Passage by Florida’s Legislature of Senate Bill 1596 and House Bill 561, sponsored by Sen J.D. Alexander and Rep. David Rivera, Florida’s Legislature has tightened the grip on insurance fraud artists who steal from Florida’s hard-working families by staging or fabricating auto crashes and making fraudulent auto insurance claims, according to Tom Gallagher, Florida CFO. The legislation takes effect July 1.
The legislation specifies information to be included in a crash report; provides an additional fee for certain offenses relating to insurance crimes; prohibits medical doctors from referring specified patients to certain clinics for specified medical examinations and tests; provides a criminal penalty for knowingly transacting insurance without a license; and provides a limitation on retroactive assumption of certain coverages and liabilities.
SB 1596 and HB 561 enhance penalties for the newest twists on auto insurance fraud – “phantom” and “paper” auto accidents that never actually occur – making either a second-degree felony punishable by a two-year minimum mandatory prison sentence.
This corresponds with a 2003 law that established a two-year minimum sentence for anyone organizing or participating in an actual staged auto crash.
The legislation also:
• Makes it a third-degree felony for any service provider, such as a clinic or body shop, to waive insurance deductibles as a general business practice. Waiving deductibles makes it easier for individuals to profit from insurance fraud schemes.
• Requires medical clinics to post the state’s Fraud Fighters reward program hotline and reward program information.
The legislation also provides for revocation of the driver’s license of anyone convicted of auto insurance fraud.
As another important new weapon in the fight against fraud, the legislation revises the patient-brokering statute clarifying that kickbacks for patient referrals are illegal whether the patient is being referred to or from a medical clinic, and that patients themselves may be punished for soliciting kickbacks for their cooperation in fraudulent billing schemes against the insurer. Further, the definitions of “health-care provider” and “health-care facility” are clarified so that all providers and medical clinics licensed in Florida fall under the patient-brokering statute.
“I applaud Sen. Alexander and Rep. Rivera for promoting legislation to further cut off fraud artists who seek to profit from scams.” said Gallagher, who oversees the Department of Financial Services which includes the Division of Insurance Fraud. “Tougher laws strengthen our ability to put scam artists behind bars and help us put the brakes on this costly crime.”
Florida law requires drivers to carry a minimum of $10,000 in Personal Injury Protection (or PIP) coverage and $10,000 in property-damage liability coverage. Many auto insurance fraud cases involve unscrupulous lawyers, doctors and clinic owners who illegally bill for services covered by PIP, which provides coverage for medical bills from an auto accident, regardless of who is at fault.
Auto insurance fraud has been estimated to cost the average Florida family as much as $250 a year, but tough legislation passed in 2001 and 2003 in tandem with increased arrests and prosecutions have led to lower premiums in recent years.
“Fraud has driven up insurance rates for far too long. This legislation sends the message that fraud will no longer be tolerated,” said Sen. Alexander. “Those who participate in auto insurance fraud will pay for their crimes.”
Representative Rivera said the legislation also will help fight insurance fraud by providing for a forfeiture fund to help finance ongoing investigations into PIP fraud.
“The work being done by the Division of Insurance Fraud and law enforcement agencies around the state to combat insurance fraud is commendable,” Rep. Rivera said. “As a result of aggressive investigations and prosecutions, auto insurance premiums are decreasing and that’s good news for Florida’s families.”
Gallagher also successfully advocated for hiring at least three more dedicated prosecutors to be located throughout the state, joining two in Miami-Dade County. The first dedicated prosecutor, who served alone for nearly two years, is credited with more than a 20-percent increase in PIP fraud convictions and an 85-percent increase in jail time.
Gallagher has overseen DIF for the past five years, during which time the department has made more than 3,200 insurance fraud arrests including more than 1,000 PIP fraud arrests. The division has consistently led the nation’s insurance fraud bureaus in arrests and convictions.
Source: Florida Department of Financial Services
Topics Florida Auto Fraud Legislation A.J. Gallagher Medical Professional Liability
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