Medical, auto and workers’ compensation fraud are expected to be at the forefront of the National Insurance Crime Bureau focus on insurance fraud trends in 2014, according to Chief Communications Officer Roger Morris. The article in the Claims Journal says that the medical and workers’ comp business is where most of the fraud occurs today, Morris said. “The scheme is the same. It’s always been — continuing treatment, malingering as we call it, without really needing it. That’s why there’s been quite a bit of analysis of provider bills lately,” said Morris.

Medical fraud is such a huge business that the NICB established major medical fraud task forces around the country starting in 2002. There will be eight by the end of the year – with the latest one in Chicago. “We focus on strictly the medical component of the auto and the workers’ comp side, and we look at some of the fraud schemes that are being perpetrated particularly in states where there’s no-fault or PIP coverage, personal injury protection coverage, states like Florida, New York, Michigan. We’re seeing some of that move into other states like Minnesota and Kentucky,” Morris said.

He said that staged accidents are a big component in PIP states where there is typically a huge industry of organized crime involving cappers, runners, doctors, chiropractors, physical therapists and lawyers. According to Morris, it’s “all in the name of generating claims.” Medical fraud in Florida became so pervasive the state began a major crackdown initiative in 2012.

“These states are ripe for fraud, and the criminals that have been doing this in Florida have seen a lot of pressure on them now because of the medical fraud task forces and the law enforcement action that we have had in Florida and recent changes, the tightening of the fraud laws there, the PIP laws. A lot of them are moving their operations or expanding them into states like Minnesota and Kentucky,” he said. NICB has held fraud summits in Florida the past two years, as well as in Minnesota last year and in Kentucky last October.

Morris described two common auto insurance fraud scams. “One of the common, pervasive auto scams we see is the crash-and-buy scenario. A person has an accident but doesn’t have the insurance or the right coverage, so they purchase insurance and then wait a day or two and submit a claim saying the accident happened after they bought the policy,” he said. “This started very heavily during the recession and continues today, very similar to the hit-while-parked claim — the insured has an accident, they don’t have the right coverage, or circumstances exist that they don’t want the insurer to know about. They park their car somewhere and they say that when they came back, they found someone had hit it and left, and then they filed a claim,” the NICB chief communications officer explained.

Though auto theft is down, according to Morris, law enforcement is seeing an uptick in organized criminal rings that are sophisticated enough to switch vehicle identification numbers (VINs) or export cars illegally. One such ring was recently uncovered in Los Anegles.

“We monitor exports of vehicles. We check the VINs and so forth for Customs and Border Control. We had a ring that was stealing cars from local dealerships, rental agencies or from parking lots, high-end luxury cars, and they were loading them up on ships to be shipped out of the country overseas and labeling them as scrap metal,” Morris said. “When we had those containers turned around, every one of those containers — more than 25 of them — contained two high-end vehicles that had been stolen and were being shipped out of the country to be sold overseas for a much higher price. I think they sometimes get two or three times the price overseas that they get here.” There was also a recent case in New York involving 46 high-end vehicles. The vehicles, worth $2.4 million, were stolen from dealerships and other places and were being VIN-switched and resold to supposedly unsuspecting buyers.

Listen to the podcast with Roger Morris: Fraud Trends in 2014 for more information.