New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter A - Rules of General Application › Part 86 - Reports Of Suspected Insurance Frauds To Insurance Frauds Bureau; Required Warning Statements › Section 86.6 - Fraud prevention plans and special investigation units

Current through Register Vol. 46, No. 28, July 10, 2024
(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, which writes 3,000 or more of such policies
				  in any given year, and every entity licensed pursuant to article 44 of the
				  Public Health Law, except those entities with an enrolled population of less
				  than 60,000 persons in the aggregate and except those entities certified
				  pursuant to sections 4403-a, 4403-c, 4403-d, 4403-f and
				  4408-a  of the Public Health Law, shall
				  develop and 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. Notwithstanding the foregoing, insurers writing
				  only reinsurance contracts shall not be required to comply with the provisions
				  of this section.
(b) The plan shall
				  include the following provisions:
(1)
				  establishment of a full-time Special Investigations Unit separate from the
				  underwriting or claims functions of the insurer, which shall be responsible for
				  investigation of cases of suspected fraudulent activity and for implementation
				  of the insurer's fraud prevention and reduction activities under the Fraud
				  Prevention Plan. In the alternative the insurer may contract with a provider of
				  services to perform all or part of this function, but shall remain primarily
				  responsible for the development and implementation of its Fraud Prevention
				  Plan. The agreement under which such services are provided shall be filed with
				  the Insurance Frauds Bureau as part of the fraud prevention plan, and must
				  provide for specified levels of staffing devoted to the investigation of
				  suspected fraudulent claims. In the event that investigators employed by a
				  provider of services will be working for more than one insurer or on cases in
				  states other than New York, the plan must apportion the percentage of the
				  investigator's efforts which will be devoted to working for the insurer on its
				  New York cases. The agreement shall also require that the provider of services
				  cooperate fully with the Insurance Department in any examination of the
				  implementation of the Fraud Prevention Plan, and provide any and all assistance
				  requested by the Insurance Frauds Bureau, any other law enforcement agency or
				  any prosecutorial agency in the investigation and prosecution of insurance
				  fraud and related crimes;
(2) a
				  description of the organization of the Special Investigations Unit, including
				  the titles and job descriptions of the various investigators and investigative
				  supervisors, the minimum qualifications for employment in these positions in
				  addition to those required by this regulation, the geographical location and
				  assigned territory of each investigator and investigative supervisor, the
				  support staff and other physical resources, including database access available
				  to the unit and the supervisory and reporting structure within the unit and
				  between the unit and the general management of the insurer. If investigators
				  employed by the unit will be responsible for investigating cases in more than
				  one state, the plan must apportion that percentage of the investigators'
				  efforts which will be devoted to New York cases;
(3) the rationale for the level of staffing
				  and resources being provided for the Special Investigations Unit which may
				  include, but is not limited to the following objective criteria such as number
				  of policies written and individuals insured in New York, number of claims
				  received with respect to New York insureds on an annual basis, volume of
				  suspected fraudulent New York claims currently being detected, other factors
				  relating to the vulnerability of the insurer to fraud, and an assessment of
				  optimal caseload which can be handled by an investigator on an annual
				  basis;
(4) a description of the
				  relationship between the Special Investigations Unit and the claims and
				  underwriting functions of the insurer, including procedures for detecting
				  possible fraud, criteria for referral of a case to the unit for evaluation, and
				  the designation of the individuals authorized to make such a referral; and a
				  description of the relationship between the unit and the Insurance Frauds
				  Bureau, other law enforcement agencies and prosecutors, including procedures
				  for case investigation, detection of patterns of repetitive fraud involving one
				  or more insurers, criteria for referral of a case to the Insurance Frauds
				  Bureau, designation of the individuals authorized to make such referrals, and a
				  policy to avoid duplication of effort due to concurrent referrals by the unit
				  to more than one law enforcement agency;
(5) provision for the reporting of fraud data
				  to a data collection firm to be designated by the superintendent;
(6) provision for in-service training
				  programs for investigative, underwriting and claims personnel in identifying
				  and evaluating instances of suspected insurance fraud, including an
				  introductory training session and periodic refresher sessions. This description
				  shall include course descriptions, the approximate number of hours to be
				  devoted to these sessions and their frequency;
(7) provision for coordination with other
				  units of the insurer to further fraud investigations, including a periodic
				  review of claims and underwriting procedures and forms for the purpose of
				  enhancing the ability of the insurer to detect fraud and to increase the
				  likelihood of its successful prosecution, and for initiation of civil actions
				  where appropriate;
(8) development
				  of a public awareness program focused on the cost and frequency of insurance
				  fraud, and methods by which the public can prevent it;
(9) development of a fraud detection and
				  procedures manual for use by underwriting, claims and investigative personnel;
				  and
(10) timetable for the
				  implementation of the fraud prevention plan, provided however, that the period
				  of implementation shall not exceed six months from the date the plan is
				  approved.