Insurance firm receives fraudulent $1.5m claims in four months

First Mutual Life Holdings’ health insurance arm has received over $1.5 million in fraudulent claims in the first four months of the year as cases of scamming in the sector increase, chief executive Douglas Hoto has said.

Hoto said that cases of exaggerated claims from service providers were on the increase but First Mutual Health had tightened the process to close potential loopholes.

“We have cases of exaggerated claims from service providers, and what we have done is we have enforced our claims and regulation department and just in the first four months of the year we have rejected questionable claims of more than $1.5 million,” said Hoto.

“I think the claims situation worsened towards the end of the year and we estimate that we saved about $1 million in fraudulent claims in the last quarter alone.”

Tighter controls have reduced the amount paid out in claims, Hoto said. He did not give figures but said the unit had recovered $150 000 that had been paid out in fraudulent claims in the first quarter to March.

“The situation is much better; we have strengthened the claims process and aligned the benefits to the contributions. We still have cases of fraud happening but they are not on a large scale. In the first quarter alone we recovered about $150 000 from fraudulent claims,” he said.

“The big issue has been preventing undeserved claims but we are protecting the system by an adjudication process.”

Last month, Cimas Medical Aid Society suspended online drug claims after losing $1.2 million in fraudulent claims during the first quarter of this year.

Cimas, which is the second biggest medical aid fund in the country by membership, said the issue came to light recently after a woman attempted to buy drugs using stolen cards.- The Source

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