FraudBlog: It all turns on a single word. Why insurers should care about a recent high-profile federal trial

Posted by Kendra Smith

BY Matthew J. Smith, Esq., Coalition Against Insurance Fraud | October 17, 2022

A key charge in the obstruction of justice trial arising from the infamous dossier on Donald Trump’s alleged ties to Russia was thrown out last Friday by a federal judge. Igor Danchenko is on trial charged with lying to the FBI about his role in creating the dossier. Here is why insurance fraud investigators should be very concerned.

In the count that was tossed out, prosecutors alleged Danchenko lied when he told the FBI he never “talked” with a Democratic operative about the information in the dossier. The government charged Danchenko since there was very clear evidence that Danchenko and the operative repeatedly discussed the dossier in emails.

Danchenko’s attorneys argued his response was entirely truthful because they did not talk orally. The FBI agent, they asserted, failed to use the right words or ask the right questions.

The judge agreed, rejecting the prosecution’s argument that the word “talk” had a broader context which would include writings such as the emails. Not true, said the judge, ruling the word “talk” is used commonly and following the government’s bad logic would result in “divorcing words from their common meaning.”

“Divorcing words from their common meaning …” Go to any insurance conference today and you are almost guaranteed to hear the word “data.” Even persons who fail to agree on almost everything, will unite in agreement that “data” will define the entire future of insurance, and the way we fight insurance fraud. Words you will almost be guaranteed to not hear at those same conferences are the more boring and outdated: “records and documents.” If you are using those words, it may be time to climb down from your dinosaur.

Yet virtually every insurance policy in America under the anti-fraud and duty to cooperate clauses of the contract requires production of “records and documents” we may reasonably request. That policy language has not been updated in more than a half-century. It was written in a time when telephone calls were placed with operators and Western Union delivered telegrams. Yet insurers refuse to update their policies while they extol the wonders of the data world.

In a recent meeting with industry leaders where the Coalition was advocating for new anti-fraud and duty to cooperate language to make certain fraud investigators may gain access to the wealth of electronic data, clouded storage and everything from vehicle infotainment systems to the internet of things, insurers balked. They claim they don’t really see the need, fear litigation over any new language and think the current language works “just fine.”

Of course, there was no mention of concern for policyholders being more fairly informed of their duties in the event of a loss and the specific forms of electronic data which insurers may want to access to determine the legitimacy of their claim. It seems insurers consider half-century old language to be just fine to fairly inform policyholders of their duties, even in the new digital age when they never use those words themselves. By the way, I kept count. The words “records and documents” were never used in the day-long insurance meeting once, but “data” was used more than 100 times! Oh, the power of one word!

I have said for years the insurance industry is one state or federal judge away from a ruling shutting down fraud investigators due to the insurer’s refusal to update their policy language on the duty to cooperate and the types of both traditional and electronic data which is needed today to fight against insurance fraud. Perhaps the judge’s ruling in the Danchenko case should be considered as a wake-up call before it is too late.

About the author

Matthew J. Smith, Esq. is the Executive Director for the Coalitiion Against Insurance Fraud.