New CA Fraud Regulations ... what do they mean for you?

NEW CALIFORNIA DOI FRAUD COMPLIANCE REGULATIONS EXPLAINED, by Dalene Bartholomew | full whitepaper download at: https://hubs.ly/H0v9wJV0

 “Being compliant in CA takes experience, expertise, attention to detail, and just a little bit of crazy.“

On June 19, 2020, the California Department of Insurance (CDI) filed their updates to the DOI Special Investigative Units (SIU) Regulations pertaining to fraud compliance. These changes have been in the works for almost 18 months and were the collaboration of the CDI, the insurance industry and several of us who are SIU experts. Most of the new provisions go into effect October 1, 2020, while others must be implemented no later than April 1, 2021.  Now that the updates are complete, we’d like to provide you with an overview of what’s new in the changes, what it means for you, and how we can help.

What Does This Mean For You? For starters, the CA DOI is now conducting many more audits than before. The new regulations aren’t just more stringent, they’re also much more complex. The CA DOI is significantly more likely to check up on whether you’re meeting them, too. And if you haven’t guessed it by now, the answer is yes, fines for non-compliance are also increasing. This all adds up to a landscape rife with pitfalls and steeped in increased risk for your business.

Are You At Risk of Being Impacted? In short, yes. If you operate any part of your insurance program and/or business in California, then this explicitly applies to you. Insurance carriers, TPAs and self-insured corporations are at particularly high risk of exposure for failing to meet the new standards.

Despite COVID, wildfires or drought, we still need to meet all the demands of the insurance regulators as there has been no “pause” in mandatory compliance with all regulatory obligations.

What Are the Potential Costs? Not only are the new regulations dense and more stringent, but they also significantly increase both the likelihood of an audit, the complexity of an audit and the fines being levied for failure to comply. Audits performed by CA Department of Insurance are not only rigorous, they can also be quite punishing, with fines levied up to $10,000 per finding.

What’s New in the Changes? The full regulations are on the California DOI website; and they include changes to:

·       SIU contracted responsibilities including specific language to include in written agreements

·       Investigation and referral of suspected insurance fraud with a focus on credible referrals, referral content and completion level of the investigation

·       Anti-Fraud Training with a focus on the hours of training and maintaining of records

·       Law Enforcement communication and a change in the number of days within which to respond

·       SIU Annual Report now requires reporting of number of hours of fraud investigation

·       SIU Staffing to meet requirements for adequate staff and level of expertise

The recent changes present a challenge the entire industry must adjust to meet, so it is now more important than ever to find the right partner to reduce your regulatory burden. We provide solutions that are easy to integrate and can be customized for any situation or program. 

What is the solution? When you make us a part of your suspicious claims investigation, you’re gaining the benefit of more than just our industry-leading, nation-wide bench strength in SIU and fraud investigations. You’re also building a partnership where proven expertise in regulatory compliance and training means meeting these new thresholds with confidence. Let’s talk.  Download my full whitepaper: https://hubs.ly/H0v9wJV0

Dalene Bartholomew CFE, CIFI, Vice President