CA Insurance Commissioner Announces Passage Of Bill To Help Fight Insurance Fraud

Sacramento, CA (WorkersCompensation.com) - 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 the current annual assessment of 10 cents per insured paid by health and disability insurers to up to 20 cents, giving local district attorneys more funding 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. 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.

"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.