Claims - April 2016

ny could then bill the insured’s carrier for work that didn’t need to be done, or for work that was never even done.

Insurers must understand that to successfully combat fraudulent water mitigation claims they must identify and investigate these relationships, as well as eliminate the entire network.

How do you identify a network of operatives in a water mitigation scam? A performance trend analysis may be the solution. Simply put, it’s doing a thorough examination of everyone and everything involved in the mitigation and restoration.

• Review all the documents associated with the claim. Carefully examine all businesses and service people involved — how many times has that person or group of people been involved in a series;of;claims?;Do;the;same;people collaborate on mitigations more often than can be attributed to coincidence? Are their bills higher than most others?

•;Look;for;trends;or;commonalities;that
suggest intent. Compile the informa-
tion gathered from these investigatory
forays to create a playbook for future
cases. That way, you’ll know what to
look for, and what you may need to
know even before you enter the dis-
covery phase of a case.

•;Use;all;evidence;of;trends;to;convince;a judge or a jury that something the water mitigation company characterizes as a mistake, actually is a pattern and practice of the company with the intent to deceive the insurer and collect insurance benefits to which they are not entitled.

And just as you must identify all of the players in a mitigation fraud network before launching an investigation, you must attack them all when litigating the case. There are two good reasons for this.

First, like a multi-headed monster, cutting off one part of a damage mitigation network leaves the rest to continue the fraud, while the one damaged grows back.

Second, there might not be enough evi-
dence to file against the mitigation compa-
ny or the head of the ring. However, by ag-
gressively pursuing everyone involved in
the fraud, you may be able to get that evi-
dence from someone else in the scheme.

It may be possible to find a back door inside the ring’s operation that provides access to hidden information and provides the ammunition to take down the leader. It may also be possible to cultivate a valuable confidential informant who can provide inside information on additional scams.

A win-win in the battle
against fraud

Also, examine all claims in the aggregate, rather than just the one case under consideration. Seek out examples that show the company in the client’s claim, which used restoration business “X” or plumber “Y,” used those same vendors in multiple other cases — particularly if one or more of those claims were deemed fraudulent. Finding a pattern of complicity that extends well beyond coincidence may help point the way to fraud.

Be judicious, but take certain cases to court. That accomplishes two things. It forces the mitigation companies to prove a loss is covered, and that their charges are reasonable. It also demonstrates to them, and others, that the company is willing to stand up to fraud and won’t make payments on inflated claims. Many times those fraudulent companies will stop targeting your company and focus their efforts elsewhere — such as on carriers that do not scrutinize fraudulent claims as closely.

The time has passed for carriers or the industry to just yell “fraud!” and expect action. They need to demonstrate concrete evidence that fraud has been committed and exactly how much that fraud is costing individual consumers. Only then will it be possible to put a crimp in fraudulent mitigation claims, and only then will lawmakers be willing to take up legislation that helps curb such criminal activity.

Brian S. Tenzer, Esq. is a partner at Goldstein Law Group in Fort Lauderdale, Fla. Tenzer serves on the Florida Advisory Committee on Arson Prevention and is a member of the Broward County Bar Association, National Society of Professional Insurance Investigators, National Fire Protection Association and Florida Property & Casualty Insurance Fraud Task Force.