COUNTY OF SAN MATEO

Inter-Departmental Correspondence

District Attorney’s Office

 

DATE:

Jun 10, 2005

BOARD MEETING DATE:

June 21, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

James P. Fox, District Attorney

SUBJECT:

Application for Renewal of the Workers’ Compensation Insurance Fraud Grant

 

RECOMMENDATION:

Adopt a resolution authorizing submission of a grant application to the California Department of Insurance for grant funds in the amount of $569,725.00 for the Workers’ Compensation Insurance Fraud Program for FY 2005-06.

 

VISION ALIGNMENT:

Commitment: Sow the Seeds of Future Prosperity

Goal 18: Attract and maintain leading edge industries.

The Department of Insurance grant contributes to this goal by discouraging workers compensation insurance fraud throughout the County, thereby making San Mateo County a more attractive location for businesses.

 

BACKGROUND:

Under the provisions of Sections 1872.83, California Code of Regulations, Subchapter 9, Article 3, Section 2698.55, the California Insurance Commissioner is granted authority to issue funds to District Attorneys throughout the state for the purpose of investigating and prosecuting cases involving workers’ compensation insurance fraud. In July 1994, the Board adopted a resolution authorizing the submission of an application to the California Department of Insurance (DOI) for the subject grant. In November 1994, the Board also approved an Appropriation Transfer Request and an amendment to the Salary Ordinance to add staff and implement the program. Since 1994, the Board has renewed this application annually.

DISCUSSION:

An application is required each year to receive state funds through the DOI. Once our application is approved, the DOI requires execution of a grant award agreement before monies are distributed. The grant award agreement provides, among other things, that any liability arising out of the performance of this grant, including civil court actions for damages, shall be the responsibility of the grant recipient and the authorizing agency. The salaries, benefits, services and supplies necessary to investigate and prosecute workers’ compensation insurance fraud, are funded partially by the subject grant and partially by a grant addressing automobile insurance fraud investigation and prosecution. A proposal to authorize the application for the automobile insurance fraud investigation grant will be concurrently submitted to the Board for approval.

 

In the last three fiscal years, July 1, 2002 through April 15, 2005*, the Unit has received 97 suspected fraudulent workers’ compensation insurance claims to investigate and prosecute, resulting in 97 investigations. During that same three-year period, the Unit has filed 24 criminal cases involving workers’ compensation insurance fraud, and 18 defendants have been convicted of criminal charges, most of them felony offenses. The Unit has worked in tandem with the DOI, Employment Development Department, local law enforcement, various insurance companies and third party administrators, the San Mateo County School Districts, and the Risk Management Division of Employee & Public Services to successfully prosecute fraudulent activities by chiropractors, doctors, attorneys, employers and individual applicants. In the last three years, the Unit has been able to obtain court-ordered restitution in excess of $237,000. Orders of restitution can become civil judgments, can be recorded for future collection and usually specify multiple year pay out schedules. The following is a chart showing the amounts ordered and collected during the last three fiscal years.

 

Fiscal Year

Amount Ordered

Amount Collected

2002-03

$172,021

$181,587**

2003-04

$283,627

$67,803**

2004-05

$289,522

In excess of $81,000

* FY2004-2005 is truncated for purposes of data, reporting, and funding, resulting from a change in the funding cycle of DOI.

**Note: This amount includes some restitution collected for orders made in previous years.

 

FISCAL IMPACT:

The DOI establishes annual proposed funding levels for each county, which are published in the State’s Request for Funding documents as funds earmarked for both grant programs. For FY 2004-05, this County requested $552,614 and received a final State award totaling $454,430. This disparity prevented restoring a second Deputy District Attorney position, which had previously been eliminated due to significant grant under funding for FY2003-04. The District Attorney’s Office has received approval from the DOI to place any excess revenue received in a trust fund, which would be used to fund any future shortages and does not anticipate exceeding program needs. Once DOI approves the subject grant and automobile insurance fraud grant, it is anticipated the combined insurance fraud grant programs will be fully funded by State and trust fund monies. Assuming approval will be forthcoming from the DOI for both grants, this current Board action will have no fiscal impact on Net County Cost.