Section 119.22. Institution and maintenance of anti-fraud plans

(a) Section 1203 of the act (77 P. S. § 1040.3) requires insurers, as defined in section 1101 of the act (77 P. S. § 1039.1), to institute and maintain an insurance anti-fraud plan. This requirement applies to a workers’ compensation insurer with workers’ compensation premium volume as of August 31, 1993. Workers’ compensation insurers which become licensed or commence a writing premium volume, or both, after August 31, 1993, should institute and maintain an anti-fraud plan within 4 months of commencing to write business. Maintenance of the anti-fraud plan includes its ongoing implementation and operation by insurers. Since a substantial number of workers’ compensation insurers also actively write motor vehicle insurance, the Department encourages insurers to merge their workers’ compensation anti-fraud initiatives into their established motor vehicle insurance anti-fraud plans established under 75 Pa.C.S. Chapter 18 (relating to motor vehicle insurance fraud). The content of each insurers’ workers’ compensation anti-fraud plan should reflect the following minimum requirements:

(1) Policies and procedures established by the insurer to prevent workers’ compensation insurance fraud. The policies and procedures should cover all aspects of the insurer’s operation and recognize the wide variety of potential fraudulent activity. Procedures should address internal fraud, fraud involving the integrity and security of company data including electronic data processed information, fraud involving employes or company representatives, and fraud resulting from misrepresentation on applications and renewals for insurance coverage and claims fraud. Detailed information should be provided describing existing procedure manuals, internal policies, guidelines and employe training programs implemented by the insurer to prevent fraud. It is recommended that specific policies and procedures be either included in the anti-fraud plan or, if the policies and procedures are voluminous, appropriately summarized.

(2) Policies and procedures established by the workers’ compensation insurer to detect and investigate possible insurance fraud in the claims process. Reference should be made to specific procedure manuals, internal policies, guidelines and training initiatives designed to detect fraud in the claims process.

(3) Policies and procedures established by the insurer to report workers’ compensation insurance fraud to appropriate criminal law enforcement agencies, including procedures to cooperate with and monitor progress of the agencies in their fraud cases.

(b) To facilitate the Department’s understanding of insurers’ administration of their anti-fraud procedures, insurers are encouraged to cover the following areas in their plans:

(1) Organizational components involved in or affected by the policies and procedures, including key positions involved.

(2) Roles and interrelationships of components as they relate to the policies and the procedures described.

(3) Personnel resources involved and budget allocations to implement the anti-fraud policies and procedures.

(4) Extra-company relationships with central claims data bases and criminal law enforcement authorities as they relate to the policies and procedures implemented for anti-fraud plans.