NY Ins L § 409 (2021)
2021 New York Laws ISC - Insurance Article 4 - Insurance Frauds Prevention 409 - Fraud Prevention Plans and Special Investigations Units.

§  409.  Fraud  prevention plans and special investigations units. (a) Every  insurer  writing  private  or  commercial  automobile  insurance, workers'   compensation  insurance,  or  individual,  group  or  blanket accident and health insurance policies issued or issued for delivery  in this  state,  except for insurers that write less than three thousand of such policies, issued or issued for delivery in this state annually, and every entity licensed pursuant  to  article  forty-four  of  the  public health  law  except  those  entities with an enrolled population of less than sixty thousand persons in the aggregate and, except those  entities licensed  pursuant  to  sections  forty-four hundred three-a, forty-four hundred three-c, forty-four hundred-d, forty-four  hundred  three-f  and forty-four  hundred  eight-a  of the public health law shall, within one hundred twenty days of the effective date of this amended section to  be promulgated  by  the superintendent to implement this section, file with the  superintendent  a  plan  for  the  detection,   investigation   and prevention  of  fraudulent  insurance activities in this state and those fraudulent insurance activities affecting policies issued or issued  for delivery  in  this  state.  The  superintendent  may accept programs and processes implemented pursuant to section forty-four hundred fourteen of the public health law as satisfying the obligations of this section  and regulations promulgated thereunder.  (b)  (1) The plan shall provide the time and manner in which such plan shall be implemented,  including  provisions  for  a  full-time  special investigations  unit  and  staffing  levels  within such unit. Such unit shall be separate from  the  underwriting  or  claims  functions  of  an insurer,  and  shall  be responsible for investigating information on or cases of suspected fraudulent activity and for effectively  implementing fraud  prevention  and  reduction  activities pursuant to the plan filed with the superintendent. An insurer shall include in such plan  staffing levels   and   allocations   of  resources  in  such  full-time  special investigations unit as may be necessary and appropriate for  the  proper implementation  of  the  plan  and  approval  of  such  plan pursuant to subsection (d) of this section.  (2) In lieu of a special investigations unit, an insurer may  contract with  a provider of services related to the investigation of information on or cases of suspected fraudulent activities; provided, however,  that an  insurer  which  opts  for  contracting  with  a separate provider of services, shall provide to the superintendent a detailed plan  therefor, pursuant to requirements set forth in regulation by the superintendent.  (3)  Persons employed by special investigations units as investigators or by an independent provider of investigative services  under  contract with  an  insurer  shall  be  qualified by education or experience which shall include an associate's or bachelor's degree in criminal justice or related  field,  or  five  years  of  insurance   claims   investigation experience or professional investigation experience with law enforcement agencies,  or  seven  years  of  professional  investigation  experience involving economic or insurance related matters.  For  the  purposes  of evaluation  of medical related claims insurers may employ or retain duly licensed or  authorized  medical  professionals.  Notwithstanding  these minimum  requirements  anyone  employed  as an investigator in a special investigation unit or by a  provider  of  investigative  services  under contract  to  an  insurer as of the effective date of this paragraph and who was also so employed on or before September tenth, nineteen  hundred ninety-six   may  continue  in  such  employment  provided  the  insurer identifies such person in writing to the superintendent giving the  date such  employment began and a description of the person's qualifications, employment history and current job duties.  (c) The plan shall provide for the following:  (1)  interface  of  special  investigation  unit  personnel  with  law enforcement and prosecutorial agencies and with the financial frauds and consumer protection unit of the department of financial services;  (2)  reporting of fraud data to a central organization approved by the superintendent;  (3) in-service education and  training  for  underwriting  and  claims personnel   in   identifying   and  evaluating  instances  of  suspected fraudulent activity in underwriting or claims activities;  (4) coordination with other units of an insurer for the  investigation and  initiation  of  civil actions based upon information received by or through the special investigation unit;  (5)  public  awareness  of  the  cost  and  frequency  of   fraudulent activities, and the methods of preventing fraud;  (6)  development and use of a fraud detection and procedures manual to assist in the detection and elimination of fraudulent activity; and  (7) the time and manner in which such plan shall be implemented and  a demonstration  that the fraud prevention and reduction measures outlined in the plan will be fully implemented.  (d) (1) A fraud detection and prevention plan filed by an insurer with the superintendent pursuant to this section shall be deemed approved  by the  superintendent  if  not returned by the superintendent for revision within  one  hundred  twenty  days  of  the  date  of  filing.  If   the superintendent  returns  a  plan  for revision, the superintendent shall state the points of objection with such plan, and any amendments as  the superintendent  may  require  consistent  with  the  provisions  of this section, including,  but  not  limited  to,  staffing  levels,  resource allocation,  or  other  policy or operational considerations. An amended plan reflecting the changes  shall  be  filed  with  the  superintendent within forty-five days from the date of return.  (2)  If  the superintendent has returned a plan for revision more than one time, the insurer shall be entitled to a  hearing  pursuant  to  the provisions  of article three of this chapter and regulations promulgated thereunder.  (3) If an insurer fails to submit a  final  plan  within  thirty  days after  a  determination  of  the  superintendent  after the hearing held pursuant to paragraph two of this  subsection,  or  otherwise  fails  to submit  a plan, or fails to implement the provisions of a plan in a time and manner provided for in such plan, or  otherwise  refuses  to  comply with  the provisions of this section, the superintendent may: (i) impose a fine of not more than two thousand dollars per day for such failure by an  insurer  until  the  superintendent  deems  the  insurer  to  be  in compliance;  or  (ii)  impose  upon  the  insurer  a fraud detection and prevention plan deemed to be appropriate  by  the  superintendent  which shall  be  implemented by the insurer; or (iii) impose the provisions of both subparagraphs (i) and (ii) of this paragraph.  (e) Any plan, the information  contained  therein,  or  correspondence related  thereto,  or  any  other information furnished pursuant to this section shall be deemed to be a confidential communication and shall not be open for review or be subject to a subpoena except by a  court  order or by request from any law enforcement agency or authority.  (f)  For  purposes of this section, the term "policies" shall refer to individuals covered if coverage is issued on a group basis.  (g) Every insurer required to  file  a  fraud  prevention  plan  shall report  to  the  superintendent  on an annual basis, no later than March fifteenth, describing the insurer's  experience,  performance  and  cost effectiveness  in  implementing  the  plan,  utilizing such forms as the superintendent may prescribe. Upon consideration of  such  reports,  the  superintendent  may require amendments to the insurer's fraud prevention plan as deemed necessary.