CFS Insurance Fraud Investigation 3 — Questions and Answers
Question 1: A medical provider bills an insurer for 30-minute office visits for 50 patients on the same day, but clinic records show a maximum capacity of 20 patients daily. This is an example of:
- Upcoding
- Unbundling
- Phantom billing (Correct answer)
- Kickback scheme
Correct answer: Phantom billing
Phantom billing involves charging for services never rendered, such as visits that physically could not have occurred given capacity constraints.
Question 2: An insurance fraud investigator finds that a body shop submitted repair estimates using labor rates and parts prices from a state where costs are significantly higher than the loss location. This scheme is called:
- Parts substitution fraud
- Geographical rate arbitrage
- Inflated repair fraud (Correct answer)
- Diminished value fraud
Correct answer: Inflated repair fraud
Inflated repair fraud involves submitting estimates with artificially elevated costs, including using rates from higher-cost jurisdictions.
Question 3: Under the McCarran-Ferguson Act, regulation of insurance fraud is PRIMARILY the responsibility of:
- Federal Bureau of Investigation
- State insurance departments (Correct answer)
- Department of Justice
- Federal Insurance Office
Correct answer: State insurance departments
The McCarran-Ferguson Act grants states primary authority to regulate the insurance industry, including fraud oversight.
Question 4: Which type of insurance fraud scheme involves medical providers paying patients cash or other incentives to use their services and file claims?
- Fee splitting
- Medical mills (Correct answer)
- Capitation fraud
- Steering fraud
Correct answer: Medical mills
Medical mills recruit patients through paid recruiters and generate fraudulent claims for unnecessary or phantom treatments.
Question 5: A staged auto accident ring recruits participants to deliberately cause collisions with innocent drivers. The BEST term for the innocent driver in this scheme is:
- Straw driver
- Swoop-and-squat victim (Correct answer)
- Padding participant
- Capper
Correct answer: Swoop-and-squat victim
In a swoop-and-squat scheme, one car cuts off another and brakes suddenly, making the innocent rear driver appear at fault.
Question 6: An SIU analyst notices that multiple unrelated auto claims share the same body shop, the same attorney, and the same medical clinic. This network analysis finding MOST suggests:
- Coincidental vendor popularity
- An organized fraud ring (Correct answer)
- Legitimate referral relationships
- Geographic clustering
Correct answer: An organized fraud ring
Repeated linkage of the same vendors and professionals across unrelated claims is a strong indicator of an organized fraud network.
Question 7: When an insurer's SIU refers a fraud case to law enforcement, which federal statute is MOST commonly used to prosecute multi-state insurance fraud conspiracies?
- 18 U.S.C. § 1033 (insurance fraud) (Correct answer)
- 18 U.S.C. § 1341 (mail fraud)
- 18 U.S.C. § 1347 (healthcare fraud)
- 18 U.S.C. § 1956 (money laundering)
Correct answer: 18 U.S.C. § 1033 (insurance fraud)
18 U.S.C. § 1033 specifically criminalizes fraud against insurance companies in or affecting interstate commerce.
CFS Insurance Fraud Investigation 3
A medical provider bills an insurer for 30-minute office visits for 50 patients on the same day, but clinic records show a maximum capacity of 20 patients daily.
This is an example of: