In a January 2008 report obtained by Peach Pundit, the Georgia Department of Audits has slammed John Oxendine’s Special Fraud Program, noting that only a small percentage of reported fraud cases are investigated in a timely manner, and “very few” are ever prosecuted. The audit found that over two-thirds of the cases under investigation were closed due to the statute of limitations expiring, and less than ten percent were referred on for criminal prosecution.
The program was created by statute in 1995 with the express intention that “proper investigation of fraudulent insurance acts, followed by vigorous prosecution of insurance fraud” would reduce premiums. And our current commissioner would have us believe that is occurring, given his frequent appearance in front of any news camera rolling to cover a suspicious fire.
But when the cameras are off, so is the investigative heat. The audit found, among other problems, the failure of the department to ensure that cases were investigated in a timely manner, action had not been taken to ensure that the investigators focus their efforts on their most significant cases, and that the department had no formal goals, objectives, and performance standards to monitor the Program’s efficiency and effectiveness.
While the audit questioned the ability of the unit to effectively investigate and resolve cases, it also found that charges billed to the Special Fraud Program often had no relation to the program itself. The audit concluded that Oxendine had charged $343,000 of his office overhead had been allocated to the unit, when $125,000 should have been an appropriate number. $69,000 of $86,000 in travel costs billed to the unit had no direct relation to employees assigned to the unit, and $14,000 of $69,000 in contract fees and per diem expenses from the program appeared to be improperly charged. Thus, the financially squeezed fraud unit’s funds were redirected to cover other expenses within the Department of Insurance instead of spent on investigating cases to prepare them for prosecution.
But despite any objective measures to quantify success, Oxendine’s office response to the audit included the following:
“Based on the amount of restitution ordered, indictments obtained, and the limited occurrence of financial fraud since inception, the program has been successful, and has been a valuable service to the citizens of this state.”
Over two thirds of cases closed by statute of limitations. Less than ten percent of reported fraud referred for criminal prosecution. Resources diverted to pay for the overhead of the remainder of the Department of Insurance. And without any objective measures in place, Oxendine deems himself a success.
An actual analysis with quantifiable benchmarks indicates that at least the Special Fraud Program falls short. Oxendine should have spent a little less time chasing cameras in front of fires, and a little more time ensuring that those under his charge investigating suspicious fires were actually doing their job.