Proposed Special Investigative Unit Rule Changes Submitted to OAL
After a year of development, the California Department of Insurance (CDI) has submitted amended regulations governing insurer Special Investigative Units (SIUs) to the Office of Administrative Law (OAL). The proposed amendments represent the first changes to the SIU regs since they first took effect in October 2005.
In citing the need for the amended regs, CDI said its Fraud Division regularly receives referrals from claims organizations that are incomplete or superficial, with many failing to include key data such as the suspected loss amount, and that a lack of specificity in the rules has made it difficult for the SIU Compliance Unit to do its job. In addition, in April of this year, Insurance Commissioner Lara emailed insurers noting that compliance exams of SIU programs found that some insurers that had either not conducted — or only partially conducted — required anti-fraud training, and that some did not maintain records of required training. CDI deemed these infractions willful violations because the insurers were aware of the training requirements.
The proposed changes in the SIU regs include limiting the definition of “contracted entities” that are hired to perform SIU or integral anti-fraud personnel duties or functions on behalf of the insurer; clarification of the requirements for reporting suspected fraud when investigations remain open; a 60-day deadline for workers’ compensation claims organizations to respond to information requests from CDI’s Fraud Division or other authorized governmental agencies and transmittal requirements for such information; specific elements that must be included in an SIU’s written summary of an investigation; a requirement that SIU personnel receive 5 hours of continuing anti-fraud training per year; and specific elements that must be included in the insurer’s SIU Annual Report to the CDI.
The amended SIU regulations submitted to OAL on June 19 are currently under review with no effective date established pending a decision. A copy of the proposed regulations is attached and has been posted on the Institute’s website under the Regulation tab at https://www.cwci.org/regulatory.html.
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