Indiana Bill Gets Tough on Insurance Fraud, Passes House 95-1

By | March 7, 2005

The Indiana House of Representatives voted 95-1 last month in support of a bill that would toughen penalties against insurance fraud in an attempt to provide prosecutors with a greater incentive to pursue such crimes.

While no data exists to suggest that insurance fraud has been rampant in Indiana, that’s part of the problem, according to Howard Goldblatt, director of government affairs for the Coalition Against Insurance Fraud.

“We have no real knowledge of the extent of the problem,” Goldblatt said. “Part of it is because of the weak law there’s no real incentive to report the crime.”

The sponsor of the bill, Republican Rep. Andrew Thomas, is a former prosecutor and reportedly knows first-hand the frustration of being unable to make a case because the light penalties make it not worth the time it takes to prosecute. Thomas did not return a call from IJ requesting an interview.

The current law has a single penalty. No matter the dollar amount involved in the crime, it is classified as a D felony, with a penalty of 180 days to one year in jail. At a committee hearing on the bill, one insurance company executive mentioned a $1 million arson case in which the penalty would have been the same as if it involved only $500. Under HR 1403, insurance fraud in excess of $2,500 would be a C felony, meaning two to eight years in prison, while the fine for a class D felony would be bumped up to $10,000 maximum.

Goldblatt said the bill, if passed into law, would bring Indiana’s insurance fraud penalties into line with the rest of the country.

“We think it would bring it into the mainstream,” he said. “Are there other things that they could look at down the road? Probably. But in terms of incremental improvement, this is clearly an improvement.”

This doesn’t mean there wouldn’t be more room for improvement, such as creating an insurance fraud bureau within the insurance department, as several other states have.

“Unfortunately, that’s exactly what we need,” said Marty Wood, director of government affairs for the Insurance Institute of Indiana. “This is a step in the right direction, but certainly a unit or bureau that is dedicated to just insurance fraud is what our ultimate goal would be. Under the current financial situation it’s just not going to happen.”

A bill similar to HR 1403 was proposed two years ago but was “killed in committee,” according to Goldblatt. It seems likely that with a 95-1 vote in the House that the bill, referred to the Senate Committee on Corrections, Criminal and Civil Matters, will garner quick passage.

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Insurance Journal West March 7, 2005
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