SIU Case Study: Arson Investigation Prevents Fraudulent $1 Million Insurance Payout for Dental Practice

THE OVERVIEW

Solid investigative work and adherence to fraud identification procedures recently delivered a major win, protecting our client by preventing a fraudulent payout of over one million dollars.

The team’s investigation ultimately contributed to the conviction of an insured who intentionally set fire to his dental practice to try and cover mounting debts. The explosion and resulting fire completely destroyed the building and its contents, meaning the potential claim exposure was substantial.

THE INVESTIGATION

Q&A with Mike Small, SIU Senior Investigator

How did this case start?

An attorney submitted the claim notice to the insurance agent, who notified ACM, a Davies company, as the TPA handling the claim. They indicated that a fire had occurred, they didn’t know how, the policyholder was in the hospital, and they weren’t sure when he was going to be released. From that point, Davies opened the claim and assigned a field adjuster and fire investigator. When it was clear the situation needed further investigation, the field adjuster enlisted Investigation Solutions, the special investigations unit for Davies.

What were the initial red flags?

This was a unique arson case in that there was so much evidence.

The field adjuster had obtained grainy video footage that showed an individual arriving at the office at night, then doing something you couldn’t really make out. But when the individual on the video opened the rear door to the office, there was an explosion.

In all fires, a fire investigator is assigned and checks to see if any accelerants are involved. In this case, he found traces of gasoline on the floor and that the origin of fire was at the back portion of the building.

According to information from the adjuster and fire investigator, the dentist had taken himself to a hospital that same night for burn treatment. And when the fire marshal met with him there, his clothing still had gasoline on it.

What tactics did you use for your investigation?

The field adjuster and fire investigator used the video and physical inspection work and shared their findings, which we then augmented by reviewing the claim in its entirety.

Running searches in major databases is part of Davies’ standard operating procedure. We accessed various databases for a background investigation that pulled from public record information, as well as from an ISO “all claims” database that shows us claims an individual has made across any insurers and of all types—vehicle, homeowner, liability, etc.

The searches on this claim didn’t turn up much. It wasn’t until the sworn testimony that it was discovered the insured was having financial difficulties.

Potential payout amount

While the dentist never demanded an amount, he had a policy that covered the building and all its contents. The building limit was $450,000, with contents valued at over half a million dollars. This would have put the payout at nearly $1 million.

How does SIU partner with others for successful investigations?

It’s always a team effort when it comes to these cases. We work with claims and defense counsel to determine if we have something or not; a misrepresentation that is material to the claim. If we do, we figure out what more is needed and work together to develop the information. We thoroughly review all information before making recommendations, which takes a cohesive team and resources.

THE OUTCOME

The dentist pled guilty to intentionally burning his own dental practice and attempting to collect insurance money to cover his mounting debts. He was sentenced to 15 years with three years to serve on two felony counts: second-degree arson and first-degree insurance fraud.

TAKEAWAYS

The Top 5 things adjusters should keep an eye out for to flag potential fraud:

1. Late reporting on the claim.
2. Initial report to adjuster is vague as to circumstances of the loss.
3. Insured or claimant demands quick resolution of the claim and payment of loss.
4. History of similar losses in ISO all-claims database.
5. Immediate representation by an Attorney.

About Our SIU Team

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