Page 9 - Delaware Department of Insurance

Fraud – Investigating and understanding
Fraud is on the rise and evolving with the expansion of technology. The Fraud Bureau has seen a 29% increase in fraud reports from 2015 to 2018, and in 2019 saw
a 10% uptick.
As it relates to fraud, the Department of Insurance is responsible for investigating consumer complaints and inquiries and advocate for Delawareans; ensuring Delaware companies
are in good financial health; prosecuting insurance
fraud; and policing the conduct of carriers, agents, and brokers doing business in Delaware.
“We aggressively confront the problem of insurance fraud in Delaware by facilitating the detection of insurance fraud, reducing the occurrence of such fraud through administrative enforcement and deterrence, requiring the restitution of fraudulently obtained insurance benefits, and reducing the amount of premium dollars used to pay fraudulent claims,” said Gerald Pepper, head of the Fraud Bureau, which was established in 1995.
Fraud Bureau investigators encourage Delaware residents
to always look closely at any statements provided by their insurance company, or in the case of Medicaid and Medicare, the government. Consumers seeking new insurance companies should be wary of plans that look “too good to be true,” as they often are. The department can verify company legitimacy for residents.
As of November 2019, the department had accepted 542 referrals and tips and brought forward 15 civil cases and 21 criminal charges, leading to six arrests. Civil penalties to date amount to more than $20,000.
Most referrals involve claims
originating from motor vehicle accidents and fraud tied to applications, claims, workers compensation claims, and, in some cases, provider fraud. Substantiated cases are resolved either civilly (through an administrative hearing or consent agreement) or criminally (through the criminal justice system).
The Fraud Bureau, which has offices in Dover and Wilmington, has a $1 million annual budget that is fully funded through a $900 annual assessment to insurance companies licensed in Delaware. It has 11 staff members with investigative authority (outside of law enforcement), a collections enforcement office, and an administrative assistant. Two of the bureau’s investigators specialize
in health care fraud investigations.
While protecting residents from harm, the Fraud team also serves an important role in ensuring that companies remain financially
viable for the long term. If insurers are continuously paying out fraudulent claims, they will increase rates on everyone to make up
for those dollars. “Fraud costs everyone,” stated Commissioner Navarro.
In one prominent case last
year, a resident was arrested for insurance fraud after obtaining a life insurance policy for a family member who was terminally ill and facing imminent end-of life and setting themselves as the only beneficiary. This was conducted through forgery of the family member’s required identification, confirmation, and consent.
Residents can report known
or suspected fraud by calling 302-672-7350 (800-632-5154 toll-free) or emailing fraud@ delaware.gov.Reporting is free of charge and can be done confidentially.
Fraud Bureau Statistics (2018 and 2019)
37 18 individuals 54 $46,577 1,091
Civil Cases Criminal Arrests Criminal Charges Civil Penalties Referrals
Delaware Department of Insurance | 9