileage, did they know that this was an invalid reimbursement request, or was this an oversight on their part?

As you can see, the bar to prove fraud is high. And even if you manage to get lucky enough to gather documented evidence of all four elements of fraud, you have one more, particularly high hurdle to clear.

The district attorney has to agree to take the case.

That’s right! You can gather and document the evidence, wrap the case up in a pretty bow and hand it over to the DA, and they can say, “nahhhh, we’re good”.

Why would they turn down a perfectly good case, you ask?

A couple reasons. First, they have limited resources, so they have to be selective about which cases they are going to pursue. Second, DAs are typically elected positions, and prosecuting insurance fraud is not a sexy campaign to run an election on. People want DAs who keep crime off streets. Insurance fraud doesn’t run high on the list of the public’s concerns.

I’m not trying to discourage you. It’s still important to conduct a thorough investigation and refer cases to SIU when appropriate, but it’s important to understand the reality of bringing a case to the finish line of a fraud conviction.