Red Flags

California medical providers dramatically overbilled insurers for services rendered

Though Zalma says "insurance companies are not in the police business," he agrees that insurers could do a far better job training claims adjusters to identify fraud.

"When the companies stop spending money on training claims people, which has happened," he says, "you'll find people doing things by rote, which gives the fraudsters a better chance to succeed.

"Then there's this angle: If there's fraud in 3 to 10 percent of the claims, and you as the insurance company hire 100 experienced private investigators and they do a good job, maybe they'll stop 10 percent more of the fraud. That will save an average-sized company, say, $5 million. But make one mistake in the process and you'll get nailed in a civil suit that will cost the company more than that."

Rand Carlson

In the end, Zalma says, "You can't really deal with people who want to commit fraud, because they are going to succeed."

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