Insurance Fraud Division
Insurance fraud in the United States costs consumers an estimated $80-90 billion per year nationwide. It’s the second-largest economic crime in America, exceeded only by tax evasion. The San Diego County District Attorney’s Insurance Fraud Division is comprised of a team of specialists who handle complex insurance fraud prosecutions from inception to sentencing, with the assistance of several task forces.
The Insurance Fraud Division is led by Division Chief Dominic Dugo and Assistant Chief Lisa Weinreb. In 2011, the division secured over $3.4 million in court-ordered restitution for victims of insurance fraud. Based on the division’s investigations, criminal complaints were filed against 294 defendants. Annual grant funding awarded to the Insurance Fraud Division for 2011 was approximately $9 million. This division consists of six grant-funded units:
- Workers’ Compensation Fraud
- Auto Insurance Fraud
- Organized Automobile Fraud Activity Interdiction Program (Urban Grant)
- Disability Healthcare Insurance Fraud
- Life and Annuity Consumer Protection Program
- The Regional Auto Theft Task Force (RATT)
Workers’ Compensation Fraud
In 2011, the DA’s Office filed cases against 120 defendants involved in all aspects of workers’ compensation fraud and over $2 million dollars in restitution was ordered in these cases. Workers’ compensation fraud consists of premium fraud, provider fraud, uninsured employer fraud and applicant fraud.
Premium fraud involves businesses misrepresenting their true payroll to an insurance company in order to purchase workers’ compensation insurance at less than the proper premium. These employers often also evade taxes by paying workers in cash. This cash-based payroll is known as the "underground economy.” In California, the underground economy costs California $7 billion dollars a year in lost revenue. According to the Franchise Tax Board, approximately $6.5 billion is lost to income tax evasion in California. San Diego’s Premium Fraud Task Force helps maintain a level playing field by prosecuting businesses that commit premium fraud.
Provider Fraud involves medical and legal providers committing insurance fraud. The Insurance Fraud Division has a Medical and Legal Insurance Fraud Task Force which investigates and prosecutes medical and legal providers committing insurance fraud. The unique nature of this task force – the first of its kind in the nation – is that there are combined federal, state, and county agencies working together in one cohesive unit. Employers are required by law to have workers’ compensation insurance to cover employees who suffer job related injuries. Workers’ compensation insurance provides injured workers compensation and medical treatment as a result of their work-related injury. Some companies obtain a competitive advantage by violating these laws, undercutting legitimate businesses to a point where they can no longer fairly compete and can no longer provide well-paying jobs to San Diegans. Insurance fraud staff in the Uninsured Employer Program works with the California Labor Commissioner’s Office to investigate and prosecute employers without workers’ compensation insurance.
Applicant fraud occurs when employees fake or exaggerate work injures in order to collect workers’ compensation benefits. The Insurance Fraud Division aggressively investigates and prosecutes those cases.
Uninsured Employer Program
Insurance Fraud Division staff work with the California Labor Commissioner’s Office to investigate and prosecute employers without workers’ compensation insurance. Workers’ compensation provides injured workers the security of knowing they will receive compensation and medical treatment as a result of their work-related injury.
Auto Insurance Fraud/Urban Grant
Auto insurance fraud involves fraudulently obtaining payment from an auto insurance policy based on false facts such as inflated/fake damages, staged collisions, false claim of vehicle theft and arson, as well as agent and brokers engaged in fraudulent insurance activities. These two programs focus exclusively on prosecuting fraudulent claims related to auto insurance fraud.
One significant case prosecuted by the Insurance Fraud Division during 2011 was Operation Hit and Run, which was a three-year investigation by the District Attorney’s Office and the California Department of Insurance. Operation Hit and Run involved 11 staged accidents throughout the county of San Diego. A total of 50 defendants participated in these staged accidents defrauding various auto insurance carriers and hospitals for over $200,000. The project resulted in the prosecution of those 50 defendants, and involved over 40 search warrants with the most culpable participant receiving a significant prison sentence.
Disability and Healthcare Insurance Fraud
Healthcare fraud unnecessarily increases medical costs for everyone. The Disability and Healthcare Insurance Fraud Program investigates and prosecutes fraudulent medical and disability claims and policies, medical providers who fraudulently bill insurance companies, prescription fraud, and identity theft perpetrated to obtain healthcare. Through this program, we are able to protect the public from rising healthcare costs due to fraud.
Life and Annuity Consumer Protection Program
The Life and Annuity Consumer Protection Program investigates and prosecutes unscrupulous life insurance agents and others who seek to steal the savings of victims through power-of-attorney abuse and fraudulent claims on a legitimate policy. Life insurance and annuity scams are often targeted at senior citizens. The effect is profound and life-altering since seniors do not have the time or opportunity for financial recovery. Our program is committed to working diligently to protect senior citizens and their finances from those who would do them harm.
Regional Auto Theft Task Force (RATT)
RATT investigates and prosecutes professional auto thieves. RATT is a model of cooperation as peace officers from the following departments work in conjunction with one another: District Attorney’s Office; California Highway Patrol; San Diego Sheriff’s Department; San Diego Probation Department; California Department of Insurance; National Insurance Crime Bureau and Chula Vista; La Mesa; El Cajon; Escondido; Carlsbad; and Oceanside Police Departments.
