Dec. 09-- The Oklahoma Insurance Department has stepped up the presence of its anti-fraud unit, a move that is raising some eyebrows at the state Capitol.
In recent months, the unit has bought new police cars, shotguns, uniforms, badges, body armor and other equipment for the seven-member unit, and some are asking why.
"There's no reason for John Doak to be rolling up to a business or any other area in a SWAT-style vehicle mounted with shotguns," said state Sen. Harry Coates, R-Seminole. "That's insanity."
Doak's duties are really pretty simple -- regulate insurance companies and protect consumers -- and anything involving higher order police work should be left to sheriff's deputies and police officers, Coates said.
Coates said he had no issue with giving bulletproof vests and handguns to insurance investigators, but the level of weapons and the vehicles Doak is buying are not justified.
"This whole idea of wanting to act like they're a branch of the Department of Public Safety or a branch of law enforcement is insanity. They're not. They're in the stinking insurance oversight business," Coates said.
Former state Attorney General Drew Edmondson said he was also puzzled by the purchases.
"I'm trying to think what the justification might be, and I can't think of any," said Edmondson, when the expenditures were described to him by the Tulsa World.
Edmondson said he hasn't discussed the spending with state Insurance Commissioner John Doak, but his years in state government have proven to him that the anti-fraud unit's work is exclusively in white-collar crime.
The investigators are certified police officers, who have long carried weapons and used body armor, and have arrest authority, but Edmondson said that when arrests have been made, the uniformed officers on the scene came from local agencies, except when the suspects simply surrendered.
When the department originally went to purchase police cars this summer, an Insurance Department purchasing agent and then officials in the state central purchasing department questioned whether the vehicles were authorized.
State law restricts the purchase of police cars under a state group purchasing program to authorized law-enforcement agencies, which includes the Insurance Department, although some state purchasing officials were puzzled by that.
Insurance Department emails show Doak was personally involved in the details of the purchase, including the design of logos to go on the side of the vehicles.
When a state purchasing agent held up the vehicles out of concern about authorization in August, Doak sent an angry email to state Finance Secretary Preston Doerflinger asking him to call "ASAP."
"I am available any time and cannot believe this is how government works in Oklahoma," Doak's email says.
The purchase would be "fighting fraud with fraud funds," and Doak asks, "Who in your (department) can just put a hold in items?"
"Please get back to me as this is probably a lifelong bureaucrat trying to overstep their authority and cause undue work for all of us."
In September, a state Insurance Department purchasing agent sent a message to a car dealership manager saying: "We are still on hold from the Capitol. Some there believe we do not have the authority to buy. We now have State (representatives) weighing in."
The concerns over the department's authority were finally cleared, and two Chevrolet Tahoe four-wheel-drive vehicles and five Dodge Chargers -- all equipped with "police equipment package" -- were ordered at a total cost of $170,960.
Kelly Collins, spokeswoman for the Insurance Department, said the police equipment package is extra wiring to accommodate communications equipment and stiffer suspensions.
Bringing criminals to justice
In a letter to the Tulsa World accompanying a reply for public records, Michael Copeland, director of the agency's anti-fraud unit, said, "While the majority of the crimes we investigate are white-collar, they can still be dangerous."
Last year, two insurance fraud investigators were fatally shot in Louisiana while serving cease-and-desist orders to an insurance agent, a common task for the Oklahoma anti-fraud unit, he said.
"That incident, more than anything else, led to the purchase of the weapons, equipment and vehicles that would better protect our investigators in the line of duty," he said.
In a separate statement, Doak said funding the purchases is legitimate and comes from the department's anti-fraud revolving fund at no cost to taxpayers.
"Our anti-fraud unit investigates claims of embezzlement, exploitation of the elderly, fraud and more," he said.
The investigators travel the state protecting Oklahoma consumers, he said.
"They find criminals and bring them to justice," Doak said. "They need the proper training and tools to do that and protect themselves."
After the Louisiana deaths, Doak said he realized his investigators weren't equipped to protect themselves."
"As much as we want to stop these criminals, we also want our personnel to come home safely," he said.
In a subsequent statement, Doak said he has reached out to legislators who have criticized the purchases to explain the need for the equipment.
"Most people just don't understand why we have a law enforcement unit and exactly what it does. I'm happy to speak to any lawmaker or citizen who has a concern," he said. "I'm confident that once they understand what we're doing, their fears will be put to rest."
The Insurance Department also offered the names of other legislators who support the department's efforts, statements of support from former state Attorneys General Larry Derryberry and Mike Turpen, and statements from Louisiana Insurance Commissioner Jim Donelan and state Sen. Bill Brown, R-Broken Arrow, chairman of the Senate Insurance Committee.
Brown said he supports the department's efforts completely.
"People need to understand that insurance crime is serious," Brown said.
"Those behind it stand to lose a lot of money if they're found out, so they can be very dangerous.
"We have to do all we can to protect our law enforcement officers including the members of the Oklahoma Insurance Department's anti-fraud unit," Brown said.
Collins, spokeswoman for the department, defended the purchase of the shotguns as "standard pieces of equipment for every law enforcement agency in the county." She said the body armor purchases were necessary because old equipment had passed expiration dates.
She pointed out that the purchased vehicles replace non-police cars that the department had been leasing from the state fleet.
But Coates questioned if the real motive of the effort was protecting the fraud investigators or raising Doak's public image for political purposes and intimidating insurance companies into complying with state investigators.
"John Doak has visions of himself ... running for the U.S. Senate or something," Coates said. "He's paying for all these ads with someone else's money."
Collins said that the equipment was paid from the department's anti-fraud revolving fund, which is funded by fines obtained in insurance-related crimes, settlements related to misconduct by insurers, late fees and penalties.
No tax money was used, she said.
In fiscal year 2010, enforcement brought in $1.2 million, of which the Insurance Department got to keep 17.6 percent, or $295,000. The remainder went to the state general fund and the Attorney General's Office.
While the funding may not come from taxes, Coates said there is still plenty of reason for Oklahoma voters to be concerned about it.
"It's still coming out of somebody's pocket in the industry and the end result is the cost of your insurance and my insurance is going to go up," Coates said.
Wayne Greene 918-581-8308
Copyright 2012 - Tulsa World, Okla.