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| | Editorial: Coalition Reports on Reduction of Funds to Fight Fraud By Barry Zalma - November 15, 2010The Coalition Against Insurance Fraud issued a disturbing report that fighting fraud has taken hits in several states whose budgets are reeling from the miserable economy, in an article in the upcoming issue of the Coalition's Journal of Insurance Fraud in America.
Many state anti-fraud agencies face budget cuts. Staff are being pared and investigative resources often are being thinned. State fraud bureaus are among the fraud-busting agencies most-affected. The majority have seen budget cutbacks or outright loss of staff.
The Coalition reports the following examples:
- Arizona's fraud unit was gutted in a cost-saving move
- Anti-fraud funds were raided in Louisiana and Virginia;
- Utah's legislature killed a bill that would've raised the annual insurer assessment that funds the fraud bureau (insurers supported the increase, which would've added more investigators); and
- The California fraud bureau took a 10-percent workforce cut.
- In a near-miss, Gov. Schwarzenegger tried but failed to downgrade insurance fraud from a felony to a misdemeanor to shave jail costs. felony to misdemeanor to shave jail costs.
Aspects of the budget cutbacks were quantified in a 2009 Coalition survey of fraud bureaus, the article points out. The survey is being updated, but last year:
- 63 percent of fraud bureaus saw budget cuts;
- 35 percent left vacant staff slots unfilled; and
- 23 percent eliminated positions.
Unless your case has a confession under oath with 3 independent witnesses who are a priest, a rabbi and a nun, the chances of prosecution for insurance fraud is greatly reduced. So, in a state like California that requires every one of the insurer's "anti-fraud personnel" be trained annually to recognize fraud and statutes that require thorough investigations of suspected fraud, the work will probably go unheaded. Insurers may wish to not rely on fraud bureaus but attack the fraud perpetrators they discover in civil courts.
Barry Zalma is an attorney and a certified fraud examiner (CFE). He acts as an expert witness for insurance fraud cases. His bimonthly ZIFL (Zalma's Insurance Fraud Letter) can be found at zalma.com. He can be contacted at zalma@zalma.com
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