Dishonest drivers avoid auto premiums

Frustrated states make evasion an insurance crime

The Coalition surveyed state laws a couple of years ago to see how states deal with residents who falsely register and insure their vehicles in other states with lower auto premiums. Very few states consider this scheme an act of insurance fraud, we found.

North Carolina is an exception. Drivers must show proof of residence before they can buy auto insurance. North Carolina is trying to head off rate-evasion cons. Drivers in several states falsify North Carolina residence to obtain cheaper auto insurance than in their home states.

Rate evasion is a lose-lose for the victim state where the vehicles are garaged. Honest insurance consumers pay higher premiums to subsidize the smaller pool of drivers. Scofflaws also rob the state and local governments of registration fees or vehicle taxes.

Yet few prosecutors will go after dishonest drivers unless there’s a specific fraud law that makes convictions of violators more likely.

We may be seeing a surge of other frustrated states that have seen enough of dishonest drivers.

New Jersey is about to make life much harder for cheaters by strengthening its law targeting those who use out-of-state addresses to avoid higher New Jersey insurance. The governor signed the bill into law late last week.

New York is on tap tap with companion bills (S 4900/A 7237). The sponsors are well-placed legislators from both parties, suggesting a strong chance of success.

The Coalition is joining with insurer partners to push the legislation into law. Fraud fighters shortly will start a grassroots letter-writing campaign to show legislators in Albany why they should vote “Yes” for passage.

We strongly encourage New York fraud fighters to write their legislators. Let’s push for a surge of legislation that turns this scam into a dead-end street for cheaters.

Yet more states could see bills clamping down on premium evaders. It seems there’s a growing feeling that enough is enough. Let’s turn avoiding auto premiums into a dead-end street.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Guest blog: Staged crashes a common theme in N.C.

Insurance swindlers growing more sophisticated

North Carolina insurance commissioner Wayne Goodwin is the new chair of the NAIC’s antifraud task force. He replaces long-time chair Sandy Praeger, who retired as Kansas insurance commissioner at the end of 2014. 

We invited Commissioner Goodwin to be our guest blogger this week. He discusses emerging fraud trends his fraud bureau sees, and ongoing schemes he battles year in and year out.

We have the oldest insurance fraud bureau in the country. We are celebrating our 70th anniversary this year. We have a proud history, but we know that success in fighting fraud hinges on keeping in front of evolving criminal trends.

Fraudsters can cripple our economy unless we find a way to combat their unscrupulous acts. Far from being a victimless crime, every policyholder foots the bill for insurance fraud.

Technology is a common denominator in many of the fraud trends we are currently seeing. It’s amazing how sophisticated criminals have become. With the hardware and software currently on the market, criminals are becoming more and more sophisticated. With the advent of digital currency as a method of payment, I am sure we will see this become a factor in insurance fraud.

Cyber laundering is a new way to hide the proceeds of crime, and fighting money laundering in cyberspace is a daunting task for law enforcement agencies. There is little to no training available, and it is my hope the antifraud task force can draw attention to this issue and create training to combat this new criminal element.

Staged crashes have been a common scheme over the years, but more recently they’ve taken on a new twist. We are seeing more cases in which people stage actual car crashes rather than cases in which the accidents only occur on paper in insurance documents.

Furthermore, to take advantage of the medical payouts associated with staged crashes, some people include children into their schemes. When individuals resort to involving children in a car accident for money, there is a whole new level of concern.

We have to get ahead of the trends, and we can do that with proper training and equipment. I read that the Coalition has determined 95 percent of states are using some form of anti-fraud technology. With the reductions to state budgets, I was excited to hear this. States do take insurance fraud seriously.

The mission of the antifraud task force is to serve the public interest by assisting the state insurance regulatory officials, individually and collectively.  We are promoting the public interest through the detection, monitoring and appropriate referral for investigation of insurance crime, both by and against consumers.

I want those who commit insurance fraud to know that we are united in our efforts, and will do all that we can to stop them. I look forward to our relationship with the Coalition and can’t wait to get started.

Two auto-insurance trends bear watching

Public outreach can deter “crash-and-buy” schemes and auto giveups

The first trend is news from Maryland that “crash-and-buy” schemes are growing in the state. More people are opting to go without auto coverage, then buy a policy after an accident and file a false claim.

No one knows the frequency of “crash-and-buy” scams, but they probably happen more than we think. These crimes aren’t even prosecuted criminally in many states. Insurers sometimes discover the fraud before the claim is paid, so no money is lost. There’s also little chance of getting the money back when the insurer pays out a dishonest injury or collision claim, so honest policyholders take the hit in higher premiums.

Maryland is going after these scammers with tough civil fines. And to help deter the crime, the state has posted a video on what can happen to cheaters who get caught. Aggressive public outreach helps deter ordinary people from committing scams like “crash and buy,” research suggests.

The other trend is the growing length of car loans. Six-year loans are now the norm, and seven and eight-year loans are becoming popular, a recent report says. With the boom of new-car sales, tens of thousands of car owners likely will be underwater with their car loans four or five years from now.

With loan balances greater than the value of their cars, many drivers will have a powerful incentive to dump their vehicle. Torch it in a vacant lot, sink it in a canal or hide it in a garage somewhere. Take your pick, but insurers will buy a lot of these cars back a few years from now.

This crime also can be deterred through aggressive public outreach. If owners know the severity of this crime and the stiff consequences, they may think twice before unloading their unwanted vehicles on their insurers — and fellow policyholders.

We should start now to create this ounce of prevention.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

States already inking fraud laws onto books

Partnering, grassroots letters spell success

Spring has barely started yet fraud fighters already have earned a solid slate of new state fraud laws.

Signature wins in Kentucky, New Jersey and New Mexico are on the books, with more fraud laws expected. Fraud fighters are making a clear difference in educating state lawmakers to strengthen insurance fraud laws.

Kentucky was high on our agenda after a federal court struck down the state’s anti-solicitation law. We helped launch push in early 2015 to pass a strong new law that would pass court muster.

A bill was drafted before the legislature opened. That fast start let fraud fighters open the year with a full head of steam. The governor signed the bill Monday.

It’s an insurance crime for medical mills to try and recruit crash victims for useless, inflated and potentially unsafe “medical” treatment within 30 days of the incident. It’s also illegal to encourage crash victims to file phony claims.

Crash rings are moving into Kentucky from Florida to escape ramped-up crackdowns in the Sunshine State. Stiff penalties are important to making fraudsters wish they’d stayed in Florida.

Key to passage was a joint grassroots — should we say bluegrass-roots — letter-writing campaign by the Coalition and Kentucky chapter of IASIU. The effort generated letters from fraud fighters urging their legislators to vote for the bill. That probably was the first time Kentucky legislators had heard from constituents about an anti-fraud bill.

In New Jersey, lawmakers voted to make it an insurance crime for Garden State drivers to lie about where they garage and drive their vehicles to lower their premiums. This success took several years of effort.

We now are pushing for the governor to sign the bill into law. This crime is pervasive in New Jersey. The governor’s  signature will send a strong deterrent message to drivers around the state.

Next comes New Mexico, which last week made it a specific crime to using counterfeit airbags in auto repairs. New Mexico became the seventh state to ink such a law.

Spearheading the push was a partnership between the Coalition and Honda America.

Consumer lives are in jeopardy when dishonest body shops install cheap and unsafe knockoff bags. The airbags likely won’t deploy properly in a crash, leaving drivers and passengers gravely exposed to death or serious injury.

Kentucky, New Jersey and New Mexico have gained more tools to take scammers off the streets, and deter many others.

It’s also clear that partnering is better at passing fraud laws than going it alone. The power of partnering shows that together we can place stronger anti-fraud laws onto the books, and boot more scammers off the streets.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Let’s yank licenses of crooked docs

State license is a privilege, not a right

The Coalition has a longstanding position that medical providers who earn most of their income from insurance should have their state license yanked or suspended for committing insurance fraud. That’s a key provision of our model insurance fraud law.

A license is a privilege the state bestows, and not a right.

Why should states act so decisively? Because medical boards rarely act on their own. We surveyed medical boards several years ago and very few actively punished providers who commit insurance fraud. Some only discipline providers for violating their medicine practice, and that insurance fraud isn’t constitute such a violation.

There are enough honest docs practicing ethically that we can afford to get rid of crooks.

Medicare can now impose stiff sanctions. Docs who bilk Medicare can be kicked out of the system. They still can practice but can’t receive Medicare reimbursements. Many cheaters who specialize in fleecing Medicare thus are put out of business.

Minnesota is debating a similar move: Medical providers convicted of insurance fraud can be denied payments by the state’s auto-insurance system under a bill being considered in the statehouse.

The cheaters still can keep their medical license. They’re just out of the no-fault business. And like Medicare swindlers, the no-fault fraud specialists face potential ruin if their main source of income is shut off.

New York started booting dishonest medical providers from the state’s no-fault system several years ago. The state is showing success; more than 18 providers have been removed.

The Coalition holds up New York as a model that other no-fault states should emulate.

Crooked medical providers risk their patients’ health and wellbeing, and steal brazenly from insurers. They shouldn’t be tolerated. No-fault states should follow New York’s lead and weed out crooked docs.

The Coalition strongly believes that dishonest providers who abuse their state license to commit insurance fraud should face strict license review to determine if their license should be suspended or permanently revoked.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Do workers comp “reforms” encourage more cheating?

Report says growing number of injured workers are forced into poverty

There’s never a good reason or excuse for committing insurance fraud. Yet when people perceive that a system is unfair, they’re more likely to justify their own cheating or tolerate others who defraud. Every year more Americans feel they must cheat or cut corners to succeed in life, studies show.

comp claim form imageThus it’s troubling to read NPR’s investigation of recent reforms in state workers compensation systems. The last few years, many states have slashed benefits and made it harder for injured workers to get adequate treatment, according to the report.

Injured workers increasingly must rely on food stamps and Social Security disability to survive, the report says. Legitimately hurt workers also must fight for years to get needed benefits and treatment.

Insurers and the business community need to realize that cutting back comp benefits to this degree encourages more employees to rationalize fraud because they believe the system unfairly tilts against their legitimate needs for medical treatment and wage compensation.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

“Out-of-network” scams hitting insurers and consumer wallets

Legislators must step up and outlaw this sleazy practice

Leave it to creative docs and hospital administrators to drum up new and devious schemes to sink their fingers in your wallet.

out of network imageThe latest scam cropping up across the U.S. is leaving patients and their insurers aghast at outrageous medical bills. The scheme involves the use of “out-of-network” medical providers who basically can charge whatever they damn well please. They aren’t constrained by negotiated fees between in-network providers and insurers.

The scam works like this: You go in for a treatment or surgery — or maybe go to the emergency room after an accident or heart attack. You’re asked to sign the usual paperwork. Most people don’t read or understand much of the fine print that says you’re responsible for all charges — even those by out-of-network providers.

You get the treatment, get well, pay your deductible and bam! You get a bill for thousands or tens of thousands from some doctor you didn’t even know had worked on you.

That doctor might’ve been brought in by your doctor as a “consultant” to watch your operation or review your records.

The New York Times blew the cover on this scam last year. The news outlet found in-network docs who were hiring high-priced physician-consultants out of network and taking kickbacks from them. Since then, similar stories have been appearing across the country.

Legislation has been introduced in Florida to outlaw the practice and bring out-of-network fees more in line with in-network charges. The sponsors of SB516/HB681 likely have a uphill battle because the medical lobby in the state is powerful. But let’s hope the bill sponsors succeed and other states follow their lead to protect consumers from this sleazy practice.

In the meantime, be sure to carefully read all medical paperwork and question the use of out-of-network providers brought in supposedly on your behalf. It could save you a ton of money.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Let’s get creative with fraud sentences

Make Major League star speak out against insurance cons

Much of the public knows that former Major League Baseball star Ted Lilly recently was charged with insurance fraud.

He crunched his $200,000 RV in a collision, incurring $4,600 in damages.

Lilly was uninsured for the damage and quickly bought a policy. Then he lied to his insurer that the crash happened after the purchase so the damage would be covered.

Lilly played for several teams and reportedly earned $80 million-100 million dollars in his career. It’s incredulous that a wealthy and famous athlete would try to get away with this scam.

He could’ve spent several years in jail, yet reached a plea deal with the San Luis Obispo district attorney’s office that avoided hard time. Part of the deal included 250 hours of community service.

And that’s the rub. I found no news stories that described what kind of community service he’d perform. Does it include speaking to organizations and groups about insurance fraud and why it’s a dead-end street? I raised that question with the San Luis Obispo DAs office.

Community service was open-ended, the office said. So there’s no clear definition of what Lilly was supposed to perform.

I’m fine if he has to coach youth baseball teams. Those boys and girls would learn a lot from a former ballplayer of his caliber. And he also should speak to school or community groups about why insurance fraud is wrong and how it messed up his life.

Innovative sentences like this can have greater impact than jailtime in many cases. Having convicted fraudsters talk eye-to-eye about their crime goes farther than all the stats and anti-fraud quotes in news stories.

So let’s make fraudsters like Ted Lilly spend quality time working to make consumers — young and adult — four-square against this crime.

Thus we can turn Lilly’s regretful act into a positive. It can a springboard for a wider dialogue on creative sentences for insurance crimes.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Fraud statistics and other lies

Exaggerating the numbers does a disservice to our cause

liesEstimates of insurance fraud usually make me cringe because most are guesstimates at best. They’re based on little if any good science.

Wild-eyed estimates can backfire unless you can back them up. Just ask North Carolina Governor Pat McCrory. This week he said 40 percent of state workers-comp claims involve fraud and abuse.

40 percent!

Eyebrows across the land were raised and soon the critics came out en masse.

Part of the problem here, of course, is that it’s nearly impossible to disprove McCrory’s statement because of the “…and abuse” part.

Fraud is fraud, but abuse often is in the eye of the beholder. It’s a slippery concept. What is abuse to some may just be thorough treatment to others. Are three chiro treatments too few and five too many? Opinions differ greatly.

This is not to excuse workers who malinger after a real injury.But such estimates shift the focus from preventing fraud, and questions the credibility of those who toss around unsubstantiated estimates. This should be a lesson to the entire fraud-fighting community — including the Coalition.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Cross-state sales could open scams

Regional pacts better suited to protect consumers from con artists

The idea of allowing consumers to buy health coverage from any insurer in any state has been floated in Congress for several years. It would be an alternative to a consumer’s state or regional exchange. Someone in the Northeast thus could buy coverage from an insurer in the Southwest.

It’s a bad idea that persists. Any proposals should be voted down.

The idea would open the door for rampant fraud and undermine consumer protections. How would the system be regulated?

Let’s say a scammer in State A peddles fake health coverage to consumers in State B. Would the insurance department in State A have the resources or will to remedy those victims — non-residents who may live hundreds of miles away? That state has enough challenges just protecting its own residents.

Luckily the idea remains in the concept stage in Congress. But now it’s surfacing in state legislatures.

The Affordable Care Act lets states create regional exchanges that offer coverage to consumers within the compact. These are partnerships among like-minded states. They’re designed for closely knitted oversight that protects consumers in all states of the region.

But a well-intended New Hampshire lawmaker has introduced a bill allowing residents to buy health insurance from any other state. It would jeopardize the health and wellbeing of New Hampshire residents.

A scammer in another state could sell phony coverage to New Hampshire residents, and skirt New Hampshire’s licensing and oversight.

Who ensures out-of-state health entities are properly licensed and vetted for sale in the state? Or better, who creates and enforces regulations to prevent predators from selling across state lines?

We applaud New Hampshire’s insurance department for opposing the measure at a recent legislative hearing.

Hundreds of new state legislators took office last fall. Many barely grasp state insurance-fraud laws — and especially how they protect consumers.

These cross-border insurance proposals may seem good for the lawmaker’s state residents … at first glance. But they open the door wide for scammers. It’s the school of unintended consequences at work.

The anti-fraud community needs to educate legislators about being vigilant against fraud. That’s an important part of the Coalition’s mission. We’ll steadfastly work to make sure legislative proposals minimize unintended consequences and maximize protection of consumers throughout the nation.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.