California: Insurance commissioner announces $1 million grant to fight comp fraud

The California Department of Insurance is providing a $1 million grant to help a county combat workers' compensation fraud.

Insurance Commissioner Steve Poizner said the Fresno County District Attorney's office will receive the grant. However, surrounding counties -- including Kings, Madera, Merced and Tulare -- will receive funds ranging from $48,000 to nearly $280,000. The funds was to be distributed in two installments, with the first installment expected by the end of February. The grant money stems from an assessment authorized by the Legislature and collected by the California Department of Industrial Relations.

"In this struggling economy, it is more important than ever to help businesses to stay and expand in the state," Poizner said. "Because fraud drives up the costs of workers' compensation insurance, we must continue to be vigilant in our battle with those who dishonestly and illegally take advantage of the system. Fraud is not a victimless crime. It imposes a $500 hidden tax on every man, woman and child in California."

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Poizner said the counties must annually apply for these grants. The applications are reviewed by the Workers' Compensation Grant Review Panel based on a number of criteria, including the previous year's performance. The panel makes a recommendation to the Poizner, who can accept or amend the group's recommendation. Poizner's final decision must then be ratified by the Fraud Assessment Commission.

Funding part of new focus on fraud prevention. Poizner said providing grants to local district attorneys is just one step of a new focus on preventing workers' comp fraud. After a meeting of the state's Advisory Task Force on Insurance Fraud's Blue Ribbon Review Committee last year, Poizner announced the implementation several actions to help reduce fraudulent claims, including the creation of a fusion center for insurance fraud investigations so law enforcement can share information more efficiently and quickly to identify emerging trends and crime patterns. Additional steps include:

Better training for the special investigation units on the recognition, documentation, and reporting of suspected insurance fraud claims.
Recognizing insurance companies that go beyond compliance for their greater commitment to fighting fraud.
Increasing the outreach efforts of the Department of Insurance about the consequences of fraud, and how the public can recognize it and report it.
Adopting more aggressive recruiting and retention practices, including pay upgrades, so that the department can recruit and retain qualified investigators.

The task force was created by Poizner to bring together public and private sector experts to develop innovative methods to combat insurance fraud. Since he took office in 2007, nearly 1,900 insurance fraud-related arrests have been made by the Department of Insurance's enforcement division -- more arrests during a two-year period than under any previous commissioner.

March 19, 2009

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