Federal Cooperative Disability Investigations Program Establishes New Unit in North Carolina

Federal Cooperative Disability Investigations Program Establishes New Unit in North Carolina in Partnership with North Carolina Department of Insurance Criminal Investigations Division

The North Carolina Department of Insurance recently announced that a new investigative unit formed as part of the Cooperative Disability Investigations (CDI) Program will be located in Raleigh, North Carolina, with the goal of combatting the rising trend of disability and other types of insurance fraud. As reported, the North Carolina-based CDI office will be established as a partnership between the N.C. Department of Insurance’s Criminal Investigations Division (CID), N.C. Health and Human Services, the U.S. Social Security Administration’s Office of the Inspector General, and the Social Security Administration’s regional office. The expansion demonstrates an increased effort at identifying and prosecuting insurance fraud in North Carolina.

NC DOI Criminal Investigations Division (CID) will lend its experience combatting insurance fraud by providing three officials to the unit with a single official provided by each of the other three agencies. The North Carolina Department of Insurance founded CID in 1945, which is one of the nation’s oldest insurance fraud investigation agencies. Historically, North Carolina CID agents work statewide with the insurance industry, state and federal law enforcement, and prosecutors to investigate and prosecute insurance-related crimes.

What is disability fraud or insurance fraud?

Disability insurance is designed to provide financial assistance to individuals who are unable to work due to a qualifying disability or medical condition. Disability insurance fraud refers to the intentional deceptive action by individuals to obtain undeserved benefits from insurance programs. Fraudulent activities can take many different forms, including exaggerating or falsifying information about one’s health, income, or ability to work.

Common types of disability insurance fraud include:

1. Misrepresentation of Health Condition: Individuals may exaggerate or lie about the severity of their medical condition to qualify for disability benefits. This could be providing false information to medical professionals or submitting fabricated medical records.
2. Concealing Income or Employment: Some individuals may fail to report additional income or employment while receiving disability benefits. This could include working “under the table” to hide income that might make an individual ineligible for benefits.
3. False Documentation: Fraud can include forging or altering documents, such as medical reports or employment records, to support disability claims.
4. Insurance Stacking: Individuals might attempt to collect benefits from multiple disability insurance policies simultaneously, even though they may not be eligible for such overlapping coverage.

Insurance companies employ various methods to detect and prevent disability insurance fraud, including thorough claims investigations, surveillance, and collaboration with law enforcement agencies. Penalties for disability insurance fraud can be severe and may include criminal charges, fines, repayment of wrongfully obtained benefits, and the termination of insurance coverage. Although the vast majority of individuals with disability insurance claims are honest and legitimately in need of financial assistance due to their health conditions, that is inevitably not always the case. Disability insurance fraud is a serious offense that can have significant legal consequences.

Basics of a CDI investigation

The CDI program is an anti-fraud initiative within Social Security Disability programs which acts by reviewing questionable disability claims and investigating cases of suspected disability fraud to stop payment before it is wrongly transferred. The Criminal Investigations Division with the NC Dept. of Insurance consists of investigators that are law enforcement officers authorized to carry firearms and make arrests and conduct searches. CID is often called on to look into suspected insurance fraud related to emergency funds released in response to natural catastrophes, suspicious car accidents and repair shops, healthcare fraud and medical supply irregularities, and unauthorized insurers.

The newly announced Raleigh unit can be expected to carry out CDI’s anti-fraud initiative addressing instances of fraud within Social Security disability programs. With more than 50 CDI units nationwide located in most states and U.S. territories, these offices combine state and federal resources to uncover illegal conduct in a variety of government program such as food and nutrition assistance, housing assistance, and Medicare and Medicaid, in addition to Social Security programs.

The expansion of CDI into North Carolina appears to signal increased regulation into the abuse of government programs. Previously, the US Attorney’s Office announced a commitment to identifying and prosecuting out fraud related to the CARES Act/COVID-19, which as of 2022 has reportedly resulted in charges against over 1,000 defendants for losses exceeding $1.1 billion. With additional government resources targeting additional government assistance programs, these numbers are sure to increase. If you are contacted by investigators, experienced counsel is recommended as we can help you navigate throughout the investigation.