White paper:

public/private partnerships

The purpose of these discussion groups was to identify successful public/private partnerships used to fight insurance fraud, and identify how they could be used to model future partnerships to meet the challenge of the millennium. Although such partnerships have been highly effective and are considered important to future successes in fighting fraud, there are legal issues that should be considered when using this approach.

The discussion groups identified a number of issues and developed recommendations that they felt could be resolved or reduce the impact of the fraud problem by either new public/private partnerships or expansion/enhancement of existing ones.

Some of the problems/issues identified in the discussion groups included lack of insurance fraud prosecutions as well as the use of all civil remedies available to punish insurance fraud offenders. Although advances have been made in information sharing between the public/private sector and immunity statutes have been broadened to encourage exchanges of insurance fraud information, better information sharing is required to effectively fight insurance fraud. Training and education of all stakeholders (insurance industry, law enforcement, consumers, and legislators) continues to be an issue that needs more attention. Funding for prosecutors, regulators and law enforcement involved in fighting insurance fraud is limited. A lot of focus has been placed on property/casualty and health insurance fraud, but the public sector has limited means to check duplicate/suspicious life insurance claims and the private sector has difficulty identifying the insurer in life insurance fraud cases. The insurance industry is faced with fraud reporting requirements to many agencies (prosecutors, law enforcement, regulatory agencies) which are costly, inefficient and duplicative.

The discussion groups made the following recommendations regarding public/private partnerships to fight insurance fraud:

• Educate and encourage use of civil litigation/remedies by the private sector in coordination with the public sector ensuring no negative impact for either party.

• Encourage the sharing of information to increase use of license revocations, business closure, inspections of business and services of those involved in insurance fraud.

• Use the Federal Health Care model to develop dedicated prosecutors and investigative resources to fight fraud.

• Ensure appropriate representation on the Congressional Privacy Commission that is knowledgeable of both the public/private issues and educate the commission about privacy matters needed to fight insurance fraud.

• Educate insurers and law enforcement concerning Department of Justice (DOJ) and Health and Human Services (HHS) guidelines for sharing of insurance fraud information between the public/private sector, and encourage similar guidelines in state jurisdictions.

• Improve and explore avenues to improve sharing of insurance fraud information to include:

• Educating people regarding legal limits on information sharing.

• Encourage sharing of training and education programs about insurance fraud between the public and private sectors and among associations fighting insurance fraud.

• Share obtained public information between these sectors.

• Supply through public/private partnership peace officer standardized training, as well as training for prosecutors/judges and all fraud investigators.

• Explore developing the National Insurance Crime Training Academy (NICTA) concept through a strong public/private alliance.

• Create a life insurance claim database accessible by both the public and private sector.

• Work with NICB/ISO to develop one insurance fraud reporting system accepted by all agencies so carriers can efficiently report suspected fraud to one agency that will then distribute the information to all interested parties/agencies.

• Explore a system of "earmarking" a percentage of fines, penalties, restitution, asset seizure against those involved in insurance fraud to fund-dedicated prosecutors, investigators and taskforces fighting insurance fraud.

Tracking Progress

Training/Education: Develop a baseline of insurance fraud training given to both the public and private sector though the associations involved.

Civil Remedies: Establish a baseline of civil litigation and other remedies by surveying the insurance carriers, regulatory and licensing agencies.