Presenter Jarrod Bowditch Director Verifact Investigations Private Investigations

Presenter : Jarrod Bowditch Director – Verifact Investigations “Private Investigations, Mystery Shopping and Evidence Gathering”

TOPICS TO BE DISCUSSED • Definition of Fraud • Types of Health Insurance Fraud • Fraud Indicators • Private Investigations – Evidence Gathering • Mystery Shopping – technology and customer support systems • Factual Investigations – methodologies of obtaining witness statements • Surveillance Investigations – technology and customer support systems • Fraud Hotline

LAYMAN’S DEFINITION - WHAT IS FRAUD? Fraud encompasses an array of irregularities and illegal acts characterized by intentional deception. The elements of fraud are: • A representation about a material fact • Which is false • And made intentionally, knowingly, or recklessly • Which is believed • And acted upon by the victim • To the victim’s damage

THE FRAUD TRIANGLE The phases of fraud can best be illustrated by The Fraud Triangle below. People who commit fraud generally are able to do so because there is opportunity, pressure, and a rationalization. Opportunity Pressure Rationalization

THE FRAUD TRIANGLE OPPORTUNITY is generally provided through weaknesses in the internal controls. Some examples include inadequate or no: • Audits being conducted • System controls PRESSURE can be imposed due to: • Personal financial problems • Personal vices such as gambling, drugs, extensive debt, etc. • Unrealistic deadlines and performance goals RATIONALIZATION occurs when the individual develops a justification for their fraudulent activities. The rationalization varies by case and individual. Some examples include: • “I really need this money and I’ll put it back when I get my paycheck” • “I’d rather have the company on my back than the ATO” • “I just can’t afford to lose everything – my home, car, everything”

Health Insurance Fraud Different types of fraud within the Health Insurance industry: • Hospital, Ancillary, Medical benefits • Contribution • Staff

Ancillary Fraud • Limit surfing • Falsifying treatment documents • Falsifying account documents • Over servicing • Padding

Risk Indicators – Ancillary • Multiple people having same service / same day • Amount Charged the same as Benefit Paid • Limit surfing ie. , using the limits of all dependants on membership

What is Mystery Shopping ? • Mystery shopping is a form of research work whereby an individual poses as a customer to objectively gather information on the business being studied. • The information gathered usually involves, but is not limited to, employee performance, and potential customer and supplier fraud.

What does a Mystery Shopper do ? • A mystery shopper is engaged to visit a place of business (retail shop, financial institution, health fund or other) for the purpose of evaluating the customer service, product quality, presentation and other specific details as requested by our clients. • Our mystery shoppers follow specific instructions during their visit and complete a detailed report.

Mystery Shopping • Verifact Investigations can conduct “Mystery Shopping” for members of AHIA as a group approach. • This group approach would have considerable savings to members who participate in this programme. • Intelligence would be shared between AHIA members on who is conducting fraudulent activities.

Ancillary Provider Checks Verifact use experienced investigators from various nationalities who can assist in supplier fraud in various areas but not limited to: • Optical • Acupuncture • Dental • Chiropractic

• Verifact Investigations provide credible investigator procedures, consistent with the corporate governance procedures of your organisation: and withstand scrutiny of the regulators and courts. • Deliver timely, cost effective reports which detail AHIA members any fraudulent activity. • Investigate in accordance with all statutory restrictions.

Factual Investigations Methods of obtaining witness statements • Record of Interview – taped question and answer format • Typed Narrative Statements

Advantages of both methods Record of Interview • Interview time reduced • Everything recorded • Provides scope to tease out answers • Captures actual words used and reflection of voice / tone Narrative • Reduces cost as statement finished and signed at end of interview • No need for transcribing and checking for corrections • Shorter/ more concise and focuses on the issues • Used by the courts/ lawyers as evidence in chief

Which one to use ? • Verifact has can do either ROI or Narrative Statements. • Depends on circumstances / client choice and what is required at any tribunals or courts.

Surveillance Equipment

Road surveyors rig

Surveillance Vehicle – Rear View

Onboard video monitoring & Long Range Optical - Recording Capability

Front Driving Compartment

Covert Camera housing

Long Range Optical Recording Capability 500 mm Photographic Lens = 2000 mm Lens when mounted on a CCTV Camera

Role specific technical equipment

Example of Covert camera identification video

DEVELOPMENT OF A “HOTLINE” This is a fraud control mechanism most useful in large organizations with a high frequency of easily disposable product, particularly susceptible to “shrinkage”. It is a system whereby a telephone number is set up to allow Members or Providers to report instances of what they consider fraud, or theft, to AHIA members in complete anonymity. It is a tactic that often draws malicious information, but one that has been found to be invaluable in detecting fraud in these instances. Standards Australia has an Australian Standard (AS 8004 -2003) on Whistleblowers. E. G Enron – if they had a “hotline” this fraud may not have happened. - Sarbanes Oxley Act of 2002 – defines “corporate responsibility” including the development of a single “hotline” for anonymous complaints.

Verifact has National Coverage for Investigations

Questions & Answer

Toll Free : 1300 882 615 www. verifact. com. au www. investigations. com. au