California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 9 - Insurance Fraud
Article 2 - Special Investigative Unit
Section 2698.36 - Investigating Suspected Insurance Fraud

Universal Citation: 10 CA Code of Regs 2698.36

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) The SIU shall establish, maintain, distribute, and adhere to written procedures for the investigation of possible suspected insurance fraud. An investigation of possible suspected insurance fraud shall include:

(1) A thorough analysis of a claim file, application, or insurance transaction, that includes consideration of factors indicating insurance fraud.

(2) Identification and interviews of potential witnesses who may provide information on the accuracy of the claim or application.

(3) Utilizing one or more industry-recognized databases identified by the SIU as appropriate for use in fraud investigations involving the particular line of insurance in question.

(4) Preservation of documents and other evidence obtained during an investigation.

(5) Writing a concise and complete summary of the entire investigation, which is specific to the investigation at hand, is separate from any other document prepared in connection with the investigation, and includes the investigators' findings regarding the suspected insurance fraud and the basis for their findings. The summary shall answer the following questions:
(A) What facts caused the reporting party to believe insurance fraud occurred or may have occurred?

(B) What are the suspected misrepresentations and who allegedly made them?

(C) How are the alleged misrepresentations material and how do they affect the claim or insurance transaction?

(D) Who are the pertinent witnesses to the alleged misrepresentation, if there are pertinent witnesses?

(E) What documentation is there of the alleged misrepresentation, if documented?

(F) In addition, the summary prepared pursuant to this subdivision (a)(5) shall include a statement as to whether or not the investigation is complete.

(b) Each investigation of suspected insurance fraud shall include performing at least the procedures specified pursuant to subdivision (a) of this Section 2698.36, to the extent they are applicable.

(c) The SIU shall investigate each credible referral of suspected insurance fraud that it receives from integral anti-fraud personnel, including automated or system-generated referrals. A credible referral of suspected insurance fraud is one that includes a red flag or red flags. However, the first sentence of this subdivision (c) notwithstanding, in the event that upon a preliminary review the SIU determines that it is reasonably clear that the red flag or red flags contained in the referral is not or are not the result of suspected insurance fraud, the SIU need not open an investigation. In the event that the SIU refrains from opening an investigation pursuant to the immediately preceding sentence, the SIU shall document in the claim file or SIU investigation file the reasons supporting its conclusion that the red flag or red flags contained in the referral is not or are not the result of suspected insurance fraud.

1. New section filed 9-4-2003 as an emergency; operative 9-4-2003 (Register 2003, No. 36). A Certificate of Compliance must be transmitted to OAL by 1-2-2004 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 1-2-2004 as an emergency; operative 1-3-2004. (Register 2004, No. 1). A Certificate of Compliance must be transmitted to OAL by 5-3-2004 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 5-4-2004 as an emergency; operative 5-4-2004 (Register 2004, No. 19). A Certificate of Compliance must be transmitted to OAL by 9-1-2004 or emergency language will be repealed by operation of law on the following day.
4. Editorial correction of HISTORY 3 (Register 2004, No. 36).
5. New section refiled 9-1-2004 as an emergency; operative 9-1-2004 (Register 2004, No. 36). A Certificate of Compliance must be transmitted to OAL by 12-30-2004 or emergency language will be repealed by operation of law on the following day.
6. New section refiled 12-28-2004 as an emergency; operative 12-30-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 4-29-2005 or emergency language will be repealed by operation of law on the following day.
7. New section refiled 4-29-2005 as an emergency; operative 4-29-2005 (Register 2005, No. 17). A Certificate of Compliance must be transmitted to OAL by 8-29-2005 or emergency language will be repealed by operation of law on the following day.
8. Certificate of Compliance as 4-29-2005 order, including repealer and new section, transmitted to OAL 8-26-2005 and filed 10-7-2005 (Register 2005, No. 40).
9. Amendment filed 7-30-2020; operative 10-1-2020 (Register 2020, No. 31).

Note: Authority cited: Sections 1875.24, 1879.5 and 1879.6, Insurance Code; Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d. 805, 824, 258 Cal. Rptr. 161, 771 P.2d 1247; Credit Ins. Gen. Agents Assn. v. Payne (1976) 16 Cal.3d 651, 656, 128 Cal. Rptr. 881, 547 P.2d 993; and Garris v. Carpenter (1939) 33 Cal. App. 2d. 649, 653, 92 P.2d 688. Reference: Sections 1875.20, 1875.21, 1875.24, 1879.5, 12921(a) and 12926, Insurance Code.

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