RD47 - 2009 Annual Report on the Insurance Fraud Program

Executive Summary:
The Virginia State Police (VSP) Insurance Fraud Program (IFP) is entering its eleventh year and continuing to make significant strides against the crime of insurance fraud. Since the IFP was established in 1999, the insurance industry, law enforcement and private citizens have submitted more than 15,000 notifications of suspected insurance fraud to the IFP.

The impact of insurance fraud can be felt on all levels of the economy in both Virginia and the U.S. With the exception of tax evasion, no other white collar crime robs Virginians more than insurance fraud.

“Insurance fraud is a serious crime that affects all citizens of Virginia through higher premiums and increased costs for everyday purchases,” said Colonel W. Steven Flaherty, Virginia State Police Superintendent. “I am proud of the work done by the Department’s special agents and analysts and by our allies in the fight against insurance fraud in the commonwealth.”

Insurance Fraud special agents opened 686 cases in 2009 and made 158 arrests for insurance fraud. Since the IFP was established in 1999, 3,438 fraud investigations have been undertaken, and agents have made 1,658 arrests for insurance fraud and related offenses.

The IFP received 2,076 notifications in 2009, an increase of 8 percent over 2008. More than 1,500 of those notifications, up 16 percent from 2008, were received through the secure reporting system on the IFP Web site, StampOutFraud.com.

“The number of notifications received by the Department about suspected insurance fraud has reached an all-time high. These figures may reflect the current economy as people seek to get out from under mortgage and vehicle payments they can no longer afford,” the Superintendent added.

In July, a new High Tech Crimes Division was created to address computer-related crime in Virginia. The creation of this new Division entailed the restructuring of existing entities within the Support Services Division (SSD), which was eliminated, and within the Criminal Intelligence Division.

“The Insurance Fraud and Help Eliminate Auto Theft programs, along with several other sections within the SSD, were transferred directly under the Bureau of Criminal Investigation (BCI) Director’s Office,” said Lieutenant Verlan R. Hall, Jr., Insurance Fraud Program Coordinator. “This will provide a more structured alignment of services and responsibilities for all of those sections affected, which also includes the Arson/ Bomb Unit, Marijuana Eradication, and Counterterrorism and Criminal Interdiction.”

The VSP is required by Virginia law to investigate property and casualty lines of insurance, as well as suspected workers’ compensation fraud. The 2009 statistics show property fraud cases continuing to experience the greatest increase; those cases were up 13.4 percent in 2009. Cases involving injury and casualty fraud also saw an increase – 11.8 percent; and workers’ comp cases dropped by a little more than 14 percent. In 2009, the courts ordered restitution of almost $500,000 to victims of insurance fraud. Since 1999, court-ordered restitution has reached $13.9 million, and false insurance claims reported to the IFP, both attempted and collected, have topped $100 million.

Governor Timothy M. Kaine again issued a Certificate of Recognition proclaiming the week of May 10, 2009 Insurance Fraud Awareness Week. The proclamation was presented at the Virginia Chapter of the International Association of Special Investigation Units (VA IASIU) Annual 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 and participating in several VIN etching activities. Race fans also saw the Stamp Out Fraud message on the Martin Racing trailers hauling their dirt track cars to a variety of racing events throughout southwest Virginia. Martin Racing also ran the H.E.A.T. late-model cars in the southwestern region of the state.

In 2009, the IFP broadened its “new media” marketing and public awareness efforts by producing two short videos based on real cases and posting them on the IFP YouTube Channel and Facebook Fan pages that were created last year. The videos are intended to be a unique way to educate the public about insurance fraud and to emphasize the IFP’s “Sharp Eye” Reward Program.

When the IFP began in 1999, 14 special agents were on the job investigating insurance fraud. Today, there are 25 special agents on the VSP ‘fraud squad’ as well as three analysts and a legal specialist.

We look forward to 2010 and continuing the fight against insurance fraud. As the number of notifications, arrests and prosecutions continues to rise, the 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 personnel. Working together, with a “sharp eye” for criminals, we can continue to Stamp Out Fraud in Virginia.