GALLAGHER ON LEGISLATION TO COMBAT
Legislation enhances fraud penalties
Tom Gallagher, Florida’s chief financial officer, praised legislators for
tightening the grip on fraud artists who steal from Florida’s hard-working
families by staging or fabricating auto crashes and making fraudulent auto
“I applaud Sen. J.D. Alexander and Rep. David 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 (DIF). “Tougher laws strengthen our
ability to put scam artists behind bars and help us put the brakes on this
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
"Fraud has driven up insurance rates for far too long. This legislation
sends the message that fraud will no longer be tolerated," said Senator
Alexander. "Those who participate in auto insurance fraud will pay for their
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
Senate Bill 1596, sponsored by Alexander, and House Bill 561, sponsored by
Rivera, 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 will also:
· Make 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
· Require 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.
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.