Identity Resolution Daily

By Mike Betron, Infoglide Software Director of Marketing

Of the various types of crime involving fraud, individual cases of people scamming workers’ compensation garner the most publicity. The stories typically read like this: “Joe Blow was drawing workers’ comp while working as a personal trainer, and after he was caught on video, he had to pay back $9000 and received a five-year suspended jail sentence.” While the human interest aspect of these stories, especially those including video of an injured worker involved in heavy physical activity, capture the most public attention, more organized activities impact the U.S. economy much more negatively.

The National Insurance Crime Bureau (NICB) recently released a comparison of reported instances of suspected insurance fraud for the first half of 2010 versus the first half of 2009. An article in the Charleston Post and Courier observed that “while there’s no definitive study to link the economic recession to insurance fraud, certain types of claims are rising as other forms of income, from stock dividends to paychecks, are drying up. And the trend is creating more work for the parties who work together to fight insurance fraud.”

In highlighting the cost of fraud three years ago in IdentityResolutionDaily, we tagged it as a tax on all of us. The Post and Courier article said that “those types of insurance cost more than $85 billion a year, spreading an extra cost of $1,030 per year to the average household.  ‘If insurance fraud was a business, it would be a top Fortune 500 company,” the A.G.’s website states.’”

The bad news is that this “Fortune 500” fraud enterprise is big and growing; the good news is that the more organized it gets, the more detectable it becomes using entity resolution.

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By Mike Betron, Infoglide Software Director of Marketing

A recent video story on KING5 in Seattle highlighted the aggressive efforts state agencies take to ferret out employment fraud. This particular story highlights an agency’s success in identifying and prosecuting unlicensed contractors. Such willingness to work around licensing regulations can also signal a cavalier attitude about providing workers’ compensation insurance to employees as required by law.

Many organizations face the challenge of identifying individuals or businesses that intend to deceive by altering their identity in some manner. Detecting employer fraud in workers’ comp is an example that has been highlighted in a journal article:

In order to avoid paying premiums, a company’s owners may illegally classify permanent employees as contractors. Alternately, they may operate for some time without paying their premiums, and then when the insurer is about to take action, they simply shut down the company on paper and reconstitute it under another name. Companies also use this “going out of business” ploy in cases where their experience (or modification) rating has gone up due to multiple injuries, thereby resulting in higher premiums. By reopening as another company, they can effectively reset their experience rating.

Entity analytics uses a combination of similarity searching and transitive matching to alert authorities about companies or contractors that advertise themselves as open for business and who are related to companies or contractors as known offenders. Enhancing existing systems in this way with entity resolution makes them even stronger.

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Identity Resolution Daily Links 2010-05-29

[Post from Infoglide] Reference Linking Methods - Part 1

“In the last few posts, we reviewed the basic architectures used to implement entity resolution (ER) systems.  Although this gives us the big picture at the systems level, ER really takes place at the reference (record) level where the system must ultimately decide whether two references are for the same or for different real-world objects, i.e. to link or not to link.  In this series I’ll discuss some of the most common methods for making these linking decisions.”

P&C National Underwriter: New York City Listed As No.1 In Staged Auto Accident Fraud

“NYAAIF noted that the New York-based Insurance Information Institute reported that fraud and abuse in the New York no-fault system accounts for roughly 20 percent of every no-fault claim paid—or about $1,561 per claim. Spread across the state, that amounted to nearly $230 million in ‘fraud taxes’ in 2009, according to the Alliance.”

Bank Info Security: 6 Signs of Business Loan Fraud

Three states (Wyoming, Nevada and Delaware) do not require any proof of identification to set up a business. Another 26 states allow a limited liability corporation (LLC) to be set up without showing beneficial ownership. ‘When banks try to cross-reference within their own business customers, they’ll find the connection,’ she says. ‘But when they distribute it across several banks, it’s not clearly visible. It’s hard to do pattern relationships because banks don’t compare notes, so that’s how [the fraudsters] dilute and avoid detection.’”

GovMonitor: Homeland Security Outlines 2010 Summer Travel Tips

“The Secure Flight watch-list matching process occurs before a passenger even gets to the airport so if you get a boarding pass, the Secure Flight matching process is done. In other words, you are clear once you get that pass.”

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[Post from Infoglide] Unobtrusive Measures and Identity Resolution

“For decades, researchers in the social sciences have used “unobtrusive measures” as defined originally in a 1966 book by Webb, Campbell, Schwartz, and Sechrest. The idea is to collect and analyze data without disturbing the subjects of the study. For example, instead of surveying subjects to find out how many candy bars they eat each day, the subjects’ garbage is searched and the number of candy wrappers is tallied.”

Information Management: TIBCO Software Acquires Netrics

“Gartner Research VP Andrew White highlighted the continued frenzy of acquisitions in the master data management space in a blog on the latest acquisition. ‘… this new acquisition highlights the dwindling set of data quality tools for master data management (and other interested) vendors to partner with, and/or acquire,’ White wrote. ‘The acquisition seems logical, and good, for packaged MDM (TIBCO offers one) though; but as the music dies down, who will be left standing without a partner…’”

Workers’ Comp Kit Blog: Business Owners and Secretary Facing Prison For Lying to Wiggle Out of High Premiums

“The Ventura County District Attorney’s office recently arraigned the owners, along with the company’s secretary, on five felony counts of insurance premium fraud and two counts of conspiracy to commit insurance fraud. According to authorities, the three lied to their insurer to save an estimated $500,000, making it appear their employees were more experienced than they actually were.”

SmartDataCollective: MDM Can Challenge Traditional Development Paradigms

“Dealing with imperfect data has traditionally been unacceptable because it slowed down processing; ignoring it or returning an error was a best practice. The difference about MDM development is the focus on data content (and value-based) processing.  The whole purpose MDM is to deal with all data, including the unacceptable stuff. It assumes that the data is good enough.”

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[Post from Infoglide] Recession Driving Insurance Fraud

“A recent post on McClatchy’s blog attributes growing insurance fraud to the recession: A recent survey of 37 state insurance-fraud bureaus by the Coalition Against Insurance Fraud found that the recession “appears to have had a significant impact on the incidence of fraud” last year. On average, the bureaus reported increases in case referrals and new investigations in all 15 categories of fraud the survey covers.”

Liliendahl on Data Quality: What is Data Quality anyway?

“If we look at what data quality tools today actually do, they in fact mostly support you with automation of data profiling and data matching, which is probably only some of the data quality challenges you have.”

Voice of America: Murder of US Consulate Workers in Mexico Signals New Phase in Violence

“Scott Stewart, vice president of tactical intelligence for Austin, Texas-based analysis firm Stratfor, says the killings might have been related to a recently announced U.S. plan to increase cooperation with Mexican law enforcement agencies. ‘We believe that it is likely related to a decision last month to start working more closely with the Mexican government by the Americans,” said Scott Stewart. “They were going to put some personnel into a joint fusion center in Juarez.’”

Coalition Against Insurance Fraud: False claims act for Maryland

“The Coalition issued a statement supporting the bill, saying it would serve as a deterrent and a powerful incentive for medical providers to have strong compliance programs and to “play by the rules.” False claims acts help detect fraudulent schemes that otherwise might not ever be known because they allow insiders to blow the whistle and initiate civil actions.”

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By Infoglide Software CEO Mike Shultz

A recent post on McClatchy’s blog attributes growing insurance fraud to the recession:

A recent survey of 37 state insurance-fraud bureaus by the Coalition Against Insurance Fraud found that the recession “appears to have had a significant impact on the incidence of fraud” last year. On average, the bureaus reported increases in case referrals and new investigations in all 15 categories of fraud the survey covers.

The two largest sources of fraud listed in the CAIF study are phantom vehicle accident and staged accidents. In staged accidents, perpetrators of these crimes tend to be involved in multiple incidents. They create and leave a trail of information that remains captured in insurance company datasets. Unfortunately, many of these companies don’t take advantage of sophisticated tools that can find the crooks.

Let’s look at the example of staged vehicle crimes and how they can be stopped. A ring of people who successfully pull off a staged accident and are subsequently reimbursed by insurance companies usually decide to repeat their success. Since they fear being caught, each person takes different roles, changing his/her name and address slightly to avoid being caught by the data matching algorithms employed by insurance companies in the claims process. One person acting as driver in one staged accident plays the role of witness in the next accident and the passenger in the third. Each time an accident is reported, that person changes attributes of their identity, like name and address, to trip up existing software systems.

The state of entity resolution technology has been advancing rapidly. What used to be undetectable using “data matching” software can now be easily found using entity resolution. We’ve written before about the difference between simple data matching and entity resolution and how entity resolution enables hidden relationships to be uncovered.

Working with ambiguous data is a challenge, and it can overpower traditional data matching and fuzzy matching techniques. Entity resolution disambiguates insurance fraud data to find the hidden relationships between participants in fraud rings, allowing them to be stopped and prosecuted

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By the Infoglide Team

McClatchy: Recession is fueling a boom in insurance fraud

“Whether it’s worthless health plans peddled by fax, staged auto accidents, arson or slip-and-fall accidents at the local mall, insurance fraud of all kinds is booming in the recession and consumers are paying the price in higher premiums.”

SC Magazine: Technology solutions can be the resolution to terrorist threats

“Poulter said that when it comes to areas such as fraud detection and anti-money laundering (AML), identity resolution technology can assist financial institutions in combating identity fraud and leverage name matching of hidden patterns and correlations to prevent attempts to disguise identity. A single view of this information plays its part in the fight against terror, giving authorities a greater ability to prevent money laundering, which may lead to the funding of terrorist campaigns.”

Computerworld: Cloud Computing Will Cause Three IT Revolutions

“Over the next two to five years, expect to see enormous conflict about the technical pros and cons of cloud computing that will, at bottom, be motivated by the perception on the part of the participants as to whether cloud computing represents a benefit to be embraced or a threat to be resisted. In particular, cloud computing’s three characteristics — the illusion of infinite scalability, lack of a long-term commitment, and pay-by-the-use — will result in three revolutions in the way IT is performed, and each of the revolutions will have its adherents and detractors.”

Initiate blog: An Economic Business Case for Entity Resolution

“Restated, intelligence information sharing, analysis and proactive action (such as that performed by Interpol) are the most efficient way to economically battle terrorism. Interpol’s mission is to coordinate information and operations among nations, to allow countries to track criminals across borders and share information of common interest. This also happens to be a very good way to describe the business function of entity resolution technology.”

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By the Infoglide Team

tdwi: Informatica Ups the MDM Stakes

“Until now, Informatica’s MDM strategy has largely been peripheral. It had most of the tools (e.g., data integration, data quality, data profiling, and identity resolution) but tended to partner with bigger or best-of-breed players to promote MDM-oriented offerings or services… What’s risky about the acquisition of Siperian is that it imperils Informatica’s existing MDM partnerships (especially with Oracle Corp.) and compromises its neutrality pitch.”

GCN: Fusion centers to be assessed

“Fusion centers will conduct self-assessments, followed by a gap analysis and peer reviews, according to officials at the National Fusion Center Association, a new not-for-profit organization based in Alexandria, Va., that represents the 72 fusion centers. The assessments are meant to determine their progress in reaching baseline capabilities. Those capabilities were created by a federal advisory committee that also wrote the original guidelines for those centers.”

WorkersCompensation.com: NYSIF Announces 154 Arrests

“Recent significant cases resulting in millions of dollars in savings to NYSIF have included claimants who receive benefits while operating businesses or remain employed in other capacities, the most prevalent type of workers’ comp. fraud. Other cases involve premium fraud, the most costly type, in construction, asbestos abatement and other contracting, including investigations in conjunction with the U.S. Department of Labor, the U.S. Postal Inspector, and local labor racketeering bureaus. Still other cases involve fraudulent provider billing.”

SignalScape: Experts Ponder Both Sides of Border Security

“The DHS has also tested mobile identification systems and created an information sharing plan with the Department of Justice which allows officials to search for criminal records. Art Macius, chief of staff at the Transportation Security Administration (TSA) added that organizations such as his and the DHS must also share information with their international counterparts. This international cooperation includes efforts such as cargo screening for commercial aircraft though efforts such as the Secure Flight program. Macius said that by this spring, the program will work with U.S. airlines to screen baggage and air cargo, and that the coverage will extend to international carriers by the end of the year.”

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By the Infoglide Team

IT-Director.com: The Informatica Event

[Philip Howard] “To begin with, the company talked about its acquisition of Siperian. I have already commented on this but one point that emerged at the conference was the way that Informatica describes Siperian as infrastructure MDM as opposed to application MDM. This is a hitherto unrecognised distinction (with respect to terminology) in the MDM market. Informatica distinguishes the former from the latter by saying that infrastructure MDM is domain and data model independent.”

Workforce Management: Medical Clinic Owners Plead No Contest to $60 Million Workers’ Compensation Fraud

“Investigators alleged that the pair purchased thousands of workers’ compensation client referrals from an attorney television advertising service. Clients were then sent to doctors who had a relationship with Premier, which would handle billing and collection work in return for a 50 percent fee for money they collected. Clients were then sent to attorneys who had a business relationship with Fish and Bacino, investigators allege. ‘Getting kickbacks for referring medical payments is illegal and drives up the costs in the system,’ California Insurance Commissioner Steve Poizner said in a statement.”

SignalScape: DC Police Chief Cathy Lanier Describes How Technology Is Changing Police Work in the Capitol

“The MPD also established a fusion center, which is responsible for the national capitol region. From a homeland security perspective, Chief Lanier said that the center collects and stores crime and terror alerts into a data warehouse.”

Injured Workers’ Law Firm Blog: Insurance Fraud Is a Huge Crime

“The fraudulent claims that can be made through insurance companies are categorized as being soft or hard. Soft fraud is the most common type of fraud and usually takes place when someone exaggerates a claim being made. Hard fraud takes place when someone deliberately plans a deceptive act such as a collision or the theft of their vehicle.”

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[Post from Infoglide] Identity Resolution Still On the Rise

“We’ve noted several times over the past couple of years how the market visibility of entity resolution has been evolving. Now the consolidation of the master data management (MDM) market is causing even more conjecture about the crucial role of this technology.”

SIGNAL ONLINE: Good Guys Share, Bad Guys Lose

“Lindsey adds that personnel on Joint Terrorism Task Forces, in fusion centers or in other counterterrorism-related positions could benefit from the system by accessing the more complete data source and incorporating information found there into their own analyses and evaluations. ‘We’re out there for the crime fighters, but we’re also out there to prevent terrorism activities,’ he states.”

Claims Magazine: Fraud Triage Programs 

“The Federal Bureau of Investigation estimates that the total cost of insurance fraud (excluding health care) exceeds $40 billion per year. That means insurance fraud costs the average U.S. family between $400 and $700 annually in the form of increased premiums. In California alone, the Department of Insurance (CDOI) identified the potential loss from fraud in the 2007/2008 fiscal year at $1.2 billion, according to the 2008 Annual Report of the Insurance Commissioner.”

FoxNews.com: Flight Diverted to Florida Over Passenger’s Mistaken Identity

“Some airlines already have moved to a new identification program, called Secure Flight. All domestic carriers are expected to move to the new program by March. The government system will include more details about the passenger in question, including the passenger’s sex, birth date and full name as it appears on a government identification document.”

Precision Document Imaging: What is EMR?

“The American Recovery and Reinvestment Act of 2009 provides significant cash incentives to physicians who implement electronic health records. However, in order to qualify for these incentives the physician must not only have the proper software but must engage in “meaningful use” of the software. The government plans to publish the criteria for meaningful use in February 2010. ARRA incentive reimbursement to physicians will begin in 2011.”

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