California Assembly Passes Bill to Tackle Health Insurance Fraud

August 18, 2012 (Press-News.org) In an effort to address the growing problem of health insurance fraud around the state, the California Assembly recently passed bill AB 2138, which will increase the amount given to agencies responsible for investigating bad faith disability claims and other types of insurance fraud. Under the measure, the amount paid by health and disability insurers to investigate fraud would increase from 10 cents per insured person to up to 20 cents per insured. The additional funding would allow district attorneys' offices around the state to investigate and prosecute insurance fraud cases.

"Health and disability insurance fraud seriously hurts policyholders, providers, insurers, and ultimately California's economy," said Dave Jones, the California Insurance Commissioner, in a statement. "Unfortunately, this type of fraud is increasing in sophistication, complexity and volume. This higher assessment will provide much needed resources to fight this growing problem, especially in light of federal health care reform."

This bill is currently awaiting action from the State Senate.

Insurance Fraud in California on the Rise

According to the Advisory Task Force of the California Department of Insurance -- which is made up of consumer advocates, insurance industry representatives and law enforcement officials -- AB 2138 is necessary because insurance fraud is increasingly draining the state's resources. A CDI report detailing the extent of insurance fraud in the state indicates that from 2007 to 2010, the agency received over 6,000 fraudulent health and disability claims, and of those, only 656 investigations were conducted by local district attorneys. These investigations led to 221 arrests and 184 convictions, which the CDI says is not enough given how many cases of alleged fraud actually occurred during those years.

The CDI also reports that these fraud cases cost the state about $223 million per year.

What Is Health Insurance Fraud?

Health insurance fraud is commonly associated with activities such as concealing pre-existing conditions, adding ineligible dependents to an insurance policy and failing to disclose other health care coverage before receiving benefits.

Insurance fraud isn't only associated with the policyholder. It also happens when an insurance agent misrepresents what is covered within a policy. All too often, people find their policies do not cover what they thought they did because an insurance agent led them to believe the policy was more robust than it was.

If you are struggling with an insurance dispute, it is important to investigate all of your options. An experienced health and disability insurance lawyer can help you determine what kind of claim you may have and can be an invaluable advocate when it comes to protecting your rights.

Article provided by Donahue & Horrow, LLP
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