Zurik: Questions surround Attorney General’s use of insurance fraud funds

BATON ROUGE (WVUE) - An investigative unit made up of three state agencies exists to curb the amount of insurance fraud in the state. But a FOX 8 Investigation found all of the spending by one of those agencies doesn’t seem to be going to insurance fraud cases, in possible violation of the law that founded the unit three decades ago.

The Insurance Fraud Investigation Unit was created in the 1990′s by the Louisiana State Legislature. The money to fund the unit made up of three state agencies – the State Police, Department of Insurance and Attorney General’s Office – comes from a fee assessed on insurance premiums. In setting up the unit, the legislature wrote that the funding for insurance fraud given to each agency “shall be appropriated, administered and used solely and exclusively for purposes of the fraud unit.”

“What would you expect the Attorney General [Jeff Landry] to do – to use that money for the purpose for which it’s entitled,” Tulane Law Professor Joel Friedman said.

Approximately one million dollars a year goes to the Attorney General’s Office to prosecute cases. Records we requested from the AG’s office show his office might not be spending much of the insurance fraud funds on insurance fraud cases.

In 2019, for example, records show prosecutor Amanda Martin’s total income was $82,455.90. Another set of documents showed Martin’s salary was completely funded by the Insurance Fraud Unit. Three straight years, Martin’s salary was covered by the unit’s funds. But when we reviewed 83 cases she’s prosecuted since 2018, we only found seven that appeared to be related to insurance fraud. About 90 percent of her cases had nothing to do with insurance fraud, even though her entire salary is covered by the fund’s money.

“If Assistant Attorney General X is doing ten percent of their work on insurance fraud then fair enough, 10 percent of their salary should come out of this fund, not a hundred percent. Not 80 percent, not 50 percent,” Friedman said. “Instead the attorney general is using this as a subsidy for his budget.”

FOX 8′s review of the records for other prosecutors found similar findings. Insurance fraud funds cover all of Barry Milligan’s salary, even though about 90 percent of his cases don’t deal with insurance fraud. Milligan does lead the insurance fraud unit. Wanda Yates is listed in departmental records as a receptionist in the criminal division. In 2019, insurance fraud unit funds covered all of her salary.

This is not the first time these questions have come to Attorney General Landry’s attention. In his resignation letter from the department, former Assistant Attorney General Matthew Derbes told Landry he reported and complained about the “illegal spending of insurance fraud support unit” funds, writing the office “had been illegally manipulating this fund for years.”

“This is the chief law enforcement officer of the state ignoring or circumventing the letter of the law and certainly spirit of the law,” Friedman said.

State Senator Joseph Bouie, D-New Orleans, serves on the senate insurance committee.

“Clearly you have shown me some evidence that says the number of cases of several of those staff persons are not solely within the fraud unit expenditure and that’s what the purpose of that fund is,” Sen. Bouie said.

The state senator said he wants to review what FOX 8 found and bring it to the insurance committee to investigate the findings.

Attorney General Landry’s office declined our request for an interview, telling us the Louisiana Department of Insurance is the administrator of the fund and our inquiry was better suited for their office.

A spokesperson for the Louisiana Department of Insurance (LDI) said that is not true, saying the three agencies (Department of Insurance, State Police and the Attorney General) collectively participate for administering the task force.

FOX 8 told the Attorney General’s Office the funds flow to their office and they have control over their fifteen percent allocation, thus it seems reasonable to ask questions about how the Attorney General’s Office allocates their money.

The A.G.’s Office said again “the fact remains the Department of Insurance is the fund administrator” a statement which appears to be untrue.

LDI also said each agency administers its allocated funds, so the Attorney General’s Office is responsible for how its money is spent.

THE PUBLIC RECORDS BATTLE

The Attorney General often plays a role in the oversight of the state’s public records request system, issuing opinions on types of documents that can and cannot be released under the law. But getting documents from the Attorney General’s office itself -- has taken months – and they are still not completely fulfilled.

On January 19, FOX 8 asked the Attorney General for a spreadsheet that shows all of the closed cases for the past three years and wanted the spreadsheet to list each prosecutor on the case.

Eight days later, the office responded that their system did not track closed cases by assistant attorney general. However, we responded that we have seen their case tracking system and it did allow the search we are requesting.

Two weeks later, the office sent the document we requested – about two months after telling us it couldn’t be done.

We also asked the A.G. for other spending related to the insurance fraud unit. On March 17, we asked for a dataset of all expenses from the unit. We received a summary sheet from the department of six categories. When we told them their response was vague and we wanted a detailed list, the office responded with another summary breakdown, with no expense-by-expense detail.

Professor Joel Friedman said it could be a violation of the state’s public records law and said the further detailed summary raises even more questions.

In the list of items the department said was funded by insurance fraud unit funds were things like drug testing, bar dues and even capital park security.

“When you ask somebody a question and they refuse to give you the answer the natural inference is they don’t want to give you the answer because it’s not a good answer,” Friedman said. “You can tell from the name of some of these items -- capital security, for example – have nothing to do with insurance fraud.”

The law states all unexpended money needs to be refunded, so the office has no authority to direct unused money to other departments. Friedman said he’s not sure if Attorney General Landry is aware of the findings in our story – it’s likely someone else in his office is the one who allocates the money. But, the law professor said it’s something that is unacceptable and needs to be addressed immediately by the highest-ranking law enforcer in the state.

“In the end, as Harry Truman says, the buck stops with him,” Friedman said.

FOX 8 is still waiting on a response from the attorney general’s office on those detailed expenses from the Insurance Fraud Unit.

We traded a series of emails with the AG’s office. About two days after we wrote what the Department of Insurance replied, the Attorney General’s office sent us another email. In it, the office wrote:

This tri-agency task force has operated for nearly two decades without incident. There have been no complaints from any of the participating agencies or within our own agency on the implementation of pursuing these important cases.

Amanda Martin has worked and is currently working insurance fraud cases and is eligible to be paid out of the insurance fraud fund. All parties involved in the task force are state employees, being paid by state funds, and stand ready at any moment to pursue these cases.

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