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Gallagher Applauds Legislation to Combat Insurance Fraud

5/4/2006

CONTACT: Tami Torres or Nina Banister
(850) 413-2842
 
Legislation enhances fraud penalties
 

TALLAHASSEE—Tom Gallagher, Florida's chief financial officer, today 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 insurance claims. 
 
"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 costly crime."
 
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 recent years.

"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 crimes."
 
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 families."
 
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 fraud schemes.

• 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.