The incoming Oklahoma Insurance Commissioner, John Doak, plans on laying off the majority of investigators in the state’s anti-fraud unit, a move recommended by newly-appointed Deputy Insurance Commissioner Randy Brogan, a former state senator who ran for the GOP nomination for governor and lost.
The insurance department says it plans to lay off six of the unit’s nine investigators, citing budget concerns and a refocusing of the unit on white collar crime. Brogan said that of the existing 142 open cases in the unit, 120 of them are investigations against policyholders that were initiated by insurance companies.
Some of the investigators, who wish to remain anonymous for fear of retaliation, say the layoffs are intended to help offset the cost a three former politicians who are friends of Commissioner Doak, who were recently hired in the department as deputy commissioners.
Although the anti-fraud unit is funded by $750 annual assessments on insurance companies for the “investigation of suspected insurance fraud and civil or administrative action in cases involving suspected insurance fraud,” Brogan said that the companies should handle their own investigations. “Investigating policyholders is not a function of the insurance department.”
One critic of the staff cuts, Dan Ramsey, CEO of the Independent Insurance Agents of Oklahoma disagrees, saying that whether the fraud is committed by an insurance company or the insured, the net effect is that premiums end up being increased for all policyholders.
Insurance investigators cited cases where a former Tulsa area funeral director stole more than $100,000 through a scheme of submitting false death claims, and an attorney who was suspected of embezzling $200,000 by failing to pay insurance premiums. Under the slimmed-down unit, they expect those investigations to be dropped.
The three new deputy commissioners, including former state Sen. Brogan, former state Rep. Mike Thompson and former state Sen. Owen Laughlin, were all hired at a salary of $99,000.
Assistant Insurance Commissioner Rick Farmer said that the department made cuts in other areas to pay for the cost of the three new deputy commissioners, and their hiring has nothing to do with the cuts in the anti-fraud unit. He said overall departmental cuts made so far should save the state over $500,000 this year.
Even so, questions remain regarding the hiring of the three former politicians, when so many staff cuts are being made elsewhere.
Brogan, who is overseeing the anti-fraud unit, ran a heating and air conditioning business before becoming a state senator. Some of the investigators questioned his ability to lead the department, citing the complexity of the investigations and claiming that even seasoned law enforcement investigators need a while to get up to speed on how to prosecute insurance fraud cases.