Insurance fraud is a serious and costly problem in Michigan. According to industry estimates, insurance fraud costs the average Michigan family an additional $400 to $700 per year in higher premiums. For insurance companies, detecting and preventing fraud is not just about the bottom line — it's about keeping coverage affordable for honest policyholders.
The Scale of Insurance Fraud in Michigan
Michigan faces unique challenges when it comes to insurance fraud:
The state's no-fault auto insurance system has historically provided generous benefits that attract fraudulent claims
Michigan consistently ranks among the top states for insurance fraud in the nation
Auto insurance fraud alone is estimated to cost Michigan policyholders over $1 billion annually
Fraud extends beyond auto insurance to workers compensation, homeowners, and health insurance claims
The Michigan Department of Insurance and Financial Services (DIFS) and the National Insurance Crime Bureau (NICB) work with investigators to combat fraud, but private investigations remain essential for identifying and documenting fraudulent claims.
Common Types of Insurance Fraud in Michigan
Staged Accidents
Staged accidents are one of the most prevalent fraud schemes in Michigan, particularly in the Detroit metro area. Common staging methods include:
Swoop and squat — A vehicle cuts in front of another and brakes suddenly, causing a rear-end collision
Drive down — A fraudster waves a driver into traffic, then intentionally collides with them
Phantom vehicle — A driver claims an unidentifiable vehicle caused the accident
Paper accidents — Accidents that are reported but never actually occurred
Phantom Passengers and Inflated Claims
After an accident (staged or real), fraud rings may add phantom passengers — people who weren't in the vehicle — to file additional PIP claims. They may also:
Exaggerate the severity of injuries
Claim pre-existing injuries were caused by the accident
File duplicate claims with multiple insurance companies
Medical Provider Fraud
Some medical providers participate in fraud by:
Billing for services not rendered — Charging for treatments that never happened
Upcoding — Billing for more expensive treatments than were actually provided
Unnecessary treatment — Prescribing treatment that isn't medically necessary to generate billing
Running "paper mills" — Clinics that exist primarily to process fraudulent medical claims
Workers Compensation Fraud
Workers compensation fraud in Michigan includes:
Exaggerating injuries — Claiming more severe limitations than actually exist
Fabricating injuries — Claiming an injury occurred at work when it didn't
Working while collecting benefits — Performing paid work while claiming inability to work
Malingering — Deliberately prolonging recovery to continue receiving benefits
Homeowner and Property Fraud
Property insurance fraud includes:
Inflated claims — Claiming more damage or loss than actually occurred
Staged thefts or vandalism — Creating fake property crime scenes
Arson — Deliberately setting fires to collect on insurance policies
Pre-existing damage — Claiming old damage was caused by a recent event
Red Flags That Indicate Potential Insurance Fraud
Experienced investigators and SIU (Special Investigations Unit) professionals look for specific red flags that suggest a claim may be fraudulent:
Claimant Behavior Red Flags
Filing a claim shortly after purchasing or increasing coverage
History of multiple prior claims with different insurers
Reluctance to provide recorded statements or submit to examination under oath
Changing stories or inconsistencies in the account of the incident
Refusing or delaying an Independent Medical Examination (IME)
Overly detailed and rehearsed accounts of the incident
Insistence on settlement rather than investigation
Financial difficulties that create a motive for fraud
Medical Treatment Red Flags
Delayed reporting of injuries (days or weeks after the incident)
Treatment primarily with providers known for fraud involvement
Extensive treatment that doesn't match injury severity
Referral chains where one provider refers to affiliated providers
Billing patterns that show identical treatment for all patients regardless of diagnosis
Treatment that continues far beyond expected recovery timelines
Accident and Incident Red Flags
No independent witnesses to the accident
Inconsistencies between vehicle damage and reported injuries
Previous similar accidents involving the same parties
Accident occurring shortly before policy expiration or change
All occupants claim the same injuries regardless of seating position
The accident occurred in a known staging area
How Professional Investigators Detect Insurance Fraud
Surveillance
Surveillance is the cornerstone of fraud investigation. By documenting a claimant's actual activities, investigators can:
Capture video of physical activities that contradict claimed injuries
Document the claimant working or engaging in activities while claiming disability
Establish patterns of behavior that are inconsistent with the reported condition
Provide objective, court-admissible evidence
Background Research
Comprehensive background investigations reveal:
Prior claims history across multiple insurance companies
Criminal records that may indicate dishonesty or prior fraud
Financial status that may create a motive for fraud
Connections to known fraud rings or suspicious providers
Social media activity that contradicts claimed limitations
Social Media Analysis
Social media has become a goldmine for fraud investigators:
Posts showing physical activities that contradict claimed injuries
Check-ins at locations inconsistent with reported limitations
Photos of vacations, sports, or recreational activities
Employment-related posts while claiming inability to work
Connections to other parties involved in the claim
Medical Record Analysis
Investigators coordinate with medical professionals and SIU teams to:
Identify inconsistencies between treatment records and claimed injuries
Detect patterns of billing fraud among providers
Compare treatment timelines with surveillance findings
Identify providers with histories of fraudulent billing
Financial Investigation
Following the money often reveals fraud:
Unusual financial transactions around the time of the claim
Assets that are inconsistent with reported income
Financial relationships between claimants, attorneys, and medical providers
Patterns of payments that suggest organized fraud activity
The Investigation Process
Step 1: Referral and Case Review
The investigation typically begins when an insurance SIU, attorney, or employer identifies a claim with fraud indicators and refers it to a private investigator. The investigator reviews:
All available claim documentation
Medical records and billing
Prior claims history
Any existing red flags identified by the referral source
Step 2: Investigation Plan
Based on the case review, the investigator develops a plan that may include:
Surveillance schedule and locations
Background research priorities
Social media monitoring strategy
Witness interview plan
Step 3: Field Investigation
The investigator executes the plan through:
Surveillance operations (stationary and mobile)
In-person interviews and canvassing
Database research and records retrieval
Social media monitoring and documentation
Step 4: Reporting
The investigator delivers a comprehensive report including:
Detailed findings with supporting evidence
Video and photographic documentation
Written activity logs and timelines
Analysis of findings relative to the claimed injuries
Recommendations for further investigation if warranted
Step 5: Legal Support
If the investigation reveals fraud, the investigator may:
Provide testimony in depositions and court proceedings
Assist with Examination Under Oath (EUO) preparation
Coordinate with law enforcement for criminal referrals
Support the SIU team with supplemental investigation
Why Choose Priority Investigation for Fraud Cases
At Priority Investigation, we specialize in insurance fraud investigation throughout Michigan. Our experience includes:
Thousands of surveillance operations documenting fraudulent activity
Collaboration with major insurance carriers and SIU departments
Expertise in Michigan's no-fault system and workers compensation fraud
Court testimony experience in fraud cases across Michigan
Our investigators produce detailed, court-ready evidence that supports claim denials, litigation, and criminal referrals. We understand the urgency of fraud cases and respond quickly to new assignments.
Contact Priority Investigation today for a confidential consultation about your insurance fraud investigation needs.