2013 marked the 22nd anniversary of The Insurance Fraud Bureau of Massachusetts
The Insurance Fraud Bureau of Massachusetts came close to its best year in 2013 in referring 229 cases of insurance fraud to prosecutors in the Attorney General’s Office, United States Attorney’s Office and the various District Attorneys of the Commonwealth. Created in 1990, the IFB is authorized by state statute to conduct criminal investigations in all lines of insurance fraud and is dedicated to “…the sytematic elimination of insurance fraud in Massachusetts though the prevention and investigation of fraudulent insurance transactions.”
As part of its mission, each year the IFB issues an annual report outlining the work it has done in helping to eliminate insurance fraud. While it is authorized to investigate in all lines of insurance, the majority of its focus is on the private passenger automobile insurance fraud and worker’s compensation fraud.
Highlights of 2013 for the IFB
The following are some of the highlights from the IFB’s Annual Report for 2013 that we thought might be of the most interest to Massachusetts insurance professionals. Anyone interested in viewing the full report can do so directly on the IFB website.
Referrals to the IFB
The Insurance Fraud Bureau of Massachusetts receive referrals for potential insurance fraud investigations from a number of sources. These include calls made to its hotline (1-800-32FRAUD), via its website or referral email address (firstname.lastname@example.org), or information forwarded to the Bureau either from an insurance carrier or agency. In 2013, the IFB received a total of 3,974 referrals of potential incidents of insurance fraud. After an initial review, the Bureau ultimately declined 2,566 of those tips received while accepting 1,385 for further review and investigation. Of the 3,974 referrals the Bureau received in 2013, 3,059 of those involved an automobile claim.
Since the IFB’s inception in 1990, the Bureau has received a total of 59,912 referrals, with 44,099 involving automobile insurance fraud. As such, automobile insurance fraud consitutes approximately 73% of the total number of referrals the IFB receives.
Cases Referred by the IFB for Prosecution
The IFB referred a total of 229 cases this past year to various prosecutors for prosecution. The highest percentage, 202 cases, were referred to the various district attorney offices throughout the Commonwealth. Another 22 were sent to the Attorney General’s Office of Massachusetts with a further five forwarded to the United State’s Attorney’s Office.
The IFB says that of the 229 cases referred, 194 could be classified as automobile, while another 15 involved workers’ compensation, and the remaining 20 classified as other (including provider, property, commercial and disability).
Individual Persons Charged for Insurance Fraud
A total of 229 cases were recommended by the IFB for prosecution in 2013. Within that number, 185 individual persons were charged for various forms of insurance fraud. Of the 185 individuals referred to prosecutors for insurance fraud, 184 individual cases reached a final disposition with 27 individuals being convicted. Another 67 cases were continued without a finding.
According to the IFB, it can take months or years sometimes to reach a final disposition on a particular case. In 2013, however, 27 individuals were convicted for insurance fraud as a result of the IFB’s work. Another 67 cases involving individual defendants were continued without a finding. As a result, total restitution for the individual dispositions in 2013 was approximately $442,000 says the Bureau.
The IFB in Numbers
The Insurance Fraud Bureau of Massachusetts had total revenues of $9,850,693 in 2013. This includes an Assessment of $8,849,640 along with other income of $1,001,053. The majority of the IFB’s expenses goes to Personnel Costs which totaled $5,309,299 in 2013. Facilities Costs were $1,052,990 with Administrative Costs equaling $2,121,230. Professional Services rounded out the Total Operating Expenses for the IFB at $53,364.
Other expenses of note in the Addition to Reserve fund which was $500,000 this year as was the Funding for District Attorneys, which is money given to different District Attorneys of the Commonwealth to fight fraud as directed by the Commissioner of Insurance was also $500,000 in 2013. The result is that the IFB’s Net Operating Income, which are “Amounts returned to the insurance industry in the following calendar year” for 2013 was $313,810, an increase over 2012 when that number was $261,132.