NEVADA FIRST IN FRAUD CONVICTIONS:
Attorney General Brian Sandoval announced that the Nevada Department of Justice, Insurance Fraud Unit, obtained more convictions per capita than any other state. The statistics for insurance crimes were compiled by the Coalition Against Insurance Fraud late last year for each of 43 states that have fraud investigation and prosecution bureaus. The Coalition, in an end-of-year publication for 2003, stated: "Nevada convicted the most swindlers per capita last year, logging about 10 convictions for every 100,000 residents." A recent national survey of public attitudes about insurance fraud reveals one of four people say it is okay to lie to one's insurance company in order to obtain money. Senior Deputy Attorney General Marty Howard, Director of the IFU, finds these statistics very disturbing. "You would think more people would realize that lying to their insurance company to obtain undeserved benefits is stealing and is therefore morally wrong. You would think that the possibility of being caught and punished would deter those who don't. For some it does. For the rest, well, the chances are very good that they'll be dealing with us. It is not a victimless crime. Honest policyholders pay the cost for insurance fraud." Howard also described the severe criminal penalties for insurance fraud: "Insurance fraud is a felony in Nevada just like grand larceny or theft. You can go to prison for up to five years and face a $5,000.00 fine. A felony conviction affects not only your freedom, but your right to vote, your right to hold certain jobs, and will severely impact your family. We intend to continue to get this message out and get dishonest people to think a little more seriously about the consequences of filing false insurance claims." Insurance fraud is one of the costliest white-collar crimes in the United States, ranking second only to tax evasion. A study by Hartford, Connecticut-based Conning & Co. estimated that fraud costs the insurance industry $96 billion dollars annually. One figure stands out in the report; that insurance fraud costs families $5,000 each year. This amount includes not only higher premiums, but also the resulting higher prices for consumer goods and services.
CWCI STUDY EXAMINES EVIDENCE-BASED MEDICINE IN WORKERS' COMP:
The California Workers' Compensation Institute has issued a new study examining the development and history of evidence-based medicine (EBM) as a tool for assuring appropriate, quality medical care, and its potential for containing treatment costs and improving California workers' comp patient outcomes. SB 228, signed in October, requires the state to adopt EBM guidelines for workers' comp by December 2004 to control overutilization of medical services, set parameters for effective care, and to reduce treatment costs. The law also made treatment protocols published by medical specialty societies admissible before the WCAB, and made medical utilization guidelines presumptively correct in regard to the extent and scope of treatment, with guidelines of the American College of Occupational and Environmental Medicine (ACOEM) given the presumption until a new schedule is adopted. ACOEM guidelines published last month will be presumed correct as of March 22. State lawmakers estimated the guidelines will reduce workers' comp medical costs by $1 billion to $4.5 billion a year. The study also gauges the reach of the guidelines, noting that just over half of California workers' comp claims are trauma or non-specific diagnoses not covered by ACOEM. That means just under half of all claims will be subject to the guidelines—together representing 55 percent of all medical payments and 60 percent of indemnity payments. Analyzing current treatment levels and time off work for two types of low back injuries common to workers' comp, the study finds utilization of x-rays, CT scans and MRIs, physical medicine, chiropractic care, and surgery, as well as days off work, all significantly exceed ACOEM recommendations, so in many cases, guidelines may have a big effect on the course and cost of treatment. But, CWCI notes, EBM guidelines are not absolute rules or intended to usurp physician judgment, and they will be interpreted on a case-by-case basis. Clearly, necessary conditions to realize system savings include more than just the presence of an evidence-base, and the gap between actual and ACOEM-expected levels of care illustrates the challenge. Workers' comp is a complex system, and many parties contribute to medical decisions. While providers make initial testing, treatment and disability management decisions, claims adjusters, employers, nurse case managers, attorneys, workers' comp judges and injured workers also make decisions about compensability, safety, return to work, pay for care and absence from work. These groups often use standards that are not based on evidence of effectiveness, but on traditional insurance industry practices, perceptions of regulations, legal precedents, threats of legal action, and physician statements made without scientific evidence. Achieving quality care in a cost-efficient system as intended by SB 228 will require all groups to work from the same scientific evidence base to ensure consistency across all aspects of medical quality. The report, "Evidence-Based Medicine and the California Workers' Comp System" is posted in the "Policy Issues" section of the Newsroom at www.cwci.org. CWCI will issue a Research Note on the study next month.
AUTO INSURANCE, WORKERS' COMP EMERGE AGAIN AS TOP LEADING LEGAL ISSUE TRENDS:
Workers' compensation and automobile insurance laws accounted for nearly 40 percent of the new property/casualty-related statutes enacted by state legislatures last year, according to the fifth annual analysis of trends in new state insurance legislation published by the National Association of Mutual Insurance Companies. "NAMIC has placed online a summary of all 418 new property/casualty-related laws enacted in the states during 2003," said Roger Schmelzer, vice president, State and Regulatory Affairs. "Some very distinct issue trends emerge from the many new state insurance laws enacted during 2003. The 87 new auto insurance laws identified in the NAMIC survey account for the single largest issue trend among the property/casualty-related statues enacted in 2003. The survey also identifies 75 new workers' compensation laws, making this the second most common issue trend," Schmelzer continued. "Combined, these two categories make up well over a third of all the new laws identified in this year's survey. Other notable recurring issue trends revealed in the NAMIC 2003 Survey of New State Laws include new laws pertaining to insurance scoring, telephone solicitations and tort reform." Texas enacted the greatest number of new laws in the survey with 34. Colorado followed with 23, North Dakota had 20, Oregon enacted 18, Louisiana passed 17, and California and Virginia approved 16 new laws each. At the other end of the scale, Alabama, Alaska, Hawaii, Missouri, and Ohio each approved just one new property/casualty-related law in 2003. Only two new laws were enacted in Iowa, Pennsylvania, and Vermont. In addition to auto and workers comp, the survey identified 30 other distinct issue trends, including: 24 insurance scoring laws enacted in 20 states; 24 telephone solicitation laws enacted in 21 states; 25 tort reform laws enacted in 16 states; 15 insurer notification requirement laws enacted in 11 states, and 14 new laws regulating rates and forms enacted in 10 states. Other important new law issue trends included producer licensing, financial regulations, privacy and disclosure, state residual market plans, insurer tax provisions, role of the state insurance regulator, anti-insurance fraud efforts, foreign insurers, guaranty fund operations, regulatory filing requirements, and mold. A summary of the NAMIC 2003 Survey of New State Insurance Laws is available to the public at NAMIC Online http://www.namic.org/reports/2003NewLaws/.
CALIF. COMMISSIONER ANNOUNCES SETTLEMENT ON BEHALF OF SURVIVORS OF VICTIMS OF ARMENIAN HOLOCAUST:
California Insurance Commissioner John Garamendi announced a settlement in long running litigation between descendants of the victims of the Armenian Genocide and the New York Life Insurance Company. "During the late 1800s and early 1900s New York Life sold thousands of life insurance policies to ethnic Armenians in the Turkish Ottoman Empire. Many of those who bought the policies were killed during a deliberate, systematic and government-controlled genocide that began in April 1915. Many of the survivors of these policyholders live in California and I am gratified that due to the parties' hard work in this matter, justice will finally be served. After long negotiations, I have been able to secure a $20 million fund that will go to the payment of those claims. New York Life has been generous in its willingness to compromise in order to come to a complex, detailed agreement that will make up for past delays and will benefit both the survivors of Armenian policyholders as well as the Armenian community. Of the $20 million fund, at least $3 million will be put into the 'Unclaimed/Heirless Fund,' which will be contributed to charitable organizations whose activities advance the Court-approved charitable interests of the Armenian community. I will appoint the three members of the Settlement Fund Board, and that Board will evaluate each claim, pursuant to standards and criteria to be determined by the Board together with the Parties. Potential claimants will be informed via Notice to be approved by the Court and published statewide. I would also like to thank both the Plaintiffs' attorneys, Vartkes Yeghiayan and Joe Majarian, Yeghiayan & Associates; Mark Geragos and Shelley Kaufman, Geragos & Geragos; Brian S. Kabateck, Kabateck & Garris; Bill Shernoff and Evangeline Garris, Shernoff, Bidart & Darras, and New York Life Insurance Company, for their hard work and cooperation in making this settlement a reality."
