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CA Department of Insurance

Insurance Commissioner Dave Jones Announces Passage Of Bill To Help Fight Insurance Fraud

News: 2012 Press Release

For Release: September 5, 2012
Media Calls Only: 916-492-3566
Insurance Commissioner Dave Jones Announces Passage Of Bill To Help Fight Insurance Fraud
AB 2138 Provides More Funding to Fight Growing Problem

Insurance Commissioner Dave Jones today announced that the California State Legislature has passed Assembly Bill 2138, authored by Assembly Budget Committee Chair Bob Blumenfield (D-San Fernando Valley). The measure, sponsored by Commissioner Jones and the Department of Insurance, would increase funding made available to local district attorneys to investigate and prosecute health and disability insurance fraud throughout California.

"I am pleased that the State Legislature passed this bill giving local communities the necessary resources to fight the growing problem of insurance fraud," said Commissioner Jones. "This type of fraud hurts everyone from policyholders to providers, and, unfortunately, it is becoming more sophisticated. I applaud Assembly Member Blumenfield for authoring this important anti-fraud legislation."

In May 2009, CDI's Advisory Task Force on Insurance Fraud, which included law enforcement officials, insurance industry representatives, and consumer advocates, completed a comprehensive report of the anti-fraud insurance programs in California. The report found, among other things, that the health and disability insurance lines had insufficient policy assessments to support a statewide anti-fraud effort. This led to the recommendation to increase funding that is called for in AB 2138.

Health and disability insurance fraud is a critical problem for policyholders, providers, insurers, and California's economy and is increasing in sophistication, complexity, and volume. California's strained economy has resulted in an increase in insurance fraud schemes and local district attorneys often have fewer resources at their disposal to fight fraud. From 2007 to 2010, CDI received more than 6,000 health and disability-suspected fraudulent claims statewide, with a fraction of those claims referred to the local district attorneys. They were only able to conduct 656 investigations from these claims, resulting in 221 arrests and 184 convictions with an annual average of $223 million in chargeable fraud. However, this only represents a portion of total fraudulent activity currently being perpetuated within the state because most cases go unreported to CDI. Furthermore, due to limited resources, CDI closes some claims and only a fraction of these claims are turned over to local district attorneys for further investigation and prosecution. Additional funding would provide local assistance with the resources they need to increase investigations, arrests, and convictions, as well as extend their reach to other counties. Furthermore, with the implementation of the federal Affordable Care Act, it is crucial to ensure that district attorneys receive additional funds necessary to aggressively investigate and prosecute healthcare and disability insurance fraud.

"I urge Governor Jerry Brown to sign this bill giving the Department and local law enforcement the tools to better combat this disturbing crime, especially in light of federal health care reform," said Commissioner Jones.

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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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