Lie Strong

Who is at fault when we do not tell the truth?

March 05, 2013 Photo

There was irony in the air this February, the month in which we celebrate the birth of George Washington, the first president of the United States.

Washington is famously known for a story from his childhood in which he could not tell a lie when questioned about chopping down a cherry tree. It has inspired people for generations. This year, however, another American icon’s story was an inspiration killer. After years of questions, Lance Armstrong, an athlete best known for defeating cancer and winning the Tour de France seven times, finally admitted that he lied to us all. The founder of the LiveStrong Foundation has come clean and admitted to using performance-enhancing drugs.

Floyd Landis, a former Armstrong teammate, has filed a whistle-blower, or qui tam, lawsuit, in which the government is expected to join. This lawsuit is on behalf of the U.S. Postal Service (USPS), which funded Armstrong's Tour de France cycling teams from 1999-2003. The sponsorship paid $10 million a year for a total of $50 million. The writ of qui tam, or a claim under the provisions of the Federal False Claim Act, allows a private individual who possesses knowledge of past or present fraud that has been committed against the federal government to bring suit on its behalf. These whistle-blower lawsuits are deemed one of the most successful ways for the government to combat fraud, waste, and abuse.

Others that may file suit are USPS and SCA Promotions, a Dallas-based insurance company that paid Armstrong a performance bonus of $12 million for winning the Tour de France three times and testifying that he did so without using performance-enhancing drugs. The Sunday Times is seeking to recover $1.5 million in damages and other costs resulting from a 2004 suit.

Armstrong, certainly, is not the first prominent public figure to lie. But, does this recent divulgence of information—which clearly illustrates the magnitude of lying under oath—shake the very core of what our legal principles and systems are based upon? After all, our legal system is based on investigating—deposing, verifying, and fact finding—in order to assess damages, liability, truth, and, if warranted, punishment.

A few years ago, the head of BP told us that no oil was leaking into the Gulf, which might have been believable if it weren't for the live camera feed showing otherwise. We all watched in horror day after day as gallons of oil spewed relentlessly into the Gulf of Mexico. He clearly did not learn from other past presidents that the truth will be found out—figures like Richard Nixon who shamelessly said, "I cannot tell a lie," or Bill Clinton who defiantly said that he did "not have sexual relations with that woman." The list of prominent figures attempting to evade truth is, sadly, a long one, e.g., Martha Stewart, Barry Bonds, and Bernie Madoff to name a few.

But for more common cases, what do we do about those people who lie about a claim when testifying under oath? Who is liable for the direct bearing that such testimony will have on a claim or legally protected right?

Statistics are rarely kept that track those who lie under oath. However, they are maintained for the amount and continued growth of fraud in the insurance industry. The Coalition Against Insurance Fraud estimates that fraud costs more than $80 billion a year in the United States, and the National Insurance Crime Bureau reports a 19 percent increase in questionable claims.

Statistics show that fraud and deceit in the field of claims has risen not only on the part of claimants and insureds, but also adjusters and agents. The damage and risk that fraud is causing has become a huge problem for insurers. While insurers continue to invest in fraud prevention technology, social media sites continue to explode in popularity and, thus, vast amounts of information. More than 75 percent of insurers now report using social media sites to compile data for fraud and claims investigations.

Social media sites now provide an astonishing amount of information at our fingertips, but perhaps more astonishing is the fact that those putting information out there do not realize the exposure to which they’ve left themselves open. Gone are the days of hiring expensive surveillance to monitor the actions of a claimant who is unable to work due to an injury. Now, you can become "friends" with them over various social media sites, and their lives in comments and photos become an open book—and at no cost to you. Suddenly, that seriously injured individual can be found tweeting about the large fish that he caught in the Gulf, and pictures of his great catch can be viewed on Facebook.

What are those in the claims and related industries supposed to do when our decisions about liability and damages hinge on the statements and testimony of those involved? How do we know that when we are making a liability decision or offer of settlement the testimony that we have based those decisions upon is the truth? The American public, U.S. Postal Service, and others held Armstrong to the same standard as everyone else, and yet today, we know he lied.

When investigating claims, we must seek to establish the truth and proceed with our decisions based upon that information. In the insurance industry alone, lies and fraud exact a high cost that is being passed on to the consumers of those services that carriers are in the business of protecting. Costs for lying to an insurance company include:

  • Your insurance may be canceled
  • Your claim may be denied
  • You and others will face higher insurance premiums
  • You may be denied obtaining insurance in the future
  • You may be found guilty under the law and fined $100,000-$200,000
  • Depending on the jurisdiction, you may face jail time.

As in the Armstrong saga, lying and fraud come with consequences, and lying to your insurance company will bring a host of possible costs no one wants to pay.


Mary Anne Medina is an instructor and course developer for Vale Training Solutions. She has extensive experience in claims process redesign and claims handling training, with an emphasis on liability loss adjusting. She has been a CLM Fellow since 2010 and can be reached at MMedina@vale-ts.com.

 

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About The Authors
Mary Anne Medina

Mary Anne Medina is vice president of business development with Field Pros Direct. mmedina@fieldprosdirect.com  

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