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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 twenty 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 2013-14, the Fraud Division identified and reported 515 SFCs, assigned 130 new cases, and made 27 arrests and 28 referrals to prosecuting authorities. Potential loss amounted to $27,635,234.

District Attorneys' Disability and Healthcare Program

In Fiscal Year 2013-14, ten counties received funding totaling $5,913,640 through the Department's Disability and Healthcare Insurance Fraud Grant Program. The district attorneys reported 254 investigations, 86 arrests, and 61 convictions, which also included a majority of Fraud Division arrests. Chargeable fraud amounted to $235,930,005 with $3,392,396 restitution ordered by the courts.

In 2012, the legislature increased the assessment from ten cents ($.10) to 20 cents ($.20). The sharing formula between CDI and the district attorneys was also modified, so that instead of a 50/50 split, district attorneys now receive 70% of the fund proceeds. Regulations implementing these provisions became effective on July 1, 2013.

Disability Insurance Fraud Assessment Grant Program Regulations

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