RD95 - 2008 Annual Report on the Insurance Fraud Program


Executive Summary:
Insurance fraud is like a virus, spreading throughout the economy and stealing more than $1,000 a year from the average Virginia household. The impact of insurance fraud can be felt on all levels of the Virginia economy. For the last decade, the Virginia State Police (VSP) Insurance Fraud Program (IFP) has been fighting the crime of insurance fraud; and, in 2008, the IFP launched its own viral attack against insurance fraud using social networking Web sites and marketing techniques to reach out to the citizens of the commonwealth.

In 2008, the IFP expanded its “new media” marketing and public awareness efforts by adding a “Stamp Out Fraud” fan page in Facebook.com and a YouTube.com channel. The Web site, http://www.stampoutfraud.com/ , one of the elements of the original marketing mix that included television advertising and news releases, was also redesigned and updated.

“I’m very excited about this new approach to raising public awareness about insurance fraud and its potential as another resource for fighting fraud,“ said Lieutenant W. Roger Rector, Coordinator, Insurance Fraud Program. “The IFP has had some great success stories over the past ten years, and I look forward to continued successes as we build our fraud fighting toolbox.”

Since the establishment of the program in 1999, more than 13,000 notifications about suspected insurance fraud have been sent to the IFP from the insurance industry as well as from citizens. The number of notifications received by the IFP in 2008 reached almost 2,000 – an all-time high – and a 14.5 percent increase over 2007.

“Insurance fraud is a serious crime that affects all Virginia residents, through higher premiums and increased costs for items and services they purchase everyday,” said Colonel W. Steven Flaherty, Virginia State Police Superintendent. “As the program’s numbers indicate, our dedicated Insurance Fraud special agents and analysts are not only concerned with reducing crime, but also protecting the commonwealth’s citizens.”

Insurance Fraud special agents opened 808 cases in 2008, an increase of 76.4 percent, and made 307 arrests for insurance fraud, a 47.6 percent increase over 2007. In ten years, 2,752 fraud investigations have been undertaken, and agents have made 1,500 arrests for insurance fraud and related offenses.

“Convictions for insurance fraud took a huge leap in 2008 – going from 39 to 174. This was due, in part to two cases that resulted in 100 convictions,” commented Lt. Rector. “Since the insurance fraud program was initiated in 1999, there have been a total of 673 convictions for insurance fraud and related offenses.”

“Insurance fraud special agents also presented 278 cases to the commonwealth’s attorneys for prosecution,” said Lt. Rector, “which is an increase of more than 200 percent from the previous year.”

In 2008, the courts ordered restitution of almost $1.3 million to victims of insurance fraud. Over the past ten years, court-ordered restitution has reached $13.4 million, and false insurance claims reported to the IFP have surpassed the $86 million mark.

The VSP investigate property and casualty lines of insurance, as well as workers’ compensation. Property fraud cases continue to show the great increase, they were up by 16.8 percent in 2008. Cases involving injury and casualty fraud saw a slight decrease of 1.7 percent; and workers’ comp cases dropped by slightly less than six percent.

Governor Timothy M. Kaine again issued a Certificate of Recognition proclaiming May 4 – 10 as Insurance Fraud Awareness Week. The proclamation was presented to Captain Steven S. Lambert, Support Services Division by Jerry Altieri, president of the Virginia Chapter of the International Association of Special Investigation Units (VAIASIU), during the 16th annual VAIASIU Seminar.

The IFP continued to partner with the Help Eliminate Auto Theft (H.E.A.T.) Program – sharing “billboard” space on the H.E.A.T. salvage examination vehicle, participating in several VIN etching activities and teaching an Insurance Fraud class at the Virginia Crime Prevention Conference. Race fans will also see the Stamp Out Fraud message on the Martin Racing trailers hauling their dirt track cars to a variety of racing events throughout the southwest Virginia. Martin Racing also runs the H.E.A.T. late-model cars in the southwestern region of the state.

In 2008, the IFP made 46 Fraud Awareness presentations to insurance groups, citizens and law enforcement. For the first time the IFP was invited to present at the Spring Institute Program sponsored by the Commonwealth’s Attorneys’ Services Council. The presenters included two commonwealth’s attorneys, Insurance Fraud agents and a supervisor.

We look forward to 2009 and continuing the fight against insurance fraud. As the number of notifications, arrests and prosecutions continues to rise, IFP would like to thank everyone who has contributed to our success – citizens; commonwealth’s attorneys; local, state and federal law enforcement officials; legislators; and insurance industry. Working together, with a “sharp eye” for criminals, we can continue to Stamp Out Fraud in Virginia.

The entire report can be viewed online at www.stampoutfraud.com. Click on “News” at the top of the page, which will take you to the link for Insurance Fraud Annual Reports. You will be able to review all of the IFP’s annual reports dating from 2001, as well at the current 2008 Annual Report.

If you have any questions about the annual report or other insurance fraud-related matters, please don’t hesitate to contact me at (804) 674-2706 or insurancefraud@vsp.virginia.gov. You may also contact the IFP’s public relations manager, Pam Jewell, at (804) 674-2777 or Pamela.Jewell@vsp.virginia.gov.