Reporting Suspected Insurance Fraud

Dennis Pompa Associate Commissioner

Reporting Requirements – Texas Ins Code §  A person must report fraud not later than the 30 th day after he makes a determination or reasonably suspects that a fraudulent insurance act has been or is about to committed in this state.  A person shall make the report of suspected fraud in writing to the insurance fraud unit.  The report shall be made in a format prescribed by the Fraud Unit or NAIC.

Texas Antifraud Plans  TIC § Antifraud Plan Required for Certain Plan Issuers  Prescribes the statutory requirement for establishing an antifraud plan.  TIC § Filing of Antifraud Plan  Insurers may file their plan with the Fraud Unit annually.

TDI’s Fraud Unit  Receives reports of suspected insurance fraud (10,000 yearly).  Interview suspects and witnesses.  Acquire and analyze financial, business, and legal documents; follow the flow of money.  Prepare comprehensive investigative reports for submission to a prosecuting agency.

Elements of a Comprehensive Suspected Fraud Report  Tell us about who was involved in the fraud.  Provide as much identifying information on all persons involved.  Vehicles or personal property details.  Explain when the fraud occurred or when the claim was reported and how it was reported.  Where did the fraud occur.  Explain efforts taken to contact parties involved in the fraud.

Elements of a Comprehensive Suspected Fraud Report - Continued  Its important to know if the claim has been paid. Please include the amount, denied or pending $$.  Tell us why you suspect the claim is fraudulent.  Tell us about the documents you have to support your allegations.  Submit your contact information.

When Reporting Insurance Fraud  Submit a Copy of the Policy or Declaration page.  Submit an official affidavit attesting to the authenticity of the records.  Copies of recorded transcripts are good, but also include a duplicate copy of the audio recording.  Be Detailed  Explain Everything

Fraud Trends  Theft of Premiums – Agents  Disability Fraud  Disappearing Auto’s (owner give up)  Medical Provider Fraud  Medical Identity Theft  Misrepresenting Beneficiary (health)

Fraud Trends - Continued  Unlicensed Health Ins Plans  Mortgage Fraud (Title – Escrow)  Disaster Fraud  Application Fraud – ID Theft  Disability Claim Fraud  Economic Related Fraud

Saddled With Debt, Some Decide to Torch Vehicles

TDI’s Investigation Process  Case assigned to an investigator who is responsible for developing additional facts.  90 day updates to the complainant.  Concluded investigation submitted to a prosecuting agency having venue over the offense.

Recent Fraud Case Brenda Buckaloo-Merchant, a former supervising claims adjuster schemed to approve claims and divert payment checks over $1.2 Million to a fictitious health care provider that was in reality her. She used the money for personal purchases including foreign travel, gambling, gifts for friends, and her local ministry. She plead guilty in Dallas to 1 st Degree Felony Theft, sentenced to twelve years in the Texas Department of Corrections, fined $3,000, and ordered to pay restitution of $1,208,316.

Hurricane Ike Fraud Stat’s  Reports of Fraud  76 Agent Fraud  23 Adjuster Fraud  428 Disaster Claim Fraud  Cases Opened for Investigation  31 Agent Fraud  1 Adjuster Fraud  60 Disaster Claim Fraud  Cases Referred for Prosecution  10 Agent Fraud  18 Disaster Claim Fraud

Statistics – Fiscal Year 2009 Fraud reports received11,021 Calls received toll-free Hotline5,451 Cases opened for investigation637 Cases referred for prosecution206 Amount of fraud identified in referred cases$18,079,014 Indictments resulting from investigations148 Convictions from cases referred125 Restitution assessed by courts on Fraud Unit cases$7,449,148 Subpoenas issued439 Open records requests processed145

 Fraud Resources Link’s  Annual Fraud Conference  Annual Report to the Commissioner  Top 10 Cases for FY 2009  Search engine for insurance fraud indictments and convictions.  On-line reporting for consumer’s and SIU’s.

Agent Fraud  Claim Fraud  Workers’ Comp Fraud Sponsored by the Texas Department of Insurance