Volume 5, No. 7 - July 2016

News You Can Use

- Updating you on what's going on

Department of Financial Services Enhances Law Enforcement Strategy with Newly-Formed Division of Investigative and Forensic Services

Chief Financial Officer and State Fire Marshal Jeff Atwater announced an exciting transition involving the law enforcement units housed within the Florida Department of Financial Services. Three sworn law enforcement units operate under the direction of the Department, which is led by CFO Atwater—the Division of Insurance Fraud, the Bureau of Fire and Arson Investigations, and the Office of Fiscal Integrity. To create greater efficiencies and to streamline the way the Department does business, these units were combined into the newly-formed Division of Investigative and Forensic Services, also known as DIFS, effective July 1.

Division Director Simon Blank stated, “As a nationally-recognized leader in the fight against fraud, our ability to share intelligence and resources is paramount as we continually raise the bar by adjusting our methods and adapting our techniques to match an ever-evolving crime. By combining forces, we’re able to extend our reach and do more to protect the people of Florida from falling victim to acts of insurance fraud, arson or the misuse of state funds.”

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Miami Attorney Charged with Insurance Fraud and Grand Theft

Chief Financial Officer Jeff Atwater and the Department of Financial Services’ Division of Investigative and Forensic Services (DIFS) announced the recent arrest of Miami attorney, Anett Lopez, 42, for her involvement in a personal injury protection (PIP) fraud scheme that accounted for nearly $1.5 million in financial loss. Lopez allegedly filed numerous lawsuits demanding payment for treatment of patients at Care Resources Group, LLC, a PIP clinic in Miami that fraudulently operated under a straw ownership.

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Ft. Myers Business Owner Steals More Than $1,000,000 Through Payroll Check-Cashing and Workers’ Comp Scheme

Chief Financial Officer Jeff Atwater and the Department of Financial Services’ (DFS) Division of Investigative and Forensic Services (DIFS) announced the recent arrest of Ivan Hernandez, owner of Global Staffing / Professional Staffing and Payroll Services in Ft. Myers. Hernandez is alleged to have ran a criminal enterprise by claiming to provide workers’ compensation insurance and payroll services to his clients but instead of providing those services, Hernandez allegedly provided fictitious policies and pocketed his client’s payments. As a result, Hernandez is being held responsible for the theft of more than $1,000,000.

An investigation by DIFS’ Bureau of Insurance Fraud and the Department’s Division of Workers’ Compensation Bureau of Compliance revealed that in August 2013 Hernandez obtained a workers’ compensation insurance policy for his company, Global Staffing Services, LLC. The policy accounted for two employees, an estimated $51,000.00 payroll and listed Hernandez’s company as a staffing company that provided employee recruiting services. When obtaining the policy, Hernandez stated Global Staffing Services was a staffing company that provided employee recruiting services for various companies but would not directly hire or offer any long-term or short-term staffing services.

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Husband and Wife Duo Arrested for Role in Alleged Fake Investment Scam

The Florida Office of Financial Regulation (OFR) announced the arrests of Miguel Angel Perez and his wife, Maritza Belinda Perez, on charges of organized fraud, grand theft and mortgage fraud in connection with the sale of investment offerings in Clearwater.

“The Florida Office of Financial Regulation remains committed to protecting Floridians from financial fraud,” said Commissioner Drew J. Breakspear. “Potential investors interested in these types of offerings are urged to proceed with caution and take time to fully research the investment and company, including verifying proper licensure.”

Miguel and Maritza Perez allegedly defrauded at least 13 Floridians out of approximately $500,000 through a fraudulent investment scheme. Potential investors were purportedly recruited through “free” real estate investment seminars held at various hotels throughout the Tampa Bay area, where investments in an assisted living facility were offered. The OFR investigation revealed that the assisted living facility never came into operation and the pair are alleged to have used a large portion of investor funds for personal living expenses, including the purchase of their home in New Port Richey.

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Florida Insurance Commissioner Announces Public Hearings for Two Insurance Companies Requesting Long-Term Care Insurance Rate Increases Up to 95% and 114%

Florida Insurance Commissioner David Altmaier announced the Office of Insurance Regulation (Office) will host two public hearings on Friday, August 12, 2016, to discuss significant long-term care insurance rate increases being proposed by Metropolitan Life Insurance Company (“Metlife”) and Unum Life Insurance Company of America (“Unum”). The majority of policyholders impacted by the proposed rate increases reside in the South Florida area of Broward or Miami-Dade counties, but Floridians from all parts of the state are included. For a list detailing the number of policyholders by county for each company, click here for MetLife and here for Unum.

Metlife is the largest life insurance company in Florida and one of the largest long-term care insurance companies in Florida. As of year-end 2015, Metlife had a net income of $3.7 billion and surplus of $14.48 billion. It is proposing long-term care insurance rate increases ranging from 20% up to 95%. These increases are expected to affect approximately 22,796 Florida policyholders. If this rate filing is approved as requested, the average annual premium would change from $1,593 to $2,580.

Unum is the largest provider of disability insurance products in the United States and also one of the largest long-term care insurance companies in Florida. As of year-end 2015, Unum had a net income of $203.5 million and a surplus of $1.56 billion. It is proposing rate increases ranging from 0% up to 114%. These increases are expected to affect approximately 45,666 Florida policyholders. If this rate filing is approved as requested, the average annual premium would change from $581 to $862.

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Office Receives Amended NCCI Workers’ Compensation Rate Filing

The Office of Insurance Regulation received an amended rate filing by the National Council on Compensation Insurance (NCCI) to address a third legal change affecting Florida’s workers’ compensation system. This amended filing increases NCCI’s initial proposed combined average rate increase from 17.1% to 19.6%.

Individual projected rate impacts for all three recent legal changes include the following:

· A 2.2% projected rate increase for the June 9th Florida Supreme Court decision in the case of Westphal v. City of St. Petersburg (Westphal), in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits in Section 440.15(2)(a), Florida Statutes, unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.

· A 15% projected rate increase for the April 28th Florida Supreme Court decision in the case of Castellanos v. Next Door Company (Castellanos), which found the mandatory attorney fee schedule in Section 440.34, Florida Statutes, unconstitutional as a violation of due process under both the Florida and United States Constitutions.

· A 1.8% projected rate increase related to updates within the Florida Workers’ Compensation Health Care Provider Reimbursement Manual (HCPR Manual) per Senate Bill 1402. The manual becomes effective on July 1, 2016.
NCCI is proposing an effective date of October 1, 2016 for new and renewal workers’ compensation policies and that the 19.6% rate increase apply to all workers’ compensation policies in effect as of October 1, 2016.

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We highly recommend that licensees routinely check their MyProfile account(s) for messages from the Department. We send an email notification at the same time to remind you to check your MyProfile account but on rare occasions you may not receive that email. For that reason, we suggest you add our domains dfs.state.fl.us and MyFloridaCFO.com to your email software's Trusted or Safe Senders List to ensure you are able to receive email notifications from us. Licensees who have a valid email address on file with the Department, as required by law, are sent important email notifications when something that affects their application, license, continuing education, or appointment(s) occurs. Additionally, we will keep you informed with warnings regarding new schemes and scams being marketed to licensees. You can update your contact information through your MyProfile account. We want to keep you informed in a timely manner of pertinent information. You are still required to abide by the Florida Insurance Code regardless of whether you read the information we provide or attempt to provide.