Louisiana State Police: Staff size limits insurance fraud investigations

By David Jacobs | The Center Square

Lack of staff and information is keeping Louisiana State Police from investigating most of the fraud claims the Department of Insurance refers, a member of LSP’s insurance fraud and auto theft unit told a legislative task force Tuesday.

The insurance department referred 1,402 cases of possible fraud last year to State Police, most involving auto insurance, according to Tuesday’s presentation. State Police pursued 316 of them.

Referrals are chosen based on whether police have enough information and people to fully investigate a claim in a reasonable amount of time, Lt. Michael Wilkerson said. He said 25 LSP investigators handle about 12 to 16 cases per year.

“We do not have the manpower to feasibly work on all of these investigations,” he said, explaining they prioritize cases that are relatively easy to prove over the ones that would take more time and effort.

Wilkerson spoke to a task force charged with looking for ways to reduce the cost of automobile insurance in Louisiana, where rates are among the highest in the nation. State Sen. Katrina Jackson, a Monroe Democrat, said she supported the group’s work, in part, because she was not convinced a package of legal changes approved last year would lead to lower rates as supporters promised.

Act 37 from June’s special session altered Louisiana’s civil justice system in several ways. For example, it lowered the threshold a case must be worth to guarantee the right to a jury trial from $50,000, the highest in the nation, to $10,000.

While the changes were sold as measures to lower insurance rates, the legislation did not contain any measures to require rate reductions. Supporters now say it could take years before the changes have an effect.

The task force heard Tuesday that one measure that could be driving up insurers’ costs, leading them to increase rates, is doctors inflating medical costs for accident plaintiffs.

Dr. David Aiken, an orthopedic surgeon, said many doctors are charging accident victims, who are seeking to pay for their medical bills through litigation, several times more than private insurance or Medicare would pay, yet state law doesn’t allow juries to see those comparisons.

Aiken suggested courts use the workers’ compensation rate schedule. Doctors still could charge more than what workers’ compensation calls for but would not have an incentive to do so, he said.

Jackson, however, said the Louisiana Legislature already has established oversight boards for licensed professions that can deal with ethics complaints. She suggested the State Board of Medical Examiners should have a chance to address the alleged price inflation problem before legislators consider changing the law.

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