Bill to Increase Health Insurance Anti-Fraud Prosecutions

Our San Francisco insurance attorneys always follow legal developments within the insurance industry. A new bill was passed this week in California, Assembly Bill 2138, which will increase funding to prosecute health and disability insurance fraud. In some cases, this law would double the the current annual assessment of ten cents per insured paid by health and disability insurers to up to 20 cents per insured.

Health and disability insurance fraud costs everyone much money and is a drain on the California economy. The National Health Care Anti-Fraud Association (NHCAA) estimates that the financial losses due to health insurance fraud are in the tens of billions of dollars each year – nationwide. In California, the Department of Insurance received more than 6,000 health and disability related suspected fraudulent claims complaints between 2007 and 2010. The Department estimates that these types of fraud cases cost California $223 million per year. Insurance Commissioner Dave Jones said about the bill this week, “I am pleased that the State Legislature passed this bill giving local communities the necessary resources to fight the growing problem of insurance fraud. This type of fraud hurts everyone from policyholders to providers, and, unfortunately, it is becoming more sophisticated.

I applaud Assembly Member Blumenfield for authoring this important anti-fraud legislation.” This legislation has been in the works for a long time. The Department’s Advisory Task Force on Insurance Fraud, which is composed of law enforcement officials, insurance industry representatives, and consumer advocates, found, in a study conducted several years ago, that there were insufficient funds for health and disability anti-fraud measures. Now that it has passed in the Assembly, Bill 2138 is waiting for approval in the State Senate before going to the governor for a final signature.

President Obama recently announced a new National Fraud Prevention Partnership . This is a voluntary partnership including the federal government, state officials, private health insurance organizations, and other healthcare anti-fraud groups, and is “designed to share information and best practices in order to improve detection and prevent payment of fraudulent health care billings. The partnership will enable those on the front lines of industry anti-fraud efforts to share their insights more easily with investigators, prosecutors, policymakers and other stakeholders.” Health and Human Services Secretary, Kathleen Sebelius, said, “This partnership puts criminals on notice that we will find them and stop them before they steal health care dollars.”

When we talk about this kind of health insurance and disability fraud, sometimes it means patients and policyholders trying to cheat the system, which ends up hurting all of us with the cost of higher premiums. The fraud to be combated by this increased funding and attention is also perpetrated by insurance agents misrepresenting policies to consumers. All too often, honest consumers get caught in disputes over what is and isn’t covered, policy benefits, etc. The insurance companies and their agents are most interested in profits, and not your health and quality of life. If you are suffering and involved in a dispute over your insurance, contact a California insurance lawyer in your area.

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