U.S. Insurance Fraud Convictions Rising
NU Online News Service, Dec. 18, 3:27 p.m. EST?State insurance fraud bureaus, led by Florida, increased their conviction rate by nearly one-third from 2001 through 2002, a new study by the Coalition Against Insurance Fraud has found.[@@]
The Washington, D.C.-based organization said the increase in successful prosecutions came about even as fraud bureaus were complaining that their biggest concerns included having adequate resources to do their job and the impact of reduced budgets on their ability to perform.
Coalition findings came after a study of 43 bureaus. Among the key findings:
? Convictions rose by nearly one-third, to a record 2,535. The five states with highest number of convictions were Florida, 458; New York, 389; New Jersey, 302; Pennsylvania, 221 and South Carolina, 98. Tied for last place at three apiece were Delaware and the District of Columbia.
? Fraud investigations rose by 16 percent.
? Cases presented for prosecution increased 14 percent. The top-five states in bringing prosecutions were Florida, 771; California, 687; New Jersey, 508; South Carolina, 448; and Pennsylvania 302.
However, Dennis Jay, the coalition's executive director, said while fraud bureaus are making solid progress in fighting swindles, their gains "must be tempered by the reality that they'll be seriously challenged to maintain these successes in the years ahead."
Overall fraud convictions passed the 2,500 mark for the first time since the coalition's first study in 1994. Florida led the nation in convictions with 458 last year. Florida, New York, New Jersey and Pennsylvania logged the largest gains in convictions.
In other trends:
? The fraud bureaus sent more than 4,800 cases to prosecutors in 2002. Fraud bureaus began a record 33,000 investigations last year, up from about 27,000 two years ago. New Jersey opened the most cases, with nearly 5,000.
? The state agencies received nearly 99,000 case referrals of suspected frauds last year, a 4.5 percent spike over 2001. New York's 24,758 were by far the largest total for one state.
Growing money problems, however, could hamper fraud bureaus in the future. Two of three fraud bureaus saw their budgets flatten out or drop this year. The average budget fell slightly over the last two years, and nine of 10 fraud bureaus say lack of resources is now their biggest challenge, the study found.
Total staff also declined for the first time in seven years, down to 1,331 last year from 1,377 in 2001.
"Funding is a big problem. The number of cases that we would like to open is increasing, but funding is flat. Healthcare fraud cases are either increasing or simply becoming more visible," one fraud bureau director said in the study.
The Coalition said fraud bureaus may be a crime-fighting bargain, costing an average of just 48 cents per-state-resident each year. Spending ranged from a low of about seven cents per person in Texas, Georgia and Ohio to a high of $3.48 in New Jersey.
The state fraud bureaus with the three highest budgets were California, $34 million; New Jersey $29.9 million; and Florida, $11.2 million.
Despite their solid crime-fighting gains, fraud bureaus will be challenged to keep ahead of insurance swindles. Many scams are growing larger and more complex, spreading faster, and sometimes are more violent, Mr. Jay noted.
Staged accidents for insurance money, the Coalition said, remain a large problem in states such as New York, Florida and New Jersey. Many staged accidents are run by large and organized crime rings that are racking up hundreds of millions of dollars in phony injury claims. People even are dying in staged accidents, Mr. Jay noted.
Fake insurance also remains widespread. According to the Coalition, hundreds of thousands of small businesses have bought phony health coverage. Many businesses also have bought fake liability coverage in a tight insurance market.
"Fraud bureaus have made encouraging gains, but this doesn't mean insurance fraud is decreasing. Fraud will remain a serious and widespread crime that will severely test fraud bureaus for years to come. Bureaus can deal decisive blows to swindlers only with better financial support from government and the private sector," Mr. Jay said.
The study said that prosecutors listed among their concerns increasing healthcare fraud by chiropractors and physical therapists, as well as increases in staged accident rings.
Fraud units in some cases also said they had some problems generating sufficient referrals to keep police and prosecutors busy, and there were difficulties because they lacked a prosecutor dedicated to insurance fraud cases.
A copy of the study can be viewed online and downloaded from the coalition Web site, www.InsuranceFraud.org.
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