California IC Announces Bill To Help Fight Insurance Fraud Passes Assembly

Oakland, CA (WorkersCompensation.com) - Insurance Commissioner Dave Jones today announced the California Assembly passed AB 2138, authored by Assembly Member Bob Blumenfield (D-San Fernando Valley). The bill is sponsored by Commissioner Jones and the California Department of Insurance (CDI). It would increase the current annual assessment of 10 cents per insured paid by health and disability insurers to up to 20 cents in order to increase funding to local district attorneys so that they can investigate and prosecute health and disability insurance fraud throughout the state.

"Health and disability insurance fraud seriously hurts policyholders, providers, insurers, and ultimately California's economy," said Commissioner Jones. "Unfortunately, this type of fraud is increasing in sophistication, complexity, and volume. This higher assessment will provide much needed resources to fight this growing problem, especially in light of federal health care reform."

In May 2008, 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.

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. The local district attorneys were only able to conduct 656 investigations from these suspected fraudulent claims, resulting in 221 arrests and 184 convictions with an annual average of $223 million in chargeable fraud.

AB 2138 now moves to the Senate for consideration.

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