Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
COALITION PASSES MODEL BILL ESTABLISHING FRAUD UNITS
Washington D.C.—States would get a new full-fledged law enforcement unit devoted to fighting the multi-billion dollar problem of insurance fraud under the provisions of a model bill developed by the Coalition Against Insurance Fraud.
The model’s adoption was the second phase of a two-step process — defining fraud and then creating a state investigative unit. The coalition’s model fraud bureau bill, approved by the coalition board of directors at its September meeting, addresses issues such as police powers for investigation, immunity and confidentiality, and other critical factors in the fight to curtail fraud.
In the past several years, 28 states have created fraud bureaus to investigate suspected fraudulent activity and bring to justice violators of existing insurance fraud laws. However, in some cases, fraud bureaus have jurisdiction over specific areas only, such as workers’ compensation or health insurance fraud. Some other state agencies have restricted authority that may hamper effectiveness.
The coalition’s fraud bureau model gives the unit jurisdiction over all lines of insurance. Coupled with a broad definition of insurance fraud, the model helps protect both consumers and insurers and eliminates problems that can inhibit the unit’s effectiveness when the definition of fraud is too narrow.
Most states’ existing units are under the insurance division. The model endorses that approach, with one caveat. It recognizes that several states have placed the unit under the Attorney General’s office.
Fraud bureau investigators are granted full police powers under the model’s provisions. This will give them greater access to vital information from other law enforcement agencies as well as protect the information supplied to, or collected by, the unit. These protections will make the unit’s members more effective crime fighters.
The model requires anyone in the industry who has information about suspected fraud to report it to the fraud bureau. In addition, other individuals may report suspected fraud, and the provisions allow for a voluntary reward fund to be set up as an incentive for tips from private citizens. Broad immunity from civil liability is granted to anyone reporting suspected fraud.
Copies of the model fraud bureau act can be obtained by contacting the Coalition Against Insurance Fraud, 1511 K Street NW, Washington, D.C., 20005, telephone (202) 393-7330.
© Copyright 1995 Alikim Media