WASHINGTON GAINS FRAUD BUREAU

Washington State approved its first fraud bureau and added a fraud prosecutor. Gov. Christine Gregoire signed SB 6234 into law in late March. The measure decisively passed the state House and Senate earlier this winter.

Washington joins the mainstream of states that have adopted a coordinated approach to fraud fighting. Forty states, plus Washington, D.C., have created insurance fraud bureaus through legislation, said Howard Goldblatt, director of government affairs for the Coalition Against Insurance Fraud, which testified for the bill and actively supported its passage.

The new law takes effect July 1, 2006, but it’s unclear when the unit will begin operations. It will be funded by the insurance department’s operating budget. Insurers won’t be assessed a fee to cover the bureau’s operating costs.

Key provisions, among others, include:

Mandatory reporting: Insurers must report suspected swindles to the fraud bureau.

• Confidentiality: The information from fraud investigations will remain confidential, and will not be available publicly.
• Immunity: Anyone reporting fraud will be fully covered by civil immunity against lawsuits by fraud suspects.
• Police powers: Fraud bureau investigators will have limited police powers. Investigators can subpoena fraud suspects, but will not have powers of arrest.
• Fraud warnings: Insurance applications and claim forms must carry fraud warnings. The warnings put would-be swindlers on notice, and the signed documents provide clear evidence of fraud during prosecutions.

The new law also makes clear that insurers can be fraud victims just like anyone else. That allows insurers to receive restitution if they are fraud victims, Goldblatt said.

“Washington has taken its anti-fraud efforts to a new level. Insurance crimes can only be fought effectively through highly coordinated efforts by insurers and state agencies. The new fraud bureau puts swindlers on notice that Washington is serious about combating insurance fraud and helping to keep coverage affordable in the state,” he continued.