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CA Department of Insurance

Disability and Healthcare Fraud

Disability and Healthcare Insurance Fraud Program

Health insurance fraud is a significant problem for health insurance policyholders because it drains resources out of the system causing unnecessary premium increases. California Insurance Code Section 1872.85(a) provides funding for the Disability and Healthcare Fraud Program through annual special purpose assessment to be determined by the Commissioner: not to exceed 20 cents ($0.20) for each insured person in California who is covered by an individual or group insurance policy it issues. This funding supports criminal investigations statewide by the Fraud Division and prosecution by district attorneys of suspected fraud involving disability and healthcare.

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 2014-15, the Fraud Division identified and reported 501 SFCs, assigned 91 new cases, and made 15 arrests and 21 referrals to prosecuting authorities. Potential loss amounted to $54,221,430.

Healthcare Settlement

During fiscal year 2014-15, the Fraud Division identified and reported 95 SFCs, assigned 80 new cases, and made six arrests and six referrals to prosecuting authorities. Potential loss amounted to $54,123,918.

District Attorneys' Disability and Healthcare Program

In fiscal year 2014-15, 11 counties received funding totaling $5,104,000 through the department's Disability and Healthcare Insurance Fraud Grant Program. The district attorneys reported 242 investigations, 76 arrests, and 81 convictions, which also included a majority of Fraud Division arrests. Chargeable fraud amounted to $229,584,770 with $12,807,752 restitution ordered by the courts.

District Attorneys' Disability and Healthcare Supplemental Program (Settlement)

As the result of a one-time Qui-Tam settlement, the California Department of Insurance received $4,000,000 to be awarded over four years, through an annual competitive process, available to those counties receiving a Disability and Healthcare Grant. These funds are to be used solely for the enhanced investigation and prosecution of cases involving healthcare/medical providers that have the potential to have great impact on disability and healthcare insurance fraud.

Fiscal year 2014-15 was the first year of this award; seven counties received funding totaling $1,000,000 through the Disability and Healthcare-Supplemental Insurance Fraud Grant Program. The district attorneys reported 79 investigations and 11 arrests. Chargeable fraud amounted to $1,162,633.

Disability Insurance Fraud Assessment Grant Program Regulations

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