Opioid schemes fueled by staged car accidents, insurance fraud

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Even auto insurance fraud can be used to score opioids illegally. Image by Flickr user Images Money

Even auto insurance fraud can be used to score opioids illegally. Image by Flickr user Images Money

Criminal enterprises are tapping into the lucrative opioid business through creative schemes that are less likely to be identified as opioid abuse, misuse or diversion. One of the latest schemes? Auto insurance fraud. First, some background…

While extensive progress has been made in establishing, improving, and mandating prescription drug monitoring programs across the United States, criminal schemes are ever-evolving and becoming more sophisticate.  Despite countless efforts to distribute naloxone (an opioid antagonist), educate at-risk communities, and improve training and education on the dangers of prescription opioid addictions, the United States still faces rising unintentional overdoses involving opioids.

Years of policy changes, reforms and new funding has done little to curb this national crisis that affects citizens from all demographics. Prescription Drug Monitoring Programs (PDMPs), which have been successfully implemented in all but one state, provide medical providers insight into a patient’s controlled substance history across the state and, in some cases, even neighboring states.  These investments are critical to fighting   this widespread, long term fight with addiction, but are far from the only approach needed to start saving our afflicted.

Integrating relevant data sources allows for analytics to be used to spot trends and anomalies that can help us combat this epidemic. However, that integration is often prohibited by policy or law. Recent reports from the Massachusetts Department of Health show promise in overcoming these challenges, while still adhering to regulations and respecting privacy laws. Our ability to improve support, interventions and policy changes depends on a deeper understanding of the data, so we can empower those on the front lines of the battle.

Nothing illustrated the sometimes bizarre connections between data sources more than a recent story from my SAS colleague, Michelle Bergeron, a former Insurance Fraud Investigative Analyst. I was intrigued to discover that Michelle had experience with the opioid crisis through her work investigating insurance fraud.  Not only are criminals exploiting the medical system through diversion techniques (with doctor shopping or through pill mills), but they also were extending their acquisition of these highly profitable drugs through typical insurance fraud schemes.  I’ll let Michelle take it from here:

In 2010, one of my investigators noticed an increasing trend of staged accidents in the Louisville, Kentucky area. A common strategy to detect organized fraud activity is to analyze the attorneys and clinics involved across accidents, looking for commonalities.  We immediately recognized that there were 2 primary clinics and an attorney that were involved in the vast majority of accidents. 

Once we knew which companies were involved, we pulled the medical bills and invoices submitted for the accident claims.  There was an unusual component to the majority of the medical bills that made us dig into the data.  Almost every person involved in the “accidents” was written prescriptions for Vicodin, Ambien and Soma.  That’s an unusual combination for a minor auto accident. Additionally, almost all of the patients treated at the clinics received exactly the same pharmacological combination.  The treatment patterns, combined with the fact that over 90% of the policies were 3 months old or less at the time of the accident provided ample evidence to open a major case investigation.

Local field investigators took statements from the claimants and got details on their injuries and treatments.  During extensive interviews one of the participants broke down and admitted they were part of an organized staged accident scheme.  Participants were paid a flat fee of approximately $500 and the doctor and lawyer would submit bills on their behalf.  They would go to the pain management office and pick up their scripts shortly after being seen by the medical clinic.  They were allowed to resell the prescriptions on the street or keep them for personal use.

It was a simple way for low income individuals to make some extra cash and to support their personal prescription drug use.  How do we stop people from procuring unnecessary medication or selling it illegally?  This type of fraud is nothing new in the insurance industry and it still occurs today in many areas of the country.  Fortunately, investigators and analysts have great detection tools, such as SAS, that allow them to recognize patterns and anomalies in their data.  That allows them to gather evidence and turn the cases over to law enforcement for prosecution and help keep prescription drugs off the streets.

It’s both fascinating and disturbing to realize the creativity of the schemes criminal enterprises will use to obtain opioids. Reselling opioids on the street yields much higher margins than their illegal (and more dangerous) counterpart - heroin.

Unencumbered by red tape, data access issues or institutionalized processes, bad actors continue to be successful in finding different ways to avoid detection and maximize profit.  While these inequalities may seem daunting, many hard-working fraud investigators, analysts and state government leaders are onto these schemes. They are striving to identify not only the criminals, but the life-saving measures desperately needed to reverse the cycle of addiction and end this devastating epidemic.

Opioids are just one of the many topics being discussed at the National Health Care Anti-Fraud Association Annual Training Conference this week. Come visit SAS at booth 213!

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About Author

Jen Dunham

Principal Solutions Architect

As a Solution Specialist within the Security Intelligence Global Practice, Jen is focused on providing subject matter expertise and assistance to Government teams addressing various security risks such as Cyber Security, Insider Threat, Targeting/Lead Generation, and other Intelligence-specific applications of the SAS Security Intelligence Foundation. Having served as an all-source intelligence analyst in the United States Army, and having since worked closely with numerous law enforcement, defense, and intelligence organizations around the world, Jen has a unique and comprehensive view within these areas and how their tradecraft and missions vary. Jen has worked in mission areas to include; counterterrorism, counterespionage, counternarcotic, peacekeeping missions, priority intelligence requirements, and the Balkans (Bosnia-Herzegovina). Over the last 22 years, Jen has held a security clearance with numerous agencies supporting organizations such as FBI, DEA, NSA, CIA, NCTC, State Department, Department of Energy, and also State and Local Law Enforcement. Jen also has in-depth knowledge (through previous employment) of technology and information companies such as i2, Dun & Bradstreet, Choicepoint and Thompson Reuters.

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