LOUISIANA INSURANCE FRAUD TASK FORCE

2018 Annual Report

2018 Annual Report

The 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 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.

2 2018 Annual Report Table of Contents

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

3 2018 Annual Report Letter From The Superintendent

State of Louisiana Department of Public Safety and Corrections Public Safety Services

KEVIN REEVES, COLONEL DEPUTY SECRETARY

4 2018 Annual Report Louisiana State Police

Insurance Fraud / Auto Theft Program

5 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

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 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.

6 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

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.

2018 Referral Information

Referrals Received from LDI 904

LDI Referrals Accepted 265

LDI Referrals Rejected 639 Non-LDI Investigations 85

Total Referrals 989

In 2018, 75.1% of the referrals received from the Department of Insurance were 2018 LDI Referrals & Non-LDI Referrals Received related to auto claims fraud, followed by Type of Investigation… LDI Non-LDI property & casualty fraud at 8.7%, bodily inju- Arson 5 0 ry fraud at 5.8%, and healthcare fraud at Auto Claims Fraud 679 12 3.8%. The remaining types listed in the table to the right make up the remaining 6.6 %. 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

7 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

2018 Referrals Accepted by Type...

LDI AND NON-LDI REFERRALS ACCEPTED

Property & Casualty Commercial Policy Fraud Fraud 8% 2% Other Healthcare Fraud 3% 4% Bodily Injury Fraud 4% Fugitive 5%

Auto Theft Auto Claims Fraud 10% 62%

Fraudulent Insurance Documents / Cards 2%

*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.

8 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

2018 Investigations and Arrests...

2018 Case Information

Investigations & Incidents Opened 271

Investigations & Incidents Closed 291

Arrests 229

In 2018, the Insurance Fraud / Auto Theft Program opened 271 criminal investigations and closed 291 investigations. Region 1 (Baton Rouge, Hammond, 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.

Three Year Statistical Profile...

357

316 296 287 291 2016 271

229 2017 200 201

2018

INVESTIGATIONS INVESTIGATIONS ARRESTS OPENED CLOSED

9 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

2018 LSP Investigations Conducted by Type...

Disability Life Property and Casualty 1% 1% 9% Healthcare 2% Bodily Injury 10% Commercial 1% Auto Claims 43%

Fugitive 9%

Auto Theft 14%

Forgery Other Fraudulent Insurance 2% 5% Documents 2%

*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.

10 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

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.

2018 Judicial Actions Convictions 57 Parish Convictions Jail Time Ordered 81 years, 5 months Beauregard 1 Bossier 2 Probation Ordered 77 years, 7 months Caddo 12 Community Service 0 Concordia 1 East Feliciana 2 Pre-Trial Intervention 20 Franklin 1 Iberia 2 Restitution $404,403.21 Jefferson 1 Court Fines $13,327.50 Jefferson Davis 4 Lafayette 4 Livingston 1 Orleans 7 Ouachita 9 In 2018, the Program had 21% of their convictions declared in Caddo Parish, 16% in Ouachita Parish, followed by 12% in Orleans Rapides 1 Parish. The remaining convictions were spread throughout 61 other St. Charles 1 parishes. The table to the right shows all convictions by parish. St. Landry 1 St. Mary 2 Terrebonne 1 Union 1 Vernon 1 West Carroll 1 West Feliciana 1 TOTAL… 57

11 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Unit

2018 Budget Expenditures...

12 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

Region 1 Investigative Highlights Staged Automobile Crash Healthcare Fraud East Baton Rouge Parish East Baton Rouge Parish

On October 1, 2018, The Louisiana State Police In February 2018, the LSP CID New Orleans Criminal Investigations Division (LSP CID), Ba- Field Office received a criminal referral from an ton Rouge Field Office received a complaint from insurance company in reference to a possible the Louisiana Department of Insurance alleging fraud committed by Carissa Kerner. The compa- possible insurance fraud with regard to a crash ny alleged that Kerner overcharged the insurance involving a U-Haul rental truck and a Budget rent- company for medical supplies. A State Police in- al truck. A State Police investigation determined vestigation determined that Kerner billed the in- that Frankie Relan, Harley Marshall and Christo- surance company $159,000.00 for a total of pher Webb staged the crash for the purpose of ini- 15,900 catheters, and was compensated tiating a claim and defrauding an insurance com- $110,526.40. The investigation revealed Kerner pany. On October 30, 2018, LSP Detectives ar- actually had 1,820 catheters shipped to the patient, rested Relan and Marshall pursuant to State Police and invoices provided to the insurance company warrants charging them with Insurance Fraud and from Kerner were altered as to justify the amount Filing False Public Records. Marshal was booked Kerner billed. The investigation determined into the East Baton Rouge Parish Prison. Webb's Kerner was overpaid $97,152.18 due to Kerner warrant remains active submitting fraudulent invoices. On August 28, 2018, Troopers obtained an arrest warrant for Slip and Fall Fraud Kerner, charging her with Insurance Fraud and East Baton Rouge Parish Theft. On August 14, 2018, Kerner surrendered to authorities at the East Baton Rouge Jail. In June 2017, the LSP CID Baton Rouge Field multiple counts of Possession of Stolen Property Office received a complaint from an insurance in Orleans Parish. company alleging fraud regarding a slip and fall at Auto Theft Recoveries a department store in Baton Rouge, Louisiana. A Orleans Parish State Police investigation determined Herman Lovelady made misrepresentations to the insur- In June of 2018, LSP CID New Orleans Field Of- ance company in an attempt to defraud the insur- fice received a complaint concerning a suspect ance company of money in which he was not enti- using a truck and trailer to steal vehicle(s) in the tled. As a result of Lovelady's actions, the insur- Parish of Orleans. An investigation led investiga- ance company incurred $18,479.44 in legal fees tors to serve two search warrants at properties be- and investigative expenses. On August 2, 2018, lieved to be used as “chop shops” in New Orleans, LSP Investigators arrested Lovelady pursuant to a Louisiana. During the service of the warrants, State Police warrant charging him with Insurance investigators located stolen vehicles, a stolen all- Fraud and Perjury. He was booked into the East terrain vehicle, a stolen trailer, a vehicle with an Baton Rouge Parish Prison. 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.

13 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

Region 2 Investigative Highlights Healthcare Fraud insurance company. Arrest warrants were ob- Calcasieu Parish tained for all five suspects. On July 23, 2018, Troopers arrested the five suspects and booked On March 06, 2015, Louisiana State Police Crimi- them into the Evangeline Parish Correctional Cen- nal Investigations Division (LSP CID), Breaux ter on charges of Insurance Fraud, Filing False Bridge Field Office received a criminal complaint Public Records, and Contributing to the Delin- of healthcare fraud against Cage Motion Diagnos- quency of a Juvenile. tics of Carlsbad, California. Insurance Fraud / Auto Theft Troopers in conjunction with the FBI Staged Automobile Crash investigated the complaint. The investigation de- Terrebonne Parish termined that Cage Motion intentionally used the wrong CPT codes on the claims they were sending In May of 2018, LSP CID Houma Field Office to a Louisiana based insurance company. The was notified of a suspicious crash by a LSP Troop treatment claimed by Cage Motion was managed C Trooper that occurred on LA HWY 182 in Ter- by Dr. Carlos Choucino, an infectious disease rebonne Parish. The driver and occupants of the doctor in Lake Charles, Louisiana. Based on the vehicle reported to the investigating Trooper the fraudulent billing claims, the insurance company driver veered off the roadway attempting to avoid compensated Cage Motion approximately a hazard. When the vehicle traveled off of the $750,000.00. The Louisiana’s Attorney General’s roadway, it became submerged in a marshy area; Office accepted the file for prosecution. On July however, the Trooper noticed the occupants were 26, 2018, a Louisiana Grand Jury indicted Dr. relatively dry. Upon recovery of the vehicle, the Carlos Choucino, Dr. Andrew Osborne (Cage Mo- Trooper found items wedged against the accelera- tion) and Ms. Stacy Osborne (Cage Motion) on tor. This information was forwarded to the Hou- the criminal charge Money Laundering. They ma Field Office. The driver and occupants initiat- were booked into the East Baton Rouge Parish ed claims against the vehicle’s insurer in the Jail. amount of $15,766.84. A State Police criminal investigation determined that the driver and occu- Staged Automobile Crash pants of the vehicle had provided false infor- Evangeline Parish mation to the investigating Trooper and to the in- surance company. Troopers obtained warrants On March 01, 2016, LSP CID Breaux Bridge Field charging Kendrick Verrett, Shira Verrett, Esther Office received a criminal complaint from the Burrell, Dajia Phillips, and a 16 year old juvenile Louisiana Department of Insurance concerning on charges of Insurance Fraud, Theft, and Filing a allegations of insurance fraud against Sheba Wil- False Police Report. 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

14 LOUISIANA STATE POLICE 2018Annual Report Insurance Fraud / Auto Theft Program

Region 3 Investigative Highlights Theft of Claimed Property Following the completion of the LSP investigation Bossier Parish in September 2018, arrest warrants were secured through the 26th JDC of Bossier Parish on Flem- On May 15, 2018, Louisiana State Police Criminal ing for Forgery (5 counts), Identity Theft (5 Investigations Division (LSP CID) Bossier City counts), and Computer Fraud (5 counts) and on Field Office received a complaint from an insur- Morgan for Forgery (1 count), Identity Theft (1 ance company by way of the Louisiana Depart- count), and Computer Fraud (1 count). On Sep- ment of Insurance. The complainant alleged their tember 21, 2018, Fleming and Morgan surren- former employee/agent, Lisa Marks-Little, dered to Bossier Sheriff’s Office personnel on the pawned a wedding ring which she had previously LSP arrest warrants. 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 Duplicate Hail Damage the amount of $13,486.28. The loss settlement Morehouse Parish endorsement contained language that any property In early 2018, LSP CID Monroe Field Office, the insurance company paid for becomes the prop- opened an investigation based upon a complaint erty of the company. A State Police investigation filed with the Louisiana Department of Insurance. determined that Marks-Little initiated a claim to This complaint concerned allegations of insurance the insurance company alleging the ring had been fraud against Jennifer McMillan. A State Police lost. Marks-Little received payment from State investigation determined McMillan filed a proper- Farm to satisfy the loss claim. Marks-Little sold ty damage claim against her homeowner’s insur- the ring to a local jeweler for $3,200.00. On June ance policy following alleged hail damage to the 22, 2018, Marks-Little voluntarily surrendered to roof of her residence. It was discovered McMillan Bossier Parish deputies pursuant to a State Police had a prior hail damage claim to the same resi- warrant charging her with one count of Theft. dence for which she was previously paid. The in- vestigation further showed the repairs for the pre- Forgery, Identity Theft and Computer Fraud vious claim were never done. If McMillan been successful with her claim, she would have de- Bossier Parish frauded her insurance company in the amount of On March 28, 2018, LSP CID Bossier City Field approximately $8,060.00. Troopers obtained an Office opened an investigation regarding the sub- arrest warrant for McMillan through the 4th JDC mission of forged documents to Louisiana based of Morehouse Parish for violation of LRS health insurance companies. These submissions 22:1924, Insurance Fraud. On April 16, 2018, allegedly occurred between June 16 and Septem- McMillan was arrested by troopers at Morehouse ber 1, 2017. Kristy S. Fleming was employed by Parish Jail on the outstanding warrant. 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.

15 LOUISIANA STATE POLICE 2018Annual Report Insurance Fraud / Auto Theft Program

LAW ENFORCEMENT AUTO THEFT

TRAINING In conjunction with the Program’s insurance fraud mission, troopers and investigators combat The Insurance Fraud and Auto Theft Program Louisiana’s auto theft. Annually, hundreds of provided a wide spectrum of training to the stolen vehicles are identified and recovered by Louisiana law enforcement community. The State Police. Vehicles are found during traffic formal training seminars are entitled “Auto Theft stops, crash investigations, criminal Investigations” and “Physical Inspections”; the investigations, and routine physical inspections. former being part of the Louisiana Peace Officer Troopers are assisted by mobile and stationary Standards Training (POST). The second is taught license plate reader systems, global positioning exclusively by State Police, where the department system devices, and electronic tracking apparatus. trains troopers and other agencies how to properly Sometimes identifying the stolen vehicle in police inspect a vehicle and make a VIN determination custody is rudimentary; sometimes identifying the ensuring the VIN has not been altered or changed. vehicle requires a thorough inspection involving During the Auto Theft Investigations course, the removal of parts, paint, rust, and other instructors discuss the possibility of a false vehicle containments. Troopers rely on their strong and theft report submitted in conjunction with a tenured relationships with the National Insurance fraudulent insurance claim. In 2018, members of the Program conducted 17 training sessions containing 271 officers.

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

16 LOUISIANA STATE POLICE 2018 Annual Report Insurance Fraud / Auto Theft Program

Additions Departures

Lieutenant Jeff Watts, the Region 1 Officer in Trooper Mindi Keith transferred to the Baton Rouge Field Office in the latter part of 2018. She Charge and former Insurance Fraud Unit Program previously served in Patrol and Gaming Divisions. Coordinator, retired from State Police after 28 years of service. LT Watts was assigned to the Patrol Division and Gaming Division, before Trooper Camille Joey Babineaux transferred into being assigned to the Insurance Fraud Unit. the Lake Charles Field Office from Troop D Patrol.

Lieutenant Julie Lewis, the Region III Officer in Trooper Jeffrey Theriot transferred to the New Charge, retired after 25 years of service. Before Orleans Field Office from Troop L Patrol. transferring to her position with the Insurance

Fraud Unit, LT Lewis served State Police in the

Sergeant Joseph Cuccia transferred to the New Criminal Intelligence Unit, Public Information Orleans Field Office from the Patrol Division. Office, Narcotics Division, and Patrol. SGT Cuccia was previously assigned to the unit before a brief stint at Troop B Patrol Division. Sergeant Stephen Shawn McMillian retired with 17 years of service. SGT McMillian worked in Investigator Jeffrey Cagle was hired by State the Patrol Division and Training Division prior to Police and assigned to the Baton Rouge Field his assignment to the Insurance Fraud Unit. Office. He was previously employed with the Louisiana Department of Public Safety.

Sergeant Raynell Theard transferred from the Investigator Jason Gagliano was hired by State New Orleans Field Office to the Gaming Police and assigned to the New Orleans Field Enforcement Division in early 2018. He was Office. INV Gagliano has prior service with the recently promoted to Lieutenant within Gaming. New Orleans Police Department.

Master Trooper Anthony Scott Farris transferred SGT Sanikka Williams was promoted to Sergeant from the Lake Charles Field Office to the Gaming and assigned to the Monroe Field Office. SGT Enforcement Division. Williams returned to the Program following an assignment in the Criminal Detectives 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.

17 LOUISIANA STATE POLICE 2018Annual Report Insurance Fraud / Auto Theft Program

Field Office Contacts

Bossier City Monroe Sgt. Michael Wilkerson Sgt. Sanikka Williams 4185 Viking Dr 3420 Medical Plaza Dr, Ste 10 Bossier City, LA 71111 Monroe, LA 71203

(318) 741-2733 (318) 362-4588

Baton Rouge Sgt. Eric Adams Alexandria 7919 Independence Blvd Sgt. Larry Zeller Baton Rouge, LA 70896 5903 Coliseum Blvd (225) 925-3850 Alexandria, LA 71302 (318) 484-2104 New Orleans Sgt. Joe Cuccia 1450 Poydras St, Ste 1300 New Orleans, LA 70112 (504) 310-7064

Lake Charles Sgt. Kent Pevoto One Lakeshore Dr, Ste 970 Breaux Bridge Lake Charles, LA 70629 Sgt. Dale Latham Houma (337) 491-2906 437 West Mills Rd Sgt. Larry Badeaux Breaux Bridge, LA 70517 103 Melissa Ln 337-332-8080 Houma, LA (985) 876-8834

Program Coordinator: Lt. David Stelly 337-332-8063 Administrative Specialist: Helena Graham 225-925-3536 Insurance Fraud / Auto Theft Program email: [email protected]

18 OFFICE OF THE ATTORNEY GENERAL 2018 Annual Report Louisiana Attorney General ’s Criminal Division

Insurance Fraud Support Unit

19 OFFICE OF THE ATTORNEY GENERAL 2018Annual Report Insurance Fraud Support Unit

Louisiana Attorney their taxes. This is why the Unit entered into an General Jeff Landry agreement with LDR to investigate and assist in is proud of the ef- the prosecution of all tax-related fraud in Louisi- forts of his Insur- ana. These prosecutions are of tax preparers, who ance Fraud Support receive a fee for preparing Louisiana state tax re- Unit (the Unit). turns for others, and individuals who commit tax Through prosecu- evasion and/or fraud through the filing of their tions and the recov- personal Louisiana state tax returns. In 2018, the ery of hundreds of Unit and LDR renewed the annual agreement – thousands of dollars prosecuting state tax fraud cases and insurance in restitution, the fraud cases.

unit is a valuable asset in the fight against criminals The Unit may handle insurance fraud cases that who defraud the begin with a complaint made directly to the Attor- State and its tax- ney General’s Office. Additionally, the Unit may payers. The Unit operates as part of a tri-agency consult with – and provide legal support to – all task force created by the Legislature and dedicated local and state law enforcement agencies regard- solely to fighting insurance fraud in Louisiana. ing insurance fraud matters and questions. This includes, but is not limited to, reviewing drafts of The Unit fulfills three primary responsibilities: arrest and search warrants; conducting legal re- providing legal advice and consultation to the oth- search; and evaluating cases from a prosecutor’s er two task force agencies – the Louisiana State perspective (i.e., whether there is sufficient evi- Police (LSP) and the Louisiana Department of In- dence to satisfy legal burdens of proof). Due to surance (LADOI), in insurance fraud matters; the complex nature of some of the cases handled prosecuting individuals statewide charged with – the local district attorney may be consulted insurance fraud; and presenting insurance fraud while the investigation is still ongoing to obtain information and training to the insurance industry the necessary authority to offer a plea agreement, along with state and federal agencies. immunity to a target of the investigation to secure his cooperation concerning other targets, or re- quest to prosecute the case outright. The primary objective of the Unit is to provide superior legal representation to the LADOI and LSP in insurance fraud investigations and prose- The Unit’s attorneys attend intelligence-sharing cutions. Assistant Attorneys General assigned to meetings hosted by LSP in Baton Rouge. These the Unit prosecute violations of Louisiana’s crimi- meetings are attended by members of special in- nal laws under Titles 14, 22, 23, and 47 by con- vestigative units from many insurance companies ducting – or assisting in – criminal prosecutions that do business in Louisiana. Under a statutory upon the recusal or assistance request of local dis- grant of immunity from civil liability, these per- trict attorneys and by providing legal support to sonnel share information regarding fraud trends law enforcement agencies investigating criminal and specific cases being worked. This level of insurance fraud. cooperation has resulted in the successful prose- cutions of several staged accident rings, producer fraud cases, and theft of equipment and automo- Furthermore, the Unit also works closely with the biles. Louisiana Department of Revenue (LDR). History shows that if criminals are defrauding insurance companies, then those same criminals are likely The Unit’s section chief has given presentations defrauding the State when it comes time to pay on insurance fraud prosecution issues before

20 OFFICE OF THE ATTORNEY GENERAL 2018Annual Report Insurance Fraud Support Unit organizations such as the National White Collar BASIC INFORMATION ABOUT THE UNIT Crime Center, the Louisiana Association of Self

Insured Employers, the Orleans Parish District Attorney’s Economic Crimes Unit, the Insurance Statutory Authority for Operations Security Association, the American Council of Life Insurers, the National Insurance Crime Bu- La. Const. Art. IV, Section 8 provides, in perti- reau (NICB), the Louisiana District Attorneys’ nent part: Association, the LADOI, and the Louisiana Claims Association. All of the Unit’s attorneys As necessary for the assertion or protec- attend continuing legal education training from various sources, including the National Associa- tion of any right or interest of the state, the tion of Insurance Commissioners (NAIC) and oth- attorney general shall have authority er NICB or NAIC sponsored training. Moreover, ……. the Unit is connected with the Homeland Security Information Network – enabling attorneys to track (2) upon the written request of a insurance fraud cases from start to finish. This district attorney, to advise and as- network allows everyone involved with the cases sist in the prosecution of any crim- to have access to relevant information at all times. inal case; and (3) for cause, when authorized by the court which would have origi- As part of our ongoing commitment to working nal jurisdiction and subject to judi- with insurers operating in Louisiana, as well as cial review, (a) to institute, prose- fostering the professional development and exper- cute, or intervene in any criminal tise of our individual Assistant Attorneys General action or proceedings, or (b) to su- – the Unit attended a law enforcement summit persede any attorney representing event hosted by Blue Cross/Blue Shield on Sep- the state in any civil or criminal tember 25, 2018. Participation in this day-long action. meeting offered special training to law enforce- ment in insurance and healthcare fraud-related issues. Criminal Division Director Pat Magee, La. Code of Criminal Procedure Article 682 pro- who oversees operations of the Unit, addressed vides, in pertinent part: this gathering and briefed them on the functions and actions of the Unit. 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 All Assistant Attorneys General assigned to the the place of the recused district attorney. Unit are expected to handle opinion requests. When opinions are assigned, work is done with law clerks to research and draft accurate responses La. R. S. 36:702(E) provides: to the requests. 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

21 OFFICE OF THE ATTORNEY GENERAL 2018Annual Report Insurance Fraud Support Unit

extraditions, in accordance with Article cases were closed as either a conviction, a pretrial IV, Section 8 of the Constitution of Louisi- agreement, or a consult. As of December 31, ana. 2018, the Task Force was working 1,664 active

open cases of fraud.

Additional Statutory Authority for Insurance Fraud Support Unit Operations The Unit meets the state goal for Crime and Safe- ty Reform of bringing security to all Louisiana La. R. S. 40:1421 et seq. citizens by protecting our taxpayers from insur- ance related fraud. LADOI estimates that there Primary Purpose are over $500 million dollars lost annually in Louisiana to insurance fraud, as it pertains to cas- To provide superior legal representation to LA- ualty and property claims. This does not include DOI and LSP in insurance fraud investigations healthcare fraud which is estimated to be about and prosecutions. $1.5 billion in Louisiana alone. The typical Loui- siana household pays almost $1,000 a year in To attend LADOI and LSP meetings to screen in- fraud-related charges passed on to them as con- surance fraud referrals. sumers.

To prosecute tax fraud cases pursuant to contract with LDR.

STATISTICAL INFORMATION FOR THE UNIT

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

22 OFFICE OF THE ATTORNEY GENERAL 2018Annual Report Insurance Fraud Support Unit

OTHER 2018 ACCOMPLISHMENTS

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.

23 2018 Annual Report Louisiana Department of Insurance

Division of Insurance Fraud

24 LOUISIANA DEPARTMENT OF INSURANCE 2018 Annual Report Insurance Fraud Support Unit

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.

Charges Against Claimants or Licensees Resulting from Referrals by Category

*An arrest may include multiple charges.

25 LOUISIANA DEPARTMENT OF INSURANCE 2018 Annual Report Insurance Fraud Support Unit

2018 Producer, Adjuster and Company Fraud Actions...

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

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.

Company Applications Received 116 Company Applications Approved 114 Company Biographical Affidavits Received 922 Company Biographical Affidavits Approved 882

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.

26 LOUISIANA DEPARTMENT OF INSURANCE 2018 Annual Report Insurance Fraud Support Unit

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.

27 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

28 2018 Annual Report

Report Insurance Fraud to the Louisiana Department of Insurance

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!

29 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.

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