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9 Keys to a Successful Benefits Fraud Investigation

Benefits fraud costs money that could be spent on legitmate healthcare. Get justice for your company and honest employees with these 9 investigation tips.

Posted by Ann Snook on August 22nd, 2019

The FBI estimates that between three and ten per cent of all healthcare costs in the US are attributed to fraud. That adds up to billions of dollars every year.

Healthcare fraud puts honest people in danger, both medically and financially. When employees defraud their employee benefits plan, though, they also cost their employers and raise the cost of health insurance. A thorough, timely benefits fraud investigation can help you catch the fraudsters faster and recover more funds. Below you’ll find nine tips to ensure your investigation is successful.


Case management software can speed up investigations and help you recover more funds lost to fraud. Learn more by downloading our free eBook.




1. Make an Investigation Plan


Before you begin your benefits fraud investigation, create an investigation plan. Conducting an investigation can be stressful, so having a plan in place ensures your team stays on track, logs all of the important data and follows a logical route to a resolution.

A thorough investigation plan should include:

  • the scope of the investigation
  • all parties involved in the investigation
  • investigation activities/tasks and their deadlines
  • team roles and responsibilities
  • risks to the investigation


Ensuring you have all the information you need helps the investigation run smoothly and lowers your risk of making costly mistakes.


Developing an investigation plan ensures your fraud investigation stays on track. Download our investigation plan template to get started.


2. Set Up a Hotline


In 2014, the Toronto Transit Commission (TTC) began a benefits fraud investigation after receiving a tip on its “integrity line” about fraudulent healthcare receipts. After a long investigation, more than 200 employees were either dismissed or resigned due to their involvement in the multimillion-dollar scheme.

Detecting fraud and figuring out when to start an investigation is one of the most difficult parts of the process. Hotlines encourage employees to provide tips about bad behavior that you may have missed. Tips can also confirm suspicions you may have, giving your investigation a strong start.


3. Use Technology


Detecting, investigating and preventing benefits fraud takes an advanced skill set and a keen eye. Even the most meticulous investigators make mistakes, though. That’s where technology can help fight fraud.

Many insurance companies use artificial intelligence to spot fraudulent claims and make connections between suspicious providers and claimants. Using predictive analytics, AI detects patterns and anomalies much more efficiently than manual checks alone.

AI can be used at any stage of the benefits fraud investigation process, from improving security measures to hinder potential fraudsters, to spotting fraud patterns that confirm suspicions.


RELATED: Corporate Fraud Prevention: The Ultimate Guide


4. Go Undercover


“If someone is looking to prove benefits fraud, the best way to do so is to hire an investigator for surveillance or conduct an undercover investigation,” says Whitney Joy Smith, president of the Smith Investigation Agency and Smith Training Centre.

Fraudsters make their money by being sneaky, so getting honest information out of them during interviews or even collecting evidence can be difficult. That’s why you need to catch them in the act. If they don’t know they are part of a benefits fraud investigation, the criminals may reveal their schemes.


5. Use Case Management Software


If you have a lot of benefits fraud investigations on the go, it can be tough to manage them all. Using a case management solution puts all of the evidence and related documents about a case right into the case file so you don’t have to waste time tracking things down.

Case management software not only speeds up the investigation process so you can recover funds faster, but also helps you prevent future benefits fraud schemes. Case linking flags similar cases and reporting tools let your team spot patterns and track trends using graphs, charts and heat maps. Unlike paper systems and spreadsheets, case management software offers easy collaboration, deep analysis and a logical workflow.


investigating insurance fraud

6. Understand Your Evidence


Don’t waste time gathering evidence that you can’t use. As you compile physical evidence and accounts from interviews, separate the facts, inferences and opinions. Knowing the difference between these ensures you conduct a thorough, accurate and unbiased investigation.

Facts (objective pieces of data) make the best evidence because they can’t be disputed. They are also the most likely to be accepted if the case goes to court because evidence must be relevant, authentic, concrete and specific. Inferences (assumptions you make based on facts) and opinions (subjective beliefs you hold) can help you resolve a benefits fraud investigation, but shouldn’t be relied on too heavily.


7. Investigate Healthcare Providers


Employees who commit benefits fraud may not be working on their own. In some cases, fraudsters team up with medical services providers to carry out their scheme.

For example, in the TTC case, a healthcare provider called Healthy Fit issued receipts that were either inflated in price or for services that were never provided, then split the profits with employees who submitted these receipts to their employers. Even worse, because anyone can open a medical clinic, a provider may not even be real or employ licensed doctors.

For these reasons, investigate the healthcare providers behind suspicious benefits claims. You may find that they are linked to numerous fraudulent claims from different employees.

Some insurance companies use software that detects suspicious providers and delists them, meaning they won’t process or pay for claims from them. This tactic helps confirm if a provider is behind a benefits fraud scheme, protecting both employers and the insurance company.


8. Explore Social Media


If you know how to do it right, digital evidence can increase your chances of success during a benefits fraud investigation. Check out the suspect’s social media profiles to look for evidence of their fraud.

Some fraudsters slip up by revealing inconsistencies in their story on social media. For instance, an employee may submit a claim to the benefits plan for a broken arm but post a photo of themselves playing baseball the day after the “injury.”

Other fraudsters may brag about their crimes, posting an outright confession on their profiles. Make sure to also check social media accounts of the suspect’s family and friends to find further proof of benefits fraud.


Solid online research skills can make your investigations more thorough and efficient. Watch this free webinar to learn helpful techniques and tools for gathering information you need online.


9. Work Together


In order to ensure a benefits fraud investigation is successful, employers and insurance companies need to work together. While insurance providers should work to detect fraudulent claims, employers also need to keep an eye on their employees. Take notice of employees who always max out their benefits or live above their means.


Combine the insider knowledge of employee behavior that employers have with insurance companies’ fraud-fighting expertise and you’ll detect and prevent more fraud.


Use our free checklist to ensure you don’t miss any important steps during your benefits fraud investigation.


Ann Snook
Ann Snook

Marketing Writer

Ann is a marketing writer at i-Sight Software. She writes about issues related to investigations of fraud, employee misconduct, corporate security, Title IX, ethics & compliance and more.

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