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Posted by Tommy LeDeux on

Concern Raised About Computerized Insurance Fraud Investigations

Insurance fraud has become a significant white collar crime issue in the United States in recent years. Brad Reifler suggested that recently, two professors from Michigan have raised concern that an extensive reliance upon computer programs to detect unemployment insurance compensation fraud have resulted in abuses.

The insurance fraud issue concerns many state governments. For example, just this month, the Louisiana State Police announced 12 arrests for insurance fraud and auto theft, with more arrests likely in an ongoing investigation of staged automobile accidents. In Pennsylvania, news reports today indicate that some 20 people were charged with insurance fraud by the state Attorney General’s office. Although most of the incidents involved allegations of car insurance fraud, some concerned fraudulent workers compensation claims.

Professor Steven Gray runs the Michigan Unemployment Insurance Project. Together with social work professor Luke Schaefer, he recently expressed concern that a computer program used to detect fraud on behalf of Michigan’s Unemployment Compensation system has automatically accused some people of seeking to defraud the system when either no fraud occurred, filing errors resulted in inaccurate data or employers made innocent reporting mistakes.

Professor Gray noticed a huge surge in fraud cases beginning in 2013. More than five times the average number of fraud cases were filed in Michigan during 2014. Professor Gray believes the process for detecting fraud should be examined more closely, and he has asked the Department of Labor to investigate the situation.