We need to look no further than daily news articles to locate instances of insurance fraud that not only cross all lines of business, but are also showing no signs of a downturn in frequency. Many states have, of course, taken definitive steps in prior years to combat fraud such as establishing additional fraud reporting or requiring insurers to maintain either special investigative units or anti-fraud plans. Anti-fraud initiative examples from 2009 include Maryland’s revised fraud warning language, operative on April 1st and Hawaii’s significant fraud bill which greatly expanded the lines of business and enforcement provisions of the newly formed Insurance Fraud Investigations Branch within the Division of Insurance.
This year has also seen multiple proposals at the state legislative level, with some bills making their way through the process. Arizona’s insurance code now definitively provides that it is illegal for a person selling or repairing auto glass to knowingly submit a false claim to an insurer for either auto glass repair or replacement or for other related services. It additionally specifies the criminal act of falsely signing a work order, insurance assignment form or other related form in order to submit a claim to an insurer for the specified work, whether done on behalf of a policyholder or another person. California’s Department of Insurance, which already mandates anti-fraud plans, SIU’s, fraud warnings, and fraud reporting, is now permitted to convene meetings with representatives of insurance companies for the purpose of discussing specific information concerning suspected, anticipated, or completed acts of insurance fraud. There are specific requirements associated with establishing and maintaining immunity from civil liability for libel, slander, or any other relevant cause of action for the participants in these Department meetings. The Maine Workers’ Compensation Board has been granted the authority to issue stop work orders for the “knowing misclassification of construction workers” and the New York Insurance Department’s annual insurance fraud report filed with the state legislature will include instances of motor vehicle garaging misrepresentation.
Regarding anti-fraud plan initiatives, both Louisiana and Rhode Island were states with a legislative focus on anti-fraud plans in 2010. Louisiana requires insurers to file such a plan with the commissioner including an outline of the actions, procedures, and safeguards for detecting, investigating, and preventing all forms of insurance fraud. While not requiring that a specific anti-fraud plan be established or filed, Rhode Island is requiring that all insurers have anti-fraud initiatives to accomplish essentially the primary actions specified in Louisiana’s efforts. Options for consideration in Rhode Island to meet the legislative mandate are the use of fraud investigators, either insurer employees or independent contractors, or an anti-fraud plan. Other states, with ongoing legislative sessions, have pending initiatives designed to promote or mandate additional anti-fraud measures. Those proposals range from fraud plan requirements in Pennsylvania to criminalizing certain activities in New Jersey, such as lying about automobile garaging and healthcare provider rebates covering deductibles, as the focus on fraud continues.
