Alliance Supports Idea of Legislators Getting Into the Fraud-Fighting Game

July 25, 2003

The Alliance of American Insurers is reportedly confident that the National Conference of Insurance Legislators’ (NCOIL) recent unanimous adoption of a model insurance antifraud bill will add an effective new arrow to the quiver of law enforcement officials attacking this insidious crime.

“Fraud is far from being a victimless crime. It costs consumers dearly through higher insurance costs. The insurance industry spends $650 million annually trying to detect and deter fraud. This total does not count the untold millions in money paid out for undetected fraudulent claims,” said Kirk Hansen, Alliance director of claims.

The model bill would reportedly make it a crime for a person who acts as a runner, capper or steerer for the intent of seeking to falsely or fraudulently assert a claim against an insurer. A “runner,” “capper” or “steerer” is defined as a person who, directly or indirectly, procures or attempts to procure a client, patient or customer at the direction of a medical care provider whose intent is to seek to obtain benefits under a contract of insurance or to assert a claim against an insured or an insurer for providing services to the client, patient or customer.

“Perpetrators of insurance fraud need to be put in jail, not only to get them off the streets, but also to deter others who might be tempted to commit fraud. This model gives states a strongly-worded, uniform bill that can be passed easily in the states, and will help put the bad guys behind bars,” continued Hansen.

Hansen noted that there “has been a proliferation of dishonest medical clinics, particularly in large metropolitan areas, that serve as “mills” specializing in the treatment of phony injuries tied to insurance claims. Some of these clinics have links to organized crime, which has been drawn to the large amounts of money involved.”

The clinics reportedly use phony billings to generate income from insurance companies. They pay cash to runners who provide the patients – usually low-income people – used to create phony medical treatment costs. The clinics generate huge charges, claiming that they have performed batteries of tests and treatments, most of which are non-existent.

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