Letter Of The Law: When Complying With Fraud Investigations, Stick To Statutory Obligations

In this current litigious environment, insurers and individual claims professionals face many risks while handling fraud investigations, whether the investigation focuses on an insured, an outside contractor, or a medical provider.

With cases involving allegations of defamation, abuse of process, and interference with business relationships, it is important to properly manage the investigation and communications.

Many states have enacted legislation requiring insurance companies to notify law enforcement authorities when arson or fraud is suspected—and to cooperate in third-party governmental investigations of arson and fraud claims—while giving immunity for such cooperation (See e.g. Georgia: O.C.G.A. §§ 25-2-33, 33-1-16; Florida: Fla. Stat. §§ 633.126, 626.989; Illinois: 215 ILCS 145/1, 215 ILCS 5/155.24; Michigan: MCLS §§ 29.4, 500.4509).

However, such immunity from civil liability is often limited to insurers that cooperate or report in good faith in the investigation of suspected arson and fraud.