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SIU Spotlight

The Age of Automated Fraud: Defending Against Documentation Cloning and AI-Generated Claims

May 15, 2026

by Ariel C. Brownstein

For years, healthcare payers have treated note cloning—the practice of copying and pasting electronic health record (EHR) text—as a primary red flag in fraud, waste, and abuse (FWA) investigations. Today, as the industry races to embrace Artificial Intelligence (AI) for documentation, the threat of "cloning" is not disappearing; it is simply evolving. For insurance carriers facing healthcare fraud costs estimated to exceed $400 billion annually in the U.S., understanding this new and evolving technological risk is paramount to effective claims denial and successful defense litigation

The core issue with cloned documentation is its immediate challenge to the medical necessity of billed services. When medical records contain identical or near-identical entries across multiple dates of service, the documentation cannot support the premise that unique, individualized care was provided at each encounter. This practice undermines the credibility of the entire record.

Traditional copy-and-paste charting, where clinicians simply copy-forward prior entries or borrow from templates, was quickly identified by the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) as a priority for audit and enforcement. Its misuse often results in a form of fraud known as up-coding—the insertion of false or irrelevant details to justify a higher, more expensive level of service than was actually rendered. Simply put, manufactured records support inflated billing.

Cloning 2.0: AI and the New Red Flags

The rapid adoption of AI-assisted documentation tools presents carriers with a new, but strikingly familiar, compliance pitfall. Just as a keyboard shortcut once generated a suspiciously repetitive note, a sophisticated machine learning algorithm can now produce a grammatically flawless but equally generic summary.

Insurance carriers must equip claims auditors with a new playbook for identifying these high-tech red flags:

  • Repetitive and Boilerplate Phrasing: Like cut-and-paste, AI tools tend to reuse stock language verbatim—for instance, identical descriptions of a patient's presentation across many different encounters. The presence of uniform, verbose, or overly formal language that clashes with an experienced auditor's knowledge of a physician's typical "voice" should raise suspicion. These generic statements does not reflect individual patient encounters, creates the assumption that the narrative was manufactured to support, higher E/M coding and supports the appearance of a systematic inflation by a provider, not an isolated error.
  • Overly Complete Documentation: A hallmark red flag for potential upcoding is extreme documentation thoroughness. Unlike human clinicians, who focus on relevant positives and negatives, AI systems frequently generate exhaustive, boilerplate reviews of systems. Such documentation can misrepresent the scope of the encounter, creating the appearance of higher-level services and automatically inflating the reported E/M code—despite no corresponding increase in clinical work. An example of this would be a patient presenting with a sore throat and congestion, but the note documents a 14-system Review of Symptoms (ROS), all marked negative. A routine upper respiratory complaint does not clinically justify a full multi-system ROS. This level of detail artificially supports a higher E/M level without corresponding medical necessity.
  • Internal Inconsistencies: Because AI relies on patterns, it can fail to reconcile contradictory information or carry forward fabricated or outdated details. For instance, one section of an AI-generated note might state "no extremity pain," while another later mentions "episodes of upper extremity discomfort". These internal contradictions are destructive to a record's credibility and are prime targets for counsel in deposition.
  • Metadata Trails: Crucially, the technology that enables AI documentation also leaves an audit trail. Carriers must leverage the power of discovery to review system logs and timestamps that reveal when AI tools were used to generate text. This metadata can prove the extent of a provider's reliance on automated shortcuts, flagging instances of potential overreliance.

Fighting Fire with Fire: The Carrier's AI Defense

The growing sophistication of provider fraud demands that insurance carriers evolve beyond static, rules-based fraud detection to advanced analytical models. The best defense against AI-driven fraud is often the strategic use of defensive AI.

  • Carriers must transition to modern FWA prevention strategies by:
  • Pre-Payment FWA Preventive Analytics: Moving beyond traditional post-pay audits, carriers are now leveraging machine learning models to score and flag claims for high-risk behavior before adjudication. This shift prevents the improper payment from ever being made.
  • Leveraging Natural Language Processing (NLP): NLP is essential for analyzing the unstructured data in medical records, specifically clinical notes. These tools can scan millions of provider notes to detect the subtle anomalies that human auditors might miss, such as:
    • Identification of repetitive and cloned phrases across a provider's patient roster.
    • Flagging medical codes that do not align with the narrative diagnosis or description in the note.
  • Predictive Behavioral Modeling: AI systems can track a provider's historical billing and documentation patterns, automatically identifying statistically significant deviations from their peers. When a provider suddenly increases their volume of complex E/M codes (a classic up-coding indicator) or exhibits unusual service combinations, the system flags the provider as a high-risk outlier for focused investigation.
  • Network Link Analysis: Advanced analytics can uncover collusive networks of providers who might be sharing patients or services to perpetrate fraud.

In conclusion, the ultimate lesson for carriers is that documentation is not merely about filling space; it is about telling the patient's distinctive and current story. Anything—whether a copy-paste command or a machine learning algorithm—that dilutes that unique story and creates repetitive or over-documented records is a pathway to claims failure and potential fraud. Insurance carriers must treat AI documentation with the same rigorous scrutiny once reserved for chart cloning, updating audit protocols to focus on individualized clinician attestation, customization, and metadata that reveals overreliance on automation.

Firm Highlights

Thought Leadership

Supreme Court of Pennsylvania Holds That Public Policy Does Not Prevent Insurance Coverage for Sex Trafficking Claims

On July 21, 2026, the Supreme Court of Pennsylvania issued an opinion emphasizing the limited circumstances in which courts may invoke public policy to bar insurance coverage, holding in Samsung Fire & Marine Insurance Co., Ltd. (U.S. Branch) v. RI Settlement Trust that Pennsylvania public policy does not preclude coverage for claims alleging that insureds enabled or profited from human sex trafficking. The decision rejects a line of federal district court decisions predicting otherwise and reinforces that Pennsylvania courts will invoke the public policy doctrine only in the clearest of circumstances. RI Settlement is particularly significant because it arose on certified questions from the United States Court of Appeals for the Third Circuit, giving the Supreme Court the opportunity to resolve an issue on which federal courts had predicted Pennsylvania law differently. RI Settlement arose out of four separate civil complaints in which the underlying plaintiffs alleged that, as minors, they were the victims of human sex trafficking at various hotels in Philadelphia. The plaintiffs claimed that the hotel owners were negligent in failing to stop the sex trafficking from happening at their hotels. After the filing of the lawsuits, the hotel owners sought coverage under their Commercial General Liability policies. The insurers initially defended the hotels under Reservation of Rights letters, though the carriers later filed Declaratory Judgment actions seeking declarations that they did not owe a duty to defend or indemnify. In short, the insurers argued in the alternative that they did not owe any obligation to provide coverage based upon Pennsylvania public policy (because the claims violated the Human Trafficking Law – 18 Pa.C.S. § 3011) and the terms and conditions of the policy. On motions for judgment on the pleadings, the District Court found for the insurers on the basis of public policy: There is no duty to defend or indemnify against actions arising out of an insured's criminal conduct related to the sex trafficking of minors. The Court appreciates that it may make public policy the basis of a judicial decision only in “the clearest of cases.” See Minnesota Fire & Cas. Co. v. Greenfield, 589 A.2d 854, 868 (Pa. 2004) (quoting Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 760 (Pa. 1994)). Yet, the Court strains to imagine a clearer case than the one presented here in which the facts alleged indicate that Policyholders engaged in criminal conduct in violation of Pennsylvania's Human Trafficking Law. The hotel owners appealed the matter to the Third Circuit, which petitioned the Supreme Court of Pennsylvania to grant review of two certified questions of law: (1) whether Pennsylvania law had an “overriding public policy” against sex trafficking, such that an insurer’s duty to defend and/or indemnify is abrogated when an insured is alleged to have enabled or profited from such trafficking; and (2) if yes, is that duty abrogated whenever the insured’s alleged conduct would constitute a violation of the Pennsylvania Human Trafficking statute. Importantly, the certified questions did not ask the Supreme Court to determine whether the policies afforded coverage under their terms. Rather, the court was asked only whether Pennsylvania public policy independently barred coverage. As a result, the court assumed for purposes of answering the certified questions that the insurers otherwise owed a duty to defend and addressed only the public policy issue, leaving all policy-based coverage defenses for further proceedings. Because the court concluded that the answer to the first certified question was “no”, it did not reach the second issue. In reaching its determination that Pennsylvania public policy does not prohibit insurance coverage for sex trafficking claims, the court limited the impact of its decision in Minnesota Fire & Cas. Co. v. Greenfield, 855 A. 2d 854, 855 (Pa. 2004), which the RI Settlement opinion emphasized as having been an “Opinion Announcing Judgment of the Court” – or a plurality opinion. In Greenfield, the insured homeowner was sued by the estate of his houseguest who overdosed from heroin that he sold to her. The matter wound its way to the Supreme Court, which determined that the insurer did not owe a duty to defend or indemnify based upon Pennsylvania public policy, which criminalized the sale and use of heroin as a Schedule I narcotic. In RI Settlement, the court “decline[d] the invitation” to extend the rationale of the three-justice plurality in Greenfield beyond cases involving Schedule I controlled substances. In so holding, the justices in RI Settlement refused to “divine an overriding public policy pronouncement by the General Assembly by virtue of its enactment of the Human Trafficking Law.” The opinion further states that it is not “within the purview of this Court to rank the magnitude of the public policy underlying the various crimes defined in the Crimes Code. It is sufficient for the work of the courts to know that the General Assembly has identified conduct it deems harmful and dangerous to the maintenance of an orderly society and criminalized it.” While the court declined to declare that Pennsylvania public policy prohibits coverage for sex trafficking claims, the opinion in RI Settlement expressly states that insurers are free to include appropriate exclusionary language for such causes of actions in their policies if they desire to do so. It will certainly be interesting to see whether the insurance industry accepts the court’s invitation, or perhaps whether the Pennsylvania legislature steps in to clarify that sex trafficking claims are indeed of the type or magnitude that they should not be covered by insurance. In any event, we will, of course, continue to monitor this and other insurance coverage issues that arise before courts in Pennsylvania, New Jersey and throughout our firm’s geographic footprint and around the country.

Thought Leadership

Court Allows Recklessness and Punitive Damages Claims to Proceed After Work‑Zone Crash

In a case where a defendant filed preliminary objections against allegations of recklessness and punitive damages, the Susquehanna County Court of Common Pleas denied these preliminary objections. This case stems from a motor vehicle accident, where the defendants car struck the plaintiffs car after the defendant allegedly fell asleep at the wheel, going at a high rate of speed, through a construction work zone. Defendant first objected to the general allegations throughout the plaintiff’s complaint pertaining to “reckless” conduct contending that there were insufficient factual allegations to support the claim of reckless conduct. Defendant next objected to the plaintiffs claim for punitive damages, as punitive damages may only be assessed against a motorist for falling asleep while driving if there is further evidence to prove driver was aware of their drowsiness and risk of falling asleep. Lastly, defendant objected to plaintiffs complaint, claiming it lacked specificity. The court here found that the plaintiff had included in the complaint specific allegations related to the defendant’s alleged recklessness, including allegations regarding speeding in a work zone, almost striking the flagger, falling asleep at the wheel, and striking the plaintiffs vehicle which was stopped. Additionally, the court noted that falling asleep does not come without warning. The court found that these allegations were sufficient to support an allegation of recklessness at the pleadings stage.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

Thought Leadership

New Jersey Appellate Division Affirms Exclusion of Legal Malpractice Expert as Impermissible Net Opinion

Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.