Workers Compensation

Chapter 5. Insurance Commissioner

Subchapter 9. Insurance Fraud

Article 2. Special Investigative Units 

Amend 2698.30. Definitions.

As used in this article, the following definitions shall apply:

(a) “Act” means any violation of California Code of Regulations, Title 10, Chapter 5,

Section 2698.30-42, inclusive.

(b) “Authorized governmental agency (agencies)” shall have the same meaning as used in the

Insurance Frauds Prevention Act (IFPA).

(c) “Claims handler” means every employee and agent of an insurer whose principal

responsibilities include the investigation, adjustment, settlement, and resolution of claims.

(d) “Commissioner” means the Insurance Commissioner of the State of California.

(e) “Communication” includes the referral of suspected insurance fraud to the Department of

Insurance and providing information and documents requested by the Fraud Division.

(f) “Contracted entity” means any entity with which an insurer contracts to perform SIU or

integral anti-fraud personnel duties or functions on behalf of the insurer. “Contracted entity”

includes subcontractors and sub-subcontractors contracted to perform SIU or integral anti-fraud

personnel duties or functions on behalf of the insurer. The term “contracted entity” does not

include the insurer’s affiliates, or subsidiaries, with which the insurer contracts to perform SIU or

integral anti-fraud personnel duties or functions on behalf of the insurer. “Contracted entity”

does not include entities with whom an insurer, or another of the insurer’s contracted entities,

contracts to provide an expert opinion on a medical, technical, or scientific topic, or perform a

discreet, specific investigative task such as surveillance, accident reconstruction, background

checks, scene inspections, social media checks, interviews, witness canvassing, Arising Out of

Employment/Course of Employment (AOE/COE) investigations, activity checks, or database

vendor services including, but not limited to, ISO ClaimSearch, LexisNexis, and Accurint, on behalf of the insurer in connection with the insurer’s performance of its SIU or integral antifraud personnel duties or functions. However, the immediately preceding sentence

notwithstanding, entities that (1) participate in the claims handling function of the insurer,

(2) make decisions on behalf of the insurer with respect to the insurer’s SIU or integral anti-fraud

functions, or (3) contract with other entities to perform SIU or integral anti-fraud duties or

functions on behalf of the insurer, are included within the meaning of the term “contracted

entity.”

(gf) “Department” means the California Department of Insurance.

(hg) “Fraud Division” means the California Department of Insurance Fraud Division formerly

known as the Bureau of Fraudulent Claims.

(ih) “Hearing” means an adjudicative proceeding initiated by the Insurance Commissioner

pursuant to the provisions of California Insurance Code Ssection 1875.24(d).

(ji) “Inadvertent” means unintentional.

(kj) “Insurer” means every insurer admitted to do business in this state except the following:

(1) Reinsurers.

(2) Title insurers.

(3) Fraternal fire insurers.

(4) Fraternal benefit societies.

(5) Firemen, policemen, or peace officer benefit and relief associations.

(6) Grant and annuity societies.

(7) Home protection.

(lk) “Integral anti-fraud personnel” includes insurer personnel who the insurer has not identified

as being directly assigned to its SIU but whose duties may include the processing, investigating,

or litigation pertaining to payment or denial of a claim or application for adjudication ofor claim

or application for insurance. These personnel may include claims handlers, underwriters, policy

handlers, call center staff within the claims or policy function, legal staff, and other insurer

employee classifications that perform similar duties.

(ml) “Reasonable belief” is a level of belief that an act of insurance fraud may have or might be

occurring for which there is an objective justification based on articulable fact(s) and rational

inferences therefrom.

(nm) “Red flag” or “red flag event” means facts, circumstances, or events which, singly or in

combination, support(s) an inference that insurance fraud may have been committed., and

includes patterns or trends that may indicate fraud, facts or circumstances present on a claim, and

behavior or history of person(s) submitting a claim or application.

(on) “Regulations” means these regulations, California Code of Regulations, Title 10, Chapter 5,

Subchapter 9, Article 2.

(po) “Special Investigative Unit” (SIU) means an insurer’s unit or division that is established to

investigate suspected insurance fraud. The SIU may be comprised of insurer employees or by

contracting with other entities for the purpose of complying with applicable sections of the

Insurance Frauds Prevention Act (IFPA) for the direct responsibility of performing the functions

and activities as set forth in these regulations.

(qp) “Suspected insurance fraud” includes any misrepresentation of fact or omission of fact

pertaining to a transaction of insurance including claims, premium, and application fraud. These

facts may include evidence of doctoring, altering or destroying forms;, prior history of the

claimant, policy holder, applicant, or provider;, receipts;, estimates;, explanations of benefits

(EOBs), medical evaluations or billings;, medical provider notes (commonly known as SOAPE

notes:); Subjective complaint, Objective findings, Assessment, Plan and Evaluation);, Health

Care Financing Administration (HCFA) forms;, police and/or investigative reports;, relevant

discrepancies in written or oral statements and examinations under oath (EUO);, unusual policy

activity; and falsified or untruthful application for insurance. An identifiable pattern in a claim

history may also suggest the possibility of suspected fraudulent claims activity. A claim may

contain evidence of suspected insurance fraud regardless of the payment status.

(rq) “The Insurance Frauds Prevention Act” or “(IFPA)” shall refer to California Insurance Code

sections 1871-through 1879.8.

(sr) “Willful” means a purpose or willingness to commit the act or make the omission referred to

in the California Insurance Code or in these regulations. The Commissioner shall use the factors

set forth at California Code of Regulations, Title 10, Section 2591.3(d)(1)(A-E) to determine

whether or not an act is willful.

NOTE: Authority cited: Sections 1872.4, 1875.24, 1877.3, 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, 9080, 10970, 11400, 11520, 11760, 11880,

12400.1, 12743, 12921(a) and 12926, Insurance Code.

Amend Section 2698.33. SIU and Integral Anti-Fraud Personnel Contracted Responsibilities.

(a) Any contract entered into by an insurer, or an entity under contract with an insurer for the

performance of SIU or integral anti-fraud personnel duties or functions as provided under these

regulations, shall not relieve the insurer of any obligation under these regulations or the IFPA.

(b) Notwithstanding any other provisions of these regulations, a complete and executed copy of

any such agreement, including all attachments, exhibits and amendments thereto, shall be

provided to the Fraud Division upon request by the Fraud Divisionon execution.

(c) Any contract entered into by an insurer with a contracted entity under this section shall:

(1) Specify all SIU or integral anti-fraud personnel duties and functions to be performed

by the parties to the contract and how the insurer monitors performance of the contract

responsibilities;

(2) Not include provisions that could provide disincentives to the referral and/or

investigation of suspected insurance fraud;

(3) Not include provisions that purport to relieve an insurer of any obligation to comply

with the requirements of these regulations and the IFPA.; and

(4) Expressly include a provision to require the contracted entity to comply with all

applicable provisions of the IFPA and this articlethese regulations.; and

(5) Expressly require the contracted entity to include the following provisions in any

agreement the contracted entity may enter into with any subcontractor to perform SIU or

integral anti-fraud personnel duties or functions for the contracted entity on behalf of the

insurer:

(A) Subcontractor to provide entire agreement to the Fraud Division upon request:

An express provision requiring that the contractor provide to the Fraud Division a

complete and executed copy of any such agreement between the contractor and its

subcontractor, including all attachments, exhibits and amendments thereto, upon

request by the Fraud Division,

(B) Subcontractor to be bound by same requirements as contractor: An express

provision that any such agreement between the contractor and its subcontractor

shall conform to the requirements set forth in subdivisions (c)(1), (c)(2), (c)(3),

and (c)(4) of this Section 2698.33, and

(C) Limitations on subcontractor contracting with other entities: An express

provision that, in the event any subcontractor to the contracted entity contracts

with any other entity or entities to perform SIU or integral anti-fraud personnel

duties or functions on behalf of the insurer, the agreement between the

subcontractor and the entity so contracted (hereinafter a “sub-subcontractor”)

shall contain the following provisions:

1. Sub-subcontractor to be bound by same requirements as contractor and

subcontractor: The express provision described in subdivision (c)(5)(B) of

this section,

2. Sub-subcontractor to provide entire agreement to the Fraud Division

upon request: An express provision identical in substance to the provision

described in subdivision (c)(5)(A) of this section, binding the

subcontractor to provide, upon request by the Fraud Division, the

documents specified in that subdivision (c)(5)(A) but with respect to the

agreement between the subcontractor and its sub-subcontractor, and

3. No further subcontracting: An express provision prohibiting the

sub-subcontractor from permitting, or contracting with, any other entity to

perform the SIU or integral anti-fraud personnel duties or functions which

the sub-subcontractor has contracted with the subcontractor to perform on

behalf of the insurer.

(d) An insurer shall no later than April 1, 2021 ensure that the provisions described in

subdivisions (c)(5)(A) through (c)(5)(C) of this section are included in any and all of its contracts

with contracted entities for the performance of SIU or integral anti-fraud personnel duties or

functions.

NOTE: Authority cited: Sections 1875.23, 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.

Amend Section 2698.34. Communication with the Fraud Division and Authorized Governmental

Agencies.

(a) The insurer and any entity performing the SIU function(s) shall comply with specific

sections of the IFPA regarding communication with the Fraud Division and authorized

governmental agencies.

(b) On written request by the Fraud Division or an authorized governmental agency, an insurer

or its agents, shall release in a timely and complete manner any or all relevant information

deemed important that the insurer may possess relating to any specific incident of insurance

fraud. SuchThe information released pursuant to this subdivision (b) shall include:

(1) Insurance policy information;

(2) Applications;

(3) Policy premium payment records;

(4) History of claims;

(5) Information relating to the carrier’s investigation, including statements, proof and

notice of loss;

(6) Claim file documents;

(7) Claim notes;

(8) Investigation files;

(9) Investigator notes; and

(10) Other information which the Fraud Division or an Aauthorized Ggovernmental

Aagency may deem relevant and important.

(c) For the purpose of this section, timely release of information means immediate, but no more

than thirty (30) calendar days after the request or, in the event of a request relating to workers’

compensation insurance fraud, sixty (60) calendar days after the request, unless otherwise agreed

to by the Fraud Division or by the other authorized governmental agency making the request.

(d) Information released pursuant to this Section 2698.34 shall be transmitted only as follows,

unless otherwise agreed to by the Fraud Division:

(1) Via the Fraud Division’s electronic portal provided for this purpose;

(2) As hardcopy; or

(3) In an electronic file.

For purposes of this subdivision (d)(3):

(A) If the file is password-protected, the password must be provided to the Fraud

Division and must not expire.

(B) If the file is encrypted, the insurer shall provide Fraud Division with any

materials necessary in order for the encrypted information to be accessed by the

Fraud Division.

(ec) A single written request shall be considered sufficient to compel production of all

information deemed relevant by the requesting governmental agency relating to any specific

insurance fraud investigation. The single request is applicable throughout the duration of the

investigation and is applicable to the requested records of the insurer named in the request and

the records of all persons, agents, and brokers employed by and conducting business on behalf of

the insurer.

NOTE: Authority cited: Sections 1872.4, 1875.24, 1877.3, 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 1872.3, 1873, 1874.2, 1874.4, 1875.4, 1875.20, 1875.21, 1875.24, 1877.1,

1877.2, 1877.3, 1877.4, 1877.5, 1879.5, 12921(a) and 12926, Insurance Code.

Amend Section 2698.35. Detecting Suspected Insurance Fraud.

(a) An insurer’s integral anti-fraud personnel are responsible for identifying suspected insurance

fraud during the handling of insurance transactions and referring it to the SIU as part of their

regular duties.

(b) The SIU shall establish, maintain, distribute, and monitor written procedures to be used by

the integral anti-fraud personnel to detect, identify, document, and refer suspected insurance

fraud to the SIU. The written procedures shall include a listing of the red flags to be used to

detect suspected insurance fraud for the insurer. The red flags listed pursuant to the immediately

preceding sentence shall be specific to each line of insurance, or each insurance product,

transacted in or issued by the insurer.

(c) The procedures for detecting suspected insurance fraud shall provide for comparison of any

insurance transaction against red flags and other criteria that may indicate possible fraud.:

(1) Patterns or trends of possible fraud;

(2) Red flags;

(3) Events or circumstances present on a claim;

(4) Behavior or history of person(s) submitting a claim or application; and

(5) Other criteria that may indicate possible fraud.

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.

Amend Section 2698.36. Investigating Suspected Insurance Fraud.

(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 includesing the investigators’s 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.

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.

Amend Section 2698.37. Referral of Suspected Insurance Fraud.

(a) The SIU shall provide for the referral of acts of suspected insurance fraud to the Fraud

Division and, as required, district attorneys.

(b) Referrals shall be submitted in any insurance transaction where the facts and circumstances

create a reasonable belief that a person or entity may have committed or is committing insurance

fraud.

(c) Referrals shall be made within the period specified by statute.

(d) The SIU shall complete as much of its investigation as is reasonable prior to the time the

referral is made to the Fraud Division. Each referral of suspected insurance fraud shall indicate

whether the investigation is complete or further investigation is needed.

(ed) The requirements of this section do not affect the immunity granted under California

Insurance Code section 1872.5 or other such similar codes contained in the Insurance Frauds

Prevention Act.

(fe) The requirements of this section do not diminish statutory requirements contained in the

Insurance Frauds Prevention Act regarding the confidentiality of any information provided in

connection with an investigation.

NOTE: Authority cited: Section 1708, Civil Code; Sections 1872.4, 1874.6, 1875.24, 1875.4,

1877.3, 1877.5, 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;

Section 2698.40 Definitions As used in this article, the following definitions shall apply: (a) “Authorized governmental agency (agencies)” shall have the same meaning as used in the Insurance Frauds Prevention Act (IFPA). (b) “Claims handler” means every employee and agent of an insurer whose principal responsibilities include the investigation, adjustment, settlement and resolution of claims. (c) “Commissioner” means the Insurance Commissioner of the State of California. (d) “Communication” includes the referral of suspected insurance fraud to the Department of Insurance and providing information and documents requested by the Fraud Division. (e) “Department” means the California Department of Insurance. (f) “Fraud Division” means the California Department of Insurance Fraud Division formerly known as the Bureau of Fraudulent Claims. (g) “Insurer” means every insurer admitted to do business in this state except the following: (1) Reinsurers. (2) Title insurers. (3) Fraternal fire insurers. (4) Fraternal benefit societies. (5) Firemen, policemen, or peace officer benefit and relief associations. (6) Grant and annuity societies. (7) Home protection (h) “Integral anti-fraud personnel” includes insurer personnel who the insurer has not identified as being directly assigned to its SIU but whose duties may include the receipt, processing, investigating, or litigation pertaining to payment or denial of a claim or application. These personnel may include claims handlers, underwriters, agents, policy handlers, call center staff, legal staff, and other insurer employee classifications that perform similar duties. (i) “Reasonable suspicion” is a level of belief that an act of insurance fraud may have or might be occurring for which there is an objective justification based on articulable fact(s) and rational inferences therefrom. (j) “Red flag” or “red flag event” means facts, circumstances or events which, singly or in combination, support(s) an inference that insurance fraud may have been committed. (k) “Regulations” means these regulations, California Code of Regulations, Title 10, Chapter 5, Subchapter 9, Article 2. (l) “Special Investigative Unit” (SIU) means an insurer’s unit or division that is established to investigate suspected insurance fraud. The SIU may be comprised of insurer employees or by contracting with other entities for the purpose of complying with applicable sections of the Insurance Frauds Prevention Act (IFPA) for the direct responsibility of performing the functions and activities as set forth in these regulations. (m) “Suspected insurance fraud” includes any misrepresentation of fact pertaining to a transaction of insurance including claims, premium and application fraud. These facts may include evidence of doctoring, altering or destroying forms, prior history of the claimant, policy holder, applicant or provider, receipts, estimates, explanation of benefits (EOB), medical evaluations or billings, medical provider notes (commonly known as SOAPE notes; Subjective complaint, Objective findings, Assessment, Plan and Evaluation), Health Care Financing Administration (HCFA) forms, police and/or investigative reports, relevant discrepancies in written or oral statements and examinations under oath (EUO), unusual policy activity and falsified or untruthful application for insurance. An identifiable pattern in a claim history may also suggest the possibility of suspected fraudulent claims activity. A claim may contain evidence of suspected insurance fraud regardless of the payment status. (n) “The Insurance Frauds Prevention Act” or “(IFPA)” shall refer to California Insurance Code section 1871 et seq. (a) Adequacy. The adequacy of an insurer’s SIU staffing shall be determined by its demonstrated ability to establish, operate and maintain an SIU that is in compliance with these regulations. (b) Knowledge. An SIU shall be composed of employees who have knowledge and experience in general claims practices, the analysis of claims for patterns of fraud, and current trends in insurance fraud, education and training in specific red flags, red flag events, and other criteria indicating possible fraud. They shall have the ability to conduct effective investigations of suspected insurance fraud and be familiar with insurance and related law and the use of available insurer related database resources. Section 2698.43 SIU Contracted Responsibilities (a) Any contract entered into by an insurer, or an entity under contract with an insurer as provided under these regulations, shall not relieve the insurer of any obligation under these regulations or the IFPA. (b) Notwithstanding any other provisions of these regulations, a complete and executed copy of any such agreement, including all attachments, exhibits and amendments thereto, shall be provided to the Fraud Division on execution. (c) Any contract entered into by an insurer under this section shall: (1) Specify all SIU duties and functions to be performed by the parties to the contract and how the insurer monitors performance of the contract responsibilities. (2) Not include provisions that could provide disincentives to the referral and/or investigation of suspected insurance fraud. (3) Not include provisions that purport to relieve an insurer of any obligation to comply with the requirements of these regulations and the IFPA. (4) Expressly include a provision to require the contracted entity to comply with all applicable provisions of the IFPA and these regulations. Section 2698.43 SIU Contracted Responsibilities (a) Any contract entered into by an insurer, or an entity under contract with an insurer as provided under these regulations, shall not relieve the insurer of any obligation under these regulations or the IFPA. (b) Notwithstanding any other provisions of these regulations, a complete and executed copy of any such agreement, including all attachments, exhibits and amendments thereto, shall be provided to the Fraud Division on execution. (c) Any contract entered into by an insurer under this section shall: (1) Specify all SIU duties and functions to be performed by the parties to the contract and how the insurer monitors performance of the contract responsibilities. (2) Not include provisions that could provide disincentives to the referral and/or investigation of suspected insurance fraud. (3) Not include provisions that purport to relieve an insurer of any obligation to comply with the requirements of these regulations and the IFPA. (4) Expressly include a provision to require the contracted entity to comply with all applicable provisions of the IFPA and these regulations. Section 2698.44 Communication with the Fraud Division and Authorized Governmental Agencies. (a) The insurer and any entity performing the SIU function(s) shall comply with specific sections of the IFPA regarding communication with the Fraud Division and authorized governmental agencies. (b) On written request by the Fraud Division or an authorized governmental agency, an insurer or its agents, shall release in an timely and complete manner any or all relevant information deemed important that the insurer may possess relating to any specific incident of insurance fraud. Such information shall include: (1) Insurance policy information. (2) Applications. (3) Policy premium payment records. (4) History of claims. (5) Information relating to the carrier’s investigation, including statements, proof and notice of loss. (6) Claim file documents. (7) Claim notes. (8) Investigation files. (9) Investigator notes. (10) Other information which the Fraud Division or an Authorized Governmental Agency may deem relevant and important. (c) For the purpose of this section, timely release of information means immediate unless otherwise agreed to by the Fraud Division. (d) A single written request shall be considered sufficient to compel production of all information deemed relevant by the requesting governmental agency relating to any specific insurance fraud investigation at the time the request is made and subsequent to require production of the requested records by the insurer named in the request and all persons, agents and brokers employed by and conducting business on behalf of the insurer. Section 2698.45 Detecting Suspected Insurance Fraud. (a) An insurer’s integral anti-fraud personnel are responsible for identifying suspected insurance fraud during the handling of insurance transactions and referring it to the SIU as part of their regular duties. (b) The SIU shall establish, maintain, distribute and monitor written procedures to be used by the integral anti-fraud personnel to detect, identify, document and refer suspected insurance fraud to the SIU. The written procedures will include a listing of the red flags to be used to detect suspected insurance fraud for the insurer. (c) The procedures for detecting suspected insurance fraud shall provide for comparison of any insurance transaction against: (1) Patterns or trends of possible fraud (2) Red flags (3) Events or circumstances present on a claim (4) Behavior or history of person(s) submitting a claim or application (5) Other criteria that may indicate possible fraud Section 2698.46 Investigating Suspected Insurance Fraud. (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 will include: (1) A thorough analysis of a claim file, application, or insurance transaction. (2) Identification and interviews of potential witnesses who may provide information on the accuracy of the claim or application. (3) Utilizing industry-recognized databases. (4) Preservation of documents and other evidence. (5) Writing a concise and complete summary of the investigation, including the investigator’s conclusions regarding the suspected insurance fraud and the basis for their conclusions. Section 2698.47 Referral of Suspected Insurance Fraud. (a) The SIU shall provide for the referral of acts of suspected insurance fraud to the Fraud Division and, as required, district attorneys. (b) Referrals shall be submitted when in any insurance transaction the facts and circumstances create a reasonable belief that a person or entity may have committed or is committing insurance fraud. Section 2698.48 Referral Content A referral of an act of suspected insurance fraud to the Fraud Division shall be legible and in a format as directed by the Department and contain the information and data to the extent applicable, as provided in the following. (a) Fraud and referral type (1) Fraud type (2) New referral/amended referral indicator (b) Reporting party information (1) Reporting party type (2) Reporting party name (3) Reporting party California Company number (4) Reporting self-insured/contracted third party license number, as appropriate (5) Reporting party address, city, state and zip code (6) Reporting party email address (generally, contact address) (c) Alleged victim information, as appropriate (1) Alleged victim company name (2) Alleged victim California Company number (3) Alleged victim self-insured number (4) Alleged victim address, city, state and zip code (d) Insurance policy or claim information, as appropriate (1) Claim number associated with referral (2) Insurance policy number associated with referral (3) Date of loss or injury (4) Geographic location where loss or injury occurred (5) Insurance premium dollar loss (6) Total potential loss on claim prior to the identification of fraud (7) Total claim loss paid to date (8) Actual suspected fraudulent loss amount paid to date (9) A complete synopsis of all the facts on which the reasonable suspicion of the insurance fraud is based (10) Disaster claim indicator (e) Other agency referral information, as appropriate (1) Names of other authorized governmental agencies receiving this referral (2) Names of any District Attorney’s Office receiving this referral (3) National Insurance Crime Bureau (NICB) referral indicator (4) The names of any other agencies receiving this referral (f) Referral contact information, as appropriate (1) Referral contact name and phone number (2) Claim or case file handler and phone number (3) Name and phone number of person who completed referral (4) Date referral was completed (g) Information for each party associated with the referral (1) Identification of the role of the party to the loss (2) Phone number (3) Address, city, state and zip code (4) Date of birth or age (5) Social security number (6) Tax identification number (7) Drivers license number (8) State of party’s drivers license (9) Vehicle license plate number (10) Vehicle license plate state (11) Vehicle identification number (12) Other names or identifiers used by the party (13) Claim of injury indicator Section 2698.49 SIU Training Requirements for training provided by and for the SIU shall include: (a) The SIU shall establish and maintain an ongoing anti-fraud training program, planned and conducted to develop and improve the anti-fraud awareness skills of the integral anti-fraud personnel. (b) The insurer shall designate an SIU staff person to be responsible for the ongoing antifraud training program. (c) The anti-fraud training program shall include instruction on: (1) The function and purpose of the SIU. (2) Introduction/review of the written procedures established by the SIU regarding the identification, documentation and referral of incidents of suspected fraud to the SIU. (3) Identification and recognition of red flags or red flag events. (4) Any changes to current procedures for identifying, documenting and referring incidents of suspected insurance fraud to the SIU. (5) Fraud Division insurance fraud reporting requirements. (6) Introduction and review of existing and new, emerging insurance fraud trends. (d) In addition to training provided to integral antifraud personnel provided herein, the SIU personnel shall receive anti-fraud training that include investigative techniques, communication with the Fraud Division and authorized governmental agencies, fraud indicators, emerging fraud trends, legal and related issues. This training shall be provided to SIU personnel by qualified and experienced entities in the subject matter being presented. (e) All insurers shall provide an anti-fraud orientation program to all SIU and integral antifraud personnel within thirty (30) days after hire. Thereafter, insurers shall provide anti-fraud training to SIU and integral antifraud personnel on an annual basis. (f) Records of the anti-fraud training provided to all staff shall be prepared at the time training is provided and be maintained and available for inspection by the Department on request. The training records shall include the title and date of the anti-fraud training course, name and title and contact information of the instructor(s), description of the course content, length of the training course, and the name and job title(s) of participating personnel. Section 2698.50 SIU Annual Report (a) Every insurer shall, at the time its initial Certificate of Authority is issued and annually on a date prescribed by the Fraud Division on at least sixty (60) days prior to the due date, submit an annual report: (b) A complete, accurate and truthful annual report shall be submitted in a format as prescribed by the Department and shall include the following information. (1) The name(s), title(s) and contact information of the insurer’s SIU personnel, or (2) The name of the organization and organizational contacts with whom the insurer has contracted for the maintenance of the SIU or any function thereof, and (3) The names of personnel whose duties include communication with the Fraud Division on matters related to the reporting, investigation and prosecution of suspected fraudulent claims or other suspected insurance fraud. (4) A description of the insurer’s methods and written procedures used for detecting, investigating and reporting suspected insurance fraud. (5) A description of the insurer’s plan for initial and ongoing fraud education and training for integral anti-fraud personnel pursuant to these regulations. (6) A written description or chart outlining the organizational arrangement of the insurer’s anti-fraud personnel who are responsible for the investigation and reporting of suspected insurance fraud. (7) A description of how the SIU is adequately staffed to meet the requirements herein and the expertise of the staff; (8) The number of claims processed by the insurer and the number of claims referred to the SIU, for each reported company, for the past calendar year; (9) The number of suspected insurance fraud reported to the Department and to district attorney offices, for each reported company, for the past calendar year. (10) A description of any significant, anticipated changes to the insurer’s operations. (11) Insurers who enter into contracts for the purpose of compliance with CIC Section 1875.20 et seq. shall provide a complete copy of the fully executed, existing contract, including all attachments and addendum, to the Department and shall specify the manner in which the contract is monitored. (12) The number and type of civil actions for each reported company alleging acts of insurance fraud during the preceding calendar year. (c) A statement signed under penalty of perjury must accompany all reports mentioned herein. This statement must be signed by an officer of the holder of or applicant for the Certificate of Authority who attests to the accuracy of the reported information and the signor’s personal knowledge of the existence and proper maintenance of an SIU as required by CIC Section1875.20 et seq. and these regulations. (d) The insurer is to maintain a copy of the annual report that will be available for review. (e) For the purpose of these regulations, the name(s) of the insurer’s personnel who will communicate with the Fraud Division shall not be made part of the public record and shall be released only pursuant to the provisions of CIC Section 1873.1 applicable to information acquired pursuant to Article 3 of the Insurance Frauds Prevention Act. Section 2698.51 Examinations (a) The commissioner may conduct examinations of an insurer’s SIU and related operations, including operations undertaken by entities under contract with the insurer, as deemed necessary to determine compliance with the requirements of this article. (b) A written report of examination, including identification of violations of these applicable provisions of statute and regulation and required corrective action, if any, will be provided to the insurer on completion of the examination. (c) Notwithstanding any penalty imposed pursuant to the regulations, within thirty (30) days of receipt of a written report identifying any violation(s) of these regulations, an insurer shall submit to the Department a plan demonstrating how the insurer will correct such violation(s) and achieve compliance. Such plan shall be subject to examination by the Department. If accepted by the Department, the plan shall be submitted as a supplement to any existing annual report and shall be accompanied by an statement of an officer of the insurer as otherwise required for annual reports. Failure to submit a corrective action and compliance plan or to comply with such plan when accepted by the Department shall be considered a violation of these regulations. Section 2698.52 Penalties (a) On notice and hearing in accordance with Government Code sections 11550 et seq,. the Commissioner may impose sanctions for violation of these regulations and/or Article 5.6 (commencing with section 1875.20) of the California Insurance Code. (b) Not withstanding any other provisions of law, for each act in violation of these regulations an insurer will be subject to a penalty of not more than $55,000 and/or suspension or revocation of the insurer’s Certificate of Authority.