OFFICE OF THE

INSURANCE FRAUD

PROSECUTOR

NJSBA Annual Meeting and Convention

Handling the Insurance Fraud Case

May 18, 2017

State of New Jersey Departments

1. Agriculture

2. Attorney General’s Office (Law and Public Safety)

3. Banking and Insurance

4. Children and Families

5. Community Affairs

6. Corrections

7. Education

8. Environmental Protection

9. Health

10. Human Services

11. Labor and Workforce Development

12. Military and Veterans Affairs

13. State (Lt. Governor)

14. Transportation

15. Treasury

Department of Law and Public Safety

• Division of Criminal JusticeoStatewide Prosecutions

oOversight of County Prosecutor’s Offices

• Office of the Insurance Fraud Prosecutor

• Division of LawoRepresentation of all State Departments and Agencies

• Division of Consumer AffairsoProfessional Boards

▪ Board of Medical Examiners

▪ Board of Chiropractic Examiners

▪ Board of Nursing

▪ Board of Pharmacy

Office of the Insurance Fraud Prosecutor

• Created in 1998 by the Automobile

Insurance Cost Reduction Act (AICRA)

• Mission: to conduct full and fair investigations to

ensure successful criminal prosecutions, civil

adjudications, licensing sanctions or other

appropriate dispositions and to serve as the focal

point for the coordination of all anti-insurance

fraud activities statewide.

Office of the Insurance Fraud Prosecutor

• Private Insurance

oHealth

oAuto

oWorkers Compensation

oRate Evasion

• Medicaid

oHealth

oPatient Protection

oFalse Claims Act

New Jersey Statutes

• Health Care Claims Fraud N.J.S.A. 2C:21-4.2

oMaking or causing to be made a false, fictitious,

fraudulent or misleading,

oStatement of material fact in,

oOmitting (or causing to be omitted) a material fact from,

oAny a record, bill, claim or other document,

o In writing, electronically, or any other form,

oAttempts to submit, submits, or causes to be submitted

or attempts to cause to be submitted

oFor payment or reimbursement for health care services.

New Jersey Statutes

• Health Care Claims Fraud N.J.S.A. 2C:21-4.3

oPractitioner

▪ Second Degree – knowingly commits

▪ Third Degree – recklessly commits

▪ Fine up to five times the pecuniary benefit obtained or sought to

be obtained.

oNon-Practitioner

▪ Second Degree – knowingly commits five or more acts and at

least $1,000

▪ Third Degree – knowingly commits

▪ Fourth Degree – recklessly commits

New Jersey Statutes

• Insurance Fraud N.J.S.A. 2C:21.4.6o Knowingly makes, or causes to be made, a false, fictitious, fraudulent

or misleading statement of material fact,

o Omits a material fact from, or causes a material fact to be omitted from,

o Any record, bill, claim, or other document,

o In writing, electronically, orally or in any other form,

o That person attempts to submit, submits, causes to be submitted or attempts to cause to be submitted,

o As part of, in support of or opposition to, or in connection with:

▪ Claim (payment, reimbursement or benefit)

▪ Application

▪ Payment

▪ Affidavit, certification, record or other document

New Jersey Statutes

• Insurance Fraud N.J.S.A. 2C:21.4.6

oSecond Degree – five or more acts and at least $1,000

oThird Degree – otherwise

oFourth degree – motor vehicle subsection

▪ Operates a MV in this state, policy in another state, principal

residence/garaged

New Jersey Statutes

• Commercial Bribery N.J.S.A. 2C:21-10

o Solicits, accepts, or agrees to accept any benefit as consideration,

o For knowingly violating or agreeing to violate a duty of fidelity.

• “Duty of Fidelity” – not defined in NJ case law

o United States v. Lee, 359 F.3d 194 (2004) – “a person who owes a

duty of fidelity or loyalty may not engage in self-dealing or

otherwise use his or her position to further personal interest rather

than those of the beneficiary”

New Jersey Statutes

• Use of Runners N.J.S.A. 2C:21-22.1

oRunner

▪ Person who, for pecuniary benefit, procures or attempts to

procure a client, patient or customer,

▪ At the direction of, request of or in cooperation with a provider,

▪ Whose purpose is to seek to obtain benefits under a contract of

insurance or assert a claim against an insured or an insurance

carrier for providing services…

▪ Does not include individuals who procures (or attempts) clients,

patients or customers through public media.

Basic Investigation – Private Insurance

• Referral from an Insurance Carrier

oDetermine if OIFP should keep the case

▪ Criminal – keep or send to county

▪ Civil – Bureau of Fraud Deterrence

▪ Other disposition – licensing, regulatory, etc.

oSubpoenas

oSearch Warrants

oCharging – complaint summons or warrant

oIndictment

oGlobal Plea Offers

Basic Investigation – Medicaid

• Referral from the Medicaid Fraud Division

oDetermine if OIFP should keep the case or decline

• Same investigation as Private Insurance

oDetermine whether to bring a False Claims Act matter

QUESTIONS?

Contact Information

Acting Insurance Fraud Prosecutor

Christopher Iu

IuC@NJDCJ.org

609-633-6978

John Butchko

Chief of Investigations

State of New Jersey

Department of Banking and Insurance

Bureau of Fraud Deterrence

A thirty-five year veteran of New Jersey State government, John began his career with the

New Jersey Department of Banking and Insurance becoming New Jersey’s first insurance fraud

investigator appointed, when the Division of Insurance Fraud Prevention was established in 1983.

Over the next fifteen years, John worked at the Division of Insurance Fraud Prevention

serving as Investigator and Supervising Investigator before rising to the rank of Deputy Director

in 1990. In 1998 the Division of Insurance Fraud Prevention and the Insurance Fraud Unit in the

New Jersey Attorney General’s Office, Division of Criminal Justice, were merged into the newly

established Office of the Insurance Fraud Prosecutor, under the authority of the New Jersey

Attorney General.

John transferred to the new Office of the Insurance Fraud Prosecutor, where he served as

a Special Assistant to the Prosecutor and Chief of the Liaison Section until 2010 when the

Department of Banking and Insurance re-established a section to investigate insurance fraud,

named the Bureau of Fraud Deterrence.

John returned to the Department of Banking and Insurance and on July 1, 2012, was

appointed to the position of Chief of Investigations for the Bureau of Fraud Deterrence. In

December 2016 John assumed the position of head of the Bureau and its staff of 94 Investigators,

Managers, and support personnel.

John is a founding member of the New Jersey Special Investigators Association serving as

its first President from 1989 – 1994 and as a member of the NJSIA Board of Directors until 2010.

John was named a Life Member of NJSIA in 2012. Additionally, John was the recipient of the

NJSIA Annual Achievement Award in 1993, 1995, and 1996 and the NJSIA Presidents Award in

2000, 2003 and 2015.

In 2005, John was presented with the International Association of Investigative Units

Outstanding Service Award.

In his spare time, John serves on the Board of Directors for Villa Victoria Academy, a K-

12 all girls Catholic school in Ewing, New Jersey. He also owns and operates Poet’s Farm, a choose

and cut Christmas tree farm in Cream Ridge, New Jersey where he lives with his wife Ginny.

Acting Insurance Fraud Prosecutor Christopher Iu Acting Attorney General John J. Hoffman appointed Christopher Iu to serve as New Jersey’s Acting Insurance Fraud Prosecutor in December 2015. Under New Jersey law, the Insurance Fraud Prosecutor is charged with investigating all types of insurance fraud and coordinating the anti-fraud activities of state and local investigating agencies and prosecutors. The insurance Fraud Prosecutor also leads New Jersey’s Medicaid Fraud Control Unit, which recovers large sums annually on behalf of the state through criminal and civil actions. In this position, Prosecutor Iu supervises a staff of 100 and manages an annual budget of $20 million.

Iu joined the Attorney General’s Office in 2011, serving as Special Assistant to the Attorney General. Prior to that, he was an Assistant Prosecutor in the Essex County Prosecutors Office.

In his capacity as an Assistant Prosecutor, Iu was assigned to the Juvenile Unit, Trial Team and Homicide Squad, and prosecuted hundreds of cases including narcotics distribution, aggravated assaults, armed robberies and homicides. Prior to becoming an Assistant Prosecutor, Iu clerked for the Honorable Joseph A. Falcone, J.S.C., then Assignment Judge of Essex County.

In the Office of the Attorney General, Iu works with the Juvenile Justice Commission, Office of Homeland Security and Preparedness, Division on Civil Rights, and on special projects with the Division of Criminal Justice and the Division of State Police. Iu also serves as a liaison with the Governor’s Policy Office and other departments of State government. Iu received his undergraduate degree in 2000 from the State University of New York at Binghamton, and his law degree in 2003 from Seton Hall University School of Law.