2023 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.