Ex-Officer Is Taking Aim at Insurance Fraud : Workplace: Tyler Hutchison’s Westlake Village firm has investigated 500 cases this year. He says economy is a factor in rising bogus claims.
When six employees filed workers’ compensation claims against a North Hollywood shipping crate manufacturer at the same time, the company’s insurance carrier was suspicious. The workers all claimed on-the-job knee and back injuries. They hired the same attorney. And when it came time for medical treatment, they all used the same clinic.
That’s when the insurance company called in Tyler Hutchison, who spent 22 years on the Los Angeles Police Department, to investigate what it believed was a bogus claim. His Westlake Village company, T. B. Hutchison & Assoc., Inc., has built a reputation in the past seven years for helping insurance companies combat the growing problem of fraud.
Acting on a tip, Hutchison traveled to a San Fernando Valley park. At 6 feet 4 inches, the ex-cop has trouble remaining inconspicuous. But dressed in a soccer uniform he looked like a coach and fit in.
The tactic paid off. Hutchison pulled out a Camcorder and chronicled one of the “injured” workers running spiritedly on the field. The runner couldn’t resist staging a flashy bicycle kick, complete with a back flip, for the camera. So much for that workers’ compensation claim.
It’s all in a day’s work for Hutchison and his seven full-time investigators, who have handled 500 cases so far this year. Hutchison says that Southern California’s battered economy is a factor in the surge in bogus insurance claims. “Today people are committing fraud who otherwise wouldn’t, because they’re down and out.”
T. B. Hutchison represents some of the state’s largest insurance carriers, who don’t like to reveal their identities publicly. But a senior manager at a major insurance carrier that uses Hutchison’s services, says it is the one most requested by the claims staff. “His secret is simple. He runs high quality investigations. His staff have excellent backgrounds, many in law enforcement. They get results,” the insurance executive said.
Hutchison declined to give his privately owned firm’s revenue, other than to say that his sales are up 67% over 1992. The firm charges $50 an hour, plus expenses, and there are never any special recovery bonuses, he said. Of his seven investigators, three are former police officers, the others have insurance backgrounds.
Hutchison believes that his business is recession-proof: California insurance companies have become much more aggressive about policing fraud. State law now also dictates that insurance companies in California must have fraud units.
That Hutchison’s services are in demand is a sign of the times. It’s impossible to pinpoint exactly how widespread insurance fraud is, but the Chicago-based National Insurance Crime Bureau believes that fraud costs the insurance industry $20 billion annually, up 29% from 1987.
It estimates that, nationally, 10% of all claims are fraudulent. In Los Angeles, the fraud rate may be two to three times higher, according to the Crime Bureau.
“Without question, Los Angeles is the fraud capital of the world,” said George Griffith, manager of workers’ compensation fraud at the Crime Bureau’s Southern California office in Glendora.
The California Department of Insurance reports that in the fiscal year that ended in June, insurance companies reported 10,565 suspected cases of workers’ compensation fraud. That’s a more than fivefold increase from fiscal 1991-92.
Hutchison is also eyeing new markets, including doing pre-employment screening for corporations and investigating employee theft or allegations of sexual harassment.
Michael Updike, a partner with the insurance defense law firm of Michaelson & Updike in Westlake Village, said Hutchison gets a higher-than-average percentage of “drops”--that is, when attorneys for the supposed victims decide to stop representing the client.
Updike said Hutchison and his investigators conduct background checks, interview witnesses, then, in some cases, confront those filing insurance claims with the evidence and “then pull them aside and say, ‘hey, why don’t you drop it?,’ ” Updike said. “Maybe 10% of the time, they will.”
Hutchison attributes much of his success to his LAPD training. He was a member of the elite Metro Division from 1969 to 1974, he also worked on prostitution and gambling cases as the head of a vice unit in Van Nuys, followed by a stint with internal affairs--the LAPD unit that look into allegations against police officers.
After 22 years, Hutchison retired from the LAPD in 1988 because he wanted to spend more time with his wife and three children.
“I loved police work. Most people reach a point in their career when they go inside and have a desk job. Me, I was always out in the field. I liked the excitement and the camaraderie. That’s what I missed the most when I left,” he said.
Two years before he retired, Hutchison started taking steps to establish his business. While still at his police job, he purchased $10,000 in office equipment, got his private investigator’s license from the state and set up an office in his Agoura Hills home and began soliciting work from insurance carriers. He took on a few assignments in his off-hours. Hutchison retirement is 45% of his former base pay. That helped him finance the start of his business.
Hutchison said he had to learn industry lingo to get started. “I remember calling this one company and they asked me if I did AOE-COE (taking statements) and sub rosa (surveillance),” recalled Hutchison. “I said, ‘you tell me what it is and I’ll tell you if I can do it.’ ”
At the start, he took nearly all assignments that came his way, including the down-and-dirty business of tailing unfaithful spouses.
“I never wanted to be one of those old guys in the bushes,” he said. “It’s not the image I wanted.”
There were moments early on when he considered returning to the security of the Police Department.
“Eventually the business was strong enough that it got to the point where I had to start hiring others,” he said.
Today, Hutchison, 49, handles some investigations personally, but increasingly a large amount of his time is spent managing the work of others from his office.
His firm stays busy. Los Angeles’ congested freeways and boulevards provide an ideal backdrop for auto insurance fraud, according to the Crime Bureau.
Crooks regularly stage phony accidents in maneuvers known as “swoop and squats” in which insured drivers are set up to rear end other vehicles.
And with the shaky economy, the employed too are sometimes tempted. Hutchison recently tailed a utility company supervisor suspected of conducting personal business on company time.
Following the man for several days, Hutchison snapped photos of him as he loaded building supplies onto a company truck for a sideline construction job. The result: He got fired.
