Insurance Fraud Division
Insurance fraud in the United States costs consumers an estimated $80 to 90 billion per year nationwide. In California, insurance fraud is a $15 billion a year problem. It's the second-largest economic crime in America, exceeded only by tax evasion. The San Diego County District Attorney's Insurance Fraud Division addresses this problem by dedicating specialists to handle complex insurance fraud prosecutions. In 2012, we filed criminal charges against 368 defendants. To date, 306 defendants have been convicted while other cases are pending.
Our business plan is to aggressively prevent crime, conserve resources, and maximize investigations and prosecutions with available staff. We focus heavily on preventing fraud. Our outreach efforts consist of giving near weekly presentations to business and labor groups informing each side of their rights and duties and of the consequences of fraud in applying for or denying benefits. We secured public service announcements on television, social media, radio, newspaper, and billboards with the message that insurance fraud is a felony, therefore: DON'T DO IT. DON'T TOLERATE IT. REPORT IT to our hotline 1-800-315-7672.
The Insurance Fraud Division is led by Chief Dominic Dugo and Assistant Chief James Waters. The 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
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 rate. These employers often evade taxes by paying workers in cash. This cash-based payroll is known as the "underground economy." In California, the underground economy costs $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.
As a result of San Diego’s Premium Fraud Task Force – the first of its kind in the nation – and with involvement of state agencies, businesses that commit premium fraud can be prosecuted.
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 – also a first of its kind – is that there are combined federal, state and county agencies working together as cohesive unit.
Insurance Fraud staff work with the California Labor Commissioner's Office and the Contractors' State Licensing Board 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.
Applicant fraud occurs when employees fake or exaggerate work injures in order to collect workers' compensation benefits. We aggressively investigate and prosecute those cases.
Auto Insurance Fraud/Urban Grant
Auto insurance fraud involves fraudulently obtaining payment from an auto insurance policy based on false facts such as inflated or 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.
Operation Hit and Run is an example of this program's success. A jury trial involving the largest number of defendants on trial at once in our office's history resulted in nine defendants being convicted. Prior to the jury trial, another 21 defendants pleaded guilty. These results were the product of 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 San Diego County. These staged accidents defrauded various auto insurance carriers and hospitals of more than $200,000.
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 including 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; National City; and Oceanside Police Departments.
In 2013, RATT conducted a 10-month undercover operation called Operation Perfect Storm, in which investigators recovered nearly 100 stolen vehicles and indicted 64 suspects linked to this sting.
