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LAW AND PUBLIC SAFETY
DIVISION OF CRIMINAL JUSTICE

Insurance Fraud Detection Reward Program
Proposed New Rules: N.J.A.C. 13:88-3


Authorized by: Peter C. Harvey, Attorney General of New Jersey
Authority: N.J.S.A. 2C:21-4.7, Executive Reorganization Plan No. 7 (1998), Executive Order No. 9 (Hughes) and N.J.S.A. 52:14B-1 et seq.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposed Number: PRN 2004-59

Submit comments by April 17, 2004 to
Greta Gooden-Brown
Assistant Attorney General
Insurance Fraud Prosecutor
Department of Law and Public Safety
P.O. Box 094
Trenton, N.J. 08625-0094

The agency proposal follows:

Summary
These rules are proposed in response to the enactment of N.J.S.A. 2C:21-4.7 which authorizes the Office of the Insurance Fraud Prosecutor (OIFP) to provide for a reward program for the reporting of suspected health care claims fraud, insurance fraud or any other criminal offense involving or related to an insurance transaction. A reward of up to $25,000 will be paid to persons providing information leading to the arrest, prosecution and conviction of persons who have committed health care claims fraud, insurance fraud or any other criminal offense related to an insurance transaction. The OIFP, which is established in the Division of Criminal Justice in the Department of Law and Public Safety, is under the supervision of the Attorney General.
Nothing in these proposed rules affects or alters the statutory obligation found at N.J.S.A. 17:33A-9 to report violations of the New Jersey Insurance Fraud Prevention Act to the OIFP.
Proposed N.J.A.C. 13:88-3.1 sets forth the scope and purpose of the new chapter which is the implementation of those rules necessary to establish the Insurance Fraud Detection Reward program.
Proposed N.J.A.C. 13:88-3.2 contains the definitions which are necessary for the implementation of the new subchapter.

Proposed N.J.A.C.13:88-3.3 provides for the liberal construction of these rules to permit the OIFP to discharge its statutory mandate.

Proposed N.J.A.C.13:88-3.4 provides the various procedures individuals may use to report to the OIFP suspected cases of health care claims fraud, insurance fraud or any other criminal offense relating to an insurance transaction such as the toll free hotline telephone number, the OIFP website and electronic mail.
Proposed N.J.A.C. 13:88-3.5 provides for a reward application form and puts applicants on notice that they may be required to give verbal statements under oath or sign written memorializations of their verbal statements.

Proposed N.J.A.C. 13:88-3.6 provides that the reward application form must be submitted within 30 days of the individual's initial report to the OIFP of suspected health care claims fraud, insurance fraud or any other criminal offense relating to an insurance transaction.

Proposed N.J.A.C. 13:88-3.7 provides that an informant may request anonymity, but that in certain circumstances, by statute, court rule or judicial decision, the informant's identity may have to be disclosed. The proposed rule also provides that all information and materials received by or maintained by the OIFP pursuant to these rules are confidential and not subject to public access pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1 et seq.

Proposed N.J.A.C. 13:88-3.8 provides the criteria for evaluating reward program applications. The information provided must directly lead to the arrest, prosecution and conviction of a specific individual(s) or entity(ies) for health care claims fraud, insurance fraud or any other criminal offense involving or related to an insurance transaction.

Proposed N.J.A.C. 13:88-3.9 provides that within 90 days of the conviction of the individual or entity identified by the applicant, the OIFP must notify the applicant in writing of their eligibility for the reward.
Proposed N.J.A.C. 13:88-3.10 lists those persons excluded from eligibility for a reward, including individuals, and their immediate family members, employed by the OIFP and insurance companies.
Proposed N.J.A.C. 13:88-3.11 provides the process for claiming the reward amount and provides that if more than one individual or entity is entitled to a reward in a particular case, the total reward amount is to be apportioned among the eligible claimants and will not exceed either five percent of the value of the fraud or $25,000 whichever is less.

Proposed N.J.A.C. 13:88-3.12 provides the guidelines for determining who is eligible to receive a reward when there is more than one applicant in a single case.

Proposed N.J.A.C. 13:88-3.13 provides that if criminal charges are subsequently dismissed against a defendant the applicant will not be eligible for the reward, unless the result would be manifestly unjust.
Proposed N.J.A.C. 13:88-3.14 provides that the only appeal from the Insurance Fraud Prosecutor's reward determination is to the Attorney General, not through the Superior Court.

Proposed N.J.A.C. 13:88-3.15 provides for the severability of any provision of these rules adjudged to be invalid.

The Appendix contains the reward application form.

Because the OIFP is providing a 60 day comment period, the proposal is exempt from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact
The proposed new rules articulate the statutory reporting requirements established in N.J.S.A 2C:21-4.4 through -4.6 for the payment of rewards for providing information which results in the arrest, prosecution and conviction of an individual or entity for health care claims fraud, insurance fraud, or any other criminal offense related to an insurance transaction. The proposed new rules will assist the OIFP in fighting insurance fraud in the State of New Jersey. The reward program will be an incentive for individuals and entities to report instances of insurance fraud that they would not have otherwise reported to the OIFP.

Economic Impact
The adoption of these proposed new rules should not have a significant economic impact on any insurance companies. The rewards will be paid from surcharges imposed pursuant to N.J.S.A. 17:33A-5.1 and supplemented as necessary by amounts budgeted for the operation of the OIFP.

Federal Standards Statement

A Federal standards analysis is not required as the proposed new rules regulate the insurance fraud prevention and detection activities in this State. These rules relate to an insurance fraud reporting program which is the subject of State law and are not subject to any Federal requirements or standards.

Jobs Impact
The OIFP does not anticipate that any jobs will be gained or lost as a result of these proposed new rules. The OIFP invites commenters to submit any data or studies concerning the jobs impact resulting from the proposed new rule.

Agriculture Industry Impact
The OIFP does not anticipate any impact on the agriculture industry from the proposed new rules.
Regulatory Flexibility Statement
The proposed new rules will apply to individuals who report suspected insurance fraud to the OIFP none of which are small businesses as that term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq.
Smart Growth Impact
The proposed new rules will not have an impact on the achievement of smart growth or the implementation of the State Development and Redevelopment Plan.

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New Jersey Division of Criminal Justice
PO Box 085, 25 Market Street
Trenton, NJ 08625
(609) 984-6500

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