West Virginia Gets Insurance Fraud Bureau Later This Year

Having put pen to paper, West Virginia Governor Bob Wise recently signed the state’s first insurance fraud bureau into law, ushering in a new era of stepped-up crackdowns on industry fraud.

State Insurance Commissioner Jane Cline told Insurance Journal Southeast that, “Obviously we’re very pleased that at the end of the day, we were able to get legislation passed that will create an insurance fraud unit here in the insurance commission. We also have a component in the bill to do education and public awareness so we can begin to educate the public with respect to what fraud is and what it is not. One thing we’ve found is many people don’t think padding a claim is necessarily insurance fraud and we all know that it is. This (bill) will also allow us to investigate agents and any company problems.”

According to Howard Goldblatt, director of Government Affairs for the Coalition Against Insurance Fraud (CAIF), “Gov. Wise and the insurance department have taken a decisive step to reduce fraud and stabilize rising premiums. The state has had no serious anti-fraud effort until now. A fraud bureau will focus much-needed attention and resources on a crime that’s draining the state’s economy.”

Up to this point, West Virginia was one of just 10 states without a fraud bureau.

Alabama, Tennessee next?
Goldblatt noted there is still work to do in a number of other states.

“There’s been a bill that’s been trying for several years to get through in Alabama,” Goldblatt said. “Alabama is one of five states that doesn’t even define insurance fraud as a specific crime. That bill has the definition of a crime and sets up the fraud unit in the insurance department, so there is always hope that something will happen in Alabama this spring. One of the arguments that we use is that the states (that don’t have units) stick out like a sore thumb in their region whether it be Alabama that is surrounded by states that have insurance fraud laws or Oregon, which except for the Pacific Ocean, is surrounded by states with insurance laws.

In Tennessee, there appears to be no progress on getting a unit in place.

“There’s been no progress whatsoever,” Goldblatt said. “There is such a budget problem that the workers’ compensation fraud unit that was in existence was dissolved because of budget issues. What’s going on is trying to figure out how to fund the anti-fraud effort.”

While these units may take some time to come to fruition, Cline noted that forming such a unit was a major priority.

“This fraud unit over the last 13 years has been a high-agenda item for the industry,” Cline noted. “I was more optimistic this year than in the past in getting this done. We spent a great deal of time during the course of the past year educating the Legislature on the differences in West Virginia law and this was one of the areas where we were different.”

When asked if the Legislature may have seen the dollar signs on the wall with the costly problem of fraud, Cline added, “I think they were beginning to see that and understand better. I think in the past, it was always portrayed that you would just be going after consumers. Body shops, agents, companies, health care providers, etc. commit fraud, so we’re just not looking at the consumer, but with respect to the consumer, we want to provide a better education for them and to give them information and make them understand what insurance fraud is.”

The new fraud bureau is set to open its doors sometime after July 1. The unit will be funded from the state budget, and housed within the state insurance department.