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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

WCJ Improperly Refused to Conduct C&R Hearing and Erroneously Required Settlement of All Pending Petitions

In this case, the claimant sustained injuries in the course and scope of her employment as a registered nurse. The employer acknowledged the injury by a Notice of Compensation Payable (NCP).  Subsequently, a Workers’ Compensation Judge (WCJ) expanded the description of injury. The employer then filed a Termination Petition, alleging the claimant was fully recovered from the injuries. Providers filed Utilization Review (UR) Petitions, challenging UR determinations finding their chiropractic treatment to be not reasonable and necessary. A settlement of the claim was eventually reached, and the employer filed a Petition to Seek Approval of a Compromise and Release (C&R) Agreement. The C&R outlined that the agreement fully resolved all future workers’ compensation claims except for the termination and UR Petitions. Briefs were filed and one day later, the WCJ issued an Interlocutory Order which stated if instructions were not followed regarding filing of a C&R, a settlement hearing date would not be given. The employer complied with the order, and filed the C&R. Subsequently, the WCJ notified the parties that the C&R must resolve all issues in the petitions, or would not be entertained. A settlement hearing was never held, and the WCJ then issued a decision, granting the Termination Petition and dismissing the UR Petitions. The WCJ also said that the Petition for Approval of a C&R was dismissed without prejudice, as the issues in the Termination and UR Petitions went to a decision. The claimant appealed to the Workers’ Compensation Appeal Board (Board). The Board granted the claimant’s appeal, finding that the WCJ violated the requirement of Section 449 that an expedited hearing be held when a Petition for Approval of a C&R is filed.  The Board further held that it was legally incorrect for the WCJ to insist that the C&R resolve all issues raised by the pending Petitions. The Board remanded the case to a new WCJ, and Employer appealed to the Commonwealth Court. The court affirmed the Board and held that the WCJ erred, as a matter of law, by refusing to hold an expedited hearing within 30 days, once the Petition for Approval of a C&R was filed.  The court noted that the language of Section 449(b) is mandatory, and a settlement hearing is not discretionary or dependent on a party’s separate request for a stay, or whether the record has been closed. The court further rejected Employer’s argument that the case should not be remanded to a new WCJ for a new decision on the termination and and UR Petitions, as the Board passed no judgment on whether the C&R Agreement resolved the termination and UR Petitions, and left it for the WCJ to decide in connection with the Petition for Approval of a C&R.

Thought Leadership

Appellate Division Reversed Trial Judge's Orders Granting a Plaintiff's Section 40 Summary Judgement Motion

In Haskins v. Casey, et al., the plaintiff Dane Haskins worked for defendant Ekornes, Inc. (Ekornes) as a material handler. In June 2021, he filed a workers’ compensation claim petition for benefits due to a left shoulder injury in December 2020. He then resolved his workers’ compensation claim in November 2022 under an Order Approving Settlement. In January 2023, he filed a lawsuit against Ekornes and later amended to add additional claims and name other defendants, including the Ekornes president, chief financial officer, and director of human resources. In May 2025, a second amended complaint alleged that after he filed the workers compensation claim, Ekornes placed him on leave under the Family and Medical Leave Act (FMLA), denied his request for a work accommodation, and ultimately terminated him from employment in December 2021. He pleaded several causes of action asserting violations of the New Jersey Law Against Discrimination (LAD) as well as fraudulent concealment and wrongful discharge. The plaintiff then moved for partial summary judgment, seeking an order enforcing Section 40 of the Workers’ Compensation Act (WCA) as well as summary judgment on his FMLA claims. The defendants opposed the motions and cross-moved for summary judgment on the FMLA claims. After arguments, the court entered an order in December 2025, denying the FMLA motion and cross motion and granting the plaintiff’s Section 40 motion. In the order, the court permitted the plaintiff to pursue compensatory damages at trial in connection with the bodily injury claim. The court also allowed the plaintiff to present evidence of any workers’ compensation benefits to support his claim. The court then denied the defendant's subsequent reconsideration motion in February 2026. The defendants that appealed the Section 40 aspect of the orders. In reviewing the appeal de novo, the Appellate Division rejected the plaintiff's argument that the work-related injury arose out of his discrimination claims under the LAD. The plaintiff argued that he should be able to pursue a personal injury claim as a part of his LAD claim, noting that the employer’s compensation carrier would be able to assert a lien against any recovery against his LAD claims. In distinguishing between the Richter vs. Oakland Board of Education, 246 N.J. 507 (2021) case, in which the Court found that any recovery would be subject to a Section 40 lien as the allegation was that the defendants failed to accommodate her pre-existing diabetic condition, which resulted in bodily injury. In this case, the Appellate Division indicated that there was no bodily injury caused by Ekornes’ failure to accommodate a pre-existing disability. Rather, the shoulder injury was a result of a workers compensation claim, for which he received appropriate benefits previously. The Appellate Division noted that if the plaintiff was successful in proving his LAD claims, he would be entitled to damages caused by the discriminatory discriminatory conduct such as lost wages and emotional distress damages and that there will be no Section 40 lien. In addition, the Appellate Division disagreed that the petitioner could present evidence about and seek damages for his shoulder injury at trial. Although the petitioner argued that a defendant who retaliated against an employee for filing a workers’ compensation claim should not benefit from the exclusivity provision of the WCA, the Appellate Division noted that the Legislature did not include this type of scenario in the statue nor did any of the case law recognize this type of claim as a remedy. As such, the Appellate Division reversed the December 2025 order granting the the plaintiff’s Section 40 summary judgment motion as well as the February 2026 reconsideration motion order. The Appellate Division noted that they did not intend to limit the plaintiff in his pursuit of his other claims on under the LAD, FMLA, and workers’ compensation retaliation causes of action.

Thought Leadership

Commonwealth Court Reaffirms the Constitutionality of Act 111's IRE Provisions

In this case, the claimant sustained a work injury of January 6, 1994, which was acknowledged by Notice of Compensation Payable (NCP). After the claimant’s receipt of 104 weeks of temporary total disability benefits, the employer filed a Request for an Impairment Rating Examination (IRE). The IRE was performed in May 2023 and the IRE physician found that the claimant had a 5% whole person impairment, under the AMA Guides. The employer filed a Petition based on the IRE results, and the Petition was granted by the WCJ. During litigation, the claimant argued that the IRE provisions of Act 111 (Section 306(a.3) of the Act) were not applicable to her injury, since it predated June 24, 1996, the date Act 57 went into effect, and that the IRE provisions were unconstitutional. The Workers’ Compensation Judge (WCJ)) granted the Petition and the Board affirmed. On appeal to the Commonwealth Court, the claimant argued that Act 111 violated the nondelegation doctrine and that its retroactive application to the claimant’s injury was unconstitutional. The court rejected the arguments on the basis that they had already found the same arguments without merit in multiple, prior cases. The court also addressed an argument made by the claimant that Act 111 was procedurally defective under the Pennsylvania Constitution because it was only considered on two days in each House after having undergone amendments and reassignments. The court noted that the Pennsylvania Constitution requires every bill to be considered on three different days in each House. The claimant maintained that, according to the legislative history, the bill did not receive three separate days of consideration from each House when it was assigned a new bill number. The court pointed out, however, that the bill number, H.B. 1840 remained constant and was considered on three occasions by the House. Further, the court concluded that minor amendments to the bill were germane to its original subject, which was to modify the Act’s IRE process, in accordance with Protz II.