Anti-Fraud Plan - Louisiana Department of Insurance
Anti-Fraud Plan - Louisiana Department of Insurance
Anti-Fraud Plan - Louisiana Department of Insurance
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THE LOUISIANA DEPARTMENT OF INSURANCE<br />
FRAUD SECTION PROCEDURES<br />
August 12, 2011<br />
Presented by:<br />
Paul Boudreaux, Jr., Director, <strong>Insurance</strong> <strong>Fraud</strong> Section<br />
Warren E. Byrd, II, Executive Counsel<br />
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2011 Filing & Compliance Seminar<br />
WHAT IS THE FRAUD SECTION<br />
• FRAUD Section was established by statute in 1993- LSA-R.S. 22:<br />
1921, et seq, as an INVESTIGATORY BODY. We do not have<br />
any arrest or prosecutorial authority.<br />
• FRAUD Section is part <strong>of</strong> a three-agency <strong>Insurance</strong> <strong>Fraud</strong> Task<br />
Force that was established in 1999 to begin Jan 1, 2000, which<br />
includes the <strong>Louisiana</strong> State Police <strong>Insurance</strong> <strong>Fraud</strong>/Auto Theft<br />
Unit and the <strong>Louisiana</strong> <strong>Department</strong> <strong>of</strong> Justice (Attorney<br />
General) <strong>Fraud</strong> Unit<br />
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2011 Filing & Compliance Seminar<br />
• Because <strong>of</strong> the sensitive nature <strong>of</strong> fraud reports and<br />
investigations, all fraud complaints are Confidential.<br />
• The FRAUD Section records are exempt from public<br />
inspection, and FRAUD Section records and personnel<br />
are exempt from subpoena in all civil proceedings.<br />
LSA-R.S. 22:1927 & 1929.<br />
• Criminal background information is confidential and<br />
shall not be disclosed outside the FRAUD Section<br />
Office. LSA-R.S. 22:1929.<br />
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2011 Filing & Compliance Seminar<br />
THE FRAUD SECTION PERSONNEL<br />
• FRAUD Section is a part <strong>of</strong> the Legal Division <strong>of</strong> the<br />
<strong>Insurance</strong> <strong>Department</strong>.<br />
• FRAUD Section consists <strong>of</strong> a Director, Assistant<br />
Director, Senior Investigator, Six Investigators,<br />
Secretary and two Student Workers<br />
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2011 Filing & Compliance Seminar<br />
MANDATORY REPORTS OF SUSPECTED<br />
FRAUD BY LICENSED ENTITIES<br />
• LSA-R.S. 22: 1926 & LSA-R.S. 40:1424<br />
• Any person, company or legal entity involved in the<br />
business <strong>of</strong> insurance<br />
• Within 60 days <strong>of</strong> receipt <strong>of</strong> a suspected fraudulent<br />
claim<br />
• Must report the suspected fraud to the FRAUD Section<br />
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2011 Filing & Compliance Seminar<br />
• LSA-R.S. 22:1928 & LSA-R.S. 40:1425<br />
• Civil Immunity from lawsuit for insurers, employees<br />
and agents for libel, slander (defamation <strong>of</strong><br />
character) or other relevant tort<br />
• All persons (licensed entities) covered by LSA-R.S.<br />
22: 1926 can recover attorney’s fees and costs if sued<br />
and the suit is determined to be without substantial<br />
justification.<br />
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2011 Filing & Compliance Seminar<br />
THE BUSINESS OF THE FRAUD SECTION<br />
• ANSWERS ALL QUESTIONS RELATIVE TO<br />
SUSPECTED FRAUD<br />
• FRAUD Section responds to QUESTIONS as to<br />
whether a certain activity may constitute fraud and,<br />
if applicable, how to file a formal fraud complaint.<br />
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2011 Filing & Compliance Seminar<br />
• FRAUD Section responds to suspected fraud reports from<br />
individuals. GENERAL PUBLIC FRAUD COMPLAINT.<br />
It can be filled anonymously or by an identified person.<br />
• FRAUD Section conducts investigations <strong>of</strong> suspected fraud<br />
reports from insurance companies, producers, agents,<br />
adjusters and bail bondsmen. DETAILED INDUSTRY<br />
FRAUD COMPLAINT.<br />
• Both forms are on the LDI Webpage under “Report<br />
<strong>Insurance</strong> <strong>Fraud</strong>.<br />
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2011 Filing & Compliance Seminar<br />
PROCEDURE UPON RECEIPT OF<br />
SUSPECTED FRAUD REPORT<br />
• Be sure to be specific as to why this is fraudulent and<br />
the amount <strong>of</strong> money involved, even if the claim was<br />
denied. Attach or send to FRAUD Section ASAP the<br />
file’s summary or outline and any documents that<br />
support the allegations <strong>of</strong> suspected fraud.<br />
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2011 Filing & Compliance Seminar<br />
• FRAUD Section reviews the suspected fraud report<br />
and all supporting documents.<br />
• After review <strong>of</strong> the documents and investigation thru<br />
our data bases, a decision is made whether to:<br />
• Refer for “criminal” investigation and prosecution,<br />
or<br />
• Retain in “inactive” folder pending additional<br />
information.<br />
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2011 Filing & Compliance Seminar<br />
• Referred for Criminal Investigation and Prosecution<br />
• Regular meetings with the :<br />
• <strong>Louisiana</strong> State Police (LSP)<br />
• <strong>Department</strong> <strong>of</strong> Justice (DOJ)<br />
• National Information Crime Bureau (NICB)<br />
• The files are accepted for criminal referral, rejected for<br />
criminal referral, or deferred.<br />
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2011 Filing & Compliance Seminar<br />
ISSUANCE OF CEASE & DESIST<br />
ORDER WITH CIVIL FINE<br />
• If fraud, crime or unauthorized activity is determined<br />
to have occurred BY A LICENSED ENTITY, (or an<br />
unlicensed entity that it attempting to sell insurance)<br />
then the LDI may issue a CEASE & DESIST ORDER,<br />
accompanied with an appropriated CIVIL FINE.<br />
• LSA-R.S. 22:1969.<br />
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2011 Filing & Compliance Seminar<br />
A CEASE AND DESIST ORDER AND FINE CAN BE SERVED ON A LICENSED ENTITY<br />
(OR AN UNLICENSED ENTITY ENGAGED IN INSURANCE BUSINESS)<br />
• Not all C&D’s stop the insurance business<br />
• For a Summary Suspension, we must show that the public health, safety, or welfare<br />
imperatively requires emergency action to immediately stop the alleged activity<br />
• LSA-R.S. 49:961 & LSA-R.S. 22:1969 & 1970<br />
• Most C&D’s are served with a Notice <strong>of</strong>: CIVIL FINE<br />
LICENSE SUSPENSION<br />
and/or<br />
LICENSE REVOCATION<br />
• All C&D’s are served with information as to how to request a HEARING TO APPEAL<br />
the action <strong>of</strong> the LDI<br />
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2011 Filing & Compliance Seminar<br />
NUMBER OF SUSPECTED FRAUD COMPLAINTS<br />
• In 2005 2,384<br />
• In 2006 1,466<br />
• In 2007 1,328<br />
• In 2008 1,427<br />
• In 2009 1,729<br />
• In 2010 2,944<br />
• In 2011 1,446 (thru June 30, 2011)<br />
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2011 Filing & Compliance Seminar<br />
INVESTIGATES APPLICATIONS FOR<br />
18 USC SEC. 1033 CONSENT<br />
• FRAUD Section conducts investigations into<br />
applications for consent under 18 USC SECTION 1033.<br />
This federal statute provides a means for a person with<br />
a felony conviction involving dishonesty or breach<br />
<strong>of</strong> trust or who has been convicted under that<br />
section to apply for a consent from 18 USC SECTION 1033<br />
prohibition from working in the business <strong>of</strong> insurance.<br />
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2011 Filing & Compliance Seminar<br />
INVESTIGATES COMPANIES AND PERSONS<br />
SEEKING A LOUISIANA INSURANCE LICENSE<br />
• FRAUD Section investigates criminal backgrounds and<br />
administrative actions against persons and companies applying<br />
for a license or license renewal.<br />
• FRAUD Section conducts investigations <strong>of</strong> BIOGRAPHICAL<br />
AFFIDAVITS for Company and Third Party Administrator<br />
Licensing. Any company which applies for a license to sell<br />
insurance or manage insurance in <strong>Louisiana</strong> has to provide<br />
Biographical Affidavits for each OFFICER, DIRECTOR and<br />
OWNER <strong>of</strong> 10% or more <strong>of</strong> the ownership <strong>of</strong> the company.<br />
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2011 Filing & Compliance Seminar<br />
INVESTIGATES COMPANIES SEEKING TO<br />
REGISTER TO DO BUSINESS IN LOUISIANA<br />
• FRAUD Section conducts investigations <strong>of</strong><br />
Risk Purchasing Groups, Risk Retention Groups and<br />
Discount Medical <strong>Plan</strong>s desiring to REGISTER its<br />
company to do business in <strong>Louisiana</strong>.<br />
• FRAUD Section examines and investigates the affidavit <strong>of</strong><br />
each person, conducts a background check and<br />
recommends an APPROVAL or DISAPPROVAL.<br />
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2011 Filing & Compliance Seminar<br />
INVESTIGATES “YES” FILES<br />
• License applications or notices that reveal criminal or<br />
administrative activity , securities violations, <strong>Louisiana</strong><br />
income tax debt or child support arrearage.<br />
• Recommends Approval or Disapproval.<br />
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2011 Filing & Compliance Seminar<br />
HOW CAN SOMEONE CONTACT<br />
THE LDI FRAUD SECTION?<br />
• By WEBSITE: www.ldi.state.la.us<br />
Click on the “Report <strong>Insurance</strong> <strong>Fraud</strong>” Link<br />
Click on the “General Public <strong>Fraud</strong> Report Form”<br />
Or, the “Detailed Industry <strong>Fraud</strong> Report Form”<br />
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2011 Filing & Compliance Seminar<br />
• By FACSIMILE: (225) 342-7393<br />
• By U. S. MAIL:<br />
<strong>Louisiana</strong> <strong>Department</strong> <strong>of</strong> <strong>Insurance</strong><br />
FRAUD SECTION<br />
P.O. Box 3096<br />
Baton Rouge, LA 70821<br />
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2011 Filing & Compliance Seminar<br />
• By HAND DELIVERY OR PAID COURIER:<br />
<strong>Louisiana</strong> <strong>Department</strong> <strong>of</strong> <strong>Insurance</strong><br />
Poydras Building<br />
1702 N. Third Street<br />
Baton Rouge, LA 70802<br />
ATTENTION: FRAUD SECTION<br />
• By TELEPHONE: (225) 342-4956<br />
(800) 259-5300 or 5301<br />
(Toll free only in <strong>Louisiana</strong>)<br />
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2011 Filing & Compliance Seminar<br />
• QUESTIONS!<br />
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