Five Golden Rules For Minimizing Liability In Exposing Fraud

FOR MINIMIZING LIABILITY IN EXPOSING FRAUD

by G. Andrew Nagle

Claim representatives and insurers face civil and criminal liability exposure for statements and writings made to others in the course of investigations of fraudulent activity. These rules should help your claims personnel minimize that risk while maximizing investigative tools to detect insurance fraud.

1. Insurance companies have the right to investigate all claims. Investigations must be reasonable and may not intimidate, harass, or invade anyone's privacy.
2. Unless your state has enacted the Insurance Information and Privacy Protection Act (containing provisions for free exchange of information with other carriers pursuant to fraud investigations), don't disclose personal or confidential information without a proper written authorization or lawful subpoena.
3. If you choose to make potentially defamatory statements to your insured (for instance, to express your belief that he or she is making a fraudulent claim), don't disclose your defamatory statements to any third parties.
4. If your state provides qualified or conditional privileges against defamation to insurers, make any potentially defamatory remarks in furtherance of a claim to the plaintiff's counsel, plaintiff, or insured. If it's necessary or useful to make defamatory statements, don't publish the remarks to third parties.
5. Disclose confidential information to law enforcement and your state's department of insurance, if your jurisdiction has an immunity law allowing that.