Anti-Fraud Plan - Louisiana Department of Insurance

THE LOUISIANA DEPARTMENT OF INSURANCE 

FRAUD SECTION PROCEDURES 

August 12, 2011 

Presented by: 

Paul Boudreaux, Jr., Director, Insurance Fraud Section 

Warren E. Byrd, II, Executive Counsel 

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2011 Filing & Compliance Seminar 

WHAT IS THE FRAUD SECTION 

• FRAUD Section was established by statute in 1993- LSA-R.S. 22: 

1921, et seq, as an INVESTIGATORY BODY. We do not have 

any arrest or prosecutorial authority. 

• FRAUD Section is part of a three-agency Insurance Fraud Task 

Force that was established in 1999 to begin Jan 1, 2000, which 

includes the Louisiana State Police Insurance Fraud/Auto Theft 

Unit and the Louisiana Department of Justice (Attorney 

General) Fraud Unit 

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• Because of the sensitive nature of fraud reports and 

investigations, all fraud complaints are Confidential. 

• The FRAUD Section records are exempt from public 

inspection, and FRAUD Section records and personnel 

are exempt from subpoena in all civil proceedings. 

LSA-R.S. 22:1927 & 1929. 

• Criminal background information is confidential and 

shall not be disclosed outside the FRAUD Section 

Office. LSA-R.S. 22:1929. 

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THE FRAUD SECTION PERSONNEL 

• FRAUD Section is a part of the Legal Division of the 

Insurance Department. 

• FRAUD Section consists of a Director, Assistant 

Director, Senior Investigator, Six Investigators, 

Secretary and two Student Workers 

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MANDATORY REPORTS OF SUSPECTED 

FRAUD BY LICENSED ENTITIES 

• LSA-R.S. 22: 1926 & LSA-R.S. 40:1424 

• Any person, company or legal entity involved in the 

business of insurance 

• Within 60 days of receipt of a suspected fraudulent 

claim 

• Must report the suspected fraud to the FRAUD Section 

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• LSA-R.S. 22:1928 & LSA-R.S. 40:1425 

• Civil Immunity from lawsuit for insurers, employees 

and agents for libel, slander (defamation of 

character) or other relevant tort 

• All persons (licensed entities) covered by LSA-R.S. 

22: 1926 can recover attorney’s fees and costs if sued 

and the suit is determined to be without substantial 

justification. 

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THE BUSINESS OF THE FRAUD SECTION 

• ANSWERS ALL QUESTIONS RELATIVE TO 

SUSPECTED FRAUD 

• FRAUD Section responds to QUESTIONS as to 

whether a certain activity may constitute fraud and, 

if applicable, how to file a formal fraud complaint. 

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• FRAUD Section responds to suspected fraud reports from 

individuals. GENERAL PUBLIC FRAUD COMPLAINT. 

It can be filled anonymously or by an identified person. 

• FRAUD Section conducts investigations of suspected fraud 

reports from insurance companies, producers, agents, 

adjusters and bail bondsmen. DETAILED INDUSTRY 

FRAUD COMPLAINT. 

• Both forms are on the LDI Webpage under “Report 

Insurance Fraud. 

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PROCEDURE UPON RECEIPT OF 

SUSPECTED FRAUD REPORT 

• Be sure to be specific as to why this is fraudulent and 

the amount of money involved, even if the claim was 

denied. Attach or send to FRAUD Section ASAP the 

file’s summary or outline and any documents that 

support the allegations of suspected fraud. 

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• FRAUD Section reviews the suspected fraud report 

and all supporting documents. 

• After review of the documents and investigation thru 

our data bases, a decision is made whether to: 

• Refer for “criminal” investigation and prosecution, 

or 

• Retain in “inactive” folder pending additional 

information. 

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• Referred for Criminal Investigation and Prosecution 

• Regular meetings with the : 

• Louisiana State Police (LSP) 

• Department of Justice (DOJ) 

• National Information Crime Bureau (NICB) 

• The files are accepted for criminal referral, rejected for 

criminal referral, or deferred. 

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ISSUANCE OF CEASE & DESIST 

ORDER WITH CIVIL FINE 

• If fraud, crime or unauthorized activity is determined 

to have occurred BY A LICENSED ENTITY, (or an 

unlicensed entity that it attempting to sell insurance) 

then the LDI may issue a CEASE & DESIST ORDER, 

accompanied with an appropriated CIVIL FINE. 

• LSA-R.S. 22:1969. 

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A CEASE AND DESIST ORDER AND FINE CAN BE SERVED ON A LICENSED ENTITY 

(OR AN UNLICENSED ENTITY ENGAGED IN INSURANCE BUSINESS) 

• Not all C&D’s stop the insurance business 

• For a Summary Suspension, we must show that the public health, safety, or welfare 

imperatively requires emergency action to immediately stop the alleged activity 

• LSA-R.S. 49:961 & LSA-R.S. 22:1969 & 1970 

• Most C&D’s are served with a Notice of: CIVIL FINE 

LICENSE SUSPENSION 

and/or 

LICENSE REVOCATION 

• All C&D’s are served with information as to how to request a HEARING TO APPEAL 

the action of the LDI 

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NUMBER OF SUSPECTED FRAUD COMPLAINTS 

• In 2005 2,384 

• In 2006 1,466 

• In 2007 1,328 

• In 2008 1,427 

• In 2009 1,729 

• In 2010 2,944 

• In 2011 1,446 (thru June 30, 2011) 

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INVESTIGATES APPLICATIONS FOR 

18 USC SEC. 1033 CONSENT 

• FRAUD Section conducts investigations into 

applications for consent under 18 USC SECTION 1033. 

This federal statute provides a means for a person with 

a felony conviction involving dishonesty or breach 

of trust or who has been convicted under that 

section to apply for a consent from 18 USC SECTION 1033 

prohibition from working in the business of insurance. 

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INVESTIGATES COMPANIES AND PERSONS 

SEEKING A LOUISIANA INSURANCE LICENSE 

• FRAUD Section investigates criminal backgrounds and 

administrative actions against persons and companies applying 

for a license or license renewal. 

• FRAUD Section conducts investigations of BIOGRAPHICAL 

AFFIDAVITS for Company and Third Party Administrator 

Licensing. Any company which applies for a license to sell 

insurance or manage insurance in Louisiana has to provide 

Biographical Affidavits for each OFFICER, DIRECTOR and 

OWNER of 10% or more of the ownership of the company. 

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INVESTIGATES COMPANIES SEEKING TO 

REGISTER TO DO BUSINESS IN LOUISIANA 

• FRAUD Section conducts investigations of 

Risk Purchasing Groups, Risk Retention Groups and 

Discount Medical Plans desiring to REGISTER its 

company to do business in Louisiana. 

• FRAUD Section examines and investigates the affidavit of 

each person, conducts a background check and 

recommends an APPROVAL or DISAPPROVAL. 

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INVESTIGATES “YES” FILES 

• License applications or notices that reveal criminal or 

administrative activity , securities violations, Louisiana 

income tax debt or child support arrearage. 

• Recommends Approval or Disapproval. 

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HOW CAN SOMEONE CONTACT 

THE LDI FRAUD SECTION? 

• By WEBSITE: www.ldi.state.la.us 

Click on the “Report Insurance Fraud” Link 

Click on the “General Public Fraud Report Form” 

Or, the “Detailed Industry Fraud Report Form” 

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• By FACSIMILE: (225) 342-7393 

• By U. S. MAIL: 

Louisiana Department of Insurance 

FRAUD SECTION 

P.O. Box 3096 

Baton Rouge, LA 70821 

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• By HAND DELIVERY OR PAID COURIER: 

Louisiana Department of Insurance 

Poydras Building 

1702 N. Third Street 

Baton Rouge, LA 70802 

ATTENTION: FRAUD SECTION 

• By TELEPHONE: (225) 342-4956 

(800) 259-5300 or 5301 

(Toll free only in Louisiana) 

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• QUESTIONS! 

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Anti-Fraud Plan - Louisiana Department of Insurance

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