§ 409 — Fraud prevention plans and special investigations units

§ 409. Fraud prevention plans and special investigations units. (a)\nEvery insurer writing private or commercial automobile insurance,\nworkers' compensation insurance, or individual, group or blanket\naccident and health insurance policies issued or issued for delivery in\nthis state, except for insurers that write less than three thousand of\nsuch policies, issued or issued for delivery in this state annually, and\nevery entity licensed pursuant to article forty-four of the public\nhealth law except those entities with an enrolled population of less\nthan sixty thousand persons in the aggregate and, except those entities\nlicensed pursuant to sections forty-four hundred three-a, forty-four\nhundred three-c, forty-four hundred-d, forty-four hundred three-f and\nforty-four hundred eight-a of the public health law shall, within one\nhundred twenty days of the effective date of this amended section to be\npromulgated by the superintendent to implement this section, file with\nthe superintendent a plan for the detection, investigation and\nprevention of fraudulent insurance activities in this state and those\nfraudulent insurance activities affecting policies issued or issued for\ndelivery in this state. The superintendent may accept programs and\nprocesses implemented pursuant to section forty-four hundred fourteen of\nthe public health law as satisfying the obligations of this section and\nregulations promulgated thereunder.\n (b) (1) The plan shall provide the time and manner in which such plan\nshall be implemented, including provisions for a full-time special\ninvestigations unit and staffing levels within such unit. Such unit\nshall be separate from the underwriting or claims functions of an\ninsurer, and shall be responsible for investigating information on or\ncases of suspected fraudulent activity and for effectively implementing\nfraud prevention and reduction activities pursuant to the plan filed\nwith the superintendent. An insurer shall include in such plan staffing\nlevels and allocations of resources in such full-time special\ninvestigations unit as may be necessary and appropriate for the proper\nimplementation of the plan and approval of such plan pursuant to\nsubsection (d) of this section.\n (2) In lieu of a special investigations unit, an insurer may contract\nwith a provider of services related to the investigation of information\non or cases of suspected fraudulent activities; provided, however, that\nan insurer which opts for contracting with a separate provider of\nservices, shall provide to the superintendent a detailed plan therefor,\npursuant to requirements set forth in regulation by the superintendent.\n (3) Persons employed by special investigations units as investigators\nor by an independent provider of investigative services under contract\nwith an insurer shall be qualified by education or experience which\nshall include an associate's or bachelor's degree in criminal justice or\nrelated field, or five years of insurance claims investigation\nexperience or professional investigation experience with law enforcement\nagencies, or seven years of professional investigation experience\ninvolving economic or insurance related matters. For the purposes of\nevaluation of medical related claims insurers may employ or retain duly\nlicensed or authorized medical professionals. Notwithstanding these\nminimum requirements anyone employed as an investigator in a special\ninvestigation unit or by a provider of investigative services under\ncontract to an insurer as of the effective date of this paragraph and\nwho was also so employed on or before September tenth, nineteen hundred\nninety-six may continue in such employment provided the insurer\nidentifies such person in writing to the superintendent giving the date\nsuch employment began and a description of the person's qualifications,\nemployment history and current job duties.\n (c) The plan shall provide for the following:\n (1) interface of special investigation unit personnel with law\nenforcement and prosecutorial agencies and with the financial frauds and\nconsumer protection unit of the department of financial services;\n (2) reporting of fraud data to a central organization approved by the\nsuperintendent;\n (3) in-service education and training for underwriting and claims\npersonnel in identifying and evaluating instances of suspected\nfraudulent activity in underwriting or claims activities;\n (4) coordination with other units of an insurer for the investigation\nand initiation of civil actions based upon information received by or\nthrough the special investigation unit;\n (5) public awareness of the cost and frequency of fraudulent\nactivities, and the methods of preventing fraud;\n (6) development and use of a fraud detection and procedures manual to\nassist in the detection and elimination of fraudulent activity; and\n (7) the time and manner in which such plan shall be implemented and a\ndemonstration that the fraud prevention and reduction measures outlined\nin the plan will be fully implemented.\n (d) (1) A fraud detection and prevention plan filed by an insurer with\nthe superintendent pursuant to this section shall be deemed approved by\nthe superintendent if not returned by the superintendent for revision\nwithin one hundred twenty days of the date of filing. If the\nsuperintendent returns a plan for revision, the superintendent shall\nstate the points of objection with such plan, and any amendments as the\nsuperintendent may require consistent with the provisions of this\nsection, including, but not limited to, staffing levels, resource\nallocation, or other policy or operational considerations. An amended\nplan reflecting the changes shall be filed with the superintendent\nwithin forty-five days from the date of return.\n (2) If the superintendent has returned a plan for revision more than\none time, the insurer shall be entitled to a hearing pursuant to the\nprovisions of article three of this chapter and regulations promulgated\nthereunder.\n (3) If an insurer fails to submit a final plan within thirty days\nafter a determination of the superintendent after the hearing held\npursuant to paragraph two of this subsection, or otherwise fails to\nsubmit a plan, or fails to implement the provisions of a plan in a time\nand manner provided for in such plan, or otherwise refuses to comply\nwith the provisions of this section, the superintendent may: (i) impose\na fine of not more than two thousand dollars per day for such failure by\nan insurer until the superintendent deems the insurer to be in\ncompliance; or (ii) impose upon the insurer a fraud detection and\nprevention plan deemed to be appropriate by the superintendent which\nshall be implemented by the insurer; or (iii) impose the provisions of\nboth subparagraphs (i) and (ii) of this paragraph.\n (e) Any plan, the information contained therein, or correspondence\nrelated thereto, or any other information furnished pursuant to this\nsection shall be deemed to be a confidential communication and shall not\nbe open for review or be subject to a subpoena except by a court order\nor by request from any law enforcement agency or authority.\n (f) For purposes of this section, the term "policies" shall refer to\nindividuals covered if coverage is issued on a group basis.\n (g) Every insurer required to file a fraud prevention plan shall\nreport to the superintendent on an annual basis, no later than March\nfifteenth, describing the insurer's experience, performance and cost\neffectiveness in implementing the plan, utilizing such forms as the\nsuperintendent may prescribe. Upon consideration of such reports, the\nsuperintendent may require amendments to the insurer's fraud prevention\nplan as deemed necessary.\n