Reward Use For Fraud Probes Expands

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By Daniel Hays

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NU Online News Service, Nov. 18, 12:57 p.m.EST?Following a precedent set by Florida, Virginia hasbecome the second state to offer cash rewards for information oninsurance scams as more states look for alternate ways to attackfraud.

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"More states are looking for an incentive based [anti-fraud]program," as an alternative to other methods of prosecution, saidJames Quiggle a spokesperson for the Coalition Against InsuranceFraud in Washington, D.C.

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"Enough states are finding that fraud is costing them so muchthat they are willing to experiment," Mr. Quiggle said.

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He said he believed that additional states are exploring theconcept.

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In Florida, which began its Fraud Busters reward program in1999, the state has paid varying amounts to 10 people, "primarilyemployees turning in employers, but we've also had ex-girlfriendsand ex-wives," said Nina Banister, a spokesperson for FraudBusters.

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She said in Florida the rewards are paid on a graduated scale of$1,000 on losses of less than $20,000; $5,000 on losses of $20,000to $100,000; $10,000 for losses of $100,000 to $1 million and$25,000 for losses greater than $1million.

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The rewards, for information leading to arrest and conviction ofpersons committing complex and organized insurance crimes, aredetermined by a committee of insurance company representatives, Ms.Banister said. Insurance company fees fund the program, shenoted.

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Generally, the rewards are offered by state insurance departmentinvestigators "if they have a case that fits the bill," said Ms.Banister. She said that there had been some billboard postings aswell and that department press releases all include the tips linenumber, 1-800 378-0445.

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The Virginia program, which began in September as part of thestate's Stamp Out Fraud effort, is administered by the InsuranceFraud Division of the Virginia State Police.

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Virginia's program pays up to $25,000 for tips aboutproperty-casualty insurance fraud. The reward cannot be collectedby fraud victims, insurance professionals, persons in lawenforcement or individuals who are in on fraud schemes.

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According to the Virginia State Police insurance fraud costshouseholds in the state at least $1,000 a year. The VirginiaInsurance Fraud Hotline is 877-623-7283.

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