DISABILITY AND HEALTHCARE INSURANCE FRAUD PROGRAM
Health insurance fraud is a particular problem for health insurance policyholders.  Although there are no precise figures, it is believed that fraudulent activities account for billions of dollars annually in added health care costs nationally.  Health care fraud causes losses in premium dollars and increases health care costs unnecessarily*.

As mandated by California Insurance Code Section 1872.85, funding for the Disability and Healthcare Fraud Program is derived from an annual assessment of 10 cents annually for each insured under an individual or group insurance policy issued in the state.  This funding supports criminal investigations 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 (Usually Associated with Medically Unnecessary Surgery Claims)
• Durable Medical Equipment
• Posed as Another to Obtain Benefits

This program began in the beginning of fiscal year 2004-05 as a task force concentrating their efforts in Los Angeles and Orange Counties.  Currently, there are ten peace officers and two supervisors statewide who investigate and arrest suspected violators.  This team also provides assistance and training to investigators and adjusters of private health insurance companies, other state and federal government agencies, and allied law enforcement agencies.

During Fiscal Year 2006-07, the Fraud Division identified and reported 423 SFCs, assigned 49 new cases and made 14 arrests and submitted 14 cases to prosecuting authorities.  Potential Loss amounted to $12,564,034.

DISTRICT ATTORNEYS' DISABILITY AND HEALTHCARE PROGRAM
In Fiscal Year 2006-07, five counties received funding totaling $2,362,791 through the Department's Disability and Healthcare Fraud Grant Program.  For Fiscal Year 2006-07, the district attorneys reported 201 investigations, 33 arrests, and 17 convictions, which also included a majority of Fraud Division arrests.  Chargeable fraud amounted to $131,300,764, with $839,101 in restitution ordered by the courts.

* California Insurance Code Section 1871(h).

Regulations for Disability Insurance Fraud Assessment Grant Program