RD98 - Virginia State Police Insurance Fraud Program 2007 Annual Report


Executive Summary:
The Virginia State Police (VSP) Insurance Fraud Program (IFP) is entering its tenth year and continuing to make tremendous strides against the crime of insurance fraud. This is due in large part to the partnerships that have developed with citizens, law enforcement, commonwealth’s attorneys and the insurance industry. Over the past nine years, IFP’s partners have submitted more than 11,000 notifications for suspected insurance fraud.

In 2007, arrests for insurance fraud and related crimes reached record breaking numbers. Insurance fraud special agents made 310 arrests, which is a 204 percent increase over the previous year. Agents also initiated 458 investigations, a more than 24 percent increase. Citizen partners received a total of $24,750 in “Sharp Eye” rewards -- the largest amount presented in any year since the first rewards were awarded in 2005.

“Insurance fraud is a serious crime that affects all Virginians – with increased premiums and higher costs for items and services they purchase every day,” said Colonel W. Steven Flaherty, Virginia State Police Superintendent. “I am proud of the work done by the Department’s special agents and their allies in the fight against the crime of insurance fraud in the commonwealth.”

When the IFP began in 1999, 14 special agents were on the job investigating insurance fraud. Over the past nine years, the number of special agents investigating insurance fraud has continued to increased; and with the addition of five new positions – four special agents and a legal specialist – there are now 25 special agents on the VSP fraud squad. The newly created position of legal specialist will act as a liaison between the insurance industry and the IFP’s operations, conduct training on insurance fraud, and review and evaluate legislation dealing with insurance fraud.

The IFP also welcomed a new captain in 2007. Captain Robert L. Tavenner was promoted to the rank of Major and transferred to the Bureau of Administrative Support Services in August. Lieutenant Steven W. Lambert quickly took the reins as Captain for the Support Services Division in the Bureau of Criminal Investigation.

In nine years, special agents have undertaken 1,944 fraud investigations, and 557 cases have been presented to the commonwealth’s attorneys for prosecution. Court ordered restitution also topped $12 million.

In 2007, IFP special agents presented 76 cases to commonwealth’s attorneys, a decrease from 2006, while the number of cases adjudicated in 2007 – 106 – also dropped. This decrease in cases presented to the commonwealth’s attorneys and cases adjudicated may reflect the drop in the number of arrests in 2006.

“It should be noted, however, arrests are up substantially in 2007,” said Lieutenant W. Roger Rector, Coordinator, Insurance Fraud Program, “and the number of cases adjudicated in 2007 is more in line with previous years. In 2006, there was a spike in the number of cases adjudicated – almost triple the number of cases the year before.”

The VSP continues to investigate fraud related to property and casualty lines of insurance. Vehicle fraud and workers’ compensation accounted for 77 percent of the reported casualty and injury fraud, while 69 percent of the reported property fraud was related to vehicles alone.

Since vehicle fraud receives the lion’s share of notifications and investigations, the IFP continues to partner with the Help Eliminate Auto Theft Program (H.E.A.T.) through its race car program, Vehicle Identification Number (VIN) etchings, scanner and bait cars, as well as innovative “billboards” on the Salvage Examination Vehicle (SEV) and display trailer.

The SEV, which is used at VIN etchings, public events and also doubles as a command post for the Department, is covered entirely on the left side with the insurance fraud information. As the SEV travels Virginia’s highways, the green “Sharp Eye” reward message is prominently displayed to passing traffic.

Because the SEV has a television that can be viewed outside by citizens while their car is being VIN etched, a ten-minute educational video covering both insurance fraud and auto theft is being developed. Plans call for the video to be completed by June 2008. The video will also be incorporated into IFP displays and aired at public events.

In addition, Martin Racing, the team that drives the race car for H.E.A.T, and the IFP entered into a contract that called for the placement of the IFP logo on three racing trailers for 12 months and the distribution of insurance fraud promotional items at racing events.

We can all reduce the cost of insurance fraud to Virginians by continuing to investigate, educate and cooperate. The IFP, special agents and analysts, the insurance industry, commonwealth’s attorneys and Virginia’s citizens are all to be commended for their efforts to stamp out fraud in the commonwealth.