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Investigation of Your Claim:  Fraud is Not Always the Focus

Disability insurance fraud is where a person, alone or in collusion with others, willfully makes a false statement or misrepresentation, or withholds a material fact for the purpose of collecting benefits.  An individual who commits fraud will be disqualified from any future benefits, may have to repay any benefits received and may be subject to a 25-30% penalty on payments received.  They also may be criminally prosecuted, which could result in a prison sentence.

Fraud includes working or performing activities that exceed your physical limitations while on disability and receiving benefits, by not reporting other sources of disability benefits that offset benefits paid by your carrier or by creating a false impression that you were disabled for longer that you truly were and continuing to collect benefits.  Generally, the onus of proving fraud is on the insurer.

nsurance companies operate with the assumption that the basis for a disability claim is a mental condition or a personal defect of the individual.  The insurance company induces self-doubt and frustration into a claimant’s life as a way to encourage them to terminate their right to benefits.  Most claimants withdraw early in the process due to fatigue and discouragement.  Insurance company’s employ suspicion, doubt, accusation and blame in handling claims which make a claimant feel as it is their personal responsibility for their condition. Many feel like they are being treated as a criminal through the claim process.  You are guilty until proven innocent.

Insurance companies hire investigators who begin by searching databases to obtain background information on the claimant.  They access driver’s license numbers, addresses, phone numbers, criminal records and past insurance claims history.  They access information about you on Google, Yahoo, Facebook, Classmates, etc. gaining information about you and pictures you have posted. They perform court, public records and asset searches. They obtain credit reports to determine your financial status.  The investigator may be photographing and videotaping you to obtain evidence that will allow them to deny your claim.

You must be aware that the investigation business booms in a weak economy.  Investigators are known to make unfounded allegations of fraud to dissuade insured’s from pursuing a claim or they may manufacture a basis to deny your claim. Most significantly, fraud is not always the focus of the investigation, but the focus of the investigation may be to establish a basis to deny your claim.

The hardest part of their investigation is securing documentation.  If the claimant is a W-2 earner, the forms themselves should be sufficient.  If you are self-employed you should not have associated business expenses deducted on your tax returns.  For example, a dentist should not have lab expenses when he is not practicing.  You should not have deductions for business use of you automobile or any other associated business expenses. Business-related expenses should not continue if you are disabled.

Records available to private investigators are not the same that law enforcement uses.  Private investigators are not strapped like police agencies when conducting background searches.  To make allegations of fraud or manufacture a basis to deny your claim the investigation will rely heavily on fact-finding and an in-depth exploration of records such as:

Identifying sources of earned income

Is the claimant self-employed or seasonally employed?

Does W-2 income include commissions, bonuses or unused vacation and sick time?

What is the claimant’s employment history?

What physical and mental level of functioning is necessary to perform their occupation?

Did the claimant lose his job or was a layoff to take place by his employer?

Was the claimant’s business or the claimant’s employer in financial trouble?

Was the claimant frustrated with his job or resented the management of employer?

Interview the claimant’s employer to gain knowledge as the claimant’s work behavior, any disciplinary actions taken against them or if the claimant was a person who always tries to beat the system and get ahead quick.

Determination of pre-disability and current income:

Examine other income available to the claimant besides earned income?

What are the financial needs of the claimant and the economic impact of being disabled?

Examine the changes in the claimant’s standard of living before and after disability.

Is the claimant’s lifestyle inconsistent with his income?

Verification of claimant’s occupation based on financial records:

What was the claimant’s occupation(s)?

What are the material and substantial duties of the claimant?

Verify the claimant’s education and licensure.

Do the physical limitations of disability preclude claimant from performing duties of his occupation?

Pre-disability income trends:

What is the ratio of disability benefits to pre-disability income?

Does the claimant have excessive disability insurance?

Was the claimant’s income on a downtrend before becoming disabled?

Was the claimant nearing retirement?

Examine the economic impact of being disabled?

Does it support a conclusion that the claimant will need to return to work?

Business ownerships and any changes in the business:

Is the claimant’s business one which payments are typically made in cash?

Does the business have any changes in operations?

Was there an increase in the number of employees after the claimant’s disability?

Was a new, similar or related business started by the claimant?

Does the claimant go to work and if so, how often?

Have the variable expenses of the business, such as travel, telephone, supplies, and entertainment changed with the operations of the business post-disability?

Have rents paid from the business to the claimant increased after his disability?

Are personal expenses deducted in the business?

Was ownership of the business shifted to family or associates to conceal that the claimant is activity involved with the business or was income shifted to family or friends?

Were negotiations underway to sell the business prior to the claimant’s disability or did the claimant sell the business during or after the claim process?

Other considerations

Did the claimant have changes in marital status or relocation?

Does the claimant use a P.O. Box address or never home when called?

Does the claimant make frequent inquiries regarding the status of the claim, change doctors frequently, and have a history of histories of frequent injuries?

Does the claimant have a lack of incentive to return to work

Does the claimant have high personal debts or incur significant financial losses,

Does the claimant have a criminal or questionable background?

Does the claimant have; a poor credit rating or financial status or has filed for bankruptcy before, after, or has intentions to file?

Was the claimant heavily betting or drinking heavily or doing drugs?

Does the claimant’s lifestyle on disability exceed their means?

Did the claimant charges airline tickets, hotels or extraordinary items or have any recent, unusual or extensive travel?

Is the claimant credible?

You should always anticipate an investigation and be aware of the ‘flags’ that disability insurers examine.  Protecting yourself and your family starts, but does not end with this information.  Attempting to handle your own claim in today’s economic environment can be very risky and dangerous.   Your best weapons are your integrity, credibility, and knowledge.  Knowledge is the key to success.

I strongly suggest retaining the services of a qualified disability claims consultant for their knowledge and guidance in the claims process.  I strongly recommend Ms. Linda Nee, with full confidence in her abilities to represent you.  Ms. Nee has communicated with and educated my physicians, advised me on what was required of me, advised me as to what was not required of me, completed requests for additional information, completed supplemental claim forms, assisted my physicians with their statements and treatment reports.  Ms. Nee has been my voice with the insurer and successful in seeing I was paid.  Ms. Nee is but an email or phone call away from my slightest concerns.  I no longer live my life focusing on my claim or how to prove I am disabled.  Ms. Nee placed my concerns back where they should be, my family and my recovery.