The Fraud Division is the primary law enforcement agency responsible for investigating automobile insurance fraud crimes. The Fraud Division coordinates enforcement operations statewide with municipal, state and federal enforcement agencies. Completed investigations are filed with the local district attorney or the United States Attorney General's Office.
Fraud Division detectives primarily enforce the provisions of California Penal Code Sections 548 - 550. Detectives focus on five major categories: medical mills, organized crime, staged collision rings, false and fraudulent claims, and organized economic automobile theft groups. Organized criminal elements have and continue to use these types of schemes.
During Fiscal Year 2011-12, the Fraud Division received 17,259 suspected fraudulent claims (SFCs), assigned 669 new cases, arrested 249 suspects and referred 260 submissions to prosecuting authorities. The potential loss amounted to $145,356,588.
District Attorneys' Automobile Insurance Fraud Program
During Fiscal Year 2011-12, 35 counties received funding totaling $15,259,000 through the Department's Auto Insurance Grant Program. The amount of financial support provided to each county is derived from three components: county population, the number of Suspected Fraudulent Claims (SFCs) reported, and the Insurance Commissioner's evaluation of the county's historical performance and plan description.
For Fiscal Year 2011-12, California district attorneys initiated 2,756 investigations and made 1,351 arrests, culminating in 1,036 convictions. This number includes the Fraud Division's enforcement actions, and local law enforcement investigations.
Chargeable fraud amounted to $16,580,537, with $4,092,863 in restitution ordered by the courts.
The California State Legislature finds that organized automobile fraud activity operating in the major urban centers of the State represents a significant portion of all individual fraud-related automobile insurance cases. These cases result in artificially higher insurance premiums for core urban areas and low-income areas of the State than for other areas of California. Only a focused, coordinated effort by all appropriate agencies and organizations can effectively deal with this problem.
Assembly Bill 1050, chaptered October 10, 1999, created the Organized Automobile Fraud Activity Interdiction ("Urban Grant") Program in Fiscal Year 2000-01. The California Insurance Code Section 1874.8 mandates the Insurance Commissioner award three to ten grants for a coordinated program targeted at the successful prosecution and elimination of organized automobile fraud activity. The primary focus of the program is directed at the organized criminal activity that occurs in urban areas and which often involves the staging of automobile accidents and the filing of fraudulent automobile accident or damage claims.
Traditionally, legal and medical professionals or their associates mastermind these cases. In recent years, highly sophisticated groups have captured the attention of the Fraud Division, prosecutors and allied law enforcement.
During Fiscal Year 2011-12, the Fraud Division assigned 179 new cases and made 208 arrests and 256 referrals to prosecuting authorities. Potential loss amounted to $6,959,639.
District Attorneys' Organized Automobile Fraud Activity Interdiction Program
During Fiscal Year 2011-12, 10 counties were awarded grant funding totaling $6,692,000. The grant awarded to district attorneys reported 207 arrests, which included many of the Fraud Division arrests. District attorneys prosecuted 191 cases involving 429 defendants with chargeable fraud totaling $10,032,387. District attorney prosecution resulted in 228 convictions.