Panel suggests fraud unit may be axed

Wednesday, Feb. 12, 2003 | 11:07 a.m.

CARSON CITY -- An insurance fraud unit in the state attorney general's office is costing almost $1 million a year but has recovered only $126,915 in the first six months of this fiscal year.

The workers compensation fraud unit in the office has a budget in excess of $2.5 million a year but has recovered only $60,265 in the second half of 2002.

Members of the Assembly Ways and Means Committee suggested today these fraud units in the office of Attorney General Brian Sandoval be eliminated because they are not cost-effective.

Sandoval, who took office in January, told the committee the performance of the insurance fraud unit is "a great concern of mine." He said members of the unit were to meet with major insurance companies in an attempt to improve.

The unit investigates cases in which individuals try to defraud insurance companies.

Insurance companies finance the state fraud unit, but Assembly members said the insurance companies can deduct that cost from their premium taxes.

Assemblyman Bob Beers, R-Las Vegas, raised the issue whether the insurance fraud unit was cost effective.

Assembly woman Chris Giunchigliani, D-Las Vegas, and Assembly Minority Leader Lynn Hettrick, R-Minden, both suggested the workers compensation fraud unit be scrapped.

Hettrick said the unit "actually recovers a very low amount" of money. He said private companies provide their own fraud investigations.

The state unit looks into cases where workers may fake injuries or cases where employers may escape having industrial insurance coverage.

"We were told this was needed for the self-insured," Hettrick said. But only two complaints were filed, he noted. Companies who pay to support the fraud unit receive an offset of taxes going to the state's general fund, he said.

Giunchigliani said the offset apparently can be eliminated.