Insurance Fraud Convictions Rise, But Not Everywhere

Nationwide insurance fraud convictions rose 6.4 percent in 2005, but 18 fraud bureaus reported a drop in convictions from 2004 to 2005, the Coalition Against Insurance Fraud reported.

The Washington-based group said its findings, based on a study of 47 state agencies, were generally positive, but where convictions showed no growth it "is a cause for concern"

Included in the agencies reporting are those that investigate workers' compensation fraud.

From 2004 to 2005 the Coalition listed 10 states with a percentage increase of convictions and 10 with a decrease.

Listed increases were: Alaska (100 percent), Montana (100), Iowa (86), Nevada (75), New Hampshire (75), South Dakota (67), South Carolina (53), Florida (27), New Jersey (19), and New York (17).

States with a percentage decrease were: Delaware (minus-100 percent); Nebraska (minus-92); Idaho (minus-71); Rhode Island (minus-57); District of Columbia (minus-50); Louisiana (minus-18); Ohio (minus-16); Utah (minus-12), and Pennsylvania (minus-12).

The full report is online at www.InsuranceFraud.org.

The average docket of new cases has stayed flat since 2001, according to the report. The overall new case increase of 6.4 percent occurred mainly because two new units started feeding cases into the pipeline, the report noted.

However, fraud bureaus are making progress and may be setting the stage for even-stronger results over the next several years, the coalition's study concluded.

The coalition noted that insurers and hotlines are increasingly sending fraud bureaus more cases to investigate, and there was a 19 percent increase in 2005 over 2004.

Their study also found that fraud bureau budgets permitted the hiring of 280 more investigators.

Total cases presented for prosecution--5,467--rose 6.5 percent, the Coalition said, noting that most growth appears generated by newer fraud bureaus as their early cases wind through the pipeline. Florida had the largest growth in cases, the Coalition reported.

California, the study found, continues to convict more insurance swindlers than any other state--logging a record 1,546 convictions, ahead of Florida (493), New York (450) and New Jersey (354).

Fraud bureaus, the report found, opened more than 29,000 investigations in 2005--a 6.5 percent increase. These units opened about one case for every four they receive. Each investigator handled an average of 84 cases in 2005.

According to the study, a total of $134 million was budgeted for 42 bureaus reporting that data in 2006. California appropriated $36.8 million, and New Jersey $29.7 million.

The payoff for that outlay was those two states had the highest conviction rate per 100,000 residents--4.36 for California and 4.21 for New Jersey, the report said.

Fraud perpetrators throughout the nation were ordered to make restitution of $298.6 million in 2005, according to Coalition figures.