ABSTRACT
Fraud investigators throughout the industry readily acknowledge that they only see a small fraction of the fraudulent claims running through their claims-processing systems. They realize the fragility of detection and referral mechanisms. They bemoan the primacy of efficiency as the goal for the claims-processing system. Company X’s business is confined to one state, and they have just one policyholder—a labor organization—with around 17,000 certificate holders under that policy. The health benefits are the same for each certificate holder, but each family can choose between four or five different options with respect to deductibles. When the company discovers someone trying to defraud them, they write the suspect a letter outlining the facts as the company sees them and warning them to desist. Of the tips the company receives from other insurers, from law enforcement, or from informants, only one in ten tells them of a vulnerability or fraudulent practice of which they were unaware.
