Consumer eViews
FLORIDA CHIEF FINANCIAL OFFICER TOM GALLAGHER'S WEEKLY NEWSLETTER

Volume 3, Number 33, August 14, 2006

After being pummeled by eight hurricanes in 15 months that left nearly $40 billion in insured losses, we have learned how important it is to take every step possible to protect our homes and families against these devastating storms.

Now, thousands of Floridians will have an unprecedented opportunity to get a free home inspection and learn how they can strengthen their homes. The Department of Financial Services is now taking applications for a $250 million program that will inspect as many as 50,000 homes over the next year.

The department is proud to be able to roll out this program within 60 days of it becoming law on July 1. In addition to working fast, we have worked hard to make this program available to as many Floridians as possible while working to provide the most qualified inspectors.

As we are entering the height of this year’s hurricane season, please also take the time to review your family’s hurricane plan. You should have a hurricane kit, available on the department’s website at www.MyFloridaCFO.com, that includes all of your important financial documents, as well as a hurricane pack with supplies for everyone in your family, including pets, to last at least 72 hours.

We each must take responsibility for our own preparedness, both in the short-term and in the long-term. Make sure you are ready for the current hurricane season, and then log on to www.MySafeFloridaHome.com to learn how you may qualify for a free inspection to prepare for future hurricane seasons

-- Tom Gallagher

GALLAGHER FILES CHARGES AGAINST DIRECT GENERAL AGENTS FOR ‘SLIDING’ EXTRA CHARGES TO DOZENS OF CUSTOMERS

Tom Gallagher, Florida’s chief financial officer, announced that he has filed administrative charges against 12 agents and customer representatives of Direct General Insurance Agency for “sliding” ancillary products in consumers’ automobile insurance policies without their knowledge or consent, a scheme that cost policyholders as much as 44 percent extra on their premiums.

Gallagher oversees the Department of Financial Services, and the charges follow an investigation by the department’s Division of Agent and Agency Services, Bureau of Investigation, and the Division of Legal Services. Direct General operates more than 100 agencies in Florida doing business as Florida No Fault Insurance, Insurance Options Plus, Friendly Auto, and Cash Register among others. If the charges are upheld, the licensees could face revocation of their licenses. Gallagher said he will also seek restitution for affected consumers.

“Florida’s insurance professionals should be driven by their clients’ best interests, not commissions,” Gallagher said. “This department will continue to rigorously prosecute agents who violate the law and violate that trust.” 

Those agents charged are Thomas Aquinas McCullom of Gulf Breeze (12 counts); Paula Beckett (four counts) and Roger Dale Scites (seven counts), both of St. Petersburg; Kim Suzanne Velez of Ft. Myers (eight counts); Radcliffe H. McKenzie (12 counts) and Alberta Mitchell (nine counts) both of Sunrise; Katherine Anne Fitzgerald of Zellwood (four counts); Jenny R. Caddell of Middleburg (five counts); and Lekeisha Chavon Paige of Jacksonville (three counts).

In addition to eight counts of sliding, customer representative Cecilia Maus, of Cottondale, was charged with three counts of sliding products she was not licensed to sell, and Marie B. Jean, of Riviera Beach, another customer representative, was charged with eight counts of sliding and two counts of unlicensed activity. Earlier this month, Direct General customer representative Denise D. Turnbull settled sliding and unlicensed activity charges leveled by the department, by agreeing to pay restitution and serving a six-month suspension of her insurance licenses followed by a year’s probation.

To verify an agent’s license or file a complaint, consumers should log on to www.MyFloridaCFO.com or call the department’s toll-free consumer helpline at 1-800-342-2762.

GALLAGHER: ONGOING CRACKDOWN ON PIP FRAUD SNARES 3

Tom Gallagher, Florida’s chief financial officer, announced that the Department of Financial Services’ ongoing crackdown on personal injury protection (PIP) insurance fraud has led to the arrests of three individuals – including a father and daughter – on felony charges stemming from staged accidents and more than $40,000 in fraudulent auto insurance billings. Four others were previously arrested in related cases, and further arrests are anticipated.

“We are sending a clear message that we will not tolerate abuse of our citizens, and fraud steals from our citizens,” said Gallagher. “Our efforts have led to lower auto rates in recent years, so we will continue to aggressively pursue those who would defraud the system.”

These investigations are part of an ongoing crackdown by the department’s Division of Insurance Fraud in collaboration with the National Insurance Crime Bureau (NICB).

Lorenzo Morales, 51, is accused of arranging and directing a February 2004 staged accident in which his daughter, Yuliana, 19, participated. According to witnesses, Lorenzo Morales drove the at-fault vehicle into a second vehicle and then fled the scene before police arrived. Morales and his daughter billed State Farm Insurance Company for more than $25,000 for unnecessary medical procedures and treatments.

Berlitz Bourjolly, 45, of Pembroke Pines, is accused of organizing a July 2003 staged accident that resulted in more than $15,000 in fraudulent PIP and bodily injury claims filed with Geico Insurance Company. Bourjolly, also known as “Dr B,” allegedly paid the cost of the rental car used for the accident, and also paid participants up to $1,000 for their involvement. Bourjolly then referred participants for bogus medical treatment to a clinic called ECM Medical, located at 8325 NE 2 Avenue, Suite 100, in Miami.

Investigators believe that Bourjolly was a runner who graduated to operating his own clinic. In fact, Bourjolly was arrested outside his clinic, Fast Recovery Rehabilitation, located at 6151 Miramar Parkway, Suite 206, in Miramar, which was incorporated in June 2005.

In staged accidents, the planners and organizers, usually in connection with unscrupulous clinic owners, target the personal injury protection (PIP) insurance of drivers, and bill an average of $10,000 to insurance companies for each patient. Auto insurance fraud is estimated to cost the average Florida family as much as $250 a year.

Since 2000, the department’s Division of Insurance Fraud has made more than 1,100 arrests, bringing to a halt more than $36 million in fraudulent PIP claims. In Miami alone, those arrests include 741 patients, 81 clinic owners, 31 doctors, 67 clinic employees and 159 runners.

In an effort to step up the fight against this fraud, the division entered into a partnership with the Florida Automobile Joint Underwriting Association and the Miami-Dade State Attorney’s office and hired Nina Vivenzio as a dedicated prosecutor for PIP fraud in 2004. There are now two dedicated PIP prosecutors, after Erika Isidron started in February 2006. Together, they have overseen more than 450 PIP fraud arrests.

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance. Anyone with information about this case or another possible fraud scheme should call the department's Fraud Fighters Hotline at 1-800-378-0445. A reward of up to $25,000 may be offered for information leading to a conviction.

PROGRAMS GEARED TOWARD YOUNG CONSUMERS

Today's students are a purchasing powerhouse.

Teenagers spent $175 billion in 2004, according to Chicago-based Teenage Research Unlimited. The average American teen spends $103 a week!

But while teens are spending billions of dollars, most of them have little or no "real world" financial experience. Many young people do not realize that the financial decision they make on a daily basis will affect their financial future.

The Florida Department of Financial Services (DFS) has taken an active role in helping young consumers — including students, singles and young married couples — learn more about financial responsibility.

In 2004, Chief Financial Officer Tom Gallagher launched the Web site, www.yourmoneyyourlife.org, a comprehensive public education initiative designed to help students, young people and families learn the basics about personal finances. 

This Web site is tailored to meet the needs of Florida residents. It offers clear, reliable, helpful advice on financial topics confusing to many — yet absolutely vital to all of us.

With the help of some of Florida's most trusted financial institutions, the Web site aims to cover every important money topic under the Florida sun — from buying a home or car, to saving for retirement, investing, reducing debt, establishing good credit, planning for college, and defending against identity fraud.

Wheels, Deals & Spiels is a program designed by DFS for high school and college students to introduce them to the concept of making financial decisions on their own.

The program discusses important financial topics such as credit card management, purchasing consumer products, how to calculate payment options, auto insurance, verifying licenses of car dealers, lenders, and insurance agents and other businesses, as well as identity theft.

Students have the opportunity to use the interactive calculator at www.yourmoneyyourlife.org to see what their monthly payments would be on purchases such as an automobile. There are nine interactive calculators to help consumers see where their finances stand and where they may need to improve.

DFS takes an active role in assisting local governments and community agencies that provide HUD-approved first time home ownership training.

This training provides many young people with the decision-making tools to make the many financial choices involved in purchasing their first home.

DFS provides the future homeowners an educational class that explains the essentials of homeowner's insurance, the features and benefits of their policy and what the policy does or does not pay for.

The Florida Fair Lending Act and how to avoid deceptive loan tactics are also a part of the presentation. The Web site offers a mortgage payment calculator to take consumers through the process of finding out how much they can borrow.

A consumer fills in the data entry fields and clicks on the "View Report" button to see a complete amortization schedule of their mortgage payments.

The goal of the first-time home ownership training is to make sure young consumers purchase a home they can afford and maintain (taxes, insurance and repairs) over a reasonable amount of time without causing a financial hardship.

Chief Financial Officer Tom Gallagher's annual essay contest is a part of DFS's statewide public education initiative aimed at encouraging investor education among middle and high school students.

The contest, "Cash in on Your Money Smarts," offers teens a chance at more than $7,500 in prizes statewide.

Finally, I'd like to challenge businesses and chambers of commerce to work with their school districts to create a financial literacy programs at all grade levels, if they do not have one already.

Young consumers will be purchasing, saving and investing their money for a long time. The more enhanced their financial decisions, the more they will increase Florida's economic growth for many years to come.

If your school, business, chamber or community group would like to sponsor a program or want more information about DFS's Financial Literacy programs, contact us at the phone number below. You can also visit our Web site, www.MyFloridaCFO.com, or contact the division of Consumer Services at 1-800-342-2762.

Consumer Services HelpLine (800) 342-2762

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