Florida’s Chief Financial Officer Tom Gallagher said the Pete Orr Insurance Anti-Fraud Act, which the governor recently signed into law, is expected to significantly boost efforts to prosecute operators of unlicensed insurance entities that have left Floridians on the hook for millions of dollars’ in unpaid health care bills.
In a departmental release, Gallagher said the Department of Financial Services and the Office of Insurance Regulation have shut down 14 entities and dozens of affiliates marketing unlicensed insurance products to Floridians since early 2001. More than 50 insurance agents are facing disciplinary action, and several have already lost or surrendered their licenses. Six marketers have been charged criminally.
“We need to be able to file more criminal charges and send a strong message that we will not tolerate anyone selling our citizens a false sense of security,” Gallagher said. “This is a giant step toward greater protections for Florida insurance consumers.”
Senate bill 1694, spearheaded by Sen. Bill Posey, R-Rockledge, and Rep. Gus Billirakis, R-Palm Harbor, was named for Charles “Pete” Orr, the late NASCAR-circuit driver from Montverde, Fla., who died last year while he helplessly watched unpaid bills pile up. TRG Marketing Group, an unlicensed entity based in Indiana, refused to pay his cancer-treatment claims.
The Pete Orr Act, which takes effect July 1, provides that anyone who transacts unlicensed insurance can be charged with a first-, second- or third-degree felony depending on the amount of premiums collected. The law also makes it a third-degree felony for any individual who has been banned from the industry or a licensee whose license has been suspended or revoked to transact any insurance, licensed or unlicensed. It also allows policyholders to sue an unlicensed entity that has left them with unpaid claims.
Policyholders already can sue licensed agents who sell them unlicensed insurance that results in unpaid claim. And, as of last October, it is a third-degree felony for any licensed agent to sell unlicensed insurance.
Kevin McCarty, director of the Office of Insurance Regulation, said the transaction of unlicensed insurance is wreaking havoc with the legitimate market.
‘Tens of thousands have been left uninsured and unable to find legitimate coverage after being taken advantage of by these operators. Besides the terrible problems created for these people,” McCarty said, “the disruption heaped upon the legitimate, authorized health insurance market is huge.”
In April, the department conducted unannounced compliance examinations at agent offices in Pensacola, Jacksonville, Orlando, Tampa, Ft. Lauderdale and Miami. Numerous investigations, both administrative and criminal, are ongoing.
Because these entities are not licensed in Florida, they are not regulated and therefore there are no assurances of their ability to pay claims. Further, unlicensed insurance entities are not protected by any state guaranty fund that is available to licensed insurance companies that may find themselves unable to pay claims.
For more than a year, the department has been conducting a statewide public education campaign for more than a year that warns consumers to “Verify Before You Buy.” Employers and individuals shopping for health insurance coverage are urged to check with the Department of Financial Services to be sure they are dealing with a Florida-licensed insurance company and a Florida-licensed insurance agent.
Gallagher said employers should exercise the same caution when buying workers’ compensation, and warned doctors have also been targeted by unlicensed entities selling medical malpractice insurance.
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