The North Carolina Department of Insurance’s Investigations Division is the nation’s oldest and one of the most respected state insurance department fraud units in the country. Founded in 1945, the Division is charged with conducting criminal investigations and supporting prosecution of individuals and entities committing insurancerelated crimes throughout North Carolina and across the country.

Investigative personnel are sworn, state law enforcement officers having statewide jurisdiction. The investigators are fully authorized to carry firearms, make arrests, conduct searches and present cases at all levels of prosecution. They are located throughout the state and work in close cooperation with the insurance industry, state and federal law enforcement agencies and prosecutors.

The Division remains actively involved in conducting fraud investigations involving natural catastrophes, staged automobile accidents, body and repair shops, workers’ compensation, medical providers, agent embezzlement, unauthorized insurers, “insider fraud,” durable medical equipment suppliers and others. You may know certain individuals who try to take advantage of the system by submitting fraudulent claims and justifying their actions with reasoning like, “Insurance companies are huge; they can afford this.” “My premiums are too high – I’ll show them!” “Everybody does it – what’s the big deal?”

THE BIG DEAL IS that we all pay for this fraud and we must take steps to reduce it by reporting it. In an environment where our citizens are victimized by insurance fraud or, in some cases, even seem to condone it, our mission becomes increasingly difficult. Difficult or not, however, the Investigations Division remains committed to the identification and prosecution of those responsible for insurance fraud.

Common Insurance Fraud Schemes

Automobile Insurance Fraud
1. Automobile Repair
Review all repair shop paper work carefully. Concerns noted in this area may involve one or more of the following:

• Falsely report lost or damaged parts
• Bill for excessive final cost
• Provide final statement containing false and or
unauthorized charges
• Charge for genuine parts when aftermarket or
junkyard parts were actually used
• Charge for new parts when bonding or pounding
• Be cautious of repair/body shops that refer
customers to medical or legal offices for a fee

2. Automobile Accidents
Individuals and/or organized accident “rings” that stage auto
accidents involving one or more of the following:

• Sudden stops in front of you for no reason
• Disregarding or giving up right of way to cause an accident
• No “real” accident – occurred on paper only with phony drivers and passengers – more popular now due to less of a chance of actual injury and less likelihood of police involvement
• Claims that list drivers, passengers, witnesses who do not exist and who claim excessive injuries – especially when compared to vehicle damage
• Driver has temporary vehicle registration and there is prior damage to one or both vehicles
• Unsolicited referrals or contacts by, from or to body shops, legal offices and medical offices
• Fraudulently report vehicles as stolen or vandalized in order to collect insurance money

Billing of Medical Services
A variety of dishonest techniques may be used to bill the
consumer, his or her insurance company and/or public
programs (Medicare, Medicaid, etc.), including:

• Treatment not provided or provided by other than doctor
• Alternative treatment provided
• Tests/supplies not conducted or provided
• Cancellation charge for unscheduled visits
• Charges for office visits not made
• Referral fees for services not rendered
• Unnecessary lab or other testing

Property Claims Adjusting
This type of fraud has been extremely prolific in North Carolina due to the recent hurricane related concerns.
1.Adjusting
Fraudulent claims adjusting usually involves illegal or questionable methods such as:

• Unlicensed adjuster
• Adjuster requests that his/her name be the “payee” of the insurance check
• Adjuster requests that the payee endorse the insurance check over to him/her
• Adjuster handles all business in person – no telephone, no address, no means of contact – avoids use of mail
• Claim check larger than cost of repairs made
• Invoices include charges for services not rendered or for repairs not made

2.Property Repair
This type of fraud usually involves unethical or incompetent building contractors.

• Contractor has no office or other legitimate place of contact to include telephone number, address, residence, references, etc., and avoids use of the mail
• Contractor requests full payment up front
• Contractor arrives at site unsolicited and often does not have proper equipment or supplies for the job
• Contractor unwilling to show (or does not have) license, proof of bond or liability insurance
• Contractor provides a very general estimate
• Bid is “too good to be true”

Continue on to Page 2