The New Face of Insurance Fraud Looks Just Like a Legitimate Claim

By: Pranay Mittal | June 3, 2026

Pranay Mittal leads Travelers Investigative Services, one of the largest specialized investigative units in the property-casualty industry. His team of more than 300 investigators, data analysts and forensic specialists investigates more than 35,000 suspicious claims annually.

Every week, my team reviews claims that look, on the surface, like open-and-shut cases. The injury is plausible. The treatment records are in order. The documentation is clean. And increasingly, that’s precisely the problem.

The question we’ve had to learn how to ask is whether it’s actually real or just posing as legitimate enough to move through the system. In today’s fraud environment, the line between the two is blurring fast.

I’ve spent most of my career in technology and analytics, and most recently in fraud-fighting efforts. I’d argue that the current moment is the most consequential shift I’ve seen in how fraud operates. Three forces are converging at the same time: AI tools that make document fabrication inexpensive and convincing; digital claims workflows that compress the window between submission and payment; and increasingly coordinated fraud networks that have mapped the detection gaps and built their schemes around them.

The result is fraud designed to pass traditional legitimacy tests on an individual claim basis — at first notice of loss, in the treatment records, in the billing and in the documentation. Complex fraud may only become visible when patterns are identified across claims.

The Pattern Problem

Here’s what this looks like in practice. A medical billing provider serving hundreds of claimants across multiple locations may not look unusual on an individual claim. A roofing contractor whose scopes consistently expand beyond verified damage may not surface as a problem on any single file. An attorney appearing repeatedly in claims across different businesses and geographies may be invisible unless you’re looking across your entire book.

The characteristics that make vendor and provider networks efficient — scale, specialization, distribution relationships — are the same characteristics that make them difficult to monitor closely. Complex schemes share a common design principle: they may produce plausible individual transactions that only reveal their true nature at the pattern level.

Consider this example of a 14-claim staged accident ring my team recently identified. No single claim triggered a flag — each looked like a routine fender-bender with legitimate injuries, treatment records and documentation. The fraud only became visible when investigators mapped relationships across all 14 claims and found the same attorney, the same medical providers and some of the same “victims” appearing repeatedly. Each individual transaction seemed plausible, yet the pattern was unmistakable.

Detection Timing Matters

When I talk to risk managers and business leaders about fraud, the conversation often focuses on case studies — schemes that were caught and resolved. Those stories matter. But the more important question is about capability: what does your carrier’s detection infrastructure actually look like, and at what point in the process does it engage?

There are three things that separate those carriers that are built for today’s fraud environment from those who are not.

Integration between analytics and investigation. The organizations catching coordinated fraud schemes early aren’t doing it with investigators or analytics alone — they’re doing it with both working in combination, from the moment a claim enters the system. Analytics surface patterns across the full claim portfolio; experienced investigators interpret those patterns and build actionable cases. A carrier whose investigators engage after payment has already occurred is operating a fundamentally different system from one whose analytics flag suspicious patterns before payment is authorized. Ask your carrier which one describes them.

Detection timing relative to your exposure. The financial damage from this advanced fraud is heavily concentrated in the period between when a scheme starts operating and when it’s identified. Our analytics models are designed to detect fraud within days – and sometimes hours – of first notice of loss, not because every claim warrants that scrutiny, but because the schemes that cause the most damage are the ones that scale before they’re spotted. Ask your carrier what their typical detection lag looks like for the fraud types most common in your industry.

Industry-specific pattern recognition. Fraud patterns are not uniform across industries. Construction fraud looks different from manufacturing fraud, which looks different from transportation fraud. Medical billing fraud leaves different indicators than contractor fraud, which, in turn, presents differently than staged accidents. Generic across-the-board detection finds generic fraud. What’s accelerating is advanced, tailored fraud — schemes engineered to evade the standard triggers. Identifying those types of fraud requires deep familiarity with how fraud behaves in your specific industry, geography and vendor ecosystem. Ask your carrier what they know about fraud patterns specific to your book, not just the industry at large.

This Matters Beyond the Balance Sheet

There’s a perception — one I hear sometimes even from experienced risk professionals — that fraud is primarily an insurer’s financial problem. I want to push back on that.

In workers compensation, fraud often means injured employees are steered toward suspect medical providers and subjected to unnecessary treatments — sometimes needless surgeries — by networks built to maximize billing, not necessarily to deliver care.

Across commercial lines, fraud drives up costs that flow to employers, consumers and communities. For businesses, that translates to premium pressure, operational disruption and exposure to liability claims they’re not equipped to recognize as fraudulent until significant damage is done.

The fight against fraud isn’t self-serving for insurers. It’s about protecting the integrity of a system that businesses and individuals depend on — and making sure that when someone files a legitimate claim, the process works the way it should.

The Standard Has Changed

The question for risk managers is whether their carrier has solved the pattern problem — whether they’re monitoring claims in real time, connecting dots across the full book and engaging investigative resources before payment rather than after.

The technology exists to find these fraud patterns. The investigative expertise exists to act on these findings. The question becomes: are both technology and investigators working together from the first moment a claim enters the system — and does your organization have a clear escalation path when the patterns emerge?

In my experience, organizations that take the answer to this question seriously before a major scheme hits are in a fundamentally more advantageous position than those that start asking it after. &

Managing Facility Costs in Workers’ Compensation

The role of network hospitals in medical cost control.

When hospital care is needed for a workers’ compensation claim, network participation often becomes the dividing line between managed medical costs and inflated facility spend. Hospital services introduce a level of pricing complexity, utilization variability, and administrative exposure that few other components of workers’ compensation medical care carry. Without a structured framework to guide access, oversight, and reimbursement, facility charges can escalate quickly, affecting not only medical spending, but also claim duration and recovery outcomes. As workers’ compensation stakeholders continue to focus on managing medical costs, increasing attention has shifted to how hospitals and facilities are incorporated into provider networks, and whether those networks are positioned to manage care consistently and predictably.

Provider Networks and Claim Outcomes

Provider networks have long served as a foundational element of workers’ compensation medical management, but their role has expanded beyond price negotiation alone. Research consistently shows that networked care is associated with lower medical payments, reduced total claim costs, faster access to treatment, and shorter claim durations. These outcomes reflect not only differences in reimbursement, but also differences in utilization patterns, care coordination, and administrative oversight.

Claims treated within a network tend to initiate care earlier, follow more conservative and evidence‑based pathways, and experience fewer disruptions related to authorization or billing. While professional services have historically driven network strategy, facility‑based care increasingly represents one of the most consequential opportunities to influence both cost and recovery.

Why Facility Care Requires a Different Lens

Hospital and facility services differ fundamentally from professional services in scope, scale, and financial impact. Inpatient admissions, emergency department visits, outpatient hospital procedures, ambulatory surgical centers (ASCs), and ancillary services such as anesthesia and implantable devices can represent a significant portion of claim spend within a short timeframe.

These services are also subject to substantial pricing variability. When delivered outside a network framework, facility care may be reimbursed based on billed charges, with limited ability to apply utilization controls or align care with treatment guidelines. This variability can lead to higher payments, longer claim timelines, and increased administrative friction, all of which contribute to cost instability.

The Importance of Network Hospitals and Facilities

Including hospitals, outpatient departments, emergency facilities, and ASCs within a WC PPO network allows facility care to operate within the same managed environment as professional services. Network participation establishes clearer expectations around reimbursement methodologies, access standards, and care coordination, while supporting integration with utilization review and bill review processes.

In 2025, analysis of claims utilizing the HCS Network Solutions PPO Network demonstrated meaningful reductions across several facilities and facility‑adjacent service categories in New Jersey. Observed savings included:

61% reduction in inpatient (acute) hospital services
29% reduction in outpatient hospital services
53% reduction in emergency room services
74% reduction in freestanding ambulatory surgical center services

Additional savings were observed in key ancillary components of facility care, including a:

61% reduction in devices and implantable hardware
57% reduction in anesthesia services

Together, these results illustrate how network participation can influence the most significant drivers of workers’ compensation medical spend.

Facility Management as Part of Care Coordination

Effective facility management extends beyond unit cost containment. Network facilities are better positioned to align with evidence‑based treatment guidelines, support appropriate site‑of‑care decisions, and coordinate transitions from acute care to rehabilitation.

This coordination is particularly relevant in musculoskeletal and orthopedic claims, where hospital‑based services often represent a gateway to longer‑term recovery. When facility care is managed within a network structure, downstream services, such as physical therapy, follow‑up imaging, and return‑to‑work planning, can be initiated more efficiently and with greater continuity.

A Practical Path Forward

As workers’ compensation programs continue to address medical spend, facility care has emerged as the most consequential, and actionable, area of focus. Network strategies that extend beyond professional services to meaningfully include hospitals and other facilities offer greater predictability in pricing, stronger care coordination, and improved claim stability. In an environment defined by healthcare consolidation and increasing complexity, aligning facility care within a structured network framework is not simply a cost strategy, it is a necessary foundation for delivering appropriate care and supporting timely recovery.

To learn more, please visit https://www.medrisknet.com/.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with HCS Network Solutions. The editorial staff of Risk & Insurance had no role in its preparation.

HCS Network Solutions, part of MedRisk, in business since 1994, is a leading PPO in New Jersey WC and PIP. HCS has a 100% direct-contracted provider network that includes almost all New Jersey acute care hospitals. The network delivers significant overall savings and, with its deep focus on precision, an extremely low appeals rate. Its PPO results, combined with its Healthcare Value Strategy and Outcomes Focused Network, enable insurers to be the best at delivering quality medical care to claimants at the right cost — clearly a win-win for all.