The Fraud Division is a specialized law enforcement unit within the California Department of Insurance (CDI) Enforcement Branch. Its primary responsibility is to protect consumers and insurers by investigating and combating insurance fraud in all its forms.
Creation and Authority – The Fraud Division was established under California Insurance Code §1872 to enforce anti-fraud provisions contained in the California Penal Code §§549–550. These penal code sections make it illegal to submit false or fraudulent insurance claims, stage accidents, or participate in schemes to defraud insurers.
Administration of Anti-Fraud Programs – The Division administers multiple anti-fraud programs authorized under the Insurance Code, including programs targeting automobile insurance fraud, workers’ compensation fraud, organized fraud rings, and health/disability fraud. These programs are funded in part through assessments on insurance companies writing business in California.
Investigative Role – The Fraud Division is staffed by peace officers (sworn law enforcement personnel) with full police powers. Their role includes:
Investigating fraudulent claims made by policyholders, medical providers, attorneys, and even insurance professionals.
Identifying organized fraud schemes, such as staged auto collisions or medical billing scams.
Working closely with prosecutors to prepare cases for criminal filing.
Referral for Prosecution – After completing investigations, the Fraud Division refers cases to local District Attorneys, the California Attorney General’s Office, or U.S. Attorneys for criminal prosecution. Convictions may result in fines, restitution, and imprisonment for those found guilty of insurance fraud.
Consumer Protection Mission – Beyond enforcement, the Fraud Division’s work also protects California consumers, since fraud drives up insurance premiums for everyone. By detecting and reducing fraud, the Division helps keep the insurance marketplace fair and stable.
In short, the Fraud Division functions as California’s front line defense against insurance fraud, blending investigative expertise with prosecutorial partnerships to safeguard both insurers and the public.
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