RD73 - Annual Report on the Insurance Fraud Program

Executive Summary:
Cooperation and partnerships were the hallmarks of the 2006 Virginia State Police (VSP) Insurance Fraud Program (IFP). Developing and maintaining close relationships with local, state, and federal law enforcement and judicial agencies in the Commonwealth means more criminals brought to justice on both state and federal levels.

Since the establishment of the Insurance Fraud Program in 1999, convictions for insurance fraud and related offenses have climbed steadily, reaching 592 total convictions. In 2006, there were 151 convictions for insurance fraud and related crimes, which represents a 74 percent increase over 2005 convictions. Along with convictions, the notifications received by the IFP continue to rise - from 1,638 in 2005 to 1,895 in 2006, a 15.7 percent increase.

"Convictions for insurance fraud are at a record-breaking level, reflecting the hard work and spirit of cooperation between the VSP and law enforcement agencies across the commonwealth," said Colonel W Steven Flaherty, Virginia State Police Superintendent. "The Department's Insurance Fraud Program, special agents and analysts are to be commended for their efforts in fighting this crime that affects all Virginia households and for bringing criminals to justice."

IFP special agents presented 119 cases to commonwealth's attorneys in 2006, which is a 37 percent increase over 2005. The number of cases adjudicated also saw a substantial increase from 108 cases in 2005 to 333 cases in 2006. This increase may reflect the record number of arrests made by insurance fraud special agents in 2005. While total convictions for 2006 were up, arrests for insurance fraud and related offenses experienced a slight decrease from figures reported for 2005.

"Even though the number of total arrests in 2006 dropped to 200, this is still the second highest number of arrests in any given year since the program began," explained Lieutenant W Roger Rector, IFP Coordinator. "It's also important to note the record number of convictions in 2006 follow a year with an exceptional number of arrests."

The VSP investigates insurance fraud related to property and casualty lines of insurance. While fewer injury and casualty cases are investigated by the IFP special agents, those cases showed the greatest increase in 2006 - up by almost 18.4 percent. Of the five categories of casualty fraud that are tracked, 36 percent are workers' compensation cases. Property fraud cases were up by more than 8.2 percent with motor vehicle and auto insurance fraud comprising the largest part of those cases - 72 percent.

Lt. Rector said that in addition to working with other law enforcement agencies, the IFPs efforts in 2006 to stamp out fraud include partnering with other programs within the VSP "Over the past year, the IFP has been able to provide training for insurance fraud agents and auto theft as well as bomb and arson special agents," commented Lt. Rector. "We have also been able to assist Help Eliminate Auto Theft with their bait car and license plate scanner programs."

The past year saw the IFP, local and federal law enforcement agencies, as well as commonwealth's attorneys and attorneys general combining forces to arrest and prosecute insurance fraud suspects.

One notable case that demonstrates how law enforcement agencies, working together, can make a difference is the Scott family case, which was a multistate ring with ties to Southwest Virginia. As a result of the VSP working with the Bureau of Alcohol, Tobacco and Firearms (ATF) and Lee County law enforcement, fourteen individuals were convicted of a variety of charges ranging from insurance fraud to arson to prescription fraud and received sentences spanning from 10 to 175 months.

The IFP continues with its public awareness campaign, promoting the Sharp Eye Reward, through television advertising and billboards. The Sharp Eye Reward message was also displayed on the new 2006 Ford Expedition, which can be seen on Virginia's roadways and at special events.

The IFP would like to take this opportunity to thank everyone who has contributed to our success story including law enforcement, the insurance industry, legislators, commonwealth's attorneys and most of all the citizens of Virginia. Working together, we can continue to "Stamp Out Fraud" in Virginia.