RD71 - 2012 Annual Report on the Insurance Fraud Program


Executive Summary:
The Virginia State Police (VSP) Insurance Fraud Program (IFP) continues to make inroads in the fight against the crime of insurance fraud as the number of arrests and convictions for 2012 surpassed the previous year’s numbers.

In 2012, the IFP received 1,976 notifications of suspected insurance fraud. Since 1999, when the Program began, more than 19,000 referrals have been made to the VSP. Insurance fraud special agents opened 459 cases in 2012, which is almost twice the number opened in 2011. They made 383 arrests for insurance fraud and other related offenses – a 66 percent increase over 2011.

Court-ordered restitution was more than $3 million in 2012, the second-highest amount of restitution ordered by the courts since 2001. This brings the total of ordered restitution since the program began in 1999 to almost $18 million. Suspected false insurance claims reported to the IFP, both attempted and collected, topped $147 million.

“The 2012 statistics reflect the strong partnerships the IFP has established with the insurance industry and commonwealth’s attorneys, as well as other law enforcement agencies,” said Virginia State Police Superintendent W. Steven Flaherty. “More fraudsters need to be brought to justice as Virginia residents ultimately pay the price for insurance fraud through higher rates along with increasing costs for items they purchase every day.”

Over the 14 years the program has been operating, agents have initiated 4,574 fraud investigations and made a total of 2,468 arrests for insurance fraud. In 2012, the IFP presented 115 cases to commonwealth’s attorneys, an increase over the previous year, and 138 cases went to court.

As required by Virginia law, the VSP investigates suspected fraud in property and casualty lines of insurance, as well as suspected workers’ compensation fraud. The 2012 statistics show 1,133 property fraud-related notifications were received by the IFP. Notifications involving injury and casualty fraud totaled 530. Of the 530 notifications received for injury and casualty fraud, 144 (27 percent) were for workers’ compensation claims.

The IFP’s sponsorship of the Red Flag training continued for a third year, bringing together commonwealth’s attorneys, VSP special agents and insurance company investigators to share information about the investigation and prosecution of insurance fraud. The three-day training, held in Fredericksburg, was organized by the Commonwealth’s Attorneys’ Services Council. Faculty represented all facets of law enforcement, the legal profession and the insurance industry.

Governor Robert F. McDonnell issued a proclamation declaring the week of May 6, 2012, as Insurance Fraud Awareness Week. The proclamation was presented to the insurance industry at the Virginia Chapter of the International Association of Special Investigation Units (VA IASIU) Annual Seminar. Insurance Fraud Awareness Week has been recognized by Virginia’s governors since 2002.

In 2012, the IFP‘s “new media” marketing and public awareness efforts included a second YouTube video contest targeting college students. The IFP teamed up with colleges across the commonwealth to spread the word that insurance fraud is a costly crime affecting all Virginia households. Students were asked to showcase their talents by spoofing the classic TV game show or cop show genre in a video about insurance fraud. Winners were posted on the StampOutFraud YouTube channel and Facebook Fan Page.

In addition to the video contest, banner advertising was used from December 2011 to July 2012, reaching out to consumers via the Internet and directing them to the StampOutFraud.com website for more information about insurance fraud. The ads received 35,241 click-throughs to the IFP website and more than 11 million impressions. Consumers were invited to take an insurance fraud quiz to receive a prize.

We look forward to 2013 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. 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. Working together, with a “sharp eye” for criminals, we can continue to Stamp Out Fraud in Virginia.