Zalma on Insurance

Barry Zalma, CFE, is an insurance coverage attorney. He is the founder of Barry Zalma, Inc., a California law firm whose practice emphasizes the representation of insurers and those in the business of insurance.

Mr. Zalma is the author of Insurance Claims: A Comprehensive Guide, published by Specialty Technical Publishers, Vancouver, BC at http://www.stpub.com The Truth, The Whole Truth & Nothing But The Truth, Property Claims 2nd Edition and Liability Claims and all course books used by ClaimSchool, Inc. in its training programs. He is also the author of three books published by Thomas Investigative Publishing, and numerous articles for insurance trade publications and law journals.

Mr. Zalma writes the monthly Zalma's Insurance Fraud Letter which is available, FREE, from ClaimSchool, Inc. and over the internet at http://www.zalma.com

Specialty Technical Publishers has published "Mold: A Comprehensive Claims Guide" by Culver City lawyer Barry Zalma. The book is the only comprehensive guide to cover all issues relating to claims of damage by mold or fungal infestations. It is an essential tool for every person who owns real property, manages real property, for all risk managers, realtors, property inspection companies, insurance agents and brokers, insurance claims people, and lawyers who represent property owners or insurers. It is available at http://www.stpub.com or by calling 1800-251-0381

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Who's Cheating Whom

by Barry Zalma, Esq., CFE

The story that follows is based on fact but is fiction. The names, places and descriptions have been changed to protect the guilty. This story was written for the purpose of providing insurers, those in the insurance business and the insurance buying public sufficient information to recognize and join in the fight against insurance fraud.

Some people act too smart for their own good. They want to commit a fraud but don't know how. In so doing they hurt themselves rather than help.

When I was a young insurance adjuster, thirty years ago, the company, I worked for insured a homeowner who owned a Capuchin monkey as a pet. The monkey was a friendly sort. He did not like confinement to the house. One day, when the insured was not looking, the monkey escaped. He was a pet and did not want to run away. He just wanted out of the house. His escape, therefore, led him to the roof of the next door neighbor's house. The next-door-neighbor had a tile roof. The monkey's sharp little toenails made an infuriating clicking noise as he ran back and forth on

the tiles. The neighbor, unable to stand the noise, came out of the house and saw her neighbor's monkey on her roof.

The insured was not home. The noise was unbearable. Not only did he scratch his nails on her roof but he chattered incessantly. She yelled at him without success. She picked up stones from her yard and began throwing them at the monkey.

The claimant did not know how aggressive little wild animals can be. The monkey took offense when hit by a stone. He jumped to her shoulder sinking his claws through her thin cotton shirt and taking a bite out of her neck.

Shortly, the insured returned home at about the same time, patiently removed the monkey from her neighbor's neck and applied first aid. The insured reported the incident to her insurance company and I was assigned to adjust the claim. I met the neighbor who informed me that she was a good woman. She said she did not wish to take advantage of her

neighbor. She had gone to her doctor who applied anesthetically and a bandage. The doctor told her to clean the wound out daily with hydrogen peroxide and place on it new dressings for a week. She wanted only to be paid her doctor's $100 office visit charge $5.00 for the bottle of

peroxide and $1.00 for the bandages.

Since liability appeared clear, I readily accepted her offer of

settlement. The claimant did not ask for any recovery for her pain and suffering. She did not ask to be paid for the trouble and inconvenience she went through to have her wound bandaged.

I thought I had an excellent settlement. I told the claimant I would send her a check and asked, only, that she allow me to complete my file by sending me the doctor's bill and the receipts for the peroxide and bandages.

The check, with the release printed on the back, went in the mail that day. It was negotiated by the claimant immediately. The receipts and billing from the doctor appeared the next day in my office.

Normally they just would have been filed without a glance, the file closed and put away. This time, I was waiting for a telephone call from a private lawyer to settle a $100,000 case and had time on my hands. I looked at the doctor's bill she sent me and found that it was an original carbon. The doctor kept the original bill and gave the claimant

a carbon copy. On the carbon for the office visit charge were the numbers one and zero in blue followed by an additional zero in black ball-point.

The claimant, who for an injury of her type, could have easily talked me into paying her $1,000 to $3,000 thought she had cheated me by changing a $10.00 doctor bill to $100.00 bill. In so doing she gained $90.00 and lost $3,000.

Her fraud was a success. We did nothing. We reported the fraud to no one. The insured owed the claimant much more than the $106.00 we paid her. The claimant probably thought she committed a brilliant fraud. This time the person actually damaged by the fraud was the claimant, not the

insurance company.

Adjusters must always keep in mind that when they receive a claim that seems too good to be true there is a very high probability that it is, in fact, too good to be true.

THE DISHONEST CHIROPRACTOR/ PHYSICIAN

A dishonest physician or chiropractor will, for a fee, prepare

fictitious medical reports, including billings for multiple series of physical therapy treatments. Sometimes the report of a legitimate accident victim is modified only in the name, address, and physical attributes of the victim. In all other respects the reports are legitimate. They are not a report of the victim's actual injuries since the victim either did not exist or was not injured. Medical bills generated by such fiction totals between $1200 and $3500. The numbers are kept small to avoid suspicion.

Because of the ease of use a single clerk typist with a word processor can prepare two hundred medical reports a day with the doctors' laser printer even generating his signature from a scanned image. The doctor, not involved in the procedure, receives $100 per report. The doctor is quite happy with his earnings since he need not see a patient or provide treatment. This type of operation can present hundreds of claims a month on individuals who were not injured or never injured. The claims can generate millions of dollars a year in net profits for the lawyers, physicians and recruiters involved in the crime. By applying the maxims

set forth earlier these insurance criminals have discovered that the person claimed injured, (that is the lawyer's alleged client) will never be seen by an adjuster or investigator. The criminals know that no lawyer will be called upon to take testimony from them. The criminals know that no one will go to the medical clinic to learn whether they really provided the treatment claimed. Since they keep their medical

treatment down to minimal level and the demands of the lawyer are always reasonable, the claims settle quickly. The adjuster's supervisors commend the adjuster for closing files. The adjuster is rewarded for keeping expense costs down. The insurer saved the cost of a lawyer.

The fraud was a success.

Occasionally, we read reports about the police or the fraud bureaus making arrests of a massive fraud ring. The arrests just touch the cream at the top of the glass of milk. The rest of the milk remains. It is greed that causes the criminal's demands to become sufficiently high to cause the insurer to investigate their claim.

Insurers must realize that savings of expense dollars can, and almost always will, cost them more in indemnity dollars.

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