409 - Fraud prevention plans and special investigations units.

§  409.  Fraud  prevention plans and special investigations units. (a)  Every  insurer  writing  private  or  commercial  automobile  insurance,  workers'   compensation  insurance,  or  individual,  group  or  blanket  accident and health insurance policies issued or issued for delivery  in  this  state,  except for insurers that write less than three thousand of  such policies, issued or issued for delivery in this state annually, and  every entity licensed pursuant  to  article  forty-four  of  the  public  health  law  except  those  entities with an enrolled population of less  than sixty thousand persons in the aggregate and, except those  entities  licensed  pursuant  to  sections  forty-four hundred three-a, forty-four  hundred three-c, forty-four hundred-d, forty-four  hundred  three-f  and  forty-four  hundred  eight-a  of the public health law shall, within one  hundred twenty days of the effective date of this amended section to  be  promulgated  by  the superintendent to implement this section, file with  the  superintendent  a  plan  for  the  detection,   investigation   and  prevention  of  fraudulent  insurance activities in this state and those  fraudulent insurance activities affecting policies issued or issued  for  delivery  in  this  state.  The  superintendent  may accept programs and  processes implemented pursuant to section forty-four hundred fourteen of  the public health law as satisfying the obligations of this section  and  regulations promulgated thereunder.    (b)  (1) The plan shall provide the time and manner in which such plan  shall be implemented,  including  provisions  for  a  full-time  special  investigations  unit  and  staffing  levels  within such unit. Such unit  shall be separate from  the  underwriting  or  claims  functions  of  an  insurer,  and  shall  be responsible for investigating information on or  cases of suspected fraudulent activity and for effectively  implementing  fraud  prevention  and  reduction  activities pursuant to the plan filed  with the superintendent. An insurer shall include in such plan  staffing  levels   and   allocations   of  resources  in  such  full-time  special  investigations unit as may be necessary and appropriate for  the  proper  implementation  of  the  plan  and  approval  of  such  plan pursuant to  subsection (d) of this section.    (2) In lieu of a special investigations unit, an insurer may  contract  with  a provider of services related to the investigation of information  on or cases of suspected fraudulent activities; provided, however,  that  an  insurer  which  opts  for  contracting  with  a separate provider of  services, shall provide to the superintendent a detailed plan  therefor,  pursuant to requirements set forth in regulation by the superintendent.    (3)  Persons employed by special investigations units as investigators  or by an independent provider of investigative services  under  contract  with  an  insurer  shall  be  qualified by education or experience which  shall include an associate's or bachelor's degree in criminal justice or  related  field,  or  five  years  of  insurance   claims   investigation  experience or professional investigation experience with law enforcement  agencies,  or  seven  years  of  professional  investigation  experience  involving economic or insurance related matters.  For  the  purposes  of  evaluation  of medical related claims insurers may employ or retain duly  licensed or  authorized  medical  professionals.  Notwithstanding  these  minimum  requirements  anyone  employed  as an investigator in a special  investigation unit or by a  provider  of  investigative  services  under  contract  to  an  insurer as of the effective date of this paragraph and  who was also so employed on or before September tenth, nineteen  hundred  ninety-six   may  continue  in  such  employment  provided  the  insurer  identifies such person in writing to the superintendent giving the  date  such  employment began and a description of the person's qualifications,  employment history and current job duties.    (c) The plan shall provide for the following:(1)  interface  of  special  investigation  unit  personnel  with  law  enforcement  and  prosecutorial agencies, including the insurance frauds  bureau of the state insurance department;    (2)  reporting of fraud data to a central organization approved by the  superintendent;    (3) in-service education and  training  for  underwriting  and  claims  personnel   in   identifying   and  evaluating  instances  of  suspected  fraudulent activity in underwriting or claims activities;    (4) coordination with other units of an insurer for the  investigation  and  initiation  of  civil actions based upon information received by or  through the special investigation unit;    (5)  public  awareness  of  the  cost  and  frequency  of   fraudulent  activities, and the methods of preventing fraud;    (6)  development and use of a fraud detection and procedures manual to  assist in the detection and elimination of fraudulent activity; and    (7) the time and manner in which such plan shall be implemented and  a  demonstration  that the fraud prevention and reduction measures outlined  in the plan will be fully implemented.    (d) (1) A fraud detection and prevention plan filed by an insurer with  the superintendent pursuant to this section shall be deemed approved  by  the  superintendent  if  not returned by the superintendent for revision  within  one  hundred  twenty  days  of  the  date  of  filing.  If   the  superintendent  returns  a  plan  for revision, the superintendent shall  state the points of objection with such plan, and any amendments as  the  superintendent  may  require  consistent  with  the  provisions  of this  section, including,  but  not  limited  to,  staffing  levels,  resource  allocation,  or  other  policy or operational considerations. An amended  plan reflecting the changes  shall  be  filed  with  the  superintendent  within forty-five days from the date of return.    (2)  If  the superintendent has returned a plan for revision more than  one time, the insurer shall be entitled to a  hearing  pursuant  to  the  provisions  of article three of this chapter and regulations promulgated  thereunder.    (3) If an insurer fails to submit a  final  plan  within  thirty  days  after  a  determination  of  the  superintendent  after the hearing held  pursuant to paragraph two of this  subsection,  or  otherwise  fails  to  submit  a plan, or fails to implement the provisions of a plan in a time  and manner provided for in such plan, or  otherwise  refuses  to  comply  with  the provisions of this section, the superintendent may: (i) impose  a fine of not more than two thousand dollars per day for such failure by  an  insurer  until  the  superintendent  deems  the  insurer  to  be  in  compliance;  or  (ii)  impose  upon  the  insurer  a fraud detection and  prevention plan deemed to be appropriate  by  the  superintendent  which  shall  be  implemented by the insurer; or (iii) impose the provisions of  both subparagraphs (i) and (ii) of this paragraph.    (e) Any plan, the information  contained  therein,  or  correspondence  related  thereto,  or  any  other information furnished pursuant to this  section shall be deemed to be a confidential communication and shall not  be open for review or be subject to a subpoena except by a  court  order  or by request from any law enforcement agency or authority.    (f)  For  purposes of this section, the term "policies" shall refer to  individuals covered if coverage is issued on a group basis.    (g) Every insurer required to  file  a  fraud  prevention  plan  shall  report  to  the  superintendent  on an annual basis, no later than March  fifteenth, describing the insurer's  experience,  performance  and  cost  effectiveness  in  implementing  the  plan,  utilizing such forms as the  superintendent may prescribe. Upon consideration of  such  reports,  thesuperintendent  may require amendments to the insurer's fraud prevention  plan as deemed necessary.