LOUISIANA INSURANCE FRAUD TASK FORCElsp.org/pdf/IFU_2018_Annual_Report.pdf · 2016 2017 2018. 10 LOUISIANA STATE ... In June 2017, the LSP CID Baton Rouge Field Office received a

LOUISIANA INSURANCE FRAUD TASK FORCE

2018 Annual Report

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The Louisiana Insurance Fraud Task Force is a statutorily mandated partnership between three state

agencies created to collectively investigate and deter acts of insurance fraud and auto theft in Louisiana.

The following three agencies are members of the Task Force:

Louisiana State Police

Insurance Fraud / Auto Theft Program

Office of the Attorney General

Insurance Fraud Support Unit

Louisiana Department of Insurance

Insurance Fraud Section

Louisiana Automobile Theft and Insurance Fraud Prevention Authority

Insurance fraud is any fraudulent act, knowingly and willfully committed by any person in an attempt to

injure, defraud, or deceive an insurance company. In Louisiana, insurance fraud is a felony, and when

convicted, penalties could include jail time, fines, community service, probation and/or restitution.

2018 Annual Report

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Table of Contents

2018 Annual Report

Letter From Louisiana State Police Superintendent 4

Louisiana State Police Insurance Fraud / Auto Theft Program 5

Program Notes 6

Referral Information 7

Investigations and Arrests 9

Criminal Investigations by Type 10

Judicial Actions 11

Budget Expenditures 12

Investigative Highlights 13

Law Enforcement Training and Auto Theft 16

Personnel Changes 17

Field Office Information 18

Office of the Attorney General / Insurance Fraud Support Unit 19

Basic Information 20

Statutory Authority 21

Statistical Information 22

Insurance Fraud Support Unit Budget / Other Accomplishments 23

Department of Insurance / Insurance Fraud Section & LATIFPA 24

Claims Fraud / Crime Categories and Charges 25

Producer, Claims Adjuster and Company Fraud Actions 26

Background Investigations 26

LATIFPA 26

Insurance Fraud Section / LATIFPA Budget 27

Advisory Board Members 28

How to Report Fraud 29

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2018 Annual Report

Letter From The Superintendent

State of Louisiana Department of Public Safety and Corrections

Public Safety Services

KEVIN REEVES, COLONEL

DEPUTY SECRETARY

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2018 Annual Report

Louisiana State Police


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LOUISIANA STATE POLICE 2018 Annual Report


The Program

The Insurance Fraud / Auto Theft Program is a statutorily mandated criminal investigative unit within the Louisiana State Police Bureau of Investigations, Criminal Investigations Division. The Program is dedicated to seeking justice on behalf of the citizens of the state of Louisiana and industry stakeholders by the execution of superior, professional, and effective investigations.

In mid 2018, the Program was reorganized to take advantage of additional levels of support already established within the Bureau of Investigation. The Program transitioned from the Special Investigations Division to the Criminal Investigations Division. The reorganization allowed the Program to assign insurance fraud investigators to eight field offices around the State.

Under the new structure, a sergeant within each field office directly supervises troopers and criminal investigators tasked with investigating criminal referrals from the Louisiana Department of Insurance and complaints of auto theft. Each field office is commanded by a lieutenant and each region is under the command of a State Police Captain. The statewide program coordinator is a lieutenant, tasked to work with State Police supervisors and staff, industry representatives, and governmental partners to ensure the success of the Program mission. In 2018, there were eleven State Police Troopers and six Criminal Investigators assigned to the Program throughout the state.

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Referrals Received...

The Insurance Fraud / Auto Theft Program receives insurance fraud referrals from the Louisiana Department of Insurance on a monthly basis. In 2018, the Program received 904 referrals from the Department of Insurance. Of the referrals received, the Program accepted 265 and rejected 639 referrals. In addition to the referrals received from the Louisiana Department of Insurance, the Insurance Fraud / Auto Theft Program also investigated 85 criminal cases related to insurance fraud, automobile theft, and other crimes, which were received from various entities, including Program generated operations, other law enforcement agencies, citizens, etc.

Referrals Received from LDI 904

LDI Referrals Accepted 265

LDI Referrals Rejected 639

Non-LDI Investigations 85

Total Referrals 989

2018 Referral Information

In 2018, 75.1% of the referrals received from the Department of Insurance were related to auto claims fraud, followed by property & casualty fraud at 8.7%, bodily inju-ry fraud at 5.8%, and healthcare fraud at 3.8%. The remaining types listed in the table to the right make up the remaining 6.6 %.

2018 LDI Referrals & Non-LDI Referrals Received

Type of Investigation… LDI Non-LDI

Arson 5 0

Auto Claims Fraud 679 12

Auto Theft 0 32

Bodily Injury Fraud 52 3

Catastrophe Fraud 0 0

Commercial Policy Fraud 5 1

Disability Fraud 9 0

Forgery 2 2

Fraudulent Ins. Documents 14 2

Fugitive 0 17

Healthcare Fraud 34 1

Life Insurance Fraud 11 1

Other 3 11

Producer Fraud 3 0

Property & Casualty Fraud 79 3

Worker's Compensation Fraud 8 0

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2018 Referrals Accepted by Type...

*Workman’s Compensation Fraud, Life Insurance Policy Fraud, Forgery, Disability Fraud, Commercial Policy Fraud and Producer

Fraud each represent less than 2% of the investigation types.

This chart represents the cumulative numbers of all (LDI & Non LDI) referrals accepted in 2018.

Auto Claims Fraud62%

Fraudulent Insurance Documents / Cards

2%

Auto Theft10%

Fugitive5%

Bodily Injury Fraud4%

Healthcare Fraud4%

Other3%

Property & Casualty Fraud

8%

Commercial Policy Fraud

2%

LDI AND NON-LDI REFERRALS ACCEPTED

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2018 Investigations and Arrests...

In 2018, the Insurance Fraud / Auto Theft Program opened 271 criminal investigations and closed 291 investigations. Region 1 (Baton Rouge, Hammond, New Orleans Offices) accounted for 120 of those investigations. Region 2 (Houma, Lafayette, Lake Charles Offices) recorded 50 investigations opened. Region 3 (Alexandria, Monroe, Shreveport Offices) initiated 101 investigations. The regional breakdown of closed investigations is as follows: Region 1—38%, Region 2—20%, and Region 3—42%. Of the 291 investigations closed, 170 or 58% were closed by arrest. In 2018, the Insurance Fraud / Auto Theft Program arrested a total of 229 persons throughout the state. Statewide 38% of the arrests were in Region 1, 20% were in Region 2, and 42% were in Region 3. The Insurance Fraud / Auto Theft Program opened 8% less investigations in 2018 than in 2017, but the number of investigations closed increased by 1% . The number of arrests have increased by 14% from 2017.

Investigations & Incidents Opened 271

Investigations & Incidents Closed 291

Arrests 229

2018 Case Information

Three Year Statistical Profile...

INVESTIGATIONS OPENED

INVESTIGATIONS CLOSED

ARRESTS

316

357

200

296287

201

271

291

229

2016

2017

2018

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2018 LSP Investigations Conducted by Type...

*Workman’s Compensation Fraud, Producer Fraud, and Arson each represent less than 1% of the investigation types.

This chart represents the cumulative numbers of all (LDI & Non LDI) investigations initiated in 2018.

Property and Casualty

9%Healthcare

2%

Bodily Injury

10%

Commercial1%

Fugitive9%

Auto Theft

14%

Fraudulent Insurance

Documents2%

Other

5%

Forgery

2%

Auto Claims

43%

Disability

1%

Life

1%

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2018 Judicial Actions...

In 2018, there were 57 convictions, 20 pretrial interventions, $404,403.21 ordered in restitution, and $13,327.50 assessed in fines. In judicial proceedings in 2018, there was a combined total of 81 years, 5 months of prison time ordered and 77 years and 7 months probation ordered for offenders of fraudulent acts relating to insurance fraud and other crimes.

Convictions 57

Jail Time Ordered 81 years, 5 months

Probation Ordered 77 years, 7 months

Community Service 0

Pre-Trial Intervention 20

Restitution $404,403.21

Court Fines $13,327.50

2018 Judicial Actions

In 2018, the Program had 21% of their convictions declared in Caddo Parish, 16% in Ouachita Parish, followed by 12% in Orleans Parish. The remaining convictions were spread throughout 61 other parishes. The table to the right shows all convictions by parish.

Parish Convictions Beauregard 1

Bossier 2

Caddo 12

Concordia 1

East Feliciana 2

Franklin 1

Iberia 2

Jefferson 1

Jefferson Davis 4

Lafayette 4

Livingston 1

Orleans 7

Ouachita 9

Rapides 1

St. Charles 1

St. Landry 1

St. Mary 2

Terrebonne 1

Union 1

Vernon 1

West Carroll 1

West Feliciana 1

TOTAL… 57

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Insurance Fraud / Auto Theft Unit

2018 Budget Expenditures...

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Region 1 Investigative Highlights

Staged Automobile Crash East Baton Rouge Parish

On October 1, 2018, The Louisiana State Police Criminal Investigations Division (LSP CID), Ba-ton Rouge Field Office received a complaint from the Louisiana Department of Insurance alleging possible insurance fraud with regard to a crash involving a U-Haul rental truck and a Budget rent-al truck. A State Police investigation determined that Frankie Relan, Harley Marshall and Christo-pher Webb staged the crash for the purpose of ini-tiating a claim and defrauding an insurance com-pany. On October 30, 2018, LSP Detectives ar-rested Relan and Marshall pursuant to State Police warrants charging them with Insurance Fraud and Filing False Public Records. Marshal was booked into the East Baton Rouge Parish Prison. Webb's warrant remains active

Slip and Fall Fraud East Baton Rouge Parish

In June 2017, the LSP CID Baton Rouge Field Office received a complaint from an insurance company alleging fraud regarding a slip and fall at a department store in Baton Rouge, Louisiana. A State Police investigation determined Herman Lovelady made misrepresentations to the insur-ance company in an attempt to defraud the insur-ance company of money in which he was not enti-tled. As a result of Lovelady's actions, the insur-ance company incurred $18,479.44 in legal fees and investigative expenses. On August 2, 2018, LSP Investigators arrested Lovelady pursuant to a State Police warrant charging him with Insurance Fraud and Perjury. He was booked into the East Baton Rouge Parish Prison.

Healthcare Fraud East Baton Rouge Parish

In February 2018, the LSP CID New Orleans Field Office received a criminal referral from an insurance company in reference to a possible fraud committed by Carissa Kerner. The compa-ny alleged that Kerner overcharged the insurance company for medical supplies. A State Police in-vestigation determined that Kerner billed the in-surance company $159,000.00 for a total of 15,900 catheters, and was compensated $110,526.40. The investigation revealed Kerner actually had 1,820 catheters shipped to the patient, and invoices provided to the insurance company from Kerner were altered as to justify the amount Kerner billed. The investigation determined Kerner was overpaid $97,152.18 due to Kerner submitting fraudulent invoices. On August 28, 2018, Troopers obtained an arrest warrant for Kerner, charging her with Insurance Fraud and Theft. On August 14, 2018, Kerner surrendered to authorities at the East Baton Rouge Jail. multiple counts of Possession of Stolen Property in Orleans Parish.

Auto Theft Recoveries Orleans Parish

In June of 2018, LSP CID New Orleans Field Of-fice received a complaint concerning a suspect using a truck and trailer to steal vehicle(s) in the Parish of Orleans. An investigation led investiga-tors to serve two search warrants at properties be-lieved to be used as “chop shops” in New Orleans, Louisiana. During the service of the warrants, investigators located stolen vehicles, a stolen all-terrain vehicle, a stolen trailer, a vehicle with an altered Vehicle Identification Number (VIN), and VIN plates. The vehicles had an estimated value of $48,400.00. At the conclusion of the investiga-tions, investigators arrested Edwin J. Smith on multiple counts of Possession of Stolen Property in Orleans Parish.

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insurance company. Arrest warrants were ob-

tained for all five suspects. On July 23, 2018,

Troopers arrested the five suspects and booked

them into the Evangeline Parish Correctional Cen-

ter on charges of Insurance Fraud, Filing False

Public Records, and Contributing to the Delin-

quency of a Juvenile.

Staged Automobile Crash Terrebonne Parish

In May of 2018, LSP CID Houma Field Office

was notified of a suspicious crash by a LSP Troop

C Trooper that occurred on LA HWY 182 in Ter-

rebonne Parish. The driver and occupants of the

vehicle reported to the investigating Trooper the

driver veered off the roadway attempting to avoid

a hazard. When the vehicle traveled off of the

roadway, it became submerged in a marshy area;

however, the Trooper noticed the occupants were

relatively dry. Upon recovery of the vehicle, the

Trooper found items wedged against the accelera-

tor. This information was forwarded to the Hou-

ma Field Office. The driver and occupants initiat-

ed claims against the vehicle’s insurer in the

amount of $15,766.84. A State Police criminal

investigation determined that the driver and occu-

pants of the vehicle had provided false infor-

mation to the investigating Trooper and to the in-

surance company. Troopers obtained warrants

charging Kendrick Verrett, Shira Verrett, Esther

Burrell, Dajia Phillips, and a 16 year old juvenile

on charges of Insurance Fraud, Theft, and Filing a

False Police Report.

Healthcare Fraud Calcasieu Parish

On March 06, 2015, Louisiana State Police Crimi-

nal Investigations Division (LSP CID), Breaux

Bridge Field Office received a criminal complaint

of healthcare fraud against Cage Motion Diagnos-

tics of Carlsbad, California. Insurance Fraud /

Auto Theft Troopers in conjunction with the FBI

investigated the complaint. The investigation de-

termined that Cage Motion intentionally used the

wrong CPT codes on the claims they were sending

to a Louisiana based insurance company. The

treatment claimed by Cage Motion was managed

by Dr. Carlos Choucino, an infectious disease

doctor in Lake Charles, Louisiana. Based on the

fraudulent billing claims, the insurance company

compensated Cage Motion approximately

$750,000.00. The Louisiana’s Attorney General’s

Office accepted the file for prosecution. On July

26, 2018, a Louisiana Grand Jury indicted Dr.

Carlos Choucino, Dr. Andrew Osborne (Cage Mo-

tion) and Ms. Stacy Osborne (Cage Motion) on

the criminal charge Money Laundering. They

were booked into the East Baton Rouge Parish

Jail.

Staged Automobile Crash Evangeline Parish

On March 01, 2016, LSP CID Breaux Bridge Field

Office received a criminal complaint from the

Louisiana Department of Insurance concerning

allegations of insurance fraud against Sheba Wil-

liams, Lucinda Williams, Winston Dupre, Delores

Bias and Melanie Malveaux. The State Police in-

vestigation determined that the five suspects from

Evangeline Parish, Louisiana planned to intention-

ally crash two vehicles together for the purpose of

generating fraudulent property damage and bodily

injury claims. The quintet executed the plan and

after the crash, initiated claims against an

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LOUISIANA STATE POLICE 2018Annual Report



Theft of Claimed Property

Bossier Parish

On May 15, 2018, Louisiana State Police Criminal Investigations Division (LSP CID) Bossier City Field Office received a complaint from an insur-ance company by way of the Louisiana Depart-ment of Insurance. The complainant alleged their former employee/agent, Lisa Marks-Little, pawned a wedding ring which she had previously reported lost in a claim she filed with an insurance company. As a result of the claim, Marks-Little received a payment from an insurance company in the amount of $13,486.28. The loss settlement endorsement contained language that any property the insurance company paid for becomes the prop-erty of the company. A State Police investigation determined that Marks-Little initiated a claim to the insurance company alleging the ring had been lost. Marks-Little received payment from State Farm to satisfy the loss claim. Marks-Little sold the ring to a local jeweler for $3,200.00. On June 22, 2018, Marks-Little voluntarily surrendered to Bossier Parish deputies pursuant to a State Police warrant charging her with one count of Theft.

Forgery, Identity Theft and Computer Fraud

Bossier Parish

On March 28, 2018, LSP CID Bossier City Field Office opened an investigation regarding the sub-mission of forged documents to Louisiana based health insurance companies. These submissions allegedly occurred between June 16 and Septem-ber 1, 2017. Kristy S. Fleming was employed by Gibsland Bank & Trust (GBT) Financial Services, d/b/a GBT Insurance Agency, as an insurance pro-ducer. Natalie N. Morgan was employed as her assistant. A State Police investigation determined that Fleming and Morgan forged and submitted documents in an attempt to transfer customers’ insurance policies to Fleming prior to her resigna-tion from GBT on August 31, 2017. The value of the commissions attached to the policies was ap-proximately $600,000.000 annually.

Following the completion of the LSP investigation in September 2018, arrest warrants were secured through the 26th JDC of Bossier Parish on Flem-ing for Forgery (5 counts), Identity Theft (5 counts), and Computer Fraud (5 counts) and on Morgan for Forgery (1 count), Identity Theft (1 count), and Computer Fraud (1 count). On Sep-tember 21, 2018, Fleming and Morgan surren-dered to Bossier Sheriff’s Office personnel on the LSP arrest warrants.

Duplicate Hail Damage

Morehouse Parish

In early 2018, LSP CID Monroe Field Office, opened an investigation based upon a complaint filed with the Louisiana Department of Insurance. This complaint concerned allegations of insurance fraud against Jennifer McMillan. A State Police investigation determined McMillan filed a proper-ty damage claim against her homeowner’s insur-ance policy following alleged hail damage to the roof of her residence. It was discovered McMillan had a prior hail damage claim to the same resi-dence for which she was previously paid. The in-vestigation further showed the repairs for the pre-vious claim were never done. If McMillan been successful with her claim, she would have de-frauded her insurance company in the amount of approximately $8,060.00. Troopers obtained an arrest warrant for McMillan through the 4th JDC of Morehouse Parish for violation of LRS 22:1924, Insurance Fraud. On April 16, 2018, McMillan was arrested by troopers at Morehouse Parish Jail on the outstanding warrant.

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LAW ENFORCEMENT

TRAINING

The Insurance Fraud and Auto Theft Program provided a wide spectrum of training to the Louisiana law enforcement community. The formal training seminars are entitled “Auto Theft Investigations” and “Physical Inspections”; the former being part of the Louisiana Peace Officer Standards Training (POST). The second is taught exclusively by State Police, where the department trains troopers and other agencies how to properly inspect a vehicle and make a VIN determination ensuring the VIN has not been altered or changed. During the Auto Theft Investigations course, instructors discuss the possibility of a false vehicle theft report submitted in conjunction with a fraudulent insurance claim.

In 2018, members of the Program conducted 17 training sessions containing 271 officers.

AUTO THEFT

In conjunction with the Program’s insurance fraud mission, troopers and investigators combat Louisiana’s auto theft. Annually, hundreds of stolen vehicles are identified and recovered by State Police. Vehicles are found during traffic stops, crash investigations, criminal investigations, and routine physical inspections. Troopers are assisted by mobile and stationary license plate reader systems, global positioning system devices, and electronic tracking apparatus. Sometimes identifying the stolen vehicle in police custody is rudimentary; sometimes identifying the vehicle requires a thorough inspection involving the removal of parts, paint, rust, and other containments. Troopers rely on their strong and tenured relationships with the National Insurance

Crime Bureau and local experienced vehicle technicians to assist with troublesome identifications.

2018 IFAT Program Results

Stolen Vehicles Recovered 140

Value of Recoveries $1,956,140.26

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Additions

Trooper Mindi Keith transferred to the Baton Rouge Field Office in the latter part of 2018. She previously served in Patrol and Gaming Divisions. Trooper Camille Joey Babineaux transferred into the Lake Charles Field Office from Troop D Patrol. Trooper Jeffrey Theriot transferred to the New Orleans Field Office from Troop L Patrol. Sergeant Joseph Cuccia transferred to the New Orleans Field Office from the Patrol Division. SGT Cuccia was previously assigned to the unit before a brief stint at Troop B Patrol Division. Investigator Jeffrey Cagle was hired by State Police and assigned to the Baton Rouge Field Office. He was previously employed with the Louisiana Department of Public Safety. Investigator Jason Gagliano was hired by State Police and assigned to the New Orleans Field Office. INV Gagliano has prior service with the New Orleans Police Department. SGT Sanikka Williams was promoted to Sergeant and assigned to the Monroe Field Office. SGT Williams returned to the Program following an assignment in the Criminal Detectives Division.

Departures

Lieutenant Jeff Watts, the Region 1 Officer in Charge and former Insurance Fraud Unit Program

Coordinator, retired from State Police after 28 years of service. LT Watts was assigned to the Patrol Division and Gaming Division, before

being assigned to the Insurance Fraud Unit.

Lieutenant Julie Lewis, the Region III Officer in Charge, retired after 25 years of service. Before transferring to her position with the Insurance

Fraud Unit, LT Lewis served State Police in the Criminal Intelligence Unit, Public Information Office, Narcotics Division, and Patrol.

Sergeant Stephen Shawn McMillian retired with

17 years of service. SGT McMillian worked in the Patrol Division and Training Division prior to his assignment to the Insurance Fraud Unit.

Sergeant Raynell Theard transferred from the New Orleans Field Office to the Gaming

Enforcement Division in early 2018. He was recently promoted to Lieutenant within Gaming.

Master Trooper Anthony Scott Farris transferred from the Lake Charles Field Office to the Gaming

Enforcement Division.

Trooper First Class Alexandr Nezgodinsky transferred from the Baton Rouge Field Office to the State Police Criminal Intelligence Unit.

All will be remembered for their service and

comradery.

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Field Office Contacts

Bossier City

Sgt. Michael Wilkerson

4185 Viking Dr

Bossier City, LA 71111

(318) 741-2733

Program Coordinator: Lt. David Stelly 337-332-8063

Administrative Specialist: Helena Graham 225-925-3536

Insurance Fraud / Auto Theft Program email: [email protected]

Lake Charles

Sgt. Kent Pevoto

One Lakeshore Dr, Ste 970

Lake Charles, LA 70629

(337) 491-2906

Breaux Bridge Sgt. Dale Latham 437 West Mills Rd Breaux Bridge, LA 70517 337-332-8080

Alexandria

Sgt. Larry Zeller

5903 Coliseum Blvd

Alexandria, LA 71302

(318) 484-2104

Monroe Sgt. Sanikka Williams 3420 Medical Plaza Dr, Ste 10 Monroe, LA 71203 (318) 362-4588

Baton Rouge Sgt. Eric Adams 7919 Independence Blvd Baton Rouge, LA 70896

(225) 925-3850

Houma

Sgt. Larry Badeaux

103 Melissa Ln

Houma, LA

(985) 876-8834

New Orleans

Sgt. Joe Cuccia

1450 Poydras St, Ste 1300

New Orleans, LA 70112

(504) 310-7064

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OFFICE OF THE ATTORNEY GENERAL 2018 Annual Report

Louisiana Attorney General

Jeff Landry’s Criminal Division


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OFFICE OF THE ATTORNEY GENERAL 2018Annual Report


Louisiana Attorney General Jeff Landry is proud of the ef-forts of his Insur-ance Fraud Support Unit (the Unit). Through prosecu-tions and the recov-ery of hundreds of thousands of dollars in restitution, the unit is a valuable asset in the fight against criminals who defraud the State and its tax-

payers. The Unit operates as part of a tri-agency task force created by the Legislature and dedicated solely to fighting insurance fraud in Louisiana. The Unit fulfills three primary responsibilities: providing legal advice and consultation to the oth-er two task force agencies – the Louisiana State Police (LSP) and the Louisiana Department of In-surance (LADOI), in insurance fraud matters; prosecuting individuals statewide charged with insurance fraud; and presenting insurance fraud information and training to the insurance industry along with state and federal agencies.

The primary objective of the Unit is to provide superior legal representation to the LADOI and LSP in insurance fraud investigations and prose-cutions. Assistant Attorneys General assigned to the Unit prosecute violations of Louisiana’s crimi-nal laws under Titles 14, 22, 23, and 47 by con-ducting – or assisting in – criminal prosecutions upon the recusal or assistance request of local dis-trict attorneys and by providing legal support to law enforcement agencies investigating criminal insurance fraud.

Furthermore, the Unit also works closely with the Louisiana Department of Revenue (LDR). History shows that if criminals are defrauding insurance companies, then those same criminals are likely defrauding the State when it comes time to pay

their taxes. This is why the Unit entered into an agreement with LDR to investigate and assist in the prosecution of all tax-related fraud in Louisi-ana. These prosecutions are of tax preparers, who receive a fee for preparing Louisiana state tax re-turns for others, and individuals who commit tax evasion and/or fraud through the filing of their personal Louisiana state tax returns. In 2018, the Unit and LDR renewed the annual agreement – prosecuting state tax fraud cases and insurance fraud cases.

The Unit may handle insurance fraud cases that begin with a complaint made directly to the Attor-ney General’s Office. Additionally, the Unit may consult with – and provide legal support to – all local and state law enforcement agencies regard-ing insurance fraud matters and questions. This includes, but is not limited to, reviewing drafts of arrest and search warrants; conducting legal re-search; and evaluating cases from a prosecutor’s perspective (i.e., whether there is sufficient evi-dence to satisfy legal burdens of proof). Due to the complex nature of some of the cases handled – the local district attorney may be consulted while the investigation is still ongoing to obtain the necessary authority to offer a plea agreement, immunity to a target of the investigation to secure his cooperation concerning other targets, or re-quest to prosecute the case outright.

The Unit’s attorneys attend intelligence-sharing meetings hosted by LSP in Baton Rouge. These meetings are attended by members of special in-vestigative units from many insurance companies that do business in Louisiana. Under a statutory grant of immunity from civil liability, these per-sonnel share information regarding fraud trends and specific cases being worked. This level of cooperation has resulted in the successful prose-cutions of several staged accident rings, producer fraud cases, and theft of equipment and automo-biles.

The Unit’s section chief has given presentations on insurance fraud prosecution issues before

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organizations such as the National White Collar Crime Center, the Louisiana Association of Self Insured Employers, the Orleans Parish District Attorney’s Economic Crimes Unit, the Insurance Security Association, the American Council of Life Insurers, the National Insurance Crime Bu-reau (NICB), the Louisiana District Attorneys’ Association, the LADOI, and the Louisiana Claims Association. All of the Unit’s attorneys attend continuing legal education training from various sources, including the National Associa-tion of Insurance Commissioners (NAIC) and oth-er NICB or NAIC sponsored training. Moreover, the Unit is connected with the Homeland Security Information Network – enabling attorneys to track insurance fraud cases from start to finish. This network allows everyone involved with the cases to have access to relevant information at all times.

As part of our ongoing commitment to working with insurers operating in Louisiana, as well as fostering the professional development and exper-tise of our individual Assistant Attorneys General – the Unit attended a law enforcement summit event hosted by Blue Cross/Blue Shield on Sep-tember 25, 2018. Participation in this day-long meeting offered special training to law enforce-ment in insurance and healthcare fraud-related issues. Criminal Division Director Pat Magee, who oversees operations of the Unit, addressed this gathering and briefed them on the functions and actions of the Unit.

All Assistant Attorneys General assigned to the Unit are expected to handle opinion requests. When opinions are assigned, work is done with law clerks to research and draft accurate responses to the requests.

BASIC INFORMATION ABOUT THE UNIT

Statutory Authority for Operations

La. Const. Art. IV, Section 8 provides, in perti-nent part:

As necessary for the assertion or protec-tion of any right or interest of the state, the attorney general shall have authority

…….

(2) upon the written request of a district attorney, to advise and as-sist in the prosecution of any crim-inal case; and

(3) for cause, when authorized by the court which would have origi-nal jurisdiction and subject to judi-cial review, (a) to institute, prose-cute, or intervene in any criminal action or proceedings, or (b) to su-persede any attorney representing the state in any civil or criminal action.

La. Code of Criminal Procedure Article 682 pro-

vides, in pertinent part:

When a district attorney is recused…it shall be the duty of the Attorney General to appoint a member of his staff…to act in the place of the recused district attorney.

La. R. S. 36:702(E) provides:

There shall be within the Department of Justice a criminal division. It shall be re-sponsible for criminal appeals, amicus cu-riae briefs in criminal prosecutions, habe-as corpus defense, assistance to district attorneys in criminal cases, criminal pros-ecution, public corruption, institutional and insurance fraud cases, and

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extraditions, in accordance with Article IV, Section 8 of the Constitution of Louisi-ana.

Additional Statutory Authority for Insurance Fraud Support Unit Operations

La. R. S. 40:1421 et seq. Primary Purpose To provide superior legal representation to LA-DOI and LSP in insurance fraud investigations and prosecutions. To attend LADOI and LSP meetings to screen in-surance fraud referrals. To prosecute tax fraud cases pursuant to contract with LDR.

A strategic objective for the Unit is to provide le-gal support to law enforcement agencies investi-gating criminal insurance fraud referrals by re-sponding to requests for legal consultation within two working days and by attending 90% of intelli-gence-sharing meetings hosted by the LSP Insur-ance Fraud Unit. In 2018, the Unit’s attorneys at-tended all intelligence sharing meetings with the LADOI and the LSP fraud units.

During the 2018 calendar year, the Unit not only reached the standard of 95% percent of requests for legal consultation responded to within 2 work-ing days; but also exceeded this goal in handling 100% of all requests for legal consultation within two working days.

During the 2018 calendar year, 424 new fraud cas-es were opened through the operation of the multi-agency Insurance Fraud Task Force. 280

cases were closed as either a conviction, a pretrial agreement, or a consult. As of December 31, 2018, the Task Force was working 1,664 active open cases of fraud.

The Unit meets the state goal for Crime and Safe-ty Reform of bringing security to all Louisiana citizens by protecting our taxpayers from insur-ance related fraud. LADOI estimates that there are over $500 million dollars lost annually in Louisiana to insurance fraud, as it pertains to cas-ualty and property claims. This does not include healthcare fraud which is estimated to be about $1.5 billion in Louisiana alone. The typical Loui-siana household pays almost $1,000 a year in fraud-related charges passed on to them as con-sumers.

STATISTICAL INFORMATION FOR THE UNIT

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During the 2018 calendar year, the Unit entered into a prosecution assistance agreement with the 19th Judicial District Attorney’s Office – allowing Assistant Attorneys General to prosecute all insur-ance fraud cases occurring in East Baton Rouge Parish (or where East Baton Rouge Parish is a proper jurisdiction). These Assistant Attorneys General have already begun the prosecution of multiple offenders due to this assist agreement in cases involving hundreds of thousands of dollar in fraudulent insurance claims.

In July of 2018, the Unit – working with the sup-port and assistance of the Louisiana Bureau of In-vestigations, LSP, and the Federal Bureau of In-vestigation – secured grand jury indictments of a medical doctor, a chiropractor, and an administra-tive assistant involved in fraudulently billing Blue Cross Blue Shield of Louisiana for over $750,000 in health care payments through a scheme to use erroneous billing codes to obtain grossly inflated payments for services.

Finally, the Unit was successful last year in recov-ering hundreds of thousands of dollars in court-ordered restitution to various victims – including individuals, insurance companies, and LDR.

OTHER 2018 ACCOMPLISHMENTS

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2018 Annual Report


Division of Insurance Fraud

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LOUISIANA DEPARTMENT OF INSURANCE 2018 Annual Report


Claims Fraud... The Division of Insurance Fraud received 2,085 reports of suspected fraudu-lent claims during 2018. The majority were from insurance companies in ac-cordance with La. R.S. 22:1926. Since its inception in 2007, the Division of Insurance Fraud database has accumulated 35,604 entries of suspected fraud-ulent claims. During 2018, the LDI Division of Insurance Fraud referred 904 claim fraud investigations to the State Police. There were 147 arrests resulting in 204 charges for numerous crimes as a result of criminal referrals related to sus-pected fraudulent insurance claims.

*An arrest may include multiple charges.

Charges Against Claimants or Licensees Resulting from Referrals by Category

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2018 Producer, Adjuster and Company Fraud Actions...

Background Investigations… The Division of Insurance Fraud investigates the backgrounds of companies, officers, directors, utilization review organizations, claims adjusters and other entities applying to conduct the business of insurance in Louisiana. This includes changes of officers and directors of domestic companies currently authorized to do business in the state.

Louisiana Automobile Theft and Insurance Fraud Prevention Authority... In 2010, legislation was passed to provide a portion of these funds to LATIFPA, a public agency within the Department of Insurance. La. R.S. 22:2131 established LATIFPA, for the purpose of combating motor vehicle insurance fraud, including fraud by theft and other criminal acts. La. R.S. 22:2134 and La. R.S. 40:1428, amended in 2010, authorized the Commissioner of Insurance to withhold $187,000 each fiscal year from the insurance fraud assessment to provide funding for LATIFPA. This allocation was used for conducting educational and public awareness programs designed to inform the citizens of the state about methods of preventing motor vehicle theft and combating insurance fraud. During Calendar Year 2018, LATIFPA expended $192,663.34, to raise public awareness about insurance fraud and vehicle theft and to raise awareness among teen drivers about the consequences of vehicle theft and vehicle theft prevention. For more information on the Fraud Division and LATIFPA, please refer to the 2017—2018 Louisiana Department of Insurance Annual Report.

Number of Investigations Opened 137

Fines 5

License Revocations 6

License Suspensions 2

Cease and Desist Orders Served 0

Criminal Referrals to Law Enforcement 6

Arrests Made as a Result of Criminal Referrals 0

Company Applications Received 116

Company Applications Approved 114

Company Biographical Affidavits Received 922

Company Biographical Affidavits Approved 882

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Calendar Year 2018 Budget Expenditures...

Note: This amount does not include the $192,663.34 shown above for the LA Automobile Theft Insurance Prevention Au-thority.

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2018 Annual Report

Louisiana State Police Insurance Fraud Unit

Advisory Board Members

Major Robert Brown, LSP Criminal Investigations Division Command Inspector

Captain Brad Cook, LSP Criminal Investigations Division Region 1 Commander

Lieutenant David Stelly, LSP Insurance Fraud / Auto Theft Program Coordinator

Josh Merritt, Louisiana Chapter President IASIU

Fred Lohmann, Regional Director, National Insurance Crime Bureau (NICB)

Matthew Smith, Governmental Affairs, Coalition Against Insurance Fraud

Darie Jordan, Louisiana Auto Theft and Insurance Fraud Prevention Authority

Matthew Stewart, Fraud Director, Louisiana Department of Insurance

Barry Milligan, Assistant Attorney General, Louisiana Department of Justice

Latisha Mire, Director of Corporate Compliance, Heath Care Industry in Louisiana

Bob Finley, SIU Manager, Industry SIU Representative

Richard J. Hagey, SIU Manager, Industry SIU Representative

O’Neal Weber, SIU Manager, Industry SIU Representative

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2018 Annual Report

Report Insurance Fraud to the


Insurance Fraud is ANY intentional misrepresentation

to profit from an insurance entity.

Report Fraud Online:

http://www.ldi.la.gov/consumers/insurance-fraud/report-insurance-fraud

By Phone:

(225) 342-4956 or (800) 259-5300

By Mail:

P.O. Box 3096, Baton Rouge, La 70821

Physical Address:

1702 N. Third Street, Baton Rouge, La 70802

Referrals are vetted through the Louisiana Department of Insurance (LDI). When criminal activity is

suspected LDI submits the referral to the Louisiana State Police Insurance Fraud and Auto Theft Unit for

further investigation and possible arrest(s). The Louisiana Attorney General’s Office is notified when a

referral is submitted to Louisiana State Police.

HELP LOUISIANA BOOT OUT FRAUD!

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LOUISIANA INSURANCE FRAUD TASK FORCE

LOUISIANA STATE POLICE Insurance Fraud & Auto Theft Program

7919 Independence Blvd., A-19, Baton Rouge, LA 70806 (225) 925-3536

www.lsp.org

LOUISIANA OFFICE OF THE ATTORNEY GENERAL Insurance Fraud Support Unit

1885 N. Third Street, Baton Rouge, LA 70802 (225) 326-6000

www.ag.state.la.us

LOUISIANA DEPARTMENT OF INSURANCE Insurance Fraud Section

Louisiana Auto Theft and Insurance Fraud Prevention Authority 1702 N. Third Street, Baton Rouge, LA 70802

(225) 342-4956 www.ldi.la.gov

This public document was published at a total cost of $XXX.XX One-hundred (100) copies of this public document were published in this first printing at a cost of $XXX.XX The total cost of all printings of this document, including reprints is $XXX.XX This document was published by the Louisiana State Police, Criminal Investigations Division, 7919 Independence Blvd., Baton Rouge, LA, 70806 and printed by OTS-State Printing, 1201 North Third Street, Baton Rouge, LA, 70802 to meet the requirement for an annual report of activities for the Insurance Fraud Task Force under the authority of L.R.S. 40:1427. This material was printed in accordance with the standards for printing by state agencies established pursuant to R.S. 43:31. Printing of this material was purchased in accordance with the provisions of Title 43 of the Louisiana Revised Statutes.