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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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District Attorney’s Office
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DATE:
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June 9, 2005
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BOARD MEETING DATE:
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June 21, 2005
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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James P. Fox, District Attorney
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SUBJECT:
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Application for Renewal of the Automobile Insurance Fraud Grant
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RECOMMENDATION:
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Adopt a resolution authorizing submission of a grant application to the California Department of Insurance for grant funds in the amount of $307,513 for the Automobile Insurance Fraud Program for FY 2005-06.
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VISION ALIGNMENT:
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Commitment: Sow the Seeds of our Future Prosperity
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Goal 18: Attract and maintain leading-edge industries.
The Department of Insurance grant contributes to this goal by discouraging automobile insurance fraud throughout the County, thereby making San Mateo County a more attractive location for businesses.
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BACKGROUND:
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Under the provisions of Sections 1872.8, California Code of Regulations Subchapter 9, Article 4, Section 2698.65, 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 automobile 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.
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DISCUSSION:
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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 automobile insurance fraud, are funded partially by the subject grant and partially by a grant addressing workers’ compensation insurance fraud. A proposal to authorize the application for the workers’ compensation insurance fraud investigation grant will be concurrently submitted to the Board for approval.
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Over the past three fiscal years from July 1, 2002 through March 15, 2005*, the unit has received 42 suspected fraudulent auto insurance claims to investigate and prosecute; resulting in the filing of 27 cases. The Unit has worked in tandem with the Department of Insurance, various insurance companies, third party administrators, law enforcement agencies and departments, private citizens to successfully prosecute automobile insurance fraud. The purpose of this program is to investigate and prosecute individuals who violate the law. However, orders of restitution are often sought in these cases, which can become civil judgments eliminating the necessity of victims pursuing civil litigation. These orders can be recorded for future collection and usually specify multiple year pay out schedules. The following chart provides data for the past three fiscal years regarding funding and collections.
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* FY 2004-2005 is truncated for purposes of data, reporting and funding resulting from a change in the funding cycle of DOI.
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Fiscal
Year
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Number of Defendants Ordered to Pay
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Total Number of Victims
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Total Ordered
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Total Collected (current/
previous FY)
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2002-03
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1
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7
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$1,400
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$19,350
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2003-04
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9
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7
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$103,011
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$122,217
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2004-05
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10
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6
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$27,883
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$21,862
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FISCAL IMPACT:
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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 grant programs. For FY 2004-05, this County requested $298,873 and received a final State award totaling $250,513. This reduced amount prevented restoring a second Deputy District Attorney position, which was eliminated due to significant grant under-funding for FY 2003-04. The District Attorney’s Office has received approval from the DOI to place any excess revenue received in a trust fund that would be used to fund any future shortages. It is anticipated that the District Attorney’s Office will not exceed the financial needs of the program. Once the subject grant and the above-mentioned workers’ compensation insurance fraud grant are approved by the DOI for FY 2005-06, 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.
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