The administrative health claim data collected by insurance companies often contain versatile information on individual patients, such as their interaction with doctors, medical labs, pharmacies, and other health care facilities. Since all the information for a patient is gathered in one place this is an excellent source to identify potential medical errors from multiple sources of services. Once identified, the errors can be verified. If necessary, the potential errors will be forwarded to the associated physicians. An application prototype of an administrative medical error detection and prevention had been created. The system is tested and validated by examples to detect medical errors through the creation of a list of medical error rules. Experimental results showed that medical errors can be identified using the insurance claim database. This is an inexpensive way for identifying and preventing medical errors, which will provide benefits to patients, providers and payers.