> In one case, investigators at State Farm withheld several crucial reports contradicting their fraud allegations from the bundle of evidence they handed over the law enforcement. In another, a Farmers manager admitted under oath that there was an "unwritten policy" within the company to withhold evidence from customers that could help prove their innocence.
Besides the appearance of possible bad faith, that might also -- in the context of government relying on the insurance company to do some of the investigative work -- thwart government obligations to share evidence with a defendant.
I understand that legitimate insurance fraud needs to be investigated and prosecuted, and I'm all for it. But you give them all the evidence, period, and let them decide. You do not manipulate them to save yourself from a payout. That crosses a line that has no grey in it.
If I called the police and said "Several men entered the building, and then I heard gunshots, please hurry!", and didn't mention that I knew the building to be a firing range, I'd rightly go to jail for a long time.
How is this case different?
The hypothetical you gave would be more on point if instead of deliberately withholding key information, the 911-caller made a truthful allegation for an ulterior motive. So more like, 'there are suspicious cars idling outside the firing range and people walking around with guns. Someone swung the muzzle in my direction for a moment and made me feel unsafe.'
As for the insurer paying the salary of the officer who investigates-- yeah, poor optics there but the extension of the hypothetical scenario would be that the police deprioritized gun crimes without funding and won't show up and investigate otherwise.
So the real newsworthy issue here, which the article missed, is why police departments in Pennsylvania don't investigate insurance fraud felonies unless someone in the private sector is willing to cover their expenses.
There are many examples in the article of insurance using misleading or faulty evidence, and people ending up in prison or homeless as the result.
> So the real newsworthy issue here, which the article missed, is why police departments in Pennsylvania don't investigate insurance fraud felonies unless someone in the private sector is willing to cover their expenses.
It is mind-boggling why you would think the investigators would be impartial when paid by the insurance companies. The examples from the article certainly point to the direct opposite of that.
For those interested in how a serious and meritorious bad-faith claim still generates exposure for the reporting party, despite all the immunities and whatnot, see Maxwell v. AIG.. The sources in the article I'm sure are aware of the potential for huge extracontractual awards, and I'm just not impressed that angle also is not discussed in the article.
What irks me is that they can destroy people’s lives with impunity: if they lose they just have to pay out the insured amount, they don’t need to compensate someone for making them homeless or for destroying their business.
All officers and prosecutors should be criminally liable as they are accepting bribes for prosecuting these victims.
The insurers should be liable for subverting the course of justice, and any deliberately withholding evidence that demonstrates the claim of fraud is false should make the insurance companies liable for all costs, and all “witnesses” should be separately liable for false testimony.
In the 1940's there were very popular radio dramas that aired every week following the adventures of insurance investigators, and their cozy alliances with law enforcement.
That insurance customers are contractually obligated to assist the insurer with investigations may violate the Fifth if that contract is being abused in this way, as well.
That has nothing to do with the GGP’s strange claim that there’s some general constitutional prohibition against laws with “an inherent conflict of interest”.
It is crazy how a company making false claims can ruin you so easily, and you cannot fight back or be compensated.
It doesn't have to be a company making false claims. Cross the wrong person anywhere in the world and you can have the police and courts come after you.
Like they always are whenever a society let's government centralize and "administer".
In the US system of government, checks and balances are essential to counter overreaching and abuse from any single branch. If no such checks exist against unjust prosecutions by law enforcement (the executive branch), then by default, either the judiciary or legislative branch must be at fault, or both.
In this case, it's clearly BOTH the US legislature and US courts have been remiss. Both should step in and outlaw any private funding of public law enforcement, as well as require ALL public court prosecutions to abide by the same burden of proof and evidence required of any gov't/DA-led investigation.
To allow the routine "negotiation of guilt" between prosecutors and the prosecuted to circumvent due process certainly is a violation of the Constitution -- something all three branches share culpability for allowing.
I’ve always wondered why plea deals don’t count as perjury? You’re saying you did something when you didn’t.
Causing the death of another person typically comes in the "accidental but negligent", intentional but not premeditated, intentional and premeditated.
Or in final fantasy terms
A plea moves you from Homicidaga to Homicidaja.
You can fight back, and if you win you would be very well compensated in the form of actual and punitive damages (assuming the insurance company didn't settle before trial).
This isn't mere pendantry but pointing out it is a matter of power.
It’s like democracy: the primary advantage is that people think they can effect change so they will refrain from violent revolution. Whether voters can actually effect change is largely irrelevant as long as people believe it.
There are two real economic classes of people in the USA.. productive class and the parasitical class.
The productive classes consists of people of all income levels. They could be poor, rich, or in between. These are people who generate more wealth and value for society then they consume. Could be janitors. Could be farmers. Could be CEOs of fortune 500 companies. Small business owners. The whole gamut.
Then you have the parasitical class made up of people who can control vast amounts of wealth on paper, or not, but really don't produce anything themselves. Again all income levels. Could be a guy running scams on section 8 subsidized housing so the state pays his mortgage. (having a low-income girlfriend rent his house under the program while he pretends not to live there is a common approach). Could be massive arms manufacturers like Lockheed Martin. And politicians and other state apparatus and cronies that make their money through mechanisms like regulatory capture and taxes.
So it's up to the productive classes of people to provide the material wealth and value that is then used by the entire population of the country. The provide all the food, all the clothing, all the transportation services, they build all the housing, pay all the taxes, etc etc.
The source of political power for the government then is based on it's ability to extract a percentage of that wealth and then redistribute it. It's not just through taxes that they achieve this, but also through regulations and other controls of the market. The mechanisms can be overt and they can be subtle, but the goal is always the same: Take a portion of somebody's work output and give it to somebody else to get them to go along with what you want. Calling it 'socialism' really misses the point.
It's what always have existed. It's what kings used to gain and keep power. And it's what modern governments use to gain and keep power. Same thing, different lies. Ordained by God to rule, or 'will of the people'.. it's still all made up nonsense.
For example the Pentagon, in the USA, has hundreds of billions of dollars it spent that are simply unaccounted for. They know they spent the money. But they really don't know who it went to. Or why it was spent. Or really what it was spent on.
Most American's call that waste. But when it comes to the parasitical classes.. it's not waste. It's profit. And they have zero desire to ever see these sorts of 'problem' fixed.
So they don't get fixed. The real point has nothing to do with what they are buying. The important thing is who gets the money.
And thus it's the most critical job of the government to keep it's population working as hard as possible and generating as much economic activity as possible. So they generate sets of incentives and punishments... like working with banks to protect their debts. Also corporate culture plays a huge portion, propaganda from a variety of sources is all completely critical to making sure all this stuff keeps working.
People with massive student loans, massive car payments, massive mortgage payments, are kept that way because at that point they are working their asses off for virtually nothing. All their money ends up going to the banks one way or another. They are living pay check to paycheck and are terrified at the prospect of losing any sort of wealth generating capability because even a small dip in productivity will spend them into a even deeper debt spiral.
Sane people would just walk away from something like that. Once they got tired of the car they would just walk away from it. Got tired of the house, just walk away. So it's up to the government in schools working with banks and other groups to propagandize the population and convince them that it's in their best interest to spend all their lives generating the income for other people to use.
When George Bush said that if you stop buying stuff the terrorists win... to him that is not hyperbole or odd thing to say. It's actually a accidental moment of complete honesty. The goal of the terrorists is to undermine the economy that the government stands on top of.
And it doesn't need to be 100% one way or the other.
In this particular case the insurance companies are subsidizing their profits through the use of law enforcement to carry out investigations.
OK, but there is no "loyal customer". There is only the prospect of a payout. And the incentive to avoid it.
Maybe I should read the article instead of just comments here...
So something bad happened, and he filed a claim. And the insurance company's systems presumably flagged the claim. Probably because it was much larger than expected, based on the type and age of vehicle. So they paid police to investigate for fraud. And I gather that they eventually did file a crime report. And at trial, their expert presumably testified that the vehicle wasn't worth as much as claimed.
More irony about the concept of a "loyal customer".
If getting insurance increases the cost of a bad thing happening, instead of decreasing it (because your claim will be refused, and you'll also be charged with fraud for even trying to make a claim) then what is the point of taking out insurance on anything?
I wasn't required to escrow it, but that's because I asked.
Banking products have been available for a long time. Insurance used to be closed to just the military officer corps, then they offered insurance to some “affiliated” groups, but it was under different terms I think.
I had one auto claim and they were excellent. Parents had a homeowners claim and they were likewise excellent.
Inform all the clients of these companies of what they're doing. Let them know they bribed the police to put clients in jail after filing a claim.
And don't forget to name names - don't let them hide behind the corporate facade.
So, I can see both sides of this. The government might WANT to prosecute insurance fraud, but they're rarely aware of it, because how would they find out?
Or is he correcting details of the properties used in some actuarial model? I suppose that would be more interesting but I can't imagine that a 4x premium adjustment or whatever would be worth suing for.
The idea is that the police force is too understaffed to do research against smalltime insurance fraud, but the insurance companies are more than happy to build the case independently. And the judge is still impartial, so everything is fine, right?
This worries me because the insurance isn't exactly impartial, right? I assume that once they suspect fraud, they really really want you to have indeed committed fraud, because there's hardly any downside for them if they wrongly accused you. They'll build up a very one-sided case.
Apparently in the US, the same problem is solved with an undereducated instead of an understaffed police force, plus semilegal bribes. To be honest I don't really see the fundamental difference between that and the new Dutch idea.
I wonder what HN thinks should be the solution. Staff more cops? What if recruiting good ones is prohibitively hard? What if the good ones would really prefer to be put on other cases than "we think Joe Smith stole $2000 from an enormous cash-loaded faceless financial corporation"? It's a hard problem.
(by the way, we know the lightning hit our property, the damage got bigger and bigger in specific direction, and following it the place with highest amount of damage was the tall metallic post where the motor for the gate was attached...)
This is in contrast to the inquisitorial system used in civil law countries (e.g. France, Italy) where the court is actively involved in establishing the facts of the case - so they're not an impartial referee like they are in the adversial system.
> But Schoofs acknowledges that BuzzFeed’s investigations may never rocket into the social media stratosphere with the same velocity as the company’s lighter fare. Major investigations seldom get fewer than 200,000 pageviews, but that’s a dribble of traffic compared to the 73 million pageviews garnered by The Dress.
The FTC is up and active and enforcing the rules... on the smallest companies in the US.
Somehow in this country if I get a free meal at a restaurant, post about it and don't disclose the free meal, I'm a target. But bribing police is legal without disclosure to courts? I can pay 'experts' to testify in court without revealing I'm paying? Just when I though the corruption couldn't get any more entrenched, I keep finding new areas of deep rot.
I feel like it's generally understood that when expert witnesses get called to the stand, they're being compensated for their time by whoever is calling them.
I edited it for you to see if you agree that what's good for the geese should be good for the gander. If that logic won't fly for Mommy blogger with the FTC, why should it fly with expert witness? The stakes are WAY lower in one than in the other.
To be clear, I'm not supporting the idea of the FTC giving fines to anybody. But the idea of rule of law is that laws should apply to everyone, which is clearly not the case.
Your argument BTW, feels weird. Why would you bring up the idea of 'generally understood' when that can equally apply to the other side? To me it feels like one of those subtle defenses for the current system that don't actually spell out a defense, but tries to remove criticism with offhanded comments.
Edit: I could see an argument that normal witnesses are not compensated for their time, and so a layperson might assume that an expert witness is not? But normal witnesses are appearing in their capacity as a witness; expert witnesses are appearing in their capacity as an expert. They're consultants; consultants get paid for consulting.
Bloggers... get paid for blogging. The issue, just like the expert witness, is by who. That is literally the whole point of disclosure for mommy bloggers, disclosing conflict of interests. Why not for witnesses?
Again, you keep putting out arguments that seem to be defending the current system without actually stating as much. If you feel the FTC should be as it is, then say so. These off handed contrarian comments with subtle defense of terrible things... is a kinda dishonest way to communicate.
I will say, you did spell out the rationalization of this. But a rationalization is just that: "the action of attempting to explain or justify behavior or an attitude with logical reasons, even if these are not appropriate.". Your logic can also be restated in a way that really highlights the issue I have:
People are not to assume someone in a commercial setting is getting compensated for endorsement. So therefore a disclosure is needed and strong enforcement.
People who are volunteering (jury) are to assume that things that happen in a non-commercial setting happen for money. Therefore, no disclosure is needed and no enforcement.
Also, the commercial setting has low stakes. The court setting has high stakes.
Which again, brings us back to: what's your point with these off handed comments?
Edit: Reading your other comments on this page, I think you didn't even read the article, which is why your comments are coming off so strange.
What? Jurors aren't volunteers. Jury duty is mandatory; if you get called, you have to show up or provide justification for why you can't be a juror. If you get selected, you can't just say "no sorry, this case actually sounds boring and I'd rather not". Also, jurors get paid. They are volunteers in no sense of the word.
Court is generally considered to be a professional setting; I agree that it's non-commercial but I disagree that there are only two options where one is "commercial" and the other is "if you're getting paid you have to disclose it". Who would you think is paying an expert witness for their time, if not the person who wanted them to testify?
I legitimately do not understand why you feel like this is a conflict of interest.
And you legitimately didn't read the article, so I'm legitimately not surprised you legitimately don't understand the conversation going on.
In the opening 'graphs of TFA the People should be paying experts, police officers and prosecutors, and the police and DAs should be deciding on the viability and priority of the case as they do for convenience store robberies etc.
Imagine if "Rich man" had a wife who was killed and a "Poor man" who he wanted to see convicted of the murder. Now you have police and DAs who are clearly on the take and the conviction can be funded by "Rich man". And "Rich man" can supply the "evidence" and the "experts" who explain it.
The second scenario you describe is clearly corrupt, but I don't see how paying a consultant for their time is the objectionable part; when you stack that against a DA on the take, a police force on the take, and a rich man fabricating evidence, that all seems like a larger problem to me than "the rich man can pay an expert to testify about their expertise", especially given that the testimony of the expert witness can be challenged.
TFA is "the fucking article."
It's derived from RTFA - "read the fucking article," something said when someone makes a comment that is addressed in the article. However "TFA" doesn't have the same rudeness that "RTFA" has and doesn't imply anyone didn't read the article.
For those of us that like to read and think and then comment, it can be frustrating talking with people who are just gratifying their ego by putting out words with no idea of what the topic even is.
But paying a consultant to consult for you doesn't become a bad thing to do, even if you are a bad person.
Like, consider the opposite question: Why should expert witnesses, people who have absolutely no connection to a case beyond a level of expertise in some component of it, _not_ be compensated for the time it takes them to prepare their testimony? This isn't an employee of the city; imagine you're a construction foreman and you're asked to appear as a witness to describe your experiences on a typical job site.
Why should you not get paid for preparing and giving your testimony?
By who is the question.
That's the whole point of the second scenario. And the article you are commenting on.
Why some people think that others want to hear their opinion of things they don't read is beyond me.
Seven factories owned by the same company. 680 individuals arrested for being undocumented - a misdemeanor, leaving aside all the other polarization of opinions on that.
It's a felony to (knowingly) employ someone without work authorization.
Not one supervisor, manager, or executive has been charged with anything in relation to these raids. And ICE has announced no plans to do so.
And so fraudulent claims and the shadow industry that surrounds them grow in size until something bad happens, like a grandma dies in a commercially-staged motor vehicle accident. And then everyone gets all introspective and tries to figure out how we got to that regrettable point and what we can do to walk things back to a sane place where fraudulent activity is not acceptable.
Unfortunately, the basic incentives in the insurance industry still are, and always will remain, for companies to do as little as possible about fraudulent claims. What I see in the facts reported by the article are companies that have used fraud investigators who are poorly trained or under-resourced and are generating erroneous or weakly-supported evidence of fraud, which the companies then hand off to public authorities who apparently have no better resources. That leads to two observations:
1. If the problem is irrational, counterproductive prosecutions due to poor training and resources, writing a hit-piece about supposed conflicts of interests over supplemental funding being used to patch the resource problems isn't really part of the solution.
2. The insurance companies are paying for the consequences of poor-quality investigations communicated to authorities by their investigators. The article talks about some of the claimants suing the insurers for bad faith practices (and defamation?), which I'd call a "cottage" industry in the U.S., except that the industry is quite large and active. The insurers named in the article most definitely have been incentivized to learn the lesson not to refer marginal fraud prosecutions-- maybe not to refer prosecutions at all-- and so we'll repeat the cycle mentioned above until at a future time a grandmother, aunt or child is killed again in a staged fraudulent insurance claim, and then everyone will get introspective again and muse that at one point we had laws that incentivized insurers to identify and prosecute scam artists but bad press like this article led to changes that made them stop.
Incorrect, the entire point of an insurance company is to collect as much in premiums as possible while paying out as little in claims as possible
the Clear basic incentive is to DENY as many claims as possible
>> What I see in the facts reported by the article are companies that have used fraud investigators who are poorly trained or under-resourced
I don't see that at all. I see the companies incentivizing "investigators" to find away to deny claims even if it means fabricating a good story wholesale.
The Contractor that had is business ruined by State Farm because he was talking to the press is a clear example of that
>> The insurers named in the article most definitely have been incentivized to learn the lesson not to refer marginal fraud prosecutions
Where on earth do you get any of these companies have "Learned their lesson"
Let me guess you are an insurance sales man, or in some way make your living connected to the Insurance scam?
I'm just floored to see a post on HN criticizing someone else personally on HN and then calling insurance a "scam"? It's a regulated industry, it's definitely not a scam, and I'm really saddened at the level of misunderstanding brought about by a poorly written one-sided article that doubtless was inspired by some kind of sharp-elbowed personal injury litigation strategy by sources in the story.
That does not in anyway "prove" it is not a scam, it is a legal scam backed by the government which there are many of those
The Insurance Industry for decades now have succeeded in regulatory capture where the "regulators" are made up of industry insiders that ensure the regulations favor the companies not the citizens
That is one of the biggest points of the story, is how the "regulations" mainly shield the insurance companies from liability and prohibit them from being sued
>I'm really saddened at the level of misunderstanding brought about by a poorly written one-sided article
It is not the article, the article just confirms what many of us has already experienced in Real Life when it comes to insurance.
Submit a claim, only to have it denied because you insurance only covers you if the event happens on the 5th tue during a full moon, if you are standing on one leg while praise the xenu god... That clause was on page 900 of the 4 point font contract you "agreed" to when you took out the policy
Or if the do approve your claim, You are Dropped from the insurance the second they legally can, or they jack your rates up Sky High to ensure they recover the costs, never mind that you paid in premiums for years well in excess of the claim....
I think in any organization when management constantly is trying to squeeze costs there will be instances of incompetent conduct (which folks on HN will quickly note is often indistinguishable from malice). That said, if an insurer denies claims where liability and damages are reasonably clear, or abuse legal processes-- both of those are torts, legal fees are often available for the successful party, and if you feel you've been wronged by an insurer in any of those ways by all means go speak with a bad faith insurance attorney and good luck.
Other than that, insurance companies have a right to cut down on fraud and jail fraudsters.
LEOs have access to tools that the public and corporations don't have access to, and the law prevents them having access to. By paying a LEO to access those tools the insurers are circumventing the will of the people.
Also, by paying LEOs to investigate a particular crime that means the insurer is effectively getting to pick who is investigated and who isn't. They should be able to deny a claim, and report what they believe is fraud, but the insurer shouldn't be telling law enforcement who to look in to. That's law enforcements decision alone, and payments muddy the water.
Paying for law enforcement is a bad idea. It changes the incentives too much.
Here's the evidence, counter it and let the jury decide.
I just wish they were more public about punishing the bad ones they catch. It would help people understand the necessity of investigations, and probably discourage some would-be fraudsters.
If withholding evidence that might prove your customer's innocence is a necessary part of the business, I submit that your business is bad and should not continue in its current form.