The insurance industry tries to create the impression that insurance fraud is rampant.
And it is.
And while there certainly are people who commit fraud on claims, those numbers pale when compared to the systemic cheating and massive fraud on car insurance claims being committed by the insurance industry itself.
Exhibit A: Esurance.
According to public documents filed in a recent lawsuit, Esurance Insurance Company vs. Garan Lucow Miller, P.C., Esurance would routinely lie and use false statements to avoid paying valid contractual claims for No-Fault insurance benefits. In this court case, an Esurance adjuster lied to avoid paying No-Fault attendant care benefits to a car crash injury victim who suffered a serious traumatic brain injury.
When the lies were exposed, Esurance then sued its legal defense team for “failing” to prevent the insurer’s adjuster from telling the truth in a deposition, which ended up costing Esurance approximately $750,000 on outstanding attendant care benefits.
Now is the time for the Michigan Insurance Fraud Watchdog Anti-Fraud Unit to put a stop to companies’ auto insurance fraud
When I learned of the underlying details in the Esurance lawsuit, I was outraged, although sadly not surprised. Remember, I’ve been suing insurance companies for breaking contractual promises to auto accident victims for the past twenty-five years. I’m used to claims adjusters and insurance companies lying and committing outright fraud at times to avoid paying due and owing No-Fault claims.
What surprised me is the audacity of the insurance company in this case to actually turn around and sue its own defense lawyer when the fraud was exposed.
Make no mistake, if the pleadings by the defense attorney prove true, what this auto insurer was doing is criminal. It’s deplorable. It’s cruel. It can and does ruin and devastate the lives of innocent people who are depending on Esurance so they don’t lose their homes and so they can get medical care they desperately need. Esurance would take people’s money and then use its power and wealth to refuse to pay for what it had promised all along to pay.
What Esurance is accused of doing in this case is what car insurance companies do. (It’s just unusual for an insurance company that is committing fraud to then turn around and sue its own lawyer for not helping it get away with committing that fraud.)
Claims adjusters knowingly lie and consciously break the law all the time to save money on claims, leaving innocent people to pay the price. Innocent people hurt in car accidents pay the price by having their lives upended and are further harmed by the fraud, lies, and misdeeds of insurers like Esurance.
Which brings me back to the Michigan Insurance Watchdog. Gov. Snyder made a big deal in September when he announced the creation of this Anti-Fraud Unit which would be tasked with investigating and prosecuting perpetrators of insurance fraud.
Well, now he’s got his chance. Let’s see if his watchdog actually has teeth.
In a case like this, where the auto insurance company’s fraud is laid out in black-and-white – in deposition testimony – what better opportunity could the new Anti-Fraud Unit have to disprove the skeptics – like me – who believe the Governor’s insurance fraud watchdog is all bark and no bite when it comes to the massive fraud being committed by the insurance companies themselves?
What has Esurance done that the Anti-Fraud Unit may investigate as possible car insurance fraud?
Here is information contained in the Esurance lawsuit:
- Esurance’s insured suffered a traumatic brain injury as a result of a crash, which his doctor said required 24-hour, skilled LPN-level attendant care. The victim’s wife left her job as a Licensed Practical Nurse, earning $35 per hour, to care for her husband around the clock.
- Esurance made false statements to the victim’s wife to the effect that the auto insurer wasn’t obligated to pay No-Fault benefits under certain circumstances when, in fact, it was.
- Esurance slashed the attendant care rate it was paying the victim’s wife by nearly 50% – without any medical evidence supporting the change – because the Michigan Catastrophic Claims Association told Esurance to do so.
- Esurance admitted it knew it was required to pay the victim’s wife for providing skilled care – at a higher rate (for a fixed number of hours) – but refused to do so.
- Esurance tried to mislead as to its reason for reducing the attendant care rate which occurred on June 18, 2014, by claiming the reduction was based on an occupational therapy evaluation that actually happened months later (and, ironically, documented that the victim’s wife was already providing skilled attendant care).
What is an insurance fraud investigator looking for?
On September 11, 2018, Gov. Snyder issued Executive Order (#2018-9) which created the “Anti-Fraud Unit” within the Insurance Commissioner’s Office (i.e., the Department of Insurance and Financial Services (DIFS)).
Specifically, the Executive Order stated:
- The “Anti-Fraud Unit will investigate criminal and fraudulent activity related to . . . The Insurance Code of 1956 . . . .”
- “To execute its responsibilities under this Order, the Anti-Fraud Unit may . . . [i]nvestigate claims of criminal and fraudulent activity in the insurance . . . markets that, if true, would constitute a violation of applicable state or federal law, including but not limited to . . . the Michigan Insurance Code . . . .”
What is insurance fraud?
Under Michigan law and as defined in the Insurance Code of 1956, insurance fraud is referred to as a “fraudulent insurance act” which “includes, but is not limited to, acts or omissions committed by any person who knowingly, and with an intent to injure, defraud, or deceive . . . :”
- “Presents or causes to be presented . . . by any insurer, any oral or written statement including computer-generated information as part of, or in support of, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains false information concerning any fact or thing material to the claim.”
- “Assists, abets, solicits, or conspires with another to prepare or make any oral or written statement including computer-generated documents that is intended to be presented . . . by any insurer in connection with, or in support of, any claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false information concerning any fact or thing material to the claim.” (MCL 500.4503(c) and (d))