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Fraud: Disability and Healthcare Fraud


According to Section 1871(h) of the California Insurance Code, health insurance fraud is a particular problem for health insurance policyholders.  Health care fraud causes losses in premium dollars and increases health care costs unnecessarily.

As mandated by California Insurance Code Section 1872.85(a), funding for the Disability and Healthcare Fraud Program is derived from an "... annual special purpose assessment to be determined by the commissioner, but not to exceed twenty cents ($0.20) annually for each insured under an individual or group insurance policy it issues in this state, ..."  This funding supports criminal investigations statewide by the Fraud Division and prosecution by district attorneys of suspected fraud involving disability and healthcare fraud.

This program area includes Suspected Fraudulent Claims involving: claimant disability other than workers' compensation, dental claims, billing fraud schemes, immunization fraud, unlawful solicitation, durable medical equipment, and posing as another to obtain benefits.

During Fiscal Year 2011-12, the Fraud Division identified and reported 369 SFCs, assigned 53 new cases, and made 10 arrests and nine referrals to prosecuting authorities.  Potential loss totaled $9,480,471.

District Attorneys' Disability and Healthcare Program

In Fiscal Year 2011-12, five counties received funding totaling $1,712,000 through the Department's Disability and Healthcare Insurance Fraud Grant Program.  The district attorneys reported 124 investigations, 48 arrests, and 43 convictions, which also included a majority of Fraud Division arrests.  Chargeable fraud amounted to $210,691,543 with $2,456,180 restitution ordered by the courts.

Assembly Bill 2138, Chaptered September 22, 2012, increased district attorney funding to $6,671,000 for the Disability and Healthcare Insurance Fraud Program for Fiscal Year 2013-14.  The newly promulgated California Code of Regulations for the Disability and Healthcare Insurance Fraud Program became effective on July 1, 2013.  The updated regulations can be found on the link below.

Disability Insurance Fraud Assessment Grant Program Regulations