The Fraud Division is the primary law enforcement agency responsible to investigate automobile insurance fraud crimes. The Fraud Division coordinates enforcement operation statewide with municipal, state and federal enforcement agencies. Completed investigations are filed with district attorney or the United States Attorney General's Office.
Fraud Division criminal investigators primarily enforce the provisions of California Penal Code Sections 548 - 550, and the provisions of California Insurance Code Section 1871.4. Criminal investigations 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 2007-08, the Fraud Division received 14,623 suspected fraudulent claims (SFCs), assigned 504 new cases and made 177 arrests, and submitted 206 submissions to prosecuting authorities. The potential loss amounted to $176,330,395.
District Attorneys' Automobile Insurance Fraud Program During Fiscal Year 2007-08, 34 counties received funding totaling $13,050,212 through the Department's Auto Insurance Grant Program. The amount of financial support funded to each county is derived from three components: county population, the number of SFCs reported, and a plan to utilize the grant funding.
For Fiscal Year 2007-08, the district attorneys initiated 1909 investigations and made 748 arrests, culminating in 790 convictions, which includes the Fraud Division's enforcement actions, and local law enforcement investigations.
Chargeable fraud amounted to $11,028,589, with $1,776,690 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 the state. Only a focused, coordinated effort by all appropriate agencies and organizations can effectively deal with this problem.
With the passage of Assembly Bill 1050 (Wright), the Organized Automobile Fraud Activity Interdiction ("Urban Grant") Program was created 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 2007-08, the Fraud Division assigned 227 new cases and made 274 arrests with 315 submissions to prosecuting authorities. Potential Loss amounted to $5,951,672.
District Attorneys' Organized Automobile Fraud Activity Interdiction Program
During Fiscal Year 2007-08, nine counties were awarded grant funding totaling $5,784,756. The grant-awarded district attorneys reported 249 arrests, which also included many of the Fraud Division arrests. District attorneys prosecuted 284 cases involving 523 defendants with chargeable fraud totaling $10,943,518.
District attorney outcomes totaled 287 convictions.
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