RD77 - Annual Report on the Insurance Fraud Program


Executive Summary:
The Insurance Fraud Program (IFP) of the Virginia State Police (VSP) has just completed its seventh year, and it's turned out to be quite a "Year of Firsts." The first "Sharp Eye" rewards were paid in 2005; the first Fraud Fighters Awards were presented in 2005; and the Support Services Division (SSD) and the IFP completed their first year under the restructuring of the VSP.

Over the past seven years, since the establishment of the Insurance Fraud Program in 1999, the total amount of court-ordered restitution has topped $11 million. In 2005 alone, court-ordered restitution realized a gain of 102 percent over 2004. In addition, the VSP received over 1,600 notifications of suspected insurance fraud this past year - more than double the number received when the program began in 1999. This represents an increase in notifications from 2004 to 2005 of almost 18 percent.

"The Virginia State Police has seen record-breaking numbers this year in insurance fraud notifications received, the number arrests and the number of convictions for insurance fraud," said Colonel W. Steven Flaherty, Virginia State Police Superintendent. "The Insurance Fraud Program, the special agents and the analysts are to be commended on their continued focus of reducing property and casualty fraud in the commonwealth."

The establishment of the dedicated program in1999 has resulted in more than 666 arrests for insurance fraud and other related offenses combined in just seven years. The number of total arrests reached 306 in 2005 alone, an increase of 150 percent from 2004 arrests.

In addition to a record number of notifications, 2005 was also the first full year of operation for the Support Services Division (SSD). This division includes the Insurance Fraud and Help Eliminate Auto Theft (H.E.A.T.) support staffs as well as the Counter-Terrorism & Criminal Interdiction (C.C.I.) unit, and Bomb and Arson. Captain Robert L. Tavenner oversees SSD, and Lieutenant W Roger Rector directs the day-to-day operation of the IFP.

"Even though the name has changed, the mission remains the same - to stamp out fraud," said Lieutenant Rector. "As insurance investigators, citizens and law enforcement have learned more about the program and the program's accomplishments, we have experienced an increase in almost all areas of insurance fraud investigations and anticipate that growth will continue."

The Insurance Fraud special agents are continuing in their current investigative capacities operating out of their field offices. In their efforts to stamp out fraud, agents initiated more than 357 investigations during 2005, up more than 26 percent from 2004. In seven years, 1,118 fraud investigations have been undertaken, and 362 cases have been presented to the commonwealth's attorneys for prosecution. In addition to court-ordered restitution surpassing $11 million, false insurance claims reported to IFD since 1999 have reached $40 million.

The VSP investigates insurance fraud related to property and casualty lines of insurance and property fraud cases continue to show greatest increase in 2005 - up more than 13 percent. Cases involving injury and casualty fraud increased by 11 percent over 2004.

Governor Mark R. Warner again issued a proclamation declaring May 8 - 14 as "Insurance Fraud Awareness Week." The proclamation was presented to Support Services Division director, Captain Robert Tavenner, by Philip Wong, president of the Virginia Chapter of the International Association of Special Investigation Units (VAIASIU), during the 13th annual VAIASIU Seminar.

The "Sharp Eye" reward fund public awareness campaign maintained its presence throughout Virginia with existing television ads featuring the blinking eye. The "Sharp Eye" reward message was also carried on billboards in the spring and again in the fall to complement the broadcast campaign. In May, 2005, market research was conducted to measure the effectiveness of the public awareness campaign and determine if there has been change in behavior and/or public opinion about insurance fraud since the benchmark study was done in 2000.

The IFP thanks everyone from law enforcement, the insurance industry, legislators, commonwealth's attorneys and most of all the citizens of Virginia for their efforts to combat insurance fraud. Working together, we can continue to Stamp Out Fraud in Virginia.