Insurance fraud and abuse—international concerns—are inherent in the proposition of insurance and prevalent in insurer–insured interactions. While the subject of considerable industry and regulatory attention, this little-researched area of consumer behavior and consumer ethics represents persistent social policy questions and problems at multiple levels. This article addresses the issue by first defining insurance fraud and its origins in contract, as well as consumer- and insurer-management. The authors conclude by re-envisioning the problem as one of co-creation (...) by the consumer-insured and insurer personnel, proposing a framework for its study and resolution. (shrink)

A growing literature has focused on understanding how to detect and deter unethical consumer behavior. In this work, we focus on a particularly important type of unethical consumer behavior, consumer insurance fraud, and we analyze a unique dataset to understand how experts investigate suspicious claims. Two separate but related literatures inform the process of investigating suspicious insurance claims. The first literature is grounded in field research and emphasizes the importance of secondary sources. The second literature is grounded (...) in laboratory studies that emphasize the importance of interpersonal interactions. Here we draw upon both literatures to consider the importance of claimant interviews within the context of many investigative actions and the potential for claimants to avoid interviews. In an empirical study using qualitative and quantitative data from auto insurance claim investigations, we analyze investigative chronologies conducted by skilled experts. In doing so, we find that even when investigators can access information from a variety of sources such as witnesses, databases, and physical evidence, claimant interviews are the most important step in determining whether or not claims are denied or paid. Furthermore, we identify interpersonal avoidance as an important signal of unethical claimant behavior. Our findings inform deception detection theory and practice. We identify implications for deception detection in business, particularly for consumer unethical behavior and insurance fraud investigations. (shrink)

A growing literature has focused on understanding how to detect and deter unethical consumer behavior. In this work, we focus on a particularly important type of unethical consumer behavior, consumer insurance fraud, and we analyze a unique dataset to understand how experts investigate suspicious claims. Two separate but related literatures inform the process of investigating suspicious insurance claims. The first literature is grounded in field research and emphasizes the importance of secondary sources. The second literature is grounded (...) in laboratory studies that emphasize the importance of interpersonal interactions. Here we draw upon both literatures to consider the importance of claimant interviews within the context of many investigative actions and the potential for claimants to avoid interviews. In an empirical study using qualitative and quantitative data from auto insurance claim investigations, we analyze investigative chronologies conducted by skilled experts. In doing so, we find that even when investigators can access information from a variety of sources such as witnesses, databases, and physical evidence, claimant interviews are the most important step in determining whether or not claims are denied or paid. Furthermore, we identify interpersonal avoidance as an important signal of unethical claimant behavior. Our findings inform deception detection theory and practice. We identify implications for deception detection in business, particularly for consumer unethical behavior and insurance fraud investigations. (shrink)

Insurance claim fraud costs insurance companies, policymakers, and taxpayers billions of dollars every year and has been described as the second largest white collar crime. The most common insurance fraud activity and one that contributes a significant portion of dollar losses is the practice of padding claim amounts in the event of a loss. One of the largest issues insurance companies face is that policyholders often do not perceive insurance claim padding as an (...) unethical behavior. However, very little research has examined the factors that contribute to such perceptions. Considering how consumers often attempt to justify fraudulent behavior from a fairness perspective, the present work examines how the amount of the deductible in an insurance claim situation can influence feelings of fairness and ethicality. The results of an experimental study show that higher deductible amounts result in stronger perceptions that insurance claim padding is fair to the insurance company, weaker perceptions that the behavior is unethical, and higher proposed claim award amounts. The study also shows, however, that the deductible amount effects are attenuated for consumers who display higher ethical standards as reflected by their scores on the consumer ethics scale. Implications are discussed with respect to the insurance industry, deviant consumer behavior, and general business ethics theory. (shrink)

Insurance claims fraud receives increasing attention in the insurance industry, in academic studies and in public policy spheres. Claims fraud is variously viewed as an economic-contractual problem, a moral-psychological problem, a moral-sociological problem or a criminal problem. This article discusses these theoretical perspectives on insurance claims fraud and reviews the empirical evidence on its nature and prevalence. Most research concludes that opportunistic soft fraud is more prevalent than planned criminal fraud, and that (...) consumer ethics, attitudes and psychology are important aspects of the insurance fraud problem. On the contrary, much of the policy focus on reducing fraud has been directed toward detecting and criminalizing fraud. In light of existing research, care must be taken in applying these approaches to address soft fraud. Greater focus on the social and psychological dimensions of insurance claims fraud may increase the success of soft fraud prevention and decrease the likelihood that the focus on fraud will impair insurance relationships. Improving such prevention efforts requires a better understanding of the various dimensions of fraud, the determinants of fraud behaviors and the relationship between fraud behavior and the institutional setting. (shrink)

It was proposed that ethical evaluation of insurance claim padding behavior would be affected by characteristics of the policyholder, insurance agent, and company. These three factors were manipulated in written scenarios and the premise was tested in a factorial experimental design. No significant support was found for an effect of any of the three factors on ethical perceptions of claim padding. However, females found claims padding to be significantly less ethical than males. Given a claim scenario where the (...) actual loss was $500 and the claimed amount was $3000, subjects awarded an average of $986.91 on the claim. Many respondents were willing to compensate victims for intangible losses as well as tangible losses. (shrink)

Most consumer morality studies focus on consumer immorality, i.e. different types and degrees of consumer dishonesty or deviance. This paper follows this tradition, by looking at insurance customer dishonesty. For looking at insurance customer dishonesty in a wider perspective, the paper drafts a sociology of insurance customer morality, including outlines of micro-level, meso-level and macro-level moral sociologies of insurance fraud, as well as a discussion of moral heterogeneity and a critical understanding of deviance. As a (...) next step a few empirical rsearch questions are formulated and illustrated with data from a Norwegian-German pilot study. (shrink)

Increasing frauds in insurance and mortgage‐lending illustrate the dilemma for companies between tackling fraud in the public interest and retaining customer confidence and competitive position.

This paper examines the structural features of the U.S. Health Care System that make it particularly vulnerable to fraud, and which help to account for the types of fraud that arise and the difficulties authorities confront in controlling them. These structural features include the predominance of fee-for-service structures, private sector involvement in health care delivery and health insurance, highly automated cl aims processing systems, and a processing culture and audit mentality that emphasize process accuracy over verification. The (...) paper also discusses the underlying pathology of fraud as a white-collar crime problem, and explains how the more general challenges of controlling fraud are exacerbated by particular features of the health system. The central and unsolved problem of False Claims is examined in some detail. A series of recent governmental responses to medically impossible claims of various types is shown to align more closely with a claims-process-improvement mindset than with a crime-control approach. A more mature crime-control orientation is a pre-requisite for any serious progress in reducing the levels of fraud in the U.S. health system. (shrink)

In recent years, insurance companies have begun tracking their customers’ behaviors and price premiums accordingly. Based on the Market-Failures Approach as well as the Justice-Failures Approach, I provide an ethical analysis of the use of tracking technologies in the insurance industry. I focus on the use of telematics in car insurance and on the use of fitness tracking in life insurance. The use of tracking has some important benefits to policyholders and insurers alike: it reduces moral (...) hazard and fraud, increases actuarial fairness, and incentivizes safe behavior. These benefits, however, are outweighed by significant moral objections. First, the use of tracking technologies significantly undermines the fairness of the interaction between insurance companies and policyholders. Specifically, the use of tracking eliminates information asymmetries, but in such a way that favors insurers exclusively. Furthermore, tracked behaviors and the ability to choose to behave safely are highly correlated with other variables such as income. Therefore, tracking-based insurance relies on and exacerbates existing inequalities and injustices, which undermines the benefits that tracking is supposed to introduce. (shrink)

abstract Individuals tend to change their behaviour as a response to insurance. Such behavioural responses to insurance are commonly seen as ethically and morally problematic. This is especially true of effects on behaviour from social insurance. These effects have been seen as an ethical problem, associated with irresponsibility, fraud and an immoral character. This article discusses the relevance of four different types of reasons for claims that behavioural responses to social insurance are immoral. These reasons (...) are independent reasons con‐tract related reasons reasons related to fraud and reasons related to justice. I argue that reasons related to justice are most relevant, but that this type of reason does not render the individual morally blameworthy. Hence, insofar as behavioural responses to social insurance are an ethical problem it is a problem that concerns the institution, i.e. what incentives social insurance exhibits, rather than the individual, i.e. the morality of the individual responding to it. Insofar as behavioural responses to social insurance are an ethical problem it is a problem for political philosophy rather than individual ethics. (shrink)

abstract Individuals tend to change their behaviour as a response to insurance. Such behavioural responses to insurance are commonly seen as ethically and morally problematic. This is especially true of effects on behaviour from social insurance. These effects have been seen as an ethical problem, associated with irresponsibility, fraud and an immoral character. This article discusses the relevance of four different types of reasons for claims that behavioural responses to social insurance are immoral. These reasons (...) are (1) independent reasons (2) con‐tract related reasons (3) reasons related to fraud and (4) reasons related to justice. I argue that reasons related to justice are most relevant, but that this type of reason does not render the individual morally blameworthy. Hence, insofar as behavioural responses to social insurance are an ethical problem it is a problem that concerns the institution, i.e. what incentives social insurance exhibits, rather than the individual, i.e. the morality of the individual responding to it. Insofar as behavioural responses to social insurance are an ethical problem it is a problem for political philosophy rather than individual ethics. (shrink)

The potential for biased responses that occur when researchers interact with their study participants has long been of interest to both academicians and practitioners. Given the sensitive nature of the field, researcher interaction biases are of particular concern for business ethics researchers regardless of their preference for survey, experimental, or qualitative methodology. Whereas some ethics researchers may inadvertently bias data by misrecording or misinterpreting responses, other biases may occur when study participants' responses are systematically influenced by the mere introduction of (...) researchers into the participants' environment. Although substantial empirical research has been conducted on the general topic of researcher interaction biases, none has focused specifically on business ethics research. In order to remedy this lack of empirical substantiation in the field, we review the related literature on researcher interaction biases, present an empirical example of how such biases can influence research results in an experiment assessing reactions to insurance fraud, and discuss the implications for business ethics research. (shrink)

Fraud is a pervasive and challenging problem that costs society large amounts of money. By no means all fraud is committed by ‘professional criminals’: much is done by ordinary people who indulge in small-scale opportunistic deception. In this paper, we set out to investigate when people behave dishonestly, for example by committing fraud, in an online context. We conducted three studies to investigate how the rejection of one’s efforts, operationalized in different ways, affected the amount of cheating (...) and information falsification. Study 1 demonstrated that people behave more dishonestly when rejected. Studies 2 and 3 were conducted in order to disentangle the confounding factors of the nature of the rejection and the financial rewards that are usually associated with dishonest behavior. It was demonstrated that rejection in general, rather than the nature of a rejection, caused people to behave more dishonestly. When a rejection was based on subjective grounds, dishonest behavior increased with approximately 10%, but this difference was not statistically significant. We subsequently measured whether dishonesty was driven by the financial loss associated with rejection, or emotional factors such as a desire for revenge. We found that rejected participants were just as dishonest when their cheating did not led to financial gain. However, they felt stronger emotions when there was no money involved. This seems to suggest that upon rejection, emotional involvement, especially a reduction in happiness, drives dishonest behavior more strongly than a rational cost-benefit analysis. These results indicate that rejection causes people to behave more dishonestly, specifically in online settings. Firms wishing to deter customers and employees from committing fraud may therefore benefit from transparency and clear policy guidelines, discouraging people to submit claims that are likely to be rejected. (shrink)

Conceptually, entrepreneurship is seen as the engine that drives a robust economy, promotes a favorable quality of life, and assures the availability of the attributes needed for meaningful living. However, like many popular concepts in this world, its limitations are normally not well acknowledged. A grouping of entrepreneurial ventures which has recently come into existence deals with the personal fiscal issues associated with the end-of-life phase of the human cycle. While generally praised as humanitarian services for society, that are assuredly (...) within legal bounds, these activities have potentially significant negative implications. When examined from an ethical perspective, some questionable practices became apparent. Three such undertakings in particular have to do with the terminally ill and are examined in this paper. The first, viatical transactions, is defined as the transfer of a life insurance policy's ownership to someone who does not have an insurable interest in the life of the insured individual. The second, creative tax shelters for wealthy people involved in estate planning, involves hiring unrelated parties, particularly those who are young and in failing health, to do the dying for the principal. The third, mind games, involves curtailing the use of medical resources for the dying. The justification for this is rationing scarce medical resources. (shrink)

For many years we have observed the occurrence of extorting compensation from insurance companies. The scale of it is not fully identified. Despite the enormous effort to combat with this phenomenon, the size of it is still growing. The article discusses the reasons for this phenomenon, especially motivation and tendency of the insured to fraud. It also presents the economic consequences of the phenomenon for insurance companies.

This article considers the issue of opacity as a problem for socially consequential mechanisms of classification and ranking, such as spam filters, credit card fraud detection, search engines, news trends, market segmentation and advertising, insurance or loan qualification, and credit scoring. These mechanisms of classification all frequently rely on computational algorithms, and in many cases on machine learning algorithms to do this work. In this article, I draw a distinction between three forms of opacity: opacity as intentional corporate (...) or state secrecy, opacity as technical illiteracy, and an opacity that arises from the characteristics of machine learning algorithms and the scale required to apply them usefully. The analysis in this article gets inside the algorithms themselves. I cite existing literatures in computer science, known industry practices, and do some testing and manipulation of code as a form of lightweight code audit. I argue that recognizing the distinct forms of opacity that may be coming into play in a given application is a key to determining which of a variety of technical and non-technical solutions could help to prevent harm. (shrink)

Digital business has marked an era of transformation, but also an unprecedented growth of cyber threats. While digital explosion witnessed by the banking sector since the COVID-19 pandemic has been significant, the level and frequency of cybercrimes have gone up as well. Cybercrime officials attribute it to remote working—people using home computers or laptops with vulnerable online security than office systems; malicious actors relentlessly developing their tactics to find new ways to break into enterprise networks and grasping defence evasion; persons (...) unemployed during the pandemic getting into hacking; cloud and data corruption; digital fatigue causing negligence; etc. This study adopts a case-based approach to explore the importance of business ethics, information sharing and transparency to build an information-driven society by scouting the case of Punjab and Maharashtra Co-operative (PMC) Bank, India. PMC defaulted on payments to its depositors and was placed under Reserve Bank of India’s directions due to financial irregularities and a massive fraud perpetrated by bank officials by orchestrating the bank’s IT systems. The crisis worsened when panic-stricken investors advanced their narrative through fake news peddled via social media channels, resulting in alarm that caused deaths of numerous depositors. It exposed several loopholes in information management in India’s deposit insurance system and steered the policy makers to restructure the same, thus driving the country consistent with its emerging market peers. The study further identifies best practices for aligning employees towards ethical behaviour in a virtual workplace and the pedagogical approaches for information management in the new normal. (shrink)

The problem of the manipulation of data that arises when there is both opportunity and incentive to mislead is better accepted and studied — though by no means solved — in financial accounting than in medicine. This article analyzes pharmaceutical company manipulation of medical research as part of a broader problem of corporate manipulation of data in the creation of accounting profits. The article explores how our understanding of accounting fraud and misinformation helps us understand the risk of similar (...) information manipulation in the medical sciences. This understanding provides a framework for considering how best to improve the quality of medical research and analysis in light of the current system of medical information production. I offer three possible responses: (1) use of the Dodd-Frank whistleblower provisions to encourage reporting of medical research fraud; (2) a two-step academic journal review process for clinical trials; and (3) publicly subsidized trial-failure insurance. These would improve the release of negative information about drugs, thereby increasing the reliability of positive information. (shrink)

A large number of prominent philosophers have in recent years advocated the thesis that the modern nation-state should adopt a stance of neutrality toward questions about the nature of the human good. The government, according to this way of thinking, has two proper goals, neither of which require it to make assumptions about what the constituents of a flourishing life are. First, the state must protect people against the invasion of their rights and uphold those principles of justice without which (...) there can be no stable and lasting social order. This goal is accomplished through a guarantee of basic civil liberties and the enforcement of a criminal code that prohibits murder, theft, fraud, and other widely recognized harms. Second, the state should promote the general welfare of the citizens by providing them with or helping them acquire the resources they need in order to lead lives of their own choosing. There are certain all-purpose means that people need in order to accomplish their goals—money, health, opportunities for employment—and it is legitimate for the state to pursue policies that enable citizens to acquire these goods. It may build roads, raise an army, regulate the economy, insure standards of safety, and supervise any other projects that give people the basic wherewithal they need to pursue their own ends. (shrink)

Individual and/or co-offenders fraudulent activities can have a devastating effect on a company’s reputation and credibility. Enron, Xerox, WorldCom, HIH Insurance and One.Tel are examples where stakeholders incurred substantial financial losses as a result of fraud and led to a loss of confidence in corporate dealings by the public in general. There are numerous theoretical approaches that attempt to explain how and why fraudulent acts occur, drawing on the fields of sociology, organisational, management and economic literature, but there (...) is limited empirical evidence published in accounting literature. This qualitative inductive study analyses perceptions and experiences of forensic accountants to gain insights into individual fraud and co-offending in order to determine whether the conceptual framework developed from literature accurately depicts the causes of fraud committed by individuals and groups in the twenty-first century. Findings from the study both support and extend the conceptual framework, demonstrating that strain and anomie can result in fraud, that deviant sub-groups recruit and coerce members by providing relief from strain, and that inadequate corporate governance mechanisms both contribute to fraud occurring, and provide the opportunity for fraudulent activities to be executed and often remain undetected. Additional factors emerging from this study were also identified as contributors to fraud, particularly relevant to the twenty-first century, and consequently, a refined conceptual framework is presented in the discussion and conclusion to the paper. (shrink)

The Brazilian Federal Senate created a Parliamentary Inquiry Commission (CPI) to investigate the Bolsonaro government's irregularities in the management of the COVID-19 pandemic. One of the cases that drew attention was the research conducted by Prevent Senior, a private health insurance company, on the early treatment of COVID-19. The article analyzes the scientific validity of the research and the ethical problems related to its implementation. It is based on analysis of Prevent Senior's report of the clinical study, the Brazilian (...) and USA clinical trial registries, the Senate's CPI report, and on the information reported by the media. This case of scientific fraud and political-ideological bias exemplifies how Prevent Senior, using a questionable protocol to enhance its reputation and gain government support, was instrumental in building the “early treatment” narrative for COVID-19, and shows how it served as a basis for a government public policy that promoted the use of ineffective drugs. (shrink)

In their thoughtful, nuanced and interesting discussion, Jonathan Pugh, Julian Savulescu, Rebecca Brown and Dom Wilkinson argued that officials should recognise proof of prior infection as a valid exemption from vaccination requirements.1 This commentary agrees with parts of their analysis, but argues that the case for the exemption is less clear than the authors suggest, and the better approach is to allow officials flexibility: an exemption for natural immunity may be appropriate or may not. In part, the disagreements may stem (...) from different experiences in different societies. The authors are in the UK, and their experience may differ from the USA in multiple ways, three very glaring. First, the UK broadly used the AstraZeneca vaccine, which has higher risks than the mRNA vaccines, so our assessment of vaccine risks differs. Second, the UK has universal health insurance, so some of the access to testing issues that I raise concerns about may not apply there. And third, the risk of fraud or misrepresentation may be less in the UK—and other countries—than in the USA, where real concerns about, for example, fake vaccine cards have led to multiple arrests.2 Another issue is that information about COVID-19 changes fast—what was known when the authors wrote may no longer fit the current picture. In their article, the authors argue that it is ethically imperative that COVID-19 mandates exempt those with natural immunity. The authors argue that those who have become immune through infection are ‘potentially equivalent’ to those who were vaccinated, and refusing them an exemption is ethically unjustified—they call this the ‘unnaturalistic fallacy’. The authors convincingly conclude that existing data suggest that previous infection leads to durable immunity for at least several months and protects against reinfection. The …. (shrink)

We tested whether the impact of an organizational transgression on consumer sentiment differs depending on whether the organization is a nonprofit. Competing hypotheses were tested: that people expect higher ethical standards from a nonprofit than a commercial organization, and so having this expectation violated generates a harsher response and that a nonprofit’s reputation as a moral entity buffers it against the negative consequences of transgressions. In three experiments participants were told that an organization had engaged in fraud, exploitation of (...) women, or unethical labor practices. Consistent with the moral disillusionment hypothesis, decreases in consumer trust post-transgression were greater when the organization was described as nonprofit, an effect that was mediated by expectancy violations. This drop in trust then flowed through to consumer intentions and consumer word of mouth intentions. No support was found for the moral insurance hypothesis. Results confirm that nonprofits are penalized more harshly than commercial organizations when they breach consumer trust. (shrink)

Individual and/or co-offenders fraudulent activities can have a devastating effect on a company’s reputation and credibility. Enron, Xerox, WorldCom, HIH Insurance and One.Tel are examples where stakeholders incurred substantial financial losses as a result of fraud and led to a loss of confidence in corporate dealings by the public in general. There are numerous theoretical approaches that attempt to explain how and why fraudulent acts occur, drawing on the fields of sociology, organisational, management and economic literature, but there (...) is limited empirical evidence published in accounting literature. This qualitative inductive study analyses perceptions and experiences of forensic accountants to gain insights into individual fraud and co-offending in order to determine whether the conceptual framework developed from literature accurately depicts the causes of fraud committed by individuals and groups in the twenty-first century. Findings from the study both support and extend the conceptual framework, demonstrating that strain and anomie can result in fraud, that deviant sub-groups recruit and coerce members by providing relief from strain, and that inadequate corporate governance mechanisms both contribute to fraud occurring, and provide the opportunity for fraudulent activities to be executed and often remain undetected. Additional factors emerging from this study (the ‘technoconomy’, addiction and IT measures) were also identified as contributors to fraud, particularly relevant to the twenty-first century, and consequently, a refined conceptual framework is presented in the discussion and conclusion to the paper. (shrink)

Individual and/or co-offenders fraudulent activities can have a devastating effect on a company’s reputation and credibility. Enron, Xerox, WorldCom, HIH Insurance and One.Tel are examples where stakeholders incurred substantial financial losses as a result of fraud and led to a loss of confidence in corporate dealings by the public in general. There are numerous theoretical approaches that attempt to explain how and why fraudulent acts occur, drawing on the fields of sociology, organisational, management and economic literature, but there (...) is limited empirical evidence published in accounting literature. This qualitative inductive study analyses perceptions and experiences of forensic accountants to gain insights into individual fraud and co-offending in order to determine whether the conceptual framework developed from literature accurately depicts the causes of fraud committed by individuals and groups in the twenty-first century. Findings from the study both support and extend the conceptual framework, demonstrating that strain and anomie can result in fraud, that deviant sub-groups recruit and coerce members by providing relief from strain, and that inadequate corporate governance mechanisms both contribute to fraud occurring, and provide the opportunity for fraudulent activities to be executed and often remain undetected. Additional factors emerging from this study were also identified as contributors to fraud, particularly relevant to the twenty-first century, and consequently, a refined conceptual framework is presented in the discussion and conclusion to the paper. (shrink)

A victim of a crime may claim that the criminal must make restitution of the benefit gained at his expense. The enrichment may arise directly from the criminal act. For example, a criminal demands money with menaces or obtains Property by fraud. No legal system will allow him to retain his enrichment gained at his victim's expense. More difficult problems arise if the criminal's enrichment is an indirect enrichment, for example, if he or members of his family used information (...) relating to his criminal activities and published his story. The victim's common law claim may be defeated by such submissions as: the benefit was not gained at the plaintiff's expense or the criminal did not act wrongfully in using the information so acquired. There is also the forfeiture rule which insures, in England, that neither the legal nor beneficial title to property vests in the criminal; in contrast, in the United States, the criminal will be deemed to hold the property on constructive trust. These issues are discussed in Part I and Part II of the article respectively. Part III of the article discusses briefly the English legislation which seeks to deprive criminals of the profits of their criminal activities. An important statute, the Criminal Justice Act 1988, is not well drafted. The existence of such statutes should not exclude the possibility of a common law restitutionary claim where no confiscation order has been, or can be, made. This point is examined further in Part IV of the article, which discusses the implications of the important decision of the English Court of Appeal in Attorney-General v. Blake in 1998, where the defendants conduct amounted, not only to a breach of contract, but to a serious criminal offense. Part V of the article asks whether there should be further legislative intervention and suggests that the American statutes provide only limited guidance for the English draftsman. The nature and scope of any future English legislation must now take into account the United Kingdom Human Rights Act 1998. Its possible impact is discussed in the final Part, VI, of the article. (shrink)

This case recounts the founding of HealthSouth Rehabilitation, its rapid growth, financial mishandlings and the struggle former CFO Aaron Beam had in dealing with a conscience that kept him awake at night. Beam had met HealthSouth founder Richard Scrushy when applying for a job with Lifemark Hospital Corporation in Texas in 1980. After Lifemark was bought by AMI in 1983, Scrushy invited Beam to join him in the launching of his new company in Birmingham, Alabama. The uniqueness of the hospital (...) was that it would provide inpatient surgery for those who had suffered an injury, but it would also provide outpatient services such as rehabilitation, nutrition guidance and psychological counseling. This type of structure was appealing to insurance companies because it would move the patient out of the hospital much quicker and save the cost of extended hospitalization. The company experienced rapid growth and went public within three years of launch. By 1996, the top executives of the company realized that they would not be able to meet Wall Street analysts’ forecasts which would affect the price of their stock and reduce their holdings. They decided to “cook the books” temporarily to meet quarterly expectations. However, once the financial mishandling had begun, the executives found it difficult to reverse their actions and report accurate numbers to the public. Beam decided to retire from the company in 1996; and after this action, he continued to find it difficult to sleep at night because of his involvement in the fraud. The issue in the case is whether Beam should consider coming forward and revealing to the Securities and Exchange Commission how the books had been doctored so that he could salvage his damaged conscience. (shrink)

Are federal prosecutions of non-federal officials for corruption likely to improve non-federal government? This essay suggests that such prosecutions can undermine the distinctive style of democracy at the state and local level, an effect that can be harmful to democracy in America overall. This conclusion rests on a larger argument about the different nature of federal and non-federal democracy in the United States. To insure that each official maintains impartial loyalty to values defined by a single, popularly accountable policymaker, the (...) federal system of bureaucratic populism strictly separates the officials’ public and private interests, through various devices such as civil service protection for executive officials, Article III life tenure, and fixed salary for federal judges, specialized training for federal officers, and conflict-of-interest rules that bar federal officers from acting when their judgment could be compromised by private interests. By contrast, participatory populism rejects this separation of the public and private spheres, instead mixing professional and lay decision-making by using thousands of part-time, under-paid executive and legislative officers who are expected to have substantial private interests in the communities that they represent. The essay argues that each style of democracy has mutually exclusive advantages and disadvantages. However, enforcement of federal anticorruption law against non-federal democracies can undermine their system of mingled private and public interests, reducing the degree to which such governments can provide laypersons with opportunities for political activity. As an illustration of the overextension of federal criminal law, I examine the First Circuit’s interpretation of 18 U.S.C. §§ 1341 and 1346, the federal mail fraud statute in United States v. Sawyer. Sawyer comes dangerously close to declaring that any undisclosed state or local officer’s conflict of interest constitutes a violation of § 1346 when it involves the U.S. mails. I argue that this view of § 1346 is an error. Participatory populism requires that private and public tasks be closely mingled in ways that bureaucratic populism forbids. Undoubtedly, this mixture of public and private creates a risk that public office will be used for private gain. However, it also avoids some of the bureaucratic sclerosis and lack of lay participation that can be endemic to the more centralized federal tradition. In conclusion, I suggest that federal prosecutors ought to content themselves with using § 1346 to enforce already-existing state criminal conflict-of-interest rules, for the sake of preserving a place in our federal regime for participatory populism. (shrink)

Review of Jaynes, Probability Theory: The Logic of Science; Marrison, The Fundamentals of Risk Management; and Hastie, Tibshirani and Friedman, The Elements of Statistical Learning. A standard view of probability and statistics centers on distributions and hypothesis testing. To solve a real problem, say in the spread of disease, one chooses a “model”, a distribution or process that is believed from tradition or intuition to be appropriate to the class of problems in question. One uses data to estimate the parameters (...) of the model, and then delivers the resulting exactly specified model to the customer for use in prediction and classification. As a gateway to these mysteries, the combinatorics of dice and coins are recommended; the energetic youth who invest heavily in the calculation of relative frequencies will be inclined to protect their investment through faith in the frequentist philosophy that probabilities are all really relative frequencies. Those with a taste for foundational questions are referred to measure theory, an excursion from which few return. That picture, standardised by Fisher and Neyman in the 1930s, has proved in many ways remarkably serviceable. It is especially reasonable where it is known that the data are generated by a physical process that conforms to the model. It is not so useful where the data is a large and little understood mess, as is typical in, for example, insurance data being investigated for fraud. Nor is it suitable where one has several speculations about possible models and wishes to compare them, or.. (shrink)

This paper argues that the rules that constitute a market protect autonomy and increase welfare in healthcare. Markets do the former through protecting rights to self-ownership and a cluster of rights that protect its exercise. Markets protect welfare by organizing and protecting trades. In contrast, prohibition destroys legitimate markets, giving rise to so-called black markets that harm both the autonomy and well-being of agents. For example, a fee-for-service medical system is a highly developed and specialized market. It is individuals working (...) together, through the division of labor, to provide mutual insurance. This coordination, and the benefits it makes possible, is not possible without injunctions against harm. Prohibitions on harm are not mere ethical niceties, they are practice rules for both healthcare and markets. Placing the doctor within a healthcare market actually reinforces the doctor’s moral obligation, and the legal enforcement of that obligation, not to harm. Similarly, markets reinforce patient rights to self-determination through legal and institutional enforcement of the harm principle in the form of the protection of certain basic welfare rights to life, bodily integrity, property, trade, and contract. Since the establishment of markets protects agent autonomy and welfare, and prohibition directly harms the same, there are strong reasons for establishing markets to protect trade in precisely those areas where autonomy and well-being are most vulnerable to exploitation, for example, the trade in human kidneys. (shrink)

Based on evidence from press articles covering 39 corporate fraud cases that went public during the period 1992-2005, the objective of this article is to examine the role of managers' behavior in the commitment of the fraud. This study integrates the fraud triangle (FT) and the theory of planned behavior (TPB) to gain a better understanding of fraud cases. The results of the analysis suggest that personality traits appear to be a major fraud-risk factor. The (...) analysis was further validated through a quantitative analysis of keywords which confirmed that keywords associated with the attitudes/rationalizations component of the integrated theory were predominately found in fraud firms as opposed to a sample of control firms. The results of the study suggest that auditors should evaluate the ethics of management through the components of the TPB: the assessment of attitude, subjective norms, perceived behavioral control and moral obligation. Therefore, it is potentially important that the professional standards that are related to fraud detection strengthen the emphasis on managers' behavior that may be associated with unethical behavior. (shrink)

Preferably scientific investigations would promote true rather than false beliefs. The phenomenon of fraud represents a standing challenge to this veritistic ideal. When scientists publish fraudulent results they knowingly enter falsehoods into the information stream of science. Recognition of this challenge has prompted calls for scientists to more consciously adopt the veritistic ideal in their own work. In this paper I argue against such promotion of the veritistic ideal. It turns out that a sincere desire on the part of (...) scientists to see the truth propagated may well promote more fraud rather than less. (shrink)

Introduction -- Fraud in research : frequency patterns -- An organizational approach to research fraud -- Fraud, lies, deceptions, fabrications, and falsifications -- Deviance in scientific research : norms, hot spots, control -- Concluding discussion.

We examine enforcement action in China’s emerging markets by focusing on the agents that impose this action and the role played by supervisory boards. Using newly available databases, we find that supervisory boards play an active role when Chinese listed companies face enforcement action. Listed firms with larger supervisory boards are more likely to have more severe sanctions imposed upon them by the China Security Regulatory Commission, and listed companies that face more severe enforcement actions have more supervisory board meetings. (...) Our findings are of interest, as supervisory boards in China are generally perceived to be dysfunctional. This study contributes to the existing literature in three ways. First, we shed light on the effects of supervisory boards whose role in a fraud setting has not yet been examined. Second, the study has important policy implications for governance reform. Finally, our analyses provide the most up-to-date picture of fraud and governance issues in China’s ever-growing markets. (shrink)

This is a theoretical treatment of the term "Sha Zhu Pan" (杀猪盘) in Chinese, which translates to “Pig-Butchering” in English. The article critically examines the propagation and validation of "Pig Butchering," an animal metaphor, and its implications for the dehumanisation of victims of online fraud across various discourses. The study provides background information about this type of fraud before investigating its theoretical foundations and linking its emergence to the dehumanisation of fraud victims. The analysis highlights the disparity (...) between academic literature, subjected to rigorous peer-review processes, and sensationalised narratives prevalent in the media. While academic works subject "pig butchering" to critical scrutiny and refrain from endorsing derogatory terms to depict fraud victims, numerous media outlets employ this term uncritically, further worsening the predicament of these victims. "Pig butchering" is firmly rooted in the concept of dehumanisation, and this article underscores how language moulds perceptions of fraud and behaviour, extending to the development of preventive strategies. The role of law enforcement agencies in generating and disseminating materials is also a central theme, emphasising their responsibility as trusted sources of information. We suggest that these agencies should adopt non-victim shaming language to encourage victims to report crimes and alleviate the stigma attached to victimisation. Additionally, the article offers valuable cross-cultural insights by comparing metaphors from Chinese and Nigerian contexts. This comparative analysis enriches our comprehension of the global dimensions of online fraud and its cultural diversities, highlighting the substantial impact of language on perceptions and behaviours. We advocate for a departure from victim-blaming tendencies perpetuated by select media outlets, urging a more compassionate and accurate portrayal of those affected by online fraud. We, therefore, call for a more empathetic and accurate portrayal of individuals affected by online fraud, aligning with the broader objective of promoting understanding and support for these victims. (shrink)

B\ig fraud, little lies -- Serial cheaters -- Storytelling and beautification -- Researching for results -- Corporate cooking -- Skewed competition -- Stealing authorship -- The funding effect -- There is no profile -- Toxic literature -- Clinical trials -- The jungle of journal publishing -- Beyond denial -- Scientific crime -- Slow science.

A review of fraud in medical research in Britain, Europe, the USA and Australia. It includes a history of known cases of fraud since 1974 and discusses ways for detecting and dealing with fraud that have been devised by government agencies, pharmaceutical companies, academic institutions and scientific publications (especially medical journals).

Frauds and misconduct have been common in the history of science. Recent events connected to the COVID-19 pandemic have highlighted how the risks and consequences of this are no longer acceptable. Two papers, addressing the treatment of COVID-19, have been published in two of the most prestigious medical journals; the authors declared to have analysed electronic health records from a private corporation, which apparently collected data of tens of thousands of patients, coming from hundreds of hospitals. Both papers have been (...) retracted a few weeks later. When such events happen, the confidence of the population in scientific research is likely to be weakened. This paper highlights how the current system endangers the reliability of scientific research, and the very foundations of the trust system on which modern healthcare is based. Having shed light on the dangers of a system without appropriate monitoring, the proposed analysis suggests to strengthen the existing journal policies and improve the research process using new technologies supporting control activities by public authorities. Among these solutions, we mention the promising aspects of the blockchain technology which seems a promising solution to avoid the repetition of the mistakes linked to the recent and past history of research. (shrink)

Even as today’s spectacular advances in science enhance the quality of life, so also are new opportunities created for those who would deliberately mislead a scientifically ill-informed public. The scientific community, made up of those who participate in professional science organizations and publish their methods and findings in the open scientific literature, have a responsibility to keep the public informed of scams carried out in the name of science. Fraud within the scientific community should be quickly exposed by the (...) culture of openness. Secrecy in the name of national security offers a refuge for fraudulent science. (shrink)

We can calculate financial fraud, but how do we measure bad faith? How can we evaluate the words of the pharmaceutical industry or of eco-scientific ideologies, or the subtle deception found in political scheming? Henri Atlan sheds light on these questions through the concept of _ona'ah_, which in Hebrew refers to both fraud in financial transactions and the verbal injury inflicted by speech. The world of _ona'ah_ is a world of an "in-between," where the impossible purity of absolute (...) Platonic truth gives way to a more relative notion—the near-theft, the quasi-lie. Today it seems that no discourse is safe from fraudulent excesses, be they intentional or no. As both philosopher and biologist, Atlan works on several registers. He forges links between the Talmud, the Kabbalah, and the big questions of our time, multiplying the bridges between science, philosophy, and current ethical dilemmas. In a context of financial and moral crises that appear to be weakening our democracies, Henri Atlan's work allows us to rethink the status of fraud in the contemporary world. (shrink)

This article examines how a just society must address the needs of its imprudent members. I defend compulsory insurance as an answer to this question. It has been assumed that compulsory insurance can only be justified on paternalistic grounds. I argue that this assumption is incorrect, and defend non-paternalistic compulsory insurance. To display the merits of NPCI, I identify a trilemma that arises for views about how to address the needs of the imprudent, including libertarian and so-called (...) ‘ luck -egalitarian’ views. I then suggest that NPCI enables us to escape the trilemma. (shrink)

The pandemic has altered accounting education with the widespread adoption of remote evaluation platforms. We apply the lens of the fraud triangle to consider how the adoption of remote evaluation influences accounting students’ ethical values by measuring the incidence of cheating behavior as well as capturing their perceptions of their opportunity to cheat and their rationalization of cheating behavior. Consistent with prior research, our results show that cheating is higher in the online environment compared to remote evaluation, although the (...) use of proctoring software in online evaluation appears to mitigate but not eliminate students’ the unethical behavior. However, cheating was not reduced when students attest to an honor code during the beginning of an exam. Nonetheless, we find that the use of both proctoring software and honor codes reduces students’ perceptions of opportunity and rationalization of cheating behavior. It follows that the remote evaluation environment may unintentionally be negatively influencing the ethicality of students and future accounting professionals by promoting cheating behavior and, by so doing, negatively influencing the development of unethical values of accounting students and future accounting professionals. Educators should consider the use of appropriate educational interventions to reduce the incidence and opportunities for unethical behavior and, by so doing, help promote the development of ethical values in future accounting professionals. Further implications for teaching and the accounting profession are discussed. (shrink)

This response addresses the question: how can ethical values play a role in combating fraud? Three points are made. Firstly, ethical values are both self‐ and other‐related. Secondly, changing the prevalence of fraudulent behaviours requires not only a reduction in opportunity for fraud but also a change in mindset of the perpetrators. Thirdly, that change in mindset involves the recognition that there are personal and organizational advantages to be gained by not contributing to or abetting fraudulent behaviour. This (...) latter point is illustrated with reference to the experience of Unilever where sustainable development is seen as contributing to the creation of long‐term shareholder value. (shrink)

The reasons for judgment by the Supreme Court of Canada on the appeal in Mabior (2012 SCC 47) fail to address or resolve a number of significant questions. The reasons acknowledge the fundamental role of sexual consent in protecting sexual autonomy, equality, and human dignity, but do not use the law of consent as a tool to assist the Court in crafting a fresh approach to the issue on appeal. Instead the Court adopts the same general approach to analysis of (...) the elements of aggravated sexual assault committed by fraud it used in 1998 in Cuerrier. Fifteen years later, it should be possible to re-conceptualize the problem in a more straightforward manner that reflects Charter values, fundamental common law principles, recent developments in sexual assault law, and the limitations and uncertainties of current HIV treatment and diagnosis. -/- Ironically, the two pronged legal test ultimately proposed by the Court -- non-disclosure of HIV-positive status and a “realistic possibility of transmission,” is likely to give false confidence to individuals who adhere to a regime of anti-retroviral treatment, use good quality latex condoms, and routinely conceal their HIV-positive status from their sexual partners. Research shows that HIV viral loads fluctuate widely in response to a myriad of factors. An inevitable consequence of reliance on the Mabior test will be accused who are shocked to find themselves charged under s. 273, charges that would not apply had they disclosed their HIV-positive status to their sexual partner(s). There are further practical consequences. Non-disclosure will tend to increase the risk of transmission because non-HIV-positive sexual partner(s) will not fully appreciate the actual hazards of improper condom use. As a direct result, careless sexual practices will be more common. And finally, the decision will not contribute to reducing the social stigma that haunts the lives of those who are HIV-positive -- even those who are skilled at deceit. That stigma will not be reduced or eliminated by a ruling that can be seen as tacitly validating stigmatization and fear by appearing to permit infected individuals to pretend they are not HIV-positive when they know or suspect this to be false. Deceit harms the human dignity of the deceived and deceiver alike, and does nothing to build authentic social trust and cohesion. For all these reasons, the problem on appeal in Mabior requires a different approach. This article proposes one. (shrink)

Fraud in medical publications is an increasing concern. In particular, disciplines related to perioperative medicine—including anaesthesia and critical care—currently hold the highest rankings in terms of retracted papers for research misconduct. The dominance of this dubious achievement is attributable to a limited number of researchers who have repeatedly committed scientific fraud. In the last three decades, six researchers have authored 421 of the 475 papers retracted in perioperative medicine. This narrative review reports on six cases of fabricated publication (...) in perioperative medicine that resulted in the paper’s retraction. The process that led to the unveiling of the fraud, the impact on clinical practice, and changes in regulatory mechanisms of scientific companies and governmental agencies’ policies are also presented. Fraud in medical publications is a growing concern that affects perioperative medicine requiring a substantial number of papers to be retracted. The continuous control elicited by readers, by local institutional review boards, scientific journal reviewers, scientific societies and government agencies can play an important role in preserving the ‘pact of trust’ between authors, professionals and ultimately the relationship between doctors and patients. (shrink)

Fraud in medical publications is an increasing concern. In particular, disciplines related to perioperative medicine—including anaesthesia and critical care—currently hold the highest rankings in terms of retracted papers for research misconduct. The dominance of this dubious achievement is attributable to a limited number of researchers who have repeatedly committed scientific fraud. In the last three decades, six researchers have authored 421 of the 475 papers retracted in perioperative medicine. This narrative review reports on six cases of fabricated publication (...) in perioperative medicine that resulted in the paper’s retraction. The process that led to the unveiling of the fraud, the impact on clinical practice, and changes in regulatory mechanisms of scientific companies and governmental agencies’ policies are also presented. Fraud in medical publications is a growing concern that affects perioperative medicine requiring a substantial number of papers to be retracted. The continuous control elicited by readers, by local institutional review boards, scientific journal reviewers, scientific societies and government agencies can play an important role in preserving the ‘pact of trust’ between authors, professionals and ultimately the relationship between doctors and patients. (shrink)