Identity Resolution Daily

By the Infoglide Team

BND.com: Insurance fraud investigators begin probe into workers’ comp claims at Menard

“A total of 389 guards and other workers have filed more than 500 claims, including about 290 still pending. About 230 of these claimed injury for the underlying cause of ‘repetitive trauma,’ including carpal tunnel syndrome, an injury of the wrist. The prison employs about 760 workers, of which 567 are guards. ‘The Department of Insurance is investigating recent questions raised in connection with workers’ compensation claims filed against the state of Illinois at the Menard Correctional Center,’ department spokesman Louis Pukelis said Tuesday in a written statement.”

HSToday: Fusion Centers: Tough Tightrope 

“As states and localities have put up fusion centers designed precisely to overcome this, however, they’ve had to face a different challenge: ensuring not only the quantity but the quality of information they collect and report. In candid conversations with Homeland Security Today, leading privacy advocates, scholars and state law enforcement and federal officials addressed some of the key facets of this challenge, as well as steps that can be taken to ensure that fusion centers live up to their full potential as a counterterrorism tool.”

StarNewsOnline: North Carolina collects big from Medicaid fraudsters

“North Carolina’s Medicaid fraud investigators pulled in millions last year through dozens of cases of fraud and patient abuse, the state’s attorney general’s office reported Monday. The office’s Medicaid Investigations Unit prosecuted 22 criminal convictions and 18 civil settlements, recovering $53.5 million, during the federal fiscal year that ended Sept. 30, according to a press release from N.C. Attorney General Roy Cooper.”

ReadWriteWeb: What Cloud Computing Means For Small Businesses

“Needless to say, it’s a huge deal. Gartner recently put cloud computing at the top of its list of top strategic technologies for 2011 and it’s far from the only expert extolling the glory of the Web-hosted software and infrastructure. For small businesses, the significance of this primarily comes down to cost. In many cases, using cloud-based infrastructure is cheaper than running and maintaining one’s own physical servers.”

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By Mike Betron, Infoglide Software Director of Marketing

More than half of the $98 million in “improper payments” by the federal government in 2009 were made through Medicare and Medicaid. A recent article in the New England Journal of Medicine points out that “since 1990, the Government Accountability Office (GAO) has designated Medicare as a high-risk federal program because its vast size and complexity make it vulnerable to fraud, waste, and abuse.” The article goes on to discuss how to combat the fraud through better screening.

“Increasingly, federal investigators have found that the Medicare system is being infiltrated by criminals and organized criminal networks.” One solution suggested is “imposition of more stringent entry requirements on the 18,000 applicants who, in an average month, seek Medicare’s approval to bill the program for service.” Every day, identity resolution software screens every airline passenger on every U.S. domestic flight to detect known criminals and terrorists. Could the same technology screen 18,000 new healthcare program applicants every month?

The article suggests that the Department of Health and Human Services (DHHS) be empowered “to determine which Medicare providers should create internal compliance programs designed to make them more vigilant against fraud.” Today, banks and insurance companies are using identity resolution software to detect the social networks of fraud rings. Could the same technology with its similarity searching and hidden identity detection form the core of a new system that screens internal activity to monitor compliance?

“Kimberly Brandt, director of the CMS’s program-integrity group, emphasized that the newly granted authority would enable the agency to move away from its historical ‘pay and chase’ mode to focus greater resources on fraud prevention.” Every day, identity resolution software screens every airline passenger on every U.S. domestic flight to prevent known criminals and terrorists from boarding airplanes without being detected. Could the same technology be used to make the whole Medicare and Medicaid infrastructure more proactive in preventing fraud?

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[Post from Infoglide] Recession Driving Insurance Fraud

“A recent post on McClatchy’s blog attributes growing insurance fraud to the recession: A recent survey of 37 state insurance-fraud bureaus by the Coalition Against Insurance Fraud found that the recession “appears to have had a significant impact on the incidence of fraud” last year. On average, the bureaus reported increases in case referrals and new investigations in all 15 categories of fraud the survey covers.”

Liliendahl on Data Quality: What is Data Quality anyway?

“If we look at what data quality tools today actually do, they in fact mostly support you with automation of data profiling and data matching, which is probably only some of the data quality challenges you have.”

Voice of America: Murder of US Consulate Workers in Mexico Signals New Phase in Violence

“Scott Stewart, vice president of tactical intelligence for Austin, Texas-based analysis firm Stratfor, says the killings might have been related to a recently announced U.S. plan to increase cooperation with Mexican law enforcement agencies. ‘We believe that it is likely related to a decision last month to start working more closely with the Mexican government by the Americans,” said Scott Stewart. “They were going to put some personnel into a joint fusion center in Juarez.’”

Coalition Against Insurance Fraud: False claims act for Maryland

“The Coalition issued a statement supporting the bill, saying it would serve as a deterrent and a powerful incentive for medical providers to have strong compliance programs and to “play by the rules.” False claims acts help detect fraudulent schemes that otherwise might not ever be known because they allow insiders to blow the whistle and initiate civil actions.”

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By Infoglide Software CEO Mike Shultz

A recent post on McClatchy’s blog attributes growing insurance fraud to the recession:

A recent survey of 37 state insurance-fraud bureaus by the Coalition Against Insurance Fraud found that the recession “appears to have had a significant impact on the incidence of fraud” last year. On average, the bureaus reported increases in case referrals and new investigations in all 15 categories of fraud the survey covers.

The two largest sources of fraud listed in the CAIF study are phantom vehicle accident and staged accidents. In staged accidents, perpetrators of these crimes tend to be involved in multiple incidents. They create and leave a trail of information that remains captured in insurance company datasets. Unfortunately, many of these companies don’t take advantage of sophisticated tools that can find the crooks.

Let’s look at the example of staged vehicle crimes and how they can be stopped. A ring of people who successfully pull off a staged accident and are subsequently reimbursed by insurance companies usually decide to repeat their success. Since they fear being caught, each person takes different roles, changing his/her name and address slightly to avoid being caught by the data matching algorithms employed by insurance companies in the claims process. One person acting as driver in one staged accident plays the role of witness in the next accident and the passenger in the third. Each time an accident is reported, that person changes attributes of their identity, like name and address, to trip up existing software systems.

The state of entity resolution technology has been advancing rapidly. What used to be undetectable using “data matching” software can now be easily found using entity resolution. We’ve written before about the difference between simple data matching and entity resolution and how entity resolution enables hidden relationships to be uncovered.

Working with ambiguous data is a challenge, and it can overpower traditional data matching and fuzzy matching techniques. Entity resolution disambiguates insurance fraud data to find the hidden relationships between participants in fraud rings, allowing them to be stopped and prosecuted

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By the Infoglide Team

MAINJUSTICE: Report Finds Flaws in DOJ Worker Comp Oversight

[easy registration required] “The Justice Department does not have effective measures in place to prevent fraud, abuse and waste in its program to provide compensation for employees with work-related injuries or illnesses, according to a DOJ Office of Inspector General report released today.”

Information Management: HP and Informatica’s Expanded Relationship: Portent of Bigger Deals to Come?

“So is the partnership with Informatica a ‘proof of concept’ for future acquisition or is it simply HP BIS’s answer: ‘We are a services business and we will leave software to our partners’?”

FederalComputerWeek: 5 decisions that will determine the fate of e-health records

“Under the economic stimulus law passed earlier this year, as much as $45 billion will be distributed to health care providers who buy and use approved electronic health record systems. The road ahead is still bumpy for EHRs, but experts say success hinges on the outcomes of five major decisions.”

Dalton’s Blog: Migrating Data into an MDM Repository - Case Study

“Notice that if you’re using Data Federation to implement your MDM solution, there is no data migration. Data Federation acts as a virtual central repository, and as such, does not require a physical copy of your source data. Data Federation “translates” the source information in real time according to required business rules and definitions. It is, so to speak, a real-time Extract-Transform process.”

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[Post from Infoglide] False Positives versus Citizen Profiles

“A post from Steve Bennett in Australia refers to an announcement by the Dutch government about their intent to prevent crime by profiling their citizens. By creating a digital profile of each citizen using banking, flight, and internet usage information, their justice department plans to compare citizen profiles with those of convicted criminals, then let law enforcement authorities know when matches are found. Needless to day, the move has created quite a bit of discussion in the Netherlands.”

MAINJUSTICE: Rival Agencies Agree to Halt Turf Battles

[quick registration] “‘By bringing together the agencies and personnel with existing resources and expertise we can work more effectively as partners to shut down organized crime networks, seize assets and save taxpayer dollars in the process,’ said Deputy Attorney General David Ogden in [a] statement announcing the partnership.”

HealthData Management: Assessing Demand for EHRs

“On Aug. 20, David Blumenthal, M.D., national coordinator for health information technology, predicted that the final definition of the “meaningful use” of electronic health records that will be used to determine eligibility for incentive payments under the economic stimulus program will not be available until the middle or end of spring 2010.”

South Florida Business Journal: NICB: Suspicious insurance claims up

“The number of suspicious insurance claims rose to 41,619 in the first half of the year, up from 36,743 in the prior-year period, according to a review of insurance claims referred to the National Insurance Crime Bureau.”

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By the Infoglide Team

Biz-Tech:Insurance fraud claims on the rise

“‘When someone commits insurance fraud they’re not just stealing from insurance companies,’ said Sanger. ‘They’re stealing from fellow customers.’ A recent study from the N.I.C.B. shows property/casualty insurance fraud costs Americans nearly $30 billion each year.”

PCWorld: Push For Electronic Medical Records Must Slow Down, For Security’s Sake

“‘I look forward to medical records going electronic,’ said Howard Schmidt, the former White House cybersecurity czar, ‘but I have a tremendous amount of concern about building a really, really good healthcare infrastructure… and then securing it later.’ Schmidt spoke with PCWorld at RSA 2009.”

IT-Director.com: A Bulldog Puppy Emerges

“Microsoft has moved further in its plans to introduce a master data management (MDM) capability into its product line. Microsoft had previously purchased Stratature, an MDM vendor known for its dimension management, and has used this as the basis for its MDM offering, previously known as Project Bulldog.”

Tampa Bay Online: TSA wants better picture of travelers

“With gender and birth information, the system, known as Secure Flight, will be better able to prevent misidentification of passengers who have names similar to individuals on the watch lists and better identify those who appear to pose a threat, the TSA said.”

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Several recent items in the news highlight the fact that insurance fraud continues to be a drain on society, both in the US and the UK.

In the UK, Legal and Medical reported that four people had been arrested in an insurance fraud scheme that involved staged car accidents, a common technique.

Allianz insurance alerted Merseyside police about a number of suspicious motor insurance claims in 2005. This led to the arrest of three men and one woman. . . . Detective Inspector Alyson Wilson of Merseyside Police’s Force Operations Unit said: “This is an unscrupulous crime that affects the premiums paid by the public and impacts on the whole of the motor insurance industry.”

We previously linked to an article in the Little Falls Times that had this to report about the financial impact of insurance fraud:

Insurance fraud costs Americans at least $80 billion a year. If this illegal activity were a legitimate industry, its profits would exceed Toyota, IBM, Wal-Mart and Microsoft. If measured by sales, insurance fraud would crush Johnson & Johnson, Proctor & Gamble and Coca-Cola among many more of the Forbes Global 2000.

The article goes on to state that “approximately 25 percent of insurance premium dollars going toward the effects of fraud.” In fact, we estimate that the cost of insurance fraud (plus retail fraud) adds up to over $600 per year for every American household, a number we like to call the “fraud tax“. You can bet that if the guys and gals up in Washington D.C. decided to levy a $600+ tax on every household that people might get a bit upset. Yet the fraud tax is hidden in the cost of premiums and the cost of goods so we don’t even notice it. But, believe us, it’s there, and it’s impacting each and every one of us. I mean, what would you do with an extra $600? That’s almost enough to buy two iPhones.

WSAZ.com recently reported on an insurance fraud case that involved arson.

Two Huntington have pleaded guilty to insurance fraud, arson and other charges. The West Virginia Insurance Commissioner says that 29-year old Richard E. Sturgill and 43-year old Jeffery Maynard, entered the pleas in Wayne Magistrate Court back on October 30. . . . The release says both conspired to burn a vehicle owned by Mr. Sturgill on March 18, 2007 and then filed a false insurance claim for the loss. . . . The Insurance Commissioner added, “Automobile insurance rates are affected by criminal acts such as these and we are committed to investigate and prosecute individuals who try and use insurance as a means of personal profit, while other customers pay for their acts”.

When you add arson to the mix, you’re not only costing people money but you’re also risking lives.

From the Little Falls Times article:

[Frank Henry, special investigations manager for One Beacon Insurance] said. “Staged auto accidents and arson can cause innocent people to be killed or seriously injured. Workers’ compensation costs are encouraging businesses to relocate out of state. Insurance fraud is a crime, a crime punishable by law.”

Another recent article in the UK’s Oldham Advertiser cited a new method that the insurance industry is using. It’s called voice recognition analysis (VRA), and it’s based on military interrogation techniques. The VRA systems detect “stress patterns – such as hesitation or changing of answers – in the voice of callers to indicate whether they might be lying.”

VRA is an innovative approach to insurance fraud and would seem to have significant benefits. But with more and more people filing claims online, insurance companies desperately need a way to analyze data, both structured and unstructured, to find suspicious patterns that might indicate fraud. Identity resolution (or entity resolution and analysis as Gartner terms it) provides this capability along with the ability to apply domain specific rules and automatically feed the results back into business processes.

We need to repeal the fraud tax on every American household. Insurers have a responsibility to their customers to use all reasonable means to address insurance fraud. Mihar Pandya, Allianz Insurance Fraud Manager, states it best:

The industry should be united in its efforts in disrupting this activity. In addition to working with the Insurance Fraud Bureau, the industry must continue to invest in its own fraud management strategies in order to remain effective in countering this threat.

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[Daily Post from Infoglide Software] 17 Percent of the Insurance Industry Moves into the 21st Century

“If time is money and insurance fraud is estimated to cost $80 billion a year why don’t more insurance companies use real-time databases?”

InsideUF - To catch a thief: UF research team leads world in study of retail crimes

“‘We’re looking at people very involved in highly organized retail crimes,’ Hayes said. ‘We want to determine the dynamics of these groups. We want to know how they are recruited and trained, where they steal and who bails them out of jail.’”

BTNonline: Industry Voices Secure Flight Concerns

“The government’s latest passenger prescreening program, Secure Flight, is moving toward a final rule, but industry representatives and privacy watchdogs said the Transportation Security Administration first must address concerns about cost, travel supplier compliance and the accuracy of program watchlists.”

BBC World Service: Dirty Money

“The tale may sound far-fetched, too Hollywood to be true, but it’s the life that Ken Rijock lived for a decade. He started his career as a commercial and banking lawyer, but soon became a money launderer. He estimates that he helped launder at least $200 million for approximately 30 clients before finally being caught.”

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“If I can identify [fraud] and get the claimant into the office for an interview within the first seven days, then the perpetrator and his cohorts don’t have a lot of ’skin in the game,’ so to speak.”

That’s Dennis Parker in Insurance and Technology, talking about the insurance industry’s need for speed in identifying potential fraudulent claims. Formerly with Infoglide Software, Dennis is now an insurance marketing manager at SPSS.

Dennis and his team at SPSS use their predictive analytics solution with its advanced statistical and data mining techniques to detect patterns and anomalies and generate predictive models that identify claims that warrant further investigation. Part of SOSS’ automated claims fraud detection platform is powered by our Identity Resolution Engine which has the ability to identify similar identities and relevant relationships. Combined, these two solutions help insurance providers to bring a fraudulent claimant in before too much time elapses.

Why is that important? According to the I&T article, it’s because “most fraudulent claims that are defeated are not denied by the insurer, they’re dropped by the insured. Fraudulent claims are more likely to be dropped earlier in the process because the perpetrator has less invested in the outcome.”

The problem is, according to another I&T story, “only 17 percent of insurers currently utilize advanced IT tools to detect fraudulent claims.” Instead, I&T reports that:

• Almost EVERY insurer has a Special Investigations Unit (SIU)

• MANY use basic scoring algorithms to flag claims

• SOME use real-time databases to look for multiple claims.

If time is money and insurance fraud is estimated to cost $80 billion a year why don’t more insurance companies use real-time databases?

Unfortunately, the culture of the insurance industry still greatly relies on the humans manning the claims departments and SIUs to sift through claims and make the final call to launch an investigation.

“It’s like playing six degrees of Kevin Bacon, but in a much larger scale.”

That’s director Dave Porter of UK-based Detica, maker of information intelligence software, in a ITBusiness.ca article about the perils of too much data shielding criminals from detection. Earlier this year, thanks to speed and accuracy, Detica’s modeling and data analytic solution helped bust 74 people in a organized crime insurance fraud ring.

But as Dave notes that with “most banks and insurance companies such a task is done manually with teams of two to 20 personnel looking sifting through daily transactions and deciding which ones could be questionable and then conducting further investigation. The work could take anywhere from two days to several weeks.”

In the 21st Century, two weeks is too long.

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