On July 5, 2011 the California Department of Insurance announced the gift of financial grants which total almost $32,000,000 to District Attorney Offices across this state to assist them with the investigation of Workers’ Compensation Insurance fraud.
This program could only be possible due to the fact that California employers are assessed annually an amount that is determined by the Fraud Assessment Commission. Forty-five percent of the proposed budget for the fiscal year of 2011-2012 for the State of California Department of Insurance is dedicated to combating fraud in this state’s insurance industry.
An important fact for every Californian to understand is the funds devoted to the Bureau of Fraudulent Claims Investigations is taken from an assessment that is levied against each policy, personal lines or commercial, that is sold in this state. So you can see the impact that crime is having on our wallets, the greater the magnitude of crime, the greater the premium expense.
The counties that want to have a slice of the grant pie submit their application for consideration to the California Department of Insurance. The Department of Insurance then convenes the Workers’ Compensation Grant Review Panel which reviews and makes their recommendations to the California Insurance Commissioner’s Office for the amount of premium money each D.A. Office would receive. The Insurance Commissioner will review the recommendations and either accept or reject them. The Insurance Commissioner will then submit his recommendations to the Fraud Assessment Commission for their review and consent.
The amount of money taken from the policy holders and given to the District Attorney’s offices ranges from a high of $5,700,000 for Los Angeles County, to a low of $6,000 for Plumas County. Orange County received $3,500,000, San Francisco received $739,000 and San Diego County received $4,861,584.
The truth of the existence of Workers’ Compensation fraud in this state and every other state in the country is obvious. The fact that fraudulent acts involving every other type of insurance sold in this state is also obvious. The problem is taking this amount of money on a yearly basis and giving it to the government is not the answer; the very fact that fraud has grown so much each year in this state should make us question the continual gifts of premium dollars to the government. I personally believe insurance companies could develop more comprehensive fraud awareness programs and hire more adjusters and Special Investigations Unit Adjusters to deal with fraud if they had an additional $31,774,392 each year to do it with.
Another nagging concern is the possible improper prosecution of individuals and businesses by the County District Attorney Offices for insurance fraud just to make sure they meet the quotas in order to receive the same amount of grant money, if not more for the next year.