Billions Built on Bogus Fraud Claims
PART I
Warren Buffett did not become one of the wealthiest men in world history just because he is a lovable old grandpa from Omaha. He did it just the way every other mega-billionaire has – by being ruthlessly shrewd in how and where he invests his money. The shrewdest investment of Buffett’s storied career has been in GEICO, from which he has extracted profits of $41.6 billion just since taking full control of the company in 1996.
No one makes $41.6 billion in profits on shrewdness alone, not over a period of years which included the burst of the internet bubble, the 9/11 attacks, the worst recession since the Great Depression, and a global pandemic that has ravaged the world economy. Such an accomplishment is possible only with a ruthless commitment to maximizing the bottom line. For an insurance company like GEICO, this means selling as many policies as possible while doing whatever it takes to avoid actually paying out on claims.
And this is where Buffet is revealed to be less Pop-Pop than Pol Pot.
Like State Farm (the competitor it is striving to overtake as the largest auto insurer in America), GEICO has adopted a strategy of denying and devaluing injury claims of minorities, immigrants, and lower income claimants with ginned-up accusations of fraud. I have written previously about the fundamentals of this fraud-for-profit program originated by the global consulting firm McKinsey for Allstate and State Farm which is now, unfortunately, simply the modus operandi for the entire Property Casualty Industry.
GEICO’s most transparently disingenuous deployment of fraud-for-profit strategy is against doctors providing treatment to patients injured in car crashes and submitting bills under various state PIP laws. GEICO hates how PIP laws interfere with its scheme to automatically deny injury claims based on racial, ethnic, and socio-economic stereotypes. This is because virtually every PIP law in the country requires automobile insurers to provide no-fault medical benefits coverage for treatment of injuries related to an auto crash and generally require insurers to make payment directly to medical providers within 30-60 days of getting the bill. This tight time frame, combined with disproportionate penalties for untimely compliance, makes it impossible to deny payments without some actual justification for doing so.
But justifying denials would mean hiring more people to actually review medical records and meaningfully adjust claims, which would substantially increase costs and eat into profit. As one would expect from a company owned by so successful an investor as Warren Buffett, GEICO is constantly inventing ways to reduce claims-related expenses, not increase them. GEICO has therefore taken the opposite approach required by PIP laws and simply avoids using human beings altogether, instead automatically reducing and denying no-fault payments with computer programs such as its “Geographic Reduction Rule” and “Passive Modality Rule.”
Such automatic computerized curtailments, though, must necessarily be complemented by an additional program designed to offset the consequences of so blatantly ignoring PIP statute requirements (not to mention bad faith laws). This is where headline-grabbing federal lawsuits alleging fraud against medical providers come into the picture. GEICO has filed these suits in large cities all over the country, but most often in New York and Florida due to the more drastic penalties for noncompliance with those states’ respective PIP statutes.
GEICO’s lawsuits against doctors are works of pure fiction, premised on nothing more than a mercenary calculation that doctors in urban areas serving minorities, immigrants and the economically disadvantaged can profitably be attacked by exploiting societal prejudices against their patients, which prejudices GEICO and its competitors have worked hard to foster.
In Part II of this article, I will outline a basic roadmap for detecting, exposing, and defeating GEICO’s bogus “fraud” claims as the sinister and discriminatory propaganda they truly are.