Identity Resolution Daily

By Doug Wood - Infoglide SVP of Sales

The word ‘triage’ tends to bring to mind the settings of a hospital emergency room.  Doctors and nurses try to examine the patient data quickly to ensure that patients with the most urgent needs are treated first.  This same concept holds true for insurance. Understanding which claims need further examination is a daily struggle that most P&C insurers deal with.

The Federal Bureau of Investigation estimates that the total cost of insurance fraud (excluding health care) exceeds $40 billion per year. That means insurance fraud costs the average U.S. family between $400 and $700 annually in the form of increased premiums.  Some call this the ‘fraud tax’.

A central component of a successful claim triage program is the ability to quickly and correctly identify a suspicious claim. These technologies trigger alerts when claims fall outside of normal patterns. The market is well served with competing technologies that provide rules-based predictive and behavioral analytics.

 With predictive analytics, fraudulent claims tend to slip through the cracks if the fraudster is careful not to trigger an alert by doing anything that would look suspicious.  Fraud is a chameleon, after all, and it thrives when allowed to blend into the background patterns.

A key new tool has emerged over the past few years which allows insurers to focus on the ‘who’ as much as the ‘what’. Identity resolution engines look at all of the attributes of the people, places and things involved in a claim and compare them to the goldmine of data already sitting behind the insurer’s firewall.  Accounting for variations in names, addresses, dates and a host of other attributes, identity resolution engines look at possible identity matches across data silos, while simultaneously discovering hidden social links between individuals.  For example, does the witness in Claim A share an address with someone currently being investigated by SIU in Claim B?  Do they have similar names or phone numbers?  Is there a fraud ring at work here?

Exposing suspicious claims based upon this robust analysis of the people involved is a sure-fire way to expose the chameleon and reduce fraud costs dramatically.

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By the Infoglide Software team

Financial Fraud Law: SEC Brings Expert Network Insider Trading Charges

“The Securities and Exchange Commission has charged that six expert network consultants and employees illegally tipped hedge funds and other investors to generate nearly $6 million in illicit gains… The SEC alleged that four technology company employees, while moonlighting as consultants or ‘experts’ to Primary Global Research LLC (’PGR’) without the knowledge of their employers, abused their access to inside information about such technology companies as AMD, Apple, Dell, Flextronics, and Marvell. The consultants received hundreds of thousands of dollars in purported consulting fees from PGR for sharing the inside information with PGR employees and clients, according to the SEC.”

ksnt.com: Fraud Insurance Claims on Vehicles

“Clark said people have come up with clever ways to file fraud claims by staging accidents where everyone in the accident is part of it and they try to get some sort of disability payment.”

SFGate: Medicare fraud has its own most-wanted list

“Topping the list are Miami brothers Carlos, Luis and Jose Benitez. Owners of a string of medical clinics, they allegedly scammed Medicare out of $119 million by billing for costly HIV drugs that patients never received or did not need. Authorities say they bought hotels, helicopters and boats before fleeing to Cuba.”

Business Day: Employee fraud ‘is on the rise’ with executives leading the way

“Companies worldwide have seen an increase in fraud due to ineffective internal controls, according to a report issued by Deloitte yesterday… a significant percentage of companies (51%) recognised they did not have sufficient numbers of trained staff to provide effective assurance on fraud risk in their organisations, with smaller businesses finding themselves even more constrained.”

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By Mike Betron, Infoglide Software Director of Marketing

The Aite Group recently authored a report entitled “Internal Fraud: The Devil Within.” After surveying 35 fraud and product executives at financial institutions across the U.S. and Canada, they concluded that internal fraud is a severe and growing problem that often goes undetected and almost always flies under the radar of public scrutiny.

On the customer relationship side of the business, many financial institutions have increased what they know about external actors by making their systems smarter, e.g. enhancing existing software with identity resolution:

“By incorporating identity resolution technology, they enhance existing historical data systems with information drawn from a wide variety of dynamic data sources (e.g., social media). Providing a real-time ‘360 view’ of an individual and his/her associations is improving daily business decisions at many leading companies.”

However, most have not yet incorporated the same technology to catch fraud. This survey suggests that insider collusion and individual fraudulent acts are on the upswing, representing a significant and growing percentage of monetary fraud losses. Furthermore, the report suggests that fraud problems are often swept under the rug:

“Most financial services firms are not keen to discuss the issue; institutions that build their brands on trust and reliability do not want it widely known that insider fraud is a problem. As a result, 35% of survey respondents reported prosecuting 10% or less of their confirmed internal fraud cases.”

Effective solutions (e.g., Infoglide’s Anti-Fraud Solution Suite) are proven and available. By not actively identifying internal fraud problems and pursuing effective solutions, financial services firms open themselves up to huge financial and public relations risk. Equally important, they enable competitors who move proactively to gain competitive advantage.

As report co-author Julie Conroy McNelley says, “Financial services firms must examine their current internal fraud prevention environment and determine how to bolster it. As competitors develop more robust defenses, fraudsters will migrate to the path of least resistance.”

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By the Infoglide Software Team

South Florida Business Journal: State Farm sues doctors, who fight back

“A contentious battle is heating up once again between State Farm Insurance Co. and a group of doctors that the insurer alleges have been involved in a multimillion-dollar insurance fraud scheme, according to a lawsuit. The suit claims the doctors submitted fraudulent claims based on ‘medically unnecessary diagnostic procedures’ used on those in car accidents.”

The National: Time for health care to move to the next level

“A Booz & Company study recently quantified some of the projected benefits from a proposed e-health initiative in Australia: by 2020, the programme could eliminate up to 10,000 deaths caused by medication mistakes, along with up to 310,000 unnecessary hospital admissions, 2 million unnecessary outpatient visits, and 7 million laboratory tests.”

[PDF] Inside the Midmarket: A 2011 Perspective

“In 2009, midsize businesses (53%) were mainly consumed with reducing costs and increasing efficiencies. The progress and momentum gained from these efforts continue to yield critical benefits and advantages for midsize businesses. Because of this momentum, they are now in a position to turn their attention to more forward-looking aspects of their business. This is demonstrated by the significant increase in focus on customers (+20 pts), innovation (+7 pts), and revenue growth (+5 pts).”

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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 the Infoglide Software Team

ebiz: Relevance of Enterprise Architecture to Cloud Computing

“Strategic decisions about cloud computing should both draw upon and inform the EA. An organization must have a mature and well formed understanding of its architecture components (e.g., business processes, services, applications and data) to make meaningful decisions related to cloud computing, such as whether a move to the cloud is advantageous, what services most lend themselves to a cloud deployment, and what cloud deployment model (e.g., private, public) makes the most sense. There are three key roles for EA in facilitating cloud computing strategy and planning…”

WRAL.com: State roots out $53M in Medicaid fraud

“‘Medicaid cheaters rob taxpayers, hurt needy patients and push medical costs higher for all of us,’ Cooper said in a statement. ‘We’re stopping the waste and abuse and making violators pay.’ During the federal fiscal year that ended Sept. 30, the Medicaid Investigations Unit of the state Attorney General’s Office won 22 criminal convictions and negotiated 18 civil settlements worth $53.5 million.”

AvStop.com: All Airline Passengers Now Screened Against Government Watchlists

“Under Secure Flight, the Transportation Security Administration (TSA) prescreens passenger name, date of birth and gender against terrorist watchlists before passengers receive their boarding passes. In addition to facilitating secure travel for all passengers, the program helps prevent the misidentification of passengers who have names similar to individuals on government watchlists. Prior to Secure Flight, airlines held responsibility for checking passengers against watchlists.”

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By Mike Betron, Infoglide Software Director of Marketing

On the one hand, recognition of the power that entity resolution can bring to bear on challenging problems both in the commercial and public realms continues to increase. On the other hand, resistance to change and lack of budget seem to be inhibiting dramatic increases in productivity and effectiveness that could be gained by a more rapid uptake of this new technology.

A few days after the 2009 Christmas Bomber incident, President Barack Obama made this statement:

“The bottom line is this: The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack. But our intelligence community failed to connect those dots, which would have placed the suspect on the ‘no fly’ list. In other words, this was not a failure to collect intelligence; it was a failure to integrate and understand the intelligence that we already had. The information was there.”

Being able to connect the dots by using readily available data is every bit as challenging for private companies. Many commercial organizations (e.g., insurance companies, banks), similarly have all the right data available to them to solve problems related to identity.

While some people are skeptical that we’re making enough progress in developing and using advanced analytics, we’re certain that the remaining issues are solvable using available entity resolution technology in conjunction with readily available data.  It’s more a matter of will and resources than lack of capability that’s holding us back.

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[Post from Infoglide] Best Practices Just Got Better

“On the heels of the very successful Association of Certified Fraud Examiners (ACFE) conference last month comes an industry event which represents investigators of financial crimes and fraud.  The International Association of Financial Crimes Investigators (IAFCI) meets in Washington, DC next week  with an agenda that is chock full of sessions involving discussions of best practices for solving and preventing financial crimes.”

Insurance & Technology: Analytics Improving Insurers’ Claims Fraud Detection Efforts

“In a recent report, Light noted that the key to successful fraud mitigation with technology is applying a combination of several methods - including the typical red flag approach, predictive modeling, neural networks, profiling, claims databases and identity matching - to ‘maximize the identification of true positive fraudulent claims and of true negative fraudulent claims.’”

Paul Davis on Crime: Connecting the Dots at the Local Level: Centers Make Homeland Security a State, City, and Local Affair

“Robert Riegle from the Department of Homeland Security describes fusion centers as force multipliers. ‘They leverage financial resources and the expertise of numerous public safety partners to increase information awareness and help our law enforcement agencies more effectively protect our communities.’”

The Blog: Judy Schurke, Director, Department of Labor & Industries

“L&I works extensively with state and federal law enforcement, and other regulatory agencies to detect and prosecute individuals committing workers’ comp fraud, contractors failing to register with the state, and businesses that wrongly classify workers to cheat on insurance premiums. Some investigations lead to criminal prosecution. People tend to think fraud only involves workers cheating the workers’ comp system. But in reality, millions of dollars are lost when employers, medical providers and contractors commit fraud.”

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By Douglas Wood, Infoglide Senior Vice President

On the heels of the very successful Association of Certified Fraud Examiners (ACFE) conference last month comes an industry event which represents investigators of financial crimes and fraud.  The International Association of Financial Crimes Investigators (IAFCI) meets in Washington, DC next week with an agenda that is chock full of sessions involving discussions of best practices for solving and preventing financial crimes.

With an audience looking to share thoughts on insider trading detection, mortgage fraud, organized crime ring detection, anti-money laundering and insurance claims fraud, the conference is sure to be buzzing!

One thing for certain is that there is no one “right” answer to prevention and investigation.  As I pointed out in a previous post here, it is clear that predictive analytics technologies have been a valuable tool for organizations to “catch” fraudsters based upon their behaviors.   With more and more organizations adopting identity resolution technology, however, those “best practices” are becoming even better.

Identity resolution technology goes at the heart of who’s who… and who’s working with whom… by “gliding” across an organization’s data (internal and/or third party) and searching for those tiny pieces of forensic data attributes that are the golden nuggets of financial crime investigation.  Identity resolution helps investigators understand the identity matches and non-obvious relationships between individuals across enterprise data – despite input errors or deliberate attempts to deceive.

In combating financial crimes, identity resolution technology has become the next big ‘thing’, as it provides answers to the following types of questions:

• Does someone in an incident database resemble someone in another database… and who else is connected to them?
• Is the witness in an insurance claim suspiciously similar to someone in the SIU data?
• Do credit card applicants share subtle attributes that would point to bust-out fraud?
• Does the loan applicant have a non-obvious relationship with an employee?  Or a known fraudster?
• How is the stock trader connected (by degrees of separation) to an insider?
• Is an applicant somehow connected to a Denied Person?

Infoglide Software Corporation, the leader in identity resolution engine technology, will be attending IAFCI next week and we would encourage you to drop by our booth and say hello. Otherwise, drop a note to sales@infoglide.com and I will have someone reach out to you directly to explain how this all works.

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By the Infoglide Team

All247News.com: Medicare Fraud: Updates on Government’s Efforts to Recover Money Lost to Scam Artists

“Medicare fraud and billing errors costs the government more than $36 billion last year, the Economist noted. The modus operandi involves a “care-provider” billing Medicare for non-existent or unnecessary services. These services and items include: HIV/AIDS medicines and therapy; medical equipment such as wheelchairs to neck and knee braces, as well as home health care, physical and occupational therapy and mental-health services.”

CBCnews: Crime proceeds crackdown looms

“Another method used by organized crime is to pay a 10 per cent premium for winning lottery tickets or to buy jewelry in Canada worth tens of thousands of dollars and sell it in the U.S., achieving money laundering and foreign exchange conversion at the same time.”

San Antonio Express-News: Police ‘fusion center’ on the way for S.A.

“Each center can have an individual purpose, McManus said. The South Texas center will have two branches: one working on homeland security, bolstered by a new San Antonio Police Department Terrorism Criminal Intelligence Division, the other a 24-hour tactical operations center for ‘all crimes and all hazards as they occur in San Antonio and the region.’”

Washington State Wire: Will a ‘September Surprise’ Derail Workers’ Comp Initiative?

“Schurke said a fraud-prevention effort launched in 2005 has increased collections dramatically. Collections due to L&I investigations have increased 40 percent, to $770 million. The department has invested in advanced computer technology that should make it easier to track down employers who are not reporting fully. The systems will make it possible to compare 20 state and federal databases, including the IRS.”

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