2006 New York Code - Fraud Prevention Plans And Special Investigations Units

 
    §  409.  Fraud prevention plans and special investigations units.  (a)
  Every  insurer  writing  private  or  commercial  automobile  insurance,
  workers'   compensation  insurance,  or  individual,  group  or  blanket
  accident and health insurance policies issued or issued for delivery  in
  this  state,  except for insurers that write less than three thousand of
  such policies, issued or issued for delivery in this state annually, and
  every entity licensed pursuant  to  article  forty-four  of  the  public
  health  law  except  those  entities with an enrolled population of less
  than sixty thousand persons in the aggregate and, except those  entities
  licensed  pursuant  to  sections  forty-four hundred three-a, forty-four
  hundred three-c, forty-four hundred-d, forty-four  hundred  three-f  and
  forty-four  hundred  eight-a  of the public health law shall, within one
  hundred twenty days of the effective date of this amended section to  be
  promulgated  by  the superintendent to implement this section, file with
  the  superintendent  a  plan  for  the  detection,   investigation   and
  prevention  of  fraudulent  insurance activities in this state and those
  fraudulent insurance activities affecting policies issued or issued  for
  delivery  in  this  state.  The  superintendent  may accept programs and
  processes implemented pursuant to section forty-four hundred fourteen of
  the public health law as satisfying the obligations of this section  and
  regulations promulgated thereunder.
    (b)  (1) The plan shall provide the time and manner in which such plan
  shall be implemented,  including  provisions  for  a  full-time  special
  investigations  unit  and  staffing  levels  within such unit. Such unit
  shall be separate from  the  underwriting  or  claims  functions  of  an
  insurer,  and  shall  be responsible for investigating information on or
  cases of suspected fraudulent activity and for effectively  implementing
  fraud  prevention  and  reduction  activities pursuant to the plan filed
  with the superintendent.  An insurer shall include in such plan staffing
  levels  and  allocations  of  resources  in   such   full-time   special
  investigations  unit  as may be necessary and appropriate for the proper
  implementation of the  plan  and  approval  of  such  plan  pursuant  to
  subsection (d) of this section.
    (2)  In lieu of a special investigations unit, an insurer may contract
  with a provider of services related to the investigation of  information
  on  or cases of suspected fraudulent activities; provided, however, that
  an insurer which opts  for  contracting  with  a  separate  provider  of
  services,  shall provide to the superintendent a detailed plan therefor,
  pursuant to requirements set forth in regulation by the superintendent.
    (3) Persons employed by special investigations units as  investigators
  or  by  an independent provider of investigative services under contract
  with an insurer shall be qualified  by  education  or  experience  which
  shall include an associate's or bachelor's degree in criminal justice or
  related   field,   or  five  years  of  insurance  claims  investigation
  experience or professional investigation experience with law enforcement
  agencies,  or  seven  years  of  professional  investigation  experience
  involving  economic  or  insurance  related matters. For the purposes of
  evaluation of medical related claims insurers may employ or retain  duly
  licensed  or  authorized  medical  professionals.  Notwithstanding these
  minimum requirements anyone employed as an  investigator  in  a  special
  investigation  unit  or  by  a  provider of investigative services under
  contract to an insurer as of the effective date of  this  paragraph  and
  who  was also so employed on or before September tenth, nineteen hundred
  ninety-six  may  continue  in  such  employment  provided  the   insurer
  identifies  such person in writing to the superintendent giving the date
  such employment began and a description of the person's  qualifications,
  employment history and current job duties.
    (c) The plan shall provide for the following:
    (1)  interface  of  special  investigation  unit  personnel  with  law
  enforcement and prosecutorial agencies, including the  insurance  frauds
  bureau of the state insurance department;
    (2)  reporting of fraud data to a central organization approved by the
  superintendent;
    (3) in-service education and  training  for  underwriting  and  claims
  personnel   in   identifying   and  evaluating  instances  of  suspected
  fraudulent activity in underwriting or claims activities;
    (4) coordination with other units of an insurer for the  investigation
  and  initiation  of  civil actions based upon information received by or
  through the special investigation unit;
    (5)  public  awareness  of  the  cost  and  frequency  of   fraudulent
  activities, and the methods of preventing fraud;
    (6)  development and use of a fraud detection and procedures manual to
  assist in the detection and elimination of fraudulent activity; and
    (7) the time and manner in which such plan shall be implemented and  a
  demonstration  that the fraud prevention and reduction measures outlined
  in the plan will be fully implemented.
    (d) (1) A fraud detection and prevention plan filed by an insurer with
  the superintendent pursuant to this section shall be deemed approved  by
  the  superintendent  if  not returned by the superintendent for revision
  within  one  hundred  twenty  days  of  the  date  of  filing.  If   the
  superintendent  returns  a  plan  for revision, the superintendent shall
  state the points of objection with such plan, and any amendments as  the
  superintendent  may  require  consistent  with  the  provisions  of this
  section, including,  but  not  limited  to,  staffing  levels,  resource
  allocation,  or  other  policy or operational considerations. An amended
  plan reflecting the changes  shall  be  filed  with  the  superintendent
  within forty-five days from the date of return.
    (2)  If  the superintendent has returned a plan for revision more than
  one time, the insurer shall be entitled to a  hearing  pursuant  to  the
  provisions  of article three of this chapter and regulations promulgated
  thereunder.
    (3) If an insurer fails to submit a  final  plan  within  thirty  days
  after  a  determination  of  the  superintendent  after the hearing held
  pursuant to paragraph two of this  subsection,  or  otherwise  fails  to
  submit  a plan, or fails to implement the provisions of a plan in a time
  and manner provided for in such plan, or  otherwise  refuses  to  comply
  with  the provisions of this section, the superintendent may: (i) impose
  a fine of not more than two thousand dollars per day for such failure by
  an  insurer  until  the  superintendent  deems  the  insurer  to  be  in
  compliance;  or  (ii)  impose  upon  the  insurer  a fraud detection and
  prevention plan deemed to be appropriate  by  the  superintendent  which
  shall  be  implemented by the insurer; or (iii) impose the provisions of
  both subparagraphs (i) and (ii) of this paragraph.
    (e) Any plan, the information  contained  therein,  or  correspondence
  related  thereto,  or  any  other information furnished pursuant to this
  section shall be deemed to be a confidential communication and shall not
  be open for review or be subject to a subpoena except by a  court  order
  or by request from any law enforcement agency or authority.
    (f)  For  purposes of this section, the term "policies" shall refer to
  individuals covered if coverage is issued on a group basis.
    (g) Every insurer required to  file  a  fraud  prevention  plan  shall
  report  to  the superintendent on an annual basis, no later than January
  fifteenth, describing the insurer's  experience,  performance  and  cost
  effectiveness  in  implementing  the  plan,  utilizing such forms as the
  superintendent may prescribe. Upon consideration of  such  reports,  the
  superintendent  may require amendments to the insurer's fraud prevention
  plan as deemed necessary.