Dateline NBC: State Farm Insurance Investigation

Lucretia Duffy was broadsided by a truck while driving in her hometown of Fairbanks, Alaska, in 1993. The injuries she sustained were not broken bones that show up on x-rays, but joint and muscle pains.

Despite the fact that Duffy's doctor concluded that her injuries were a result of the crash, State Farm Insurance considered Duffy a "questionable" case and sent out her medical records to a paper review company called "Comprehensive Medical Review" (CMR).

Someone in an office a thousand miles away disagreed with Duffy's doctor and concluded that her injuries were only worth a settlement of $780, at a time when her medical bills had reached $10,000.

Duffy's world was turned upside down. Her debit accumulated, her clinic stopped treating her because it had not received payment, and Duffy's at-home childcare business fell apart.

And the worst part? CMR was a sham.

In the early and middle 1990s, State Farm commonly used paper reviews to determine how much money to give to its claimants. A paper review is, in theory, a second opinion from a doctor regarding the injuries to the crash victim based solely on the claimant's medical records.

NBC's Dateline conducted a 15-month investigation of State Farm Insurance and found a number of cases similar to Duffy's. The June 23, 2000, segment, "The Paper Chase," exposed State Farm's use of CMR and a number of other paper review companies like it.

Lucretia Duffy did not know that CMR was a fraud. It was supplying State Farm with reports that in some cases were not even written by doctors. A number of cases actually written by doctors were later edited by company executives in ways that made the claimants' injuries seem less severe or unrelated to their accidents.

What Dateline uncovered was a scam in which State Farm had employed a number of medical review firms to look at cases in an effort to decrease costs. While State Farm claimed that these reviews were done by impartial parties, it plugged the reviews inside the company as "medical cost reduction services," even going so far as to say to its employees, "... if you don't want to pay a claim, send it to CMR."

State Farm processes approximately 33,000 claims a day. In the past, 1 out of every 20 was deemed "questionable" and sent out for a paper review.

CMR has, reportedly, cleaned up its act. Medical Claims Review Services, another paper review company previously employed by State Farm, closed its doors in 1995.

When confronted by Dateline reporter John Larsen as to how State Farm was alerting its customers of the mishandled cases, senior vice-president Jack North answered that they have reopened 4,900 claims settled through the use of CMR for reevaluation. Five hundred of those claims have now been paid in full and many more are set to be reexamined.

In the meantime, maybe Cindy Robinson, a victim of a fraudulent paper review who has sued State Farm, has the right idea: "If State Farm were my neighbor, I'd sell my house and move."