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HomeMy WebLinkAbout00-099• yr- -s ~~ ;. i - ~ -, g •:_ ~t~rrT~s±t"~_,~ I~~~solufic~n No. RESOLUTION AUTHOR171NG DISTRICT A"fTORNEY "f0 UNDERTAKE GRANT AWARD AGREEMENT WHEREAS, the Butte County Board of Supervisors desires to undertake a certain program designated "Workers' Compensation -California Insurance Codc Section 1872.8, California Code of Regulations Subchapter 9, Article 4. Section 2698.6.5 administered by the California Department of nsurancc. NOW, "hHEREFORE, BE IT RESOLVED that the District Attorney of Butte Count}~ is authorized, on its behalf, to submit the attached proposal to the Calif-ornia Department of lnsuranee and is authorized to execute on behalf of the Board of Supervisors the attached Grant Award Agreement including any extensions or amendments thereof. BE IT FURTEIER RESOLVED that the grant funds received hereunder shall not be used to supplant expenditures controlled by this body. IT IS AGREED that any liability arising out of the performance of this Grant Award Agreement, including civil court actions far damages., shall be the responsibility of the grant recipient and the authorizing agency. The State of California and Department of Justice disclaim responsibility for any such liability. BE I'I' FURTHER RESOLVED that grant funds received hereunder shall not be used to supplant expenditures controlled by this body. 1 hereby certify that the foregoing is a true copy of the resolution adopted by the Butte County Board oi~ Supervisors in a meeting.; thereof held on the 2S'' day ol~July, 2000, by the lollowin~„ vote: AYES: Supervisors Beeler, Houx, Josiassen, Davis and Chair Dolan NOES: None NOT VOTING: None ABSF,NT: None _ , __ %"~A E DOLA ,Chair ( But e County Board of Supervisors ATTEST: JOHN BLACKLOCK Chief Administrative Officer and Clerk of the Board of Supervisors ~ `~ ~~ Butte County District Attorney Workers' Compensation Insurance Fraud Program Projected Plan and budget Fiscal Year 2~00/2C101 ~°~ ~"~~ ~~~ ~ ~ ~~ __-- o~ In continued partnership with the State of California Department of Insurance Butte County District Attorney APPLICATION FOR A PROGRAM-I FOR THE INVESTIGATION AND PROSECUTION OF `YORKERS' COMPENSATION INSURANCE FRAUD Fiscal Year 2004101 TABLE OF CONTENTS I. SECTION ONE 1. Grant Transmitta] 2. Board of Supervisors Resolution 3. Program Contact Information II. BUDGET ELEi~LENTS A. Personnel (Sa]ary and Benefits) B. Operating Expenses C. Equipment III. BUTTE COUNTY PLAN A. Qualifications B. Program Statement C. Program Strategy D. Objectives E. Organizational Chart IV. JOINT INVESTIGATIVE PLAN DEPARTMENT OF INSURANCE GRANT APPLICATION TRANSMITTAL Office of the District Attorney, County of Butte, hereby makes application for funds under the Ghorkers 'Compensation fraud program pursuant to Section 1872.8 of the Insurance Code. Contact: Ed Szendrey, Chief Investigator Address: 25 County Center Drive Oroville, CA 95965 Telephone: (530) 538-7460 { 1) Program Title (2} Grant Period Workers' 7/1100 - 6/30/01 Compensation Fraud Prosecution Program (3) Grant Amount $135,795 (4} ProTr-am l~fanager ivlichael L. Ramsey District Attorney 25 County Center Drive Oroville, California 95965 (5) Financial Dffieer Constance Carter-Angove District r'~ttorney Administrative Officer 25 County Center Drive Oroville, CA 95965 (6) District Attorney's Signature ame: M' ael L. R y Title: District Attorney County: Butte Address: 25 County Center Drive Oroville, CA 95965 Phone: (530} 538-7411 Date: June 20, 2000 II BUDGET ELEMENTS DEPAk~"MENT OF INSURANCE WORKERS' COMPENSATION INSURANCE FRAUD GRANT F/Y 00/01 CityJCounty : Butte County Grant No. BUDGET CATEGORY AND LINE-ITEM DETAIL . Personnel Services -Salaries /Employee Benefits COST GRANT TOTAL Kevin Maloney Deputy DA IV 1.0 FTE @ 25% W/C Insurance Fraud Prosecutor Salary: {$5,503 per month x 12 months) x 1.0 FTE x 25°l0 =$16,510) 16,510 16,510 W/C Insurance Fraud Prosecutor Benefits: ($1,255 per month x 12 months) x 1.0 FTE x 25% _ $3,765) 3,765 3,765 Michael Candela Deputy DA III 1.0 FTE @ 25% WIC Insurance Fraud Prosecutor Salary: ($4,683 per month x 12 months) x 1.0 FTE x 25°!° =$14,048) 14,048 14,048 W/C Insurance Fraud Prosecutor Benefits: ($1,131 per month x 12 months) x 1.0 FTE x 25% _ $3,392) 3,392 3,392 Bernie Lightner DA Investigator I! .5 FTE @ 100°!° WIC Insurance Fraud Investigator Salary: {$2,052 per month x 12 months} x .5 FTE x 100% =$24,623) 24,623 24,623 W/C Insurance Fraud Investigator Benefits: {$40 per month x 12 months} x .5 FTE x 100°l0 = $480} 480 480 DA Investigator II 1.0 FTE @ 50°!° W/C Insurance Fraud Investigator Salary: {$3,909 per month x 12 months) x 1.0 FTE x 50°l0 =$23,455} 23,455 23,455 WiC Insurance Fraud Investigator Benefits: {$1,466 per month x 12 months} x 1.0 FTE x 50°l° _ $8,796) 8,796 8,796 Gloria Lind t_egal Secty 1 1.0 FTE @ 30% W/C Insurance Fraud Legal Secretary Salary: {$2,737 per month x 12 months} x 1.0 FTE x 30% =$9,851} 9,851 9,851 W/C Insurance Fraud Legal Secretary Benefits: ($736 per month x 12 months} x 1.0 FTE x 30°t° _ $2,648) 2,648 2,648 Francisco Zarate Chief Deputy DA 1.0 FTE @ 3% W!C Insurance Fraud Chief Deputy DA Salary: ($6,492 per month x 12 months) x 1.0 FTE x 3% =$2,337) 2,337 2,337 W/C Insurance Fraud Chief Deputy DA Benefits: ($1,396 per month x 12 months} x 1.0 FTE x 3% _ $5,03) 503 503 Constance Carter-Angove DA Administrator 1.0 FTE @ 2% WiC Insurance Fraud DA Administrator Salary: ($5,429 per month x 12 months) x 1.0 FTE x 2% =$1,954) 1,954 1,954 W/C Insurance Fraud DA Administrator Benefits: ($999 per month x 12 months) x 1.0 FTE x 2°I° _ $360) 360 360 SUBTOTAL 112,721 112,721 '(Page 1 of 4} 6J29JOa - -- DEPARTMENT OF INSURANCE WORKERS' COMPENSATION INSURANCE FRAUD GRANT F/Y Q0101 CityiCounty : Butte County Grant No. BUDGET CATEGORY AND LINE-ITEM DETAIL B. Operating Expenses COST GRANT TOTAL Communication Expense 1,217 1,217 Transportation, Travel ~ Training 2,800 2,800 Travel for meetings, case investigation, and program-related training for investigators and attorneys Office Expense 770 770 Genera! office supplies Transportation - Motar Vehicle 6,000 6,000 $500 per month is allocated for the use of vehicle assigned to project investigator (500 x 12 = 6000] Audit 1,500 1,500 Annual expense for Program Audit Indirect Costs /Administrative Overhead 5,636 5,636 5% of total direct costs. Cost allocation plan in accordance with Federal OMB Circular A-87 is on file with State Controllers Office. District Atfomey Administration County Auditor Administration General Insurance Office Maintenance Utilities SUBTOTAL $17,923 $17,923 `(Page 2 of 4} 6/29/00 DEPARTMENT OF INSURANGE WORKERS' COMPENSATION INSURANCE FRAUD GRANT FN 00101 City/County ; Butte County Grant No. BUDGET CATEGORY AND LINE-ITEM DETAIL C. Equipment COST GRANT TOTAL Desktop Computer 3100 $3,100 Desk 900 900 Chair 250 250 Safety Equipment for Investigator 900 900 SUBTOTAL $5,150 $5,150 '(Page 3 of 4} 6/29100 DEPARTMENT OF INSURANCE WORKERS' COMPENSATION INSURANCE FRAUD GRANT F/Y 00/01 City/County : Butte County Grant No. SUMMARY Budget Category COST GRANT TOTAL Personal Services 112,721 112,721 Operating Expenses 17,923 17,923 Equipment 5,150 5,150 1. Amount of Funds $135,795 $135,795 2. Percentage of Funds 100°l° 100°I° 6/29/00 ~ `(Page 4 of 4) ~AR~~' - t~~ER. FITN~~ B EA;;'Y EDWARD J. SZEiVDREY Chief Investigator June 30, 2000 Hung T. Le, Program Coordinator State of California Department of Insurance, Fraud Division 9342 Tech Center Drive, Suite 500 Sacramento, CA 95$26 Dear ~Ir. Le, FRANCISCO R ~AI2ATE Chief Deputy District Attorney This office respectfully requests to carry over 56,994 in funds provided for in the FY 1999!2000 Workers' Compensation Insurance Fraud grant. Due to Investit7ator Bernie Lightner not starting until nearly mid-year some salary savings was realized. r\lsu the $4,642.00 grant augmentation received in February was not appropriated until latz in the fiscal year, therefore the expenditures proposed in our request for the augmentation have not been made. In addition the County Auditor advises there is a 51,000 savings in audit expenditures. Thank you for your consideration of this matter. Very truly yours, MICHAEL. L. RAMSEY District Attarnev Ed Szendr Chief Investigator 25 Caunry Center Drive Oroville, California 95965-3385 Tel. (530} 538-7411 Fax: (530} 538-7071 655 Oleander Avenue Chico, California 95926-3924 Tel: (530} 891-2712 Fax: (530} 891-2715 ~----~ MICHAEL L. FZAIVISEY District Attorney III ~TJTTE ~OUI`~tT~' ~'LAI~I A,. Qualifications BUTTE COUNTY WORKERS' C01~IPENSATION INSURANCE FRAUD COUNTY PLAN QUALIFICATIONS Historical The Butte County District Attorney's Office first attempted to address workers compensation fraud cases in 199. At that time we sought funding from the Department of Insurance. As a result of that funding Butte County entered into a contract with Attorney Brigham Jones of Laughlin, Falbo, Levy & Moresi, of Redding, California to handle workers' compensation fraud cases. Mr. Jones, who was uniquely qualified to handle these cases, was appointed Special Deputy District Attorney. At that time this office relied on Mr. Jones for the handling of workers' compensation cases. Because of burdensome case loads, inadequate funding, and the lack a full appreciation of the scope of the problem, other resources were not directed to the problem. Without these internal resources in place, needed follow-up investigation was not taking place. ~y"ithout a central internal contact, Department of Insurance staff was often frustrated due to lack of adequate communications. ~~'hilc the cases were being addressed a better plan was needed. Carry-over fiends tivere used to provide for Mr. Jones services but active participation in the Department of Insurance, Workers' Compensation Fraud program was lacking. Early in 1997 an effort to improve coordination of cases and communications with the Department of Insurance was made. Investigator Craig Gill was assigned to coordinate and track the cases which flowed through this office. A meeting was held between Investigator Gill, I~Ir. Jones, Department of Insurance Investigator James Garcia, and District Attorney mana,ement to establish a tivorkable plan to address these cases. Investigator Gill's responsibilities, however, ware limited to the tracking, of cases and insuring communication between this office, itilr. Jones, and the Department of Insurance was maintained. In 1998 a number of issues became apparent. The caseload was growing and iVlr. Jones reported a number of the cases had good potential for prosecution. It was apparent the role of the investigator would have to go beyond the coordination and limited follow-up investigation of cases. Greater resources of this office would have to be committed to the workers' compensation fraud cases. Further the mind-set of this office would have to be to ag`ressively address the issue. Looking into solutions it became apparent resources to address the problem were available if we effectively took advantage of the funding and services provided by the Department of Insurance. The District Attorney committed this department to the development of a viable Insurance Fraud Unit. In fiscal year 199811999 the District Attorney entered into partnership with the Department of Insurance. Funding from the Department of Insurance allowed this office to continue using the services of Attorney Brigham Jones and provide minimal investigative support. That investigative support consisted of w project coordination by Investigator Jos Van Haut who dedicated 10% of his time to the program. In March of 1998 a significant change occurred in our Insurance Fraud Program. Attorney Brigham Jones announced he would be moving his practice to the $ay Area. At the same time Kevin Maloney, formerly of the Mendocino County District Attorney's Office, was hired as a Deputy District Attorney. Mr. Maloney came to this office with a distinguished career in Insurance Fraud. Deputy District Attorney Maloney, whose father w-as once the Insurance Commissioner, is well known in the Insurance Fraud community and has enjoyed a longstanding close relationship with the Department of Insurance. This change not only allowed this agency to bring the prosecution of workers' compensation fraud cases "in-house", it laid the foundation an which a viable program could be built. Veteran Deputy District Attorney Frank Horowitz teamed with Kevin Maloney to address the civil and criminal prosecution of Insurance Fraud. When Mr. Horowitz left• the District Attorney's Office in August of 1998, he was replaced by experienced prosecutor, Deputy District Attorney Michael Candela. Building on that foundation, funding from the Department of Insurance for fiscal year 1999/2000 allowed this office to commit veteran District Attorney Investigator Bernie Lightner, half-time, to the Workers' Compensation Insurance Fraud program. Senior Deputy District Attorney Maloney provides in-house instruction and guidance for Deputy District Attorney Candela and Investigator Lightner. Through the team building process, these three members, plus support personnel, meet regularly to discuss cases, investigation strategies, training issues, and outreach. Building on the foundation for Fiscal Year 2000/2001 In summary, our goal for fiscal year 2000-2001 is to increase the number of investigations and prosecutions over those of fiscal year 1999/2000. We have discovered key staff members and good inter-agency relations are imperative to a successful and viable program. Currently staffing our Workers' Compensation Fraud program are Deputy District Attorneys Kevin Maloney and Mike Candella (each at 25% FTE) who have proven strong prosecutorial backgrounds. They team with District Attorney Investigator Bemie Lightner (~0% FTE) who brings nearly thirty years of experience to the program. The equivalent of a full-time investigator is essential in the,evolution of our partnership with the Department of Insurance and this office. It was not until nearly mid fiscal year that we were able to assign Investigator Lightner to exclusively concentrate on our Insurance Fraud Program. In this short period of time we have observed how effective a competent Investigator can be to the development of a viable program. The blend of outreach, inter-agency relations, program coordination, and case investigation, to fully realize the potential of the program, is an art form that requires skilled individuals tivho can focus on the program. Since his appointment Investigator Lightner has used his membership in the Northern California Fraud Investigators Association to make known Butte County's desire to establish an effective Insurance Fraud program. He has met with Department of Insurance staff to iron out problems, establish lines of communication, and learn how to ? W effectively interact with DOI. He has reached out to the Insurance Industry and has developed some significant relations within that community. Mr. Troy Fransen of State Farm is currently working with Investigator Lightner providing cases and conducting requested follow-up on matters requested by this office. Investigator Lightner has also developed a working relationship tivith the State Compensation Insurance Fund representatives Bill Woods and Ed Huey. All in all Mr. Lightner has been a very busy man, wearing many hats. It is apparent for this office to fully meet the opportunities and demands of a viable unit for this next fiscal year, Investigator Lightner's position needs to be augmented with the addition of another half-time {50% FTE) investigator. To make this a viable program this office has committed resources above and beyond that provided for by the grant. Senior Investigator Guy Georgianna has committed the resources of his Major Crimes Unit to insure the success of the Insurance Fraud programs. Mr. Georgianna and his staff have given numerous hours, above and beyond the resources provided in the grant, in outreach, investigation, and the coordination of joint efforts with the Department of Insurance. v The computer skills of Investigator Jos Van Hout have been used to develop a case tracking system and oversee the development of the Fraud Web Site. In the belief health practitioners who commit fraud in any one form will be prone to commit fraud in other ways, we have teamed up with the National Heritage Insurance Company. NI-IIC is the investigative arm of 4iedicarc. Though there are regulatory restrictions on what data NHIC can provide us, we are exploring ways to share information, in an attempt to identify those health practitioners who are committing insurance fraud. This office also takes advantage of quarterly area-wide investigator meetings to network with local, state and federal law-enforcement agencies. ~Ve have featured our Insurance Fraud programs at these meetings. We have actively encouraged surrounding counties to participate in the Department of Insurance Fraud endeavors. We also recognize we are in a position to handle overflow cases, in which we have joint jurisdiction, from both the Sacramento and Redding Workers' Compensation Appeals Boards. This year we have made strides to improve our community outreach. Our promised Web site is now a reality. The Fraud HoC Line is operational. In 1v1ay we highlighted the Insurance Fraud program at the District Attorney's booth at the Silver Dollar Fair in Chico. Fair attendance was about b0,000 persons. We will do the same later in the year at the Butte County Fair in Gridley. With a foundation built upon a solid team of prosecutors and the commitment of departmental resources, the infusion of i~Ir. Lightner into the program became the catalyst that launched us on the trajectory we hoped the program would go. We exceeded the project's projected four prosecutions and have filed six Workers' Compensation Insurance Fraud cases this year. To date 27 open investigations have been worked this fiscal year. Two of these cases are extensive investigations involving chiropractors. While it has taken a concentrated effort on behalf of the District Attorney staff to build the foundation for an effective Insurance Fraud Unit we must attribute a significant portion of our growing success to a strong partnership with the Department of Insurance's Fraud Division. 3 .~ BUTTE COUNTY DISTRICT ATTORNEY INSURANCE FRAUD PROGRAM YEARL Y HIGHLIGHTS FY 991110 The Butte County District Attorney's Insurance Fraud Unit filed sir Workers' Compensation fraud cases. This exceeds tl:e projected filing of four cases by SO%. • The Brttte County District Attorney's Office Insurance Fraud Unit installed a 24- hour, toll free Hotline for reporting Workers' Compensation and Auto Insurance Fraud. The system accepts all calls from within our 534 area code. The number is 1-8 77-535-5497. The Butte County District Attorney's Office has c-Ypanded its Internet web-site to include a web page devoted to Workers' Compensation and Auto Insurance Fraud information for the public. The site includes an on tine fraud reporting form which a user can jrll out and transmit back over an Internet secured line or if they prefer, the site lists our 24 hour toll free Hotline number. The Btztte County District Attorney's Office constructed a public information bootl:, which was set up and staffed with our employees for five fall days at our County Silver Dollar Fairgrounds. The booth contained posters, flyers, handouts and provided information on our Workers' Compensatian and Arcto Insurance Investigations Division. This booth had an errposure to the tens of thousands of our citizens who passed through. Many merchants and professionals from the insurance industry took 6tandout materials and gave positive feedback. The Butte County District Attarrzey's Office Fraud Unit has expanded its outreach program to the California State Employment Development Department's Investigation Bureau located in our county. We have reached an agreement with thorn to jointly investigate suspected Workers' Compensation Fraud cases involving Premium Fraud. We will prosecute these cases locally. This fills a need for the state, erxpands our investigative resources and targets those cases which would otherwise fall tf:rouglt the cracks. Tl:is saute arrangement has been reached with the Federal Medicare Investigations office located in our county. The dollar lass to meet federal filing Standards, in some cases is in e_reess of $5©,0110. Our office has agreed to investigate and prosecute Workers' Compensation Fraud cases which fall under that standard. This closes a gap and focuses an an area of fraud that otherwise would go unchecked. This past year the Butte County District Attorney's Office saw a need to improve the way we were distributing our insurance fraud investigations. As a result our office hired an experiencect investigator to work workers' compensatiort~ and Auto Insurance Fraud cases exclusively. This has resulted in a much improved relationship with The State of California Department of Insurance and the insurance industry as a whole. This past year we had an unanticipated caseload combined with several complex case investigations. Because of this, our office supplemented its only half time insurance fraud investigalor by assigning some of the applicant fraud cases to other criminal investigators in our Major Crimes Unit. Ta date, we have trained additional three investigators to assist in these types of cases. Our assigned insurance fraud investigator attended two separate one-week long training conferences for networking and training purposes. One conference was conducted by the California District Attorney's AssociatiorzlDepartment of Insurance and one was conducted by the Northern California Fraud Investigator's Association. This enabled our investigator to become acquainted with both tl:e law enforcemer:t and tfre private insurance industry's perspective. • Our assigned part-time grant investigator has established a strong relationship with The State Compensation Insurance Fund Special Investigations Unit in Redding, California. He also solicited that agency's two S.I. U. Investigators for membership into the Northern California Fraud Investigator's Association and sponsored their membership application. Our investigator has established a close working relationship with the State Farm Insurance Company's Special Investigations Unit in Chico, California. This relationship resulted in one of our largest and currently ongoing Joitzt Undercover Practitioner Fraud Investigations with the Department of Insurance. • Our Grant Outreach Program resulted in receiving information, which has led to yet another large, complex, current joint investigation of health care Practitioner Fraud with the Departrrrent of Insurance. This case has a potential for hundreds of false billings and dozens of insurance company victims. 6~'ith the lose of our second grant Attorney, our office initially assigned an ~xperieneed senior trial Attorney to our Insurance Fraud Unit. In keeping with otcr commitment for ongoing training, this new Grant Prosecutor attended and participated in this past year's CDAAlDOI training Conference with our grant prosecutor and grant investigator. This prosecutor is also receiving on the job training from our grant prosecutor. In keeping with this office's commitment to the investigation and prosecution of FI'orkers' Compensation and Auto Insurance Fraud cases, this office continues to host a bi-monthly Area-Wide Investigator's Meeting. This meeting is attended by an average of forty investigators from federal, state and local level During these meetings, they receive information on our program and the resources available to assist them in investigation and prosecution of insurance fraud in our county. Insurance gaud Division ANNOUNCING A NEW SERVICE FOR THE I7UVESTIGATION AND PROSECUTION OF Workers' Compensation Fraud Auto Insurance Fraud The District Attorney's Of~"ice has been awarded a Grant by the California State Department of Insurance to investigate and prosecute suspected fraud in both Workers' Compensation and Auto Insurance Claims. The District Attorney has the ability to handle these cases independently or in concert with the Department of Insurance Investigations Division. "Types of cases we can become involved in include: APPLICANT FRAUD; where a person lies about being injured or a person who gets injured off the job claims the injury occurred at work or the person exaggerates the seriousness of an injuuy to receive a higher benefit . PREMIUM FRAUD: where an employer falsely claims the cumber of employees or their work classification in order to reduce the amount of premiums paid. PRACTITIONER FRAUD: where a Medical Doctor or Chiropractor bills an insurance company for treatments not received by the patient or extends the number of treatments beyond what is necessary in order to collect additional insurance money. TO REPORT SUSPECTED INSURANCE FRAUD CALL THE DISTRICT ATTORNEY'S FRAUD HOTLINE TOLL FREE 24 HOURS A DAY AT 1-877-535-5497 Butte County District Attorney - ~ trance Fraud Page 1 of 2 ~'t e r jo '~{~ ~ .~.~~ Insurance Fraud Division i1 Insurartoe Fraud i Telernarketing FOR THE INVESTIGATION AND PROSECUTION OF Fraud i Internet Fraud Workers' Compensa#ion Fraud Contact Us Auto Insurance Fraud ConYldentially :~ Fraud Qlv4aion The District Attorney's Office is funded by the California State Department of Hom® Pog,a Insurance to investigate and prosecute suspected fraud in both Workers Compensation and Auto Insurance Claims. Both of these types of crimes are felonies and are punishable by state prison. The District Attomey may investigate these cases independently or with the assistance of the Department of Insurance Investigations Division. Types of insurance fraud cases we can investigate include: APPLICANT FRAUD: typically occurs when a person lies about being injured or when a person gets injured off the job but claims the injury occurred at work. This type of fraud also occurs when a person exaggerates the seriousness of an injury in order to receive a higher dollar benefit or extend the benefit far a longer period of time. PREMIUM FRAUD: typically occurs when an employer falsely claims a lower number of employees or changes their work classification in order to reduce the amount of their premiums for workers' compensation insurance coverage. PRACTITIONER FRAUD: typically occurs when a Medical Doctor or Chiropractor bills an insurance company for treatments not actually received by the patient or extends the number of treatments beyond what is necessary in order to collect additional insurance money. Please contact us if you have been a victim of either of these types of crimes or if you have information regarding these types of fraud, which have been committed in Butte County. Your report will be kept confidential, and will be safely transmitted through a secure server. Upon receipt, our office will investigate, and when possible, prosecute these crimes to the fullest extent of the law. OR CALL US ON OUR DISTRICT ATTORNEY FRAUD HOT LINE TOLL FREE 1 877 535-5497 Insurance Fraud I Telemark2ting Fraud l lnternet_Fraud Contact Us.ConfidenUally Fraud Division Home Page Butte County District Attomey-Fraud Division Web Site Top_ of Page http://now2000.com/fraud/insurance.html 06/ 16/2000 ~~~nt~;c` the Butte County District Attorney Fraud Division -Secure Form Page 1 of 2 ^ ~Cr .t, r ~ ,_ off, ~~ ~ c , s - ., -e ~ o *.. +~,,1 ~ c~ 'E_GQ~~ - 'l Secure Form for Contacting the Fraud Division of the Butte County District Attorney's Office If you have been defrauded, or if you think someone is conducting fraud, please complete the following form and describe the circumstances. Information you supply will be transmitted securely over the Internet, and we will treat it with complete confidentiality upon receipt. Thank you for your input. Name ---- -- -- ------- Address _._ ---_-.-_ __ Company (if applicable) City ~ State I Zip t Phone) E-Mail Have you been defrauded? ~ Yes ~ No Do you think someone is conducting a fraud? ~ Yes ~ No If yes, what type of fraud is being conducted? r Telemarketing ~ fnternet r Insurance ~ Investment Scam f Prize Promotion or Sweepstakes Offer r Travel Scam ~ Lottery r False Charity r Credit Repair/Debt Consolidation C Employment Scam ~ Office Supplies C- Recovery Rooms r Rip and Tear r Telephone Billing ~ Business Opportunities r Home Repair r Real Estate ~ Identity Fraud r Other Please provide as much detail as you can regarding the fraud that you think was, or is, bein conducted. The Enterprise Record Archives Online archives from The Enterprise Record. Starting November 1999 Page i of 3 February 15, 2000 CI-IP officers faces felony fraud charges By Terry Vau Dell -Staff Writer 4ROVILLE - A 17-year veteran of the California Highway Patrol Office in Clroville appeared in court Monday to answer felony charges of worker's compensation fraud. Gary Cornwell, 41, faces four counts of filing fraudulent claims in connection with two on-the job injuries he claimed to have suffered. According to Lt. Don Beasley, who heads the 4roville CHP office, the criminal charges followed a lengthy internal affairs investigation, which resulted in Cornwell being suspended. The veteran traffic officer was arraigned on the fraud charges Monday afternoon in Butte County Superior Court and released on his own recognizance after first being booked at the county jail. He is due back in court today for entry of plea to the charges, which carry up to four years in prison upon conviction. Cornwell could not be reached for comment Monday. His attorney, Thomas Clute of Chico, said that he had not yet seen any police reports in the case, nor had an opportunity to discuss the allegations with Cornwell. Clute was critical of District Attorney Mike Ramsey for issuing a press release on the case Monday. 'I'm glad Mr. Ramsey has the resources to put out information about this,2 the officer's lawyer said, adding,'I intend to try the case in a courtroom, not the newspapers." 'At this point, I don't know if (the allegations) are the result of an intentional act, negligence or what. We'll see what the facts are in court," added the officer's lawyer. Ramsey said that the charges against the veteran officer resulted from the CI-IP internal affair investigation and follow-up probes by the DA's office http://www.chicoer.com/archives/index.inn?loc=detail&doc=/20001Febru.../15-228-news7.tx 6/26/2000 The E~~terprise Record Archives and the fraud division of the California Department of Insurance. The DA said the investigation involved two claims Cornwell filed for alleged on-the job injuries, totaling about $24,000. Three of the four felony fraud charges surround an incident in September 1996 when the officer claimed he hurt his knee getting out of his patrol car quickly during a routine traffic stop, according to the DA. Ramsey said that the officer claimed that persons in the stopped vehicle had gotten out of their own car and were coming back quickly towards Cornwell's patrol car when the injury occurred. The investigation allegedly revealed that Cornwell was not on duty the day of the claimed injury, Ramsey said. The final felony charge stems from a separate worker's compensation claim the officer filed for a shoulder injury that Cornwell said he suffered during an annual officer's training evaluation in Febniary, 1997. Ramsey said that independent witnesses2 discounted the officer's accounts of both incidents. Moreover, he said that investigators have undercover videotapes of Cornwell 'vigorously playing baseball in local recreation league games" after filing the two injury claims. Lt. Beasley, commander of the Clroville CHP office, confirmed Monday that he requested the internal affairs investigation after he became'suspiciousz of the two worker's compensation claims. Beasley said that Cornwell is clurently on administrative leave. He has until Friday to request an administrative hearing to rebut the allegations before his firing takes effect. The Oroville CHP commander said that the veteran traffic officer was Swell liked ... all the rest of the employees in the office were shockedz by the allegations. Search for Word one I - - -- _ _- _ __ ...-- _._ - ~' and ~ or ~ not Word two . -.-- -- ~' and r or ~ not Word three I iViaximum stories: ~`s' Page 2 of 3 http://www.chicoer.com/archives/inder.inn?(oc=detail&doe=/2000/Febru.../15-22$-news7.tx 6/26!2000 SUIVIl~1ARY OF CASES FILED FY 99100 Workers' Compensation Fraud cases: 1) 97-1124 -this case was referred to us on July 18, 1997. This investigation was started by our part time grant investigator and then passed on to our permanent investigator in November of 1999. After receiving additional documentation from the insurance company and conducting many more interviews, the grant prosecutor reviewed the case and filed a felony complaint for insurance fraud and obtained an arrest warrant on February 22, 2000. The suspect w•as held to answer on felony insurance fraud charges on May 1 ~, 2000 and he has a jury trial date of September 20, 2000. 2} 9$-1184 -This case was referred to us on August 12, 199$. The suspect allegedly made statements that she injured herself at home. She subsequently filed a Workers' Compensation Claim stating her injury was received while working. Several inconsistent statements by the suspect and witness statements by her coworkers at the Workers' Compensation Appeals Board led to a rejection of her claim. 3) 99-103.1 -this case was referred to us on April 2, 1999 and worked as a joint investigation with the Sacramento investigative office of the Department of Insurance. This case was primarily investigated by the California Highway Patrol's Office since the suspect was employed as a Traffic Officer when he filed his Workers' Compensation Claim. The suspect claimed he injured his knee while exiting from his patrol car in a hasty movement during a traffic stop. The case investigation was augmented by both the Department of Insurance in Sacramento and the Butte County District Attorney's Office. Investigation showed the suspect was not working on the day he claimed to be injured. Furthermore, after interviewing the citizens he stopped in the incident, it was learned none of the actions which reportedly caused his injury ever occurred. This was the thirteenth Workers' Compensation injury the suspect filed in his fourteen-year career with the California Highway Patrol. Our grant prosecutor reviewed the case and felony counts of insurance fraud were filed and an arrest warrant was issued on February 9, 2040. A preliminary trial is set to be held on June 23, 2400. 4) 99-1131 -This case was referred to us on November 15, 1999. After some investigation by our permanent grant investigator, it was assigned to an Investigator in our Major Crimes Unit for assistance. It soon became apparent there was a potential for multiple victims of practitioner fraud. A request was made and approved for a joint investigation with the Sacramento Fraud Investigation's Office of the Department of Insurance. That case is currently being conducted as an undercover operation with the additional assistance of two insurance company S.I.U.'s. The end result is expected to be the arrest and prosecution of the chiropractor and restitution to many insurance companies. 5) 99-1132 -This case was referred to us on November 15, 1999. This case was assigned out to one of our DA Investigator's in our Major Crimes Unit. With the exception of awaiting the arrival of a doctor's report, this investigation is complete. 6) 2000-1045 -This case was referred to us on April 2, 1999. After being reviewed by our grant prosecutor for an EDD violation, it was believed a premium fraud had been committed as well. The case was assigned to our permanent grant investigator in April 1999. Since that time, additional information and documentation has been requested from the insurance company. It is anticipated several felony counts of fraud against EDD and the insurance company will be filed. 7) 2000-1190 -This case came to our attention while prosecuting 97-1124. Applicant testified at deposition in support of his Workers Comp. Claim that he was unable to drive more than 30 minutes due to his injury. A "sub rosa"and private investigator's report indicated that in fact applicant had driven from Oroville to Truckee, California, a trip that should exceed 1.5 hours. SUMMARY OF CURRENT OPEN AND ACTIVE CASES FY 99100 Workers' Compensation cases: 1) 99-103 -This case was referred to us on April 2, 1999 and is currently assigned to one of our Major Crimes Unit Investigators for criminal investigation. 2) 2000-1004 -This case was referred to us on January 10, 2000. It was investigated by our permanent grant investigator for several months before it became apparent we needed to request a joint investigation from the Department of Insurance. The joint investigation was approved and at this time the records of fifty-two patients taken from the chiropractor's office are being reviewed. Claim records from thirty different insurance carriers have been requested. All fifty-two patients are being interviewed. This case is expected to last for many more months with the end result expected to be the arrest and prosecution of the chiropractor and restitution to many insurance companies for an as yet undetermined amount of money. 3) 2000-1189 -This case was develop by the Butte County D.A.'s Office from a complaint originating with a local insurance company's S.I,U. In conjunction with D.O.I.'s Fraud Bureau we are engaged in an Undercover Operation involving at least one Health Care Practitioner. It should be noted we have three additional suspected insurance fraud cases which have been referred to us. They are open but inactive awaiting additional follow up information from the insurance company S.LU.'s. It is unknown if any of them will generate sufficient evidence for criminal investigation and prosecution. Closed cases: 1) Bill Redondo -State Farm Insurance. 2) James Sharp -California fair services. 3) Steve Thompson -Liberty Mutual Insurance. 4} Claudine Kemgton -Liberty Mutual Insurance. 5) Carl Teel - Oroville High School. 6) Steve Otto -Paradise Unified School District. 1) Elizabeth Morgan -The Depot Restaurant. 8) Craig Carnes -Ernst Home Center. 4) Kirby Company -Greg Rees. 10) Mark Credell -Zenith Insurance Company. 11) Michael Duggan -Fremont Insurance Company. 12} Jeannette Varner -American Protection Insurance Company. 13) Laura Matthews -Travelers Property Casualty y; ,~1' sr ~" i.+ /~ ~-~'` rd `i '', a~ <, ~.' ~> .~ ` ;: _ a, J .:.:.' L `~~~ ~ six ~ .~ ~ ''t ~. 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I 1 ~ 1 IO~IO O o 0:0 0,10 h.'O O a0.cp~N aO W O O O N Pi ~~O G1 4) m.41 DY O'....OIO O~.O iO O O 0I 01 O Q) ~ Q1 ' Q1 C) 41 01 Qs 01 ~.. 41 Q1 ~. 41 Q7 4f ', Q1 141 4) O O O O ' O O (O I O I i I i I IN IN SINN jN IN IN N °°~-~-.i ~: ~~. ~ -_ .-~~ lr:.m.....-~ L_. _, :~;<: y ; C..-_.. ~~ ~ QUALIFICATIONS {Cont'd) 2. In FY 1996-97 9 investigations were initiated and involved an average of 1 identified suspects per investigation. In FY 1997-98 5 investigations were initiated and involved an average of 1 identified suspects per investigation. In FY 1998-99 7 investigations were initiated and involved an average of 1 identified suspects per investigations. From July 1, 1999 to June 15, 2000, 13 investigations were initiated and involved an average of 1 identified suspects per investigation. 3. In FY 1996-97 0 warrants/indictments were issued, involving an average of 0 suspects andlor defendants. In FY 1997-98 1 warrantslindictments were issued, involving an average of 1 suspect and/or defendants. In FY 1998-99 0 warrants/indictments were issued, involving an average of 0 suspects and/or defendants. From July 1, 1999 to June 15, 2000 6 warrants/indictments were issued, involving an average of 1 suspects and/or defendants. ~. In FY 1996-97 0 arrests and 0 surrenders were made. In FY 1997-98 0 arrests and 1 surrenders were made. In FY 1998-99 0 arrests and 0 surrenders were made. From July 1, 1999 to June 1 ~, 2000 0 arrests and 2 surrenders were made. 5. In FY 1996-97 0 convictions were obtained involving 0 defendants. Of these convictions, 0 were obtained by trial verdict, 0 were obtained by plea or settlement. In FY 1997-98 1 convictions were obtained involving 1 defendants. Of these convictions, 0 were obtained by trial verdict, 1 were obtained by plea or settlement. In FY 1998-99 0 convictions were obtained involving 0 defendants. Of these convictions, 0 were obtained by trial verdict, 0 were obtained by plea or settlement. From July 1, 1999 to June 1 ~, 2000, 0 convictions were obtained involving 0 defendants. Of these convictions, 0 4vere obtained by trial verdict, 0 were obtained by plea or settlement. *One held to answer at preliminary hearing, other cases pending. 6. In FY 1996-97 0 defendants were ordered to pay $0 in fines and penalty assessments. Of this amount $0 was collected from 0 defendants. In FY 1997-98 1 defendants were ordered to pay $100.00 in fines and penalty assessments. Of this amount $100.00 was collected from 1 defendants. In FY 1998-99 0 defendants were ordered to pay $0 in fines and penalty assessments, Of this amount, $0 was collected from 0 defendants. From July 1, 1999 to June 15, 2000 0 defendants were ordered to pay $0 in fines and penalty assessments. Of this amount $0 was collected from 0 defendants.* * Pending court resolution. 7. In FY 1996-97 0 defendants were ordered to pay restitution in the amount of $0 to victims. Of this amount $0 was collected from 0 defendants, benefiting 0 victims. In FY 1997-98 1 defendants were ordered to pay restitution in the amount of $1420.00 to victims. Of this amount $1920.00 was collected from 1 defendants, benefiting 1 victims. In FY 1998-99 0 defendants t4 „ were ordered to pay restitution in the amount of $0 to victims. Of this amount $0 was collected from 0 defendants, benefiting 0 vi ctims. From July 1, 1999 to June 15, 2000 0 defendants were ordered to pay restitution in the amount of $0 in fines and penalty assessments. Of this amount $0 was collected from 0 defendants, benefiting 0 victirns.* *Pending court resolution. 15 III BUTTE C OITNT~ PLAN B. Problem Statement BUTTE COUNTY WORKER'S COMPENSATION Ilr'SURANCE FRAUD COUNTY PLAN PROBLEM STATEMENT Demofft raphics Butte County can be identified as the largest county north of Sacramento, with a population of more than 200,000. Major employers include the University of California at Chico, various municipal, county, state and federal agencies. Rice, almond and walnut farming, along with lumber are the major industries of the area. Along with a diverse spectrum of employment, the demographics also include a significant high drug and welfare recipient population. It is well knotivn, lumber and government industries generate higher per capita worker's compensation claims. The county has above average wJelfare population. It follows that, as an economically depressed area, fraud is a major concern. The advent of Indian Gaming has also had a negative impact. Two casinos have opened in the Oroville area. A small increase in bad check, theft embezzlement and fraud has been attributed to those suffering gambling losses. The simple fact appears to be, worker's compensation fraud in Butte county is simply undetected, which gives rise, by word of mouth, among the "something for nothing" crowd, that Butte County is a worker's compensation fraud-friendly county. The Scope of Worker's Compensation Fraud in Butte County tiVhen Butte County District Attorney's Office first began to accept and prosecute worker's compensation cases, it appeared most suspects were individuals who attempted to fraudulently obtain money by falsifying or embellishing a claim. These types of claims were somewhat classic, the victim and suspect were clearly identified, evidence was easily obtained and follow up was straight forward. As time passed, our unit began to make contacts with other agencies. Some of these agencies such as EDD and Medicare had more than a passing relationship with the same suspects and schemes found in insurance fraud. We saw correlations with Family Support and Welfare Fraud issues. Once we "advertised" our commitment to investigate and prosecute insurance fraud, new sources of information were e~cposed. Citizen informants, some of which were professionals (Doctors, Attorney's and staff), provided additional information. As a result, we learned same of `our single incident cases were more than an isolated criminal act in a sustained history of long time criminal profiteering. 1 As a result, we have identified the proverbial tip of the iceberg in this area of insurance fraud in Butte County. Suspect claimants shotived a history of mare than one fraud claim, suggesting in some cases that previous claims may also have been fraudulent. Chiropractors, in at least three current cases, are surfacing as suspected insurance fraud mills. Some of these chiropractic offices are billing far services not rendered, using billing codes fraudulently, clearly not allowed under the statutes, and falsifying their own records. The majority of the criminal acts are tivorker's compensation scams closely followed by personal injury auto claims. We are beginning to receive information and complaints from Butte County code enforcement officials, outlining the measures some local businesses will use to avoid the payment of worker's compensation insurance premiums. Our experience shows where we often have reports of one type of fraudulent activity, we have more. EDD, FTB, IRS and other related fraudulent violations have been detected in conjunction with our worker's compensation investigations. While these related crimes are not covered within the Insurance Code, they present additional charges, prosecutorial flexibility, as well as increased potential investigative resources. Magnitude of Worker's Compensation Insurance Fraud Problems in Butte County Thus, the scope of the type of fraud in our area is much greater than previously known. In one of our current active undercover operations involving a chiropractor, from a suspected two violation case, our investigation has uncovered the potential for hundreds of cases. There are clear patterns which reveal clinics that systematically program their computers to falsely bill at the highest rates. Recent conversations with knowledgeable informants, within the industry, are identifying much greater fraud than previously imagined. We now knotiv of clinics which, in advance of treatment, identify the maximum insurance limits and target that amount until exhausting all available funds before the patient is either "healed" or no further treatment is necessary. The traditional embezzlement case in which the bookkeeper skims $100,000.00, from the office over a period of months, is now replaced by a clinic which can carefully and systematically fraudulently bill a number of unsuspecting insurance companies for millions of dollars over an indefinite period of time. During the last year we began an exchange of information and training with other agencies to enhance our local abilities to identify, investigate and prosecute insurance fraud. We learned that NHIC, (National Heritage Insurance Company}, the investigative arm of Medicare has headquarters in Chico, our largest city in Butte County. During exchanges with NHIC we learned that they handle approximately two million dollars in fraudulent claims. These claims tend to be of the same type as previously described concerning over billing, billing for services not rendered and billing improper codes. It is our belief that practitioners who commit medical fraud are likely to commit worker's compensation fraud as well. While there are a number of 2 restrictions and rules limiting the information that comes to us from NHIC, we are exploring ways to exchange information. ©ur office invites all local investigators to round table current investigations with us on a regular basis. We have invited NHIC to join us. In addition, we implemented a policy to accept and review request for complaints originating from NHIC fraud cases that do not rise to federal levels of acceptance. {Some federal fraud cases must exceed $x0,000.00 or more for purposes of prosecution. At the local level, we do not operate under such restrictions.) Obtainable Performance Objectives that will Significantly Impact Worker's Compensation Insurance Fraud in Butte County Investigations: Based on the last six months of investigation, outreach and intelligence gathering, we are discovering there are more inherently complex worker's compensation fraud cases than originally believed. At least two clinic undercover operations over the next year can be expected. One is currently in progress, and based on other pending information and cases, we expect more will be initiated. With the addition of a full time investigator adequate attention will be given to the estimated 10 cases anticipated this year. Additional fraud will be identified through our networking with NHIC, NCFIA and insurance providers. Outreach and Public Education: We believe that through news coverage, the fullest public relations and education benefits will be realized from this first undercover operation. We experience a very good relationship with all the local media outlets, including ABC, CBS, and NBC as well as all our local newsp- apers. These public media resources will be fully utilized in this and any other related operations. The Butte County District Attorney Insurance Fraud Hotline (1 877 535-5497) is operational. With advertising of this through newspapers, television PSAs and outreach at local fairs, tive anticipate receiving greater use of the Hotline by the public. "I he Butte County District Attorney's Fraud 1-lotline Webpage is up and running. We anticipate this tool will also increase responses to this office. This year, the outreach at the Silver Dollar Fairgrounds and the Butte County Fair will be our most comprehensive thus far. Information on the fraud website. & 24 hour Fraud Hot Line, flyers and worker`s compensation handouts, will be made available to every attendee. We expect to maximize our public educational efforts to effectively reach health care professionals, citizens, victims and suspects. 3 ti Networking: This office will enhance the Worker's Compensation Insurance Fraud Program through continued networking with the Northern California Fraud Investigator's Association (NCFIA), National Heritage Insurance Company (NHIC), insurance providers and local investigative agencies. Strong worker's compensation fraud prosecutions will be reinforced by the subsequent perjury, income tax fraud and money laundering filings. A complete proactive investigation and prosecution for all appropriate criminal violations is cleazly most effective. The establishment of program elements for recoupment of restitution for the victims as well as for investigations and prosecutions will be sought as logical goals following successful criminal prosecution. The acquisition of contacts, information, equipment, experienced personnel, and outside agency participation is a continuing goal. By adding these tools to carefully planned and executed undercover operations, followed by the maximization of media coverage and support, public education and violator/abuse deterrent can and will be ongoing program goals. 4 Long term objectives: With (1) a firm commitment to insurance fraud by the District Attorney; (2) The establishment of a strong investigation and prosecution team; (3) The beginnings of a workable public outreach and education program; (4) Established networking with investigative associations, the insurance industry, as well as the Department of Insurance, a solid foundation has been built. Building upon each of these elements will strengthen and expand the existing program. Due to this expansion of the Workers' Compensation Insurance Fraud caseload, within three years we anticipate the need to add another half-time attorney and another fiill-time investigator to the program. Like any other significant product, we need name recognition. By the end of the three year period, the citizens of Butte County will be able to identify the District Attorney's Office as a name linked to worker's compensation fraud education and prosecution. Violators will know that criminal conduct will not go undetected and that prosecution and accountability will be the norm in Butte County for participation in worker's compensation insurance fraud. To be recognized as a leading authority in worker's compensation fraud investigation and prosecution is a key long term objective. One of the greatest compliments is to see a program copied and emulated. Frocn a committed partnership with Department of Insurance, we fully expect to share the results of our investigations and prosecutions and to see them utilized in future training presentations. We expect our personnel to be instrumental in its dissemination. Butte County District Attorney's Office has developed state and nationally recognized programs such as Drug Endangered Children, Asset Forfeiture, and Child Abuse Response Team. We will we apply our knowledge, enthusiasm and talent to make our worker's compensation fraud program reach the same level of recognized success. 5 III B~TTTE Ct~I1NTY PLAN C. Program Strategy BUTTE COUNTY WORKERS' COMPENSATION INSURANCE FRAUD COUNTY PLAN PROGRAM STRATEGY In summary, our goal for fiscal year 2000-2001 is to • Increase the number of investigations and prosecutions over those of fiscal year 1999/2000 through public outreach and education. • Develop working relationships with the Risk Managers of the major employers in the county. (Lumber, agriculture, government, State University} • Expand public exposure to the Insurance Fraud Program through the established «'EB site, Fraud Hotline, local fairs, and community meetings. Produce a Public Service Announcement (PSA) featuring the D.A. Fraud Hotline for airing on Iocal television stations. • Continue to explore identifying fraud through nerivorking with NHIC (Medicare), EDD, County Code Enforcement, Welfare Fraud Unit, and Family Support. • Review cases with the bigger picture involved. (i.e. individual recipient cases pointing to health Care provider fraud involving other individuals. `Ve expect to complete two existing cases on local Chiropractors who are systematically defrauding insurance companies through several clients. Enhance restitution efforts through civil remedial cost recovery cases that do not meet the criminal evidentiary standard of proof beyond a reasonable doubt by filing civilly pursuant to Labor Code Section 3820. We propose to accomplish this using existing staff and resources with the addition of a half time, (~0% FTE), investigator. --------------- 0 ----------------- We have discovered key staff members, effective use and development of resources, and good inter-agency relations are imperative to a successful and viable program. Staffinff: Putting the most quali~ed persons in the key positions. Currently staffing our t~Vorkers' Compensation Fraud program are Deputy District Attorneys Kevin Maloney and iVlike Candella (each at 2~% FTE) who have proven strong prosecutorial backgrounds. They team with District Attorney Investigator Bernie Lightner (50% FTE) who brings nearly thirty years of experience to the program. Though now working outside the grant, Investigator Van Hout has developed a computerized case tracking system and aweb-site for this County's program. Senior Investigator Guy Georgianna, who supervises Investigators Lightner and Van Hout, is responsible to see all requirements of the program are carried out. He is also responsible for providing other departmental resources where needed. • Gloria Lind, an experienced Legal Secretary has been be assigned to handle the clerical responsibilities. The additional half-time ($0% FTE) investigator will allow for more focused investigation of Workers' Compensation Fraud Cases. Use and Development of Resources: Although we got off to a slower start than anticipated this fiscal year we not anly met but exceeded the projected expectations of the program by the end of the fiscal year. Through the continued development of public education, industry networking, and case development, fiscal year 2000/2001 should be our strongest year yet. Public Education Qutreach and education are key to building public confidence in our (the insurance fraud industry's) ability to protect the citizens from those who drive up insurance costs by stealing. Public outreach and education are also essential to develop the needed communication between the citizens and government to identify the fraud that is taking place. To that end the Butte County District Attorney established the Fraud Hotline and Fraud tiVeb Page. This year we tank advantage of the District Attorney's participation in the local Fairs and highlighted our Insurance Fraud Unit using banners, handouts from the Department of Insurance, and flyers advertising the Fraud Hotline. During this coming fiscal year the Butte County District Attorney will produce a Public Service Announcement (PSA) to advertise the Fraud Hotline on local television stations. The use of the PSA, exposure at the Fairs, and news releases will add to the publics knowledge of the existence of the Fraud Hotline and Web Page. The District Attorney is also committed to public education through news releases of arrests and prosecutions and of significant fraud concerns. Public education is also accomplished by the District Attorney and staff members in presentations made before community groups. ttietworkina The development of working relationships within the Insurance Fraud industry as well as related investigative agencies is key to the development of cases and efficient case management. A specific goal for this year is to meet with the Risk Ivlanagers of the major employers of the county. This past year the Butte County District Attorney Insurance Fraud Unit developed relationships with Medicare, EDD, County Code Enforcement, IRS, Welfare Fraud, and County Family Support, and other local law enforcement agencies, which expand our ability to identify and investigate Insurance Fraud. This year we will continue to build upon these relationships and continue to look for other resources as well. Since his appointment to the Insurance Fraud Unit, Investigator Lightner has used his membership in the Northern California Fraud Investigators Association to make known Butte County's desire to establish an effective Insurance Fraud program. The District Attorney will also sponsor the ne~v investigator's membership in NCFIA. Cns~ ~eveloprrretxt This past fiscal year the Butte County District Attorney Insurance Fraud Unit filed six Workers' Compensation Insurance Fraud cases. This exceeded the four cases projected far the year. With the resources now in place along Gvith the expanding outreach programs it is anticipated we will go beyond last years accomplishments in the coming year. "I'wo of the cases currently under investigation involve chiropractors. Each case came from information involving a single incident. Investigation revealed the chiropractors appear to be systematically over-billing insurance companies for services, and billing for services not performed. We believe numerous counts of fraud will be uncovered in the course of the investigations. Due to the complexity of the investigations we have teamed with the Department of Instu•ance Fraud Division investigators in these cases. We have also involved the Contractors License Board who ha~~e provided business identities for the undercover investigators. As stated above we have looked to other agencies such as NHIC and EDD to work cooperatively in the Workers' Compensation Insurance Fraud Investigations. We also recognize we are in a position to handle overflovv cases, in which we have joint jurisdiction, from both the Sacramento and Redding Workers' Compensation Appeals Boards. The investigation of these cases taxes the resources of this office making the need for the additional half-time investigator a necessity. Another key element in successful pursuit of insurance fraud is an aggressive restitution program. Deputy District Attorney Kevin Maloney has proposed the use of Remedial Cost Recovery on those cases that do not rise to the level of proof beyond a reasonable doubt under Section 3$20 of the Labor Code as a civil action. Inter-agency Relations The success of any viable Insurance Fraud program relies on a good working relationship with the Department of Insurance Fraud Division. We have made the cultivation of this relationship a priority for our Insurance Fraud Unit. From our view of the overall program, communications is a key element to not only insure adequate investigation and prosecution, but is essential to avoid duplication of effort and coordinate joint ventures with the Department of Insurance. In our Joint Investigation Plan specific guidelines hove been established regarding communication between the investigator, the attorney, and the Department of Insurance. We will insure these guidelines are met. In Conclusion We are confident we have the ability to deliver what we've promised, and must attribute a significant portion of our growing success to a strong partnership with the Department of Insurance's Fraud Division. We thank the Commission for the confidence they have shown in our ability to achieve our common goals. III BUTTE COUNTY PLAN D. Staff Qualifications BUTTE COUNTY DISTRICT ATTORiYEY WORKER'S COMPENSATION FRAUD PROG~I~I STAFF DEPUTY DISTRICT ATTORitiEY: DDA Kevin Maloney, formerly with Mendocino County District Attorney's Office, extensive knowledge of Worker's Compensation investigation and prosecution. Kevin will be handling most all prosecutions. Kevin is a graduate of the San Francisco School of Law. His first year of law practice was spent as a defense Attorney in Glenn County, followed by fourteen years as a prosecutor at Mendocino Cotuzty District Attorney's Office, and was that office's Insurance Grant Administrator and prosecutor. Member California District Attorney Association, Insurance Fraud Committee. Mr. Maloney is also an instructor at CDAAIDOI fraud seminars. DDA Mike Candela graduated from the University of San Francisco School of Law in 1987. Prior to his graduation he was a law clerk for the California Supreme Court. After graduation he worked as a Research Attorney for the San Francisco Superior Court. He also worked as a Deputy District Attorney for Marie County and worked in private practice before coming to Butte County in 1997. 1~1r. Candela is a co-author of a second and third editions of the CEB, California Criminal Law, Procedure and Practice. SENIOR INVESTIGATOR: Senior Investigator, Guy Georaiaiuza, supervises the Major Crimes Unit of the Butte County District Attorney, Investigation Division. i~Ir. Georgianna is responsible for the supervision of the program investigators and responsible for t?~e management of the program grants and grant reporting process. 10% of Ivlr. Georgianna's time is devoted to the program. He has held this position since December 1997. Guy graduated from the University of Redlands with a Business Degree and has more than riventy-five years experience in both state and federal law enforcement. PROGRAItit INVESTIGATORS: Bernie Lightner, Investigator II, is the Worker's Compensation Program Investigator. Investigator Lightner has been a law enforcement officer for over thirty yeazs. Investigator Lightner worked nine years as a patrol officer for the San Carlos, California Police Department. After moving to the North State, he continued his law enforcement career as a DA Investigator for the Butte County District Attorney's Office, assigned as the agency's Homicide Investigator for seven years. Lightner brings thirty years of experience and thousands of hours of training to this position. Investigator Jos Van Hout currently works outside the funding provided in the grant. Prior to entering law enforcement Mr. Van Hout spent 13 years specializing in computers and electronics. This background has proven valuable combined with his ten years in law enforcement. He continues to maintain the computer tracking system he developed for the Insurance Fraud system. At this time he is overseeing the development of the Fraud Web Page. Investigator Van Hout continues to assist in the investigation of Workers' Compensation Fraud Cases. SUPPORT STAFF: Gloria Lind, Supervising Legal Secretary has been so employed far nineteen years and is currently assigned to the Major Crimes Unit. III BUTTE COUNTY PLAI°~1 E. Organizational Chart BUTTE COUNTY WORKERS' COMPENSATION FRAUD ORGANIZATIONAL CHART DISTRICT ATTORNEY CHIEF I I CHIEF DEPUTY INVESTIGATOR DISTRICT ATTORNEY MAJOR KEVIN MALONEY CRIMES DEPUTY UNIT DISTRICT ATTORNEY SENIOR DEPUTY INVESTIGATOR DISTRICT ATTORNEY FRAUD INVESTIGATOR FRAUD tNVESTIGATOR I'~ JOII`~TT II~I~ESTI~ATI'~E PLAIT JOINT INVESTIGATIVE PLAN N'.emorandum of Understanding 1. Introduction (a) The "parties" to this joint plan are the California Department of Insurance - Fraud Division, and the Butte County District Attorney's Insurance Fraud Unit. (b) The parties of this joint investigative plan recognize that the C.D.I. - Fraud Division was established to investigate allegations of insurance fraud throughout the State of California, and is the primary investigative agency in this field. However, while the headquarters for the Fraud Division in Central Northern California is based in Sacramento, its investigative responsibilities encompass twenty-five central and northern counties. Due to this considerable geographical territory, the number of referrals/cases, and the finite number of investigators available, the Fraud Division cannot reasonably be expected to devote its efforts in any one county. Thus the important need for an effective joint plan to address the problem of insurance fraud in each jurisdictional territory. 2. Statement of Goals (a} Tc promote a close working relationship between the DA's insurance fraud unit ar.d the Fraud Division, based on dedication to the common goal of fighting insurance fraud, commitment to the highest professional and ethical standards, and mutual respect as law enforcement officers devoted to the pursuit of justice and t:~ie protection of the citizens of Butte County and the State of California. (b) To investigate in a timely manner, using professional standard and procedures, ar.d prosecute when appropriate, as many identifiable cases of suspected insurance fraud as we can. (c) To achieve the best possible anti-insurance fraud program we can produce, through the efficient and effective use of the limited resources provided, and the promotion of awareness in this community that the serious problem of insurance fraud is being addressed in a meaningful way by law enforcement. 3. Receipt and Assignment of Cases Present law requires that an insurer who knows or reasonably believes that an act of insurance fraud has beer. committed, report this information to the Department of Insurance - Fraud Division and the local district attorney (Insurance Code Section 1877.3}. w (a) When a suspected fraudulent claim (SFC} or a case referral package is received from insurer, it will be entered into a database, available for future reference. Both parties will maintain a case tracking system to monitor all SFC's and case referral packages received. (b) Both parties will communicate on a regular, scheduled basis to discuss SFC's ar.d case referral packages received, with the objectives being to avoid duplication of investigative efforts, and to insure that all referrals are being appropriately addressed. When a case is assigned for investigation, the assigning party will notify the other within ten working days. A monthly report regarding intake of SFC's and assigned cases will be generated by both parties and mailed to one another by the fifth working day of each month. (c} Zf the SFC or case referral package is sent only to the Fraud Division, the Fraud Division will address the matter, exercising its best discretion on how to proceed, with appropriate notice to the D.A.'s insurance fraud unit of the action taken. Zf the SEC or case referral package is sent only to the D.A.'s insurance fraud unit, it will notify the Fraud Division and determine what action, if any, the Fraud Division desires to take, as indicated in paragraphs (d}, {e), and (f) below. The information shall include the suspect`s name, carrier or administrator and the claim number. (d) As the primary investigative agency in the field of insurance fraud, the Fraud Division will have "first claim" to any SFC or case referral package sent by an insurer for investigation. There can be an exception to this provision if the referring insurer specifically requests that the investigation be done by the D.A.'s office. The Fraud division will be notified immediately to discuss the situation and avoid any duplication of investigative efforts. (e) If the Fraud Division elects to pursue an investigation of an SFC or case referral package sent by an insurer, the D.A.'s insurance fraud unit will suspend any further action on the case, pending the outcome of the Fraud Division's investigatian,,and will notify the insurer of this fact in writing. (f) If the Fraud Division elects not to pursue ar, investigation of an SFC or case referral sent by an insurer, because of excessive caseloads, resource limitations, or any other reason, or chooses to defer any matter referred, the D.A.'s insurance fraud unit will review the referral for investigation. The referring insurer will be notified of this fact in writing and a copy of the writing will be submitted to the appropriate D.A.'s insurance fraud unit. (g) Zf the D.A.`s insurance fraud unit receives a referral that would be more appropriately handled in another county's jurisdiction, the original receiving D.A.'s office will forward the referral to the appropriate county and notify the Fraud Division. 2 4. Investigations (a) Pursuant to the above provision, and to maximize the expenditure of resources, it is understood and agreed that either party will provide assistance to the other upon request in any investigation where such assistance is needed. This could include serving search warrants, interviewing witnesses, making arrests, etc. {b) Joint investigations, may be undertaken in cases where the parties determine it is beneficial to combine resources to achieve the most efficient and effective results. This will be determined on a case-by-case basis. (c} It is expected that cases will be developed from referrals by insurers, other law enforcementJgovernmental agencies (CHP; EDD; etc.), informants and other responsible sources of information. Outreach programs are encouraged to promote this aspect of the plan. (d) It is the intent of this joint investigation plan to avoid duplication of investigative efforts by maintaining regular communication to discuss caseloads and share information concerning current investigations. The Fraud Division regional supervisors will meet at a minimum of twice a year with the D.A.'s insurance fraud unit's designee to review the working relationship between both agencies. {e) The Deputy District Attorney of the D.A.'s insurance fraud unit, or his/her designee, will be available to meet with the Fraud Division investiga~or at ar.y time during the investigation of a case when so regl:ested by the investigator to discuss any aspect of the case. (f) It is the intent of the parties that by maintaining regular communication and adhering to agreed upon plans and procedures, the completed investigation will result in the filing of criminal charges and a successful prosecution. At the same time, however, it is understood that not every case that is investigated will result in prosecution. This can happen when the evidence does not develop as expected, material witnesses are no longer available, the case lacks jury appeal, the reasonable likelihood of conviction is minimal, or other unforeseen circumstances develop. The parties will take all possible steps to avoid such situations, as it is not desirable to expend investigative resources on cases that are not prosecuted in court. (g) Any investigative costs associated with a Fraud Division investigation prior to the complaint being filed, the Fraud Division will incur the cost. Any costs associated with the investigation after the complaint is filed the District Attorney`s Office will incur the cost. Responsibility for costs incurred during a "joint" undercover operation will be determined by the Memorandum of Understanding - see section 5(c}. 3 5. Undercover Operations {a} Both parties recognize the importance of undercover investigations in those cases where it is felt this technique is a viable means (often the only means} of developing evidence to prove a suspected insurance fraud. However, the parties also agree that undercover operations need to be highly organized and carefully monitored by supervisor level personnel to insure the efficiency and integrity of the investigation. It is understood that undercover operations can be very labor intensive and time consuming, and don't always produce the desired results. {b) Either party may decide to conduct an undercover operation in a particular case using its own personnel and resources. In a situation where the Fraud Division conducts its own independent undercover investigation in Butte County, the D.A.'s insurance fraud unit will be available to provide any advice or other assistance requested. (c) In a case where there will be a "joint" undercover investigation, there will be a memorandum of understanding (M.O.U.) prepared prior to the start of the investigation, which outlines and specifies the goals and the objectives of the investigation, as well as the duties and responsibilities, including personnel and financial responsibilities, of each of the parties in the investigation. 6. Case Filing Requirements (a) The investigation of suspected insurance fraud cases should focus r.ot only on the development of probable cause to make an arrest, but also on the obtaining of sufficient evidence to prove the charge beyond a reasonable doubt in a criminal court. It is understood that each case is unique, and that certain action may need to be taken in one case that would not be taken in another. {b) When submitting a case for prosecution, the investigator should present as complete a package as possible, including a detailed report, which outlines the offenses alleged to have been committed, the details of the investigation, and the evidence available to prove the charges, including identification of available witnesses and supporting documentation. In cases involving alleged false statements of misrepresentations, there must also be identified evidence to show materiality of the alleged false statement or misrepresentation to the claim. (c} To promote efficiency in this area, Fraud Division investigators are encouraged to contact the Butte County D.A. early in the investigation of a case to share ideas and develop strategies that will lead to a prosecutable case. {d) The D.A. will ensure that all formal case presentations made by the Fraud Division will be reviewed within ten working days of the presentation or delivery. If additional investigation is believed to be needed by the reviewing D.A., he/she will notify 4 the case investigator immediately. The case investigator will complete the additional investigation as soon as reasonably possible and provide the D.A. with status updates at a minimum of every fifteen working days until the investigation is completed. The D.A. will further ensure that decisions on completed investigations, complaint filings shall be done in a timely fashion but no longer than thirty days from the date of receipt. If a formal case is rejected for prosecution, the D.A. will prepare a letter in writing stating the reasons for the rejection and provide the letter to the case investigator within ten working days following the rejection. 7. Training (a) Both parties have been, and will continue to be, active participants in the annual CDAAlCDI insurance fraud training seminar. This will provide a significant portion of the ongoing training of both parties in the area of insurance fraud. (b) The parties will participate in joint informal training sessions as necessary on issues important to the investigation and prosecution of insurance fraud cases. !c) The parties will assist each other, when requested, in training sessions for insurance carriers ar.d administrators, or issues important to the detecting, investigation, and prosecution of insurance fraud cases. Both parties will notify each other when there is a request for training by an insurance carrier and ac'.:-nini strator. 8. Problem Resolution ;a) It is the intent of this join` plan. that any problems cr differences that may arise between the parties be resolved quickly through early, direct, and open communication by those personnel directly involved in the dispute. If necessary, the Chief Ir.-restigator of t:ie Fraud Division and the prosecutor in charge of the D.A.`s insurance fraud program may be called upon to resolve any dispute, concentrating on the best interests of the overall insurance fraud program. " ~.-c.__ ~ q' o -rJ Edward J. Sze rep D e Chief Investigator Butte County Cistrict Attorney K thryn Scholz Date Chief Investigator, Fraud vision California Department of Insurance 5