Un-civil civil penalties can thwart fraudsters

States need civil actions when criminal system slow to respond Continue reading

nullCrafting a model fraud law was one of the Coalition’s first agenda items when we were founded in 1993. It took us two years to complete, and still is the most complete anti-fraud model law on the streets.

The larger the fraud the stronger the penalty, our model says. Arson and other potentially life-threatening schemes merit the most-serious felony sentences. We also created a unique law exposing leaders of crash rings and organized fraud schemes to large civil fines that can bankrupt their operations.

Our “unlawful insurance act” was ahead of its time — few policymakers grasped the civil penalty’s purpose when we wrote that model in 1994. Yet with many lawmakers reluctant to strengthen criminal penalties, maybe it’s time to go after more ringleaders in civil court.

New Mexico lawmakers resist allowing judges to aggregate the full amount of the scam when sentencing fraudsters. It would let judges mete out stiffer jail terms and fines.

New York is legendary for stonewalling much-needed laws clamping down on recruiters for crash rings, and other scammers. Key committee staff typically see little need for more felonies. And supporters of tougher laws are unwilling to compromise with light misdemeanors that would discourage over-worked prosecutors from taking cases.

Some states also want to decriminalize some offenses that, the thinking goes, might further clog already-crowded prisons with non-violent offenders. It’s also harder to push for stricter criminal insurance penalties when there’s a move afoot to decriminalize other offenses.

Maybe we should seek more civil actions when the winds of change for tougher criminal penalties blow in our faces. Enacting large civil penalties get inside the wallets of fraudsters and remove their profit motive.

The Coalition helped Maryland and Minnesota enact a civil penalty. Both states can quickly go after fraudsters on their own, without waiting for the often slow-moving criminal system to wind its course. Maryland has seen success, and Minnesota wants to ramp up it effort.

To paraphrase Robert Frost — two roads diverge. One takes us on the difficult road for stronger criminal penalties. The other is less traveled. We seek civil actions when the criminal system isn’t set up to fully respond.

Fraud fighters need to have this discussion. Is it time to enact more civil penalties against fraudsters?

Let’s begin the talk.

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

Statutes of limitation should start when scam discovered

Fraud fighters gain more time to unravel crash rings, other complex frauds Continue reading

I’m often mistaken for an attorney. I’m not (much to my mother’s lament) but the law still is something I understand, or at least the kind that seeks to tamp down insurance fraud.

All states have laws setting timeframes for when prosecutions must be launched. Most statutes of limitation start the clock ticking when the crime is committed. That’s fine for crimes such as murder, which entail a very specific act.

Complex financial crimes such as insurance fraud are different. Insurers may discover a suspected scam well after the money was stolen. Staged-crash and medical rings might get away with bogus injury claims for years before insurers can discover them, and piece together enough evidence to earn a prosecution. Some life insurance scams can also take years to unravel.

Obvious insurance crooks who’d normally be convicted can go free on what amounts to a technicality.

Colorado and Arkansas recently gave fraud fighters more time to build cases against larger-scale scammers.

Colorado’s three-year statute of limitations starts running when the insurance crime is discovered. The clock used to start ticking when the scheme happened.

Arkansas allows five years for staged crashes (though still three years for other insurance crimes). The statute begins when the last scam occurred.

There’s also a wrinkle — fraud fighters have six-10 years if they couldn’t reasonably have discovered the scam in time.

These states grasp that complex insurance scams take time to discover and dismantle. It makes little sense to treat insurance fraud like a home burglary, bank robbery or murder. These are single acts that occur in specific moments.

Fraud fighters and victimized policyholders alike get a fair shake from the wise new laws in Colorado and Arkansas. Other states should review their statutes of limitation and follow this smart lead.

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

Could bogus health scams emerge from health reform

Lack of oversight could attract new wave of scam artists Continue reading

It’s anyone’s guess what will happen with the off-again, on-again attempts to repeal/replace/improve the Affordable Care Act.

But one thing seems sure: Republicans in Congress and the White House seem bent on pushing a couple of changes every scam artist should love.

The first is H.R. 1101, the Small Business Health Fairness Act of 2017. It would allow health insurance to be sold through association health plans. It sounds like a solid idea — get a bunch of like-minded people or businesses together, form your own plan and buy coverage in the unregulated secondary market. There’s a lot of problems here, as consumer and healthcare groups point out in a recent letter to Congress.

Our biggest beef is that the bill would exempt AHPs from some state regulation. Lax scrutiny could tempt scam artists to set up their own AHP, collect a ton of premiums and then disappear. It’s happened before.

The same scenario is likely with selling health insurance across state lines. The lack of regulatory oversight is an invitation for scam artists to defraud individuals and businesses by setting up bogus health plans.

The White House likens selling health insurance across state lines to selling auto insurance across state lines, which to our knowledge doesn’t happen. Do supporters of these proposals simply not understand the potential consequences for consumers?

Most supporters probably don’t remember the last wave of bogus health plans during 2000-2002. The Government Accountability Office reported 144 unauthorized entities peddled bogus health coverage to more than 200,000 policyholders. The cons stole at least a quarter billion dollars in lost premiums and unpaid medical claims many victims were forced to pay out of their own pockets. One family had a child with brain cancer, only to discover they’d bought fake coverage.

Stricter laws and tighter regulation followed, and the bogus health plans seemed to disappear. Whatever happens with healthcare, let’s hope Congress has the wisdom to first do no harm in aiding and abetting healthcare scams.

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

Examining examinations under oath

Ill-conceived Wash. bill would harm fraud fight, consumers Continue reading

A valued and effective anti-fraud tool that benefits consumers would be hobbled under a misguided bill in Washington State. It’s called the examination under oath, or EUO.

Insurers interview claimants, who are legally bound to answer questions truthfully. Thoughtful questioning by trained investigators can expose lies and mistruths by claimants trying to hide suspected scams. Telltale clues often can be uncovered only by EUOs. This is why they’re crucial to exposing often well-hidden crimes.

Many fraudsters don’t even bother showing up for an EUO, which helps insurers halt suspected claim payments and close out bad claims.

Under the Washington bill, the statute of limitations for using EUOs would begin when a suspected scam happens, instead of when an insurer discovers it. This strict time limit imposes arbitrary legal handcuffs, regardless of the actual crime-fighting need.

The bill’s stated goal is to protect consumers from supposed insurer fishing expeditions — though where’s the proof of fishing trips? We’ve seen no evidence.

“This would set up a system where insurers would be forced to pay suspect claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote the chair of a subcommittee that’s vetting the measure.

Insurers use EUOs judiciously, only when clear red flags of possible fraud are uncovered first. Companies have neither the time nor budgets to conduct large volumes of EUOs on all claims.

The Washington bill thus would backfire. Insurers would be forced to pay suspicious claims because they wouldn’t have time to fully investigate for warning signals. More bogus claims means more crime and higher premiums for honest insurance consumers in Washington.

If an insurer is abusing the privilege of compelling claimants to appear at EUOs to answer questions, regulators and existing law have existing remedies to punish them. Curtailing this important tool across the board is not in the best interest of public policy.

The Coalition will publish a white paper on EUOs later this year. We will shed more light on how EUOs work, and why we need them to work effectively as anti-fraud tools.

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

Will election changes boost anti-fraud efforts?

States need to stop crash rings, contractors, health cons Continue reading

The late David Bowie sang about “ch-ch-ch-ch-changes” in his memorable rock song. This theme could define anti-fraud legislation in 2017.

A new year always brings aspirations for success. Same with fraud fighters seeking new state laws clamping down on insurance swindlers.

Several statehouses are opening this week, and anti-fraud bills already are being docketed for debate. All amid many ch-ch-ch-ch-changes in leadership this big election year.

New state legislatures, governors and insurance commissioners have taken office. A new U.S. president and Congress could change the face of anti-fraud efforts. We’re watching closely for signals on how they’ll fund scam-busting programs for Obamacare, Medicare and Medicaid.

The anti-fraud community needs to help policymakers see that their constituents benefit greatly from robust, well-funded anti-fraud efforts.

So here’s our bucket list for 2017:

  • Michigan finally creates a state insurance-fraud authority to go after widespread auto fraud rings in the state;
  • New York’s legislature sets aside turf wars to clamp down on staged-crash rings and shady contractors; and
  • Congress and the Administration properly fund the Healthcare Fraud Prevention Partnership. It has saved hundreds of millions of dollars by uncovering scams against private health insurers and taxpayer-funded health programs such as Medicare. And that’s just the beginning.

Other states will take up the call for stronger anti-fraud laws as well. The Coalition will work with our partners to get those laws onto the books.

We’re on board — will you be?

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

Election fallout ripples through anti-fraud world

Changes at the state and federal levels could affect enforcement Continue reading

election-falloutWhile the shock of the national elections continues to be felt, the Coalition is sizing up the likely impact on fraud-fighting.

The biggest concern is whether the Trump administration will continue the federal government’s aggressive stand in combating healthcare fraud. FBI investigations and Department of Justice prosecutions have helped set records for arrests, convictions and financial recoveries in the last eight years.

Another potential concern is whether repealing the Affordable Care Act will gut anti-fraud programs that were part of the original bill. Medicare has much more capacity and authority to crackdown and prevent healthcare fraud today. Its ability to shut down scams quickly and use the latest technology such as predictive modeling could be in jeopardy.

Republicans also likely will push for interstate sales of health insurance. We’ve repeatedly warned that such an unregulated system will spur scam artists to sell fake policies to unsuspecting consumers.

Another potential casualty could be the Healthcare Fraud Prevention Partnership, an alliance of more than 60 private insurers and public agencies.

The partnership’s data-sharing program has helped save more than $260 million for healthcare payers. It would be foolish not to continue, but the program operates at the whim of the administration and HHS secretary. That’s one reason we advocated writing the program into federal law, but it’s too late for that now.

As for state elections, Wayne Goodwin, the insurance commissioner in North Carolina, lost his election. He’s a strong supporter of anti-fraud measures. Goodwin sponsors an effective fraud bureau, and chairs the NAIC Anti-Fraud Task Force.

The change of governors and insurance commissioners in other states, such as Delaware, also may affect law-enforcement efforts to combat fraud.

We’ll continue analyzing the federal and state results. We’ll report developments as they emerge. In the meantime, the Coalition stands ready to work with the new office holders to advocate strong measures that effectively combat insurance fraud.

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

Fraud bills coming, start planning for 2017 now

Busy year possible, fraud fighters can help pass bills as trusted experts Continue reading

Legislation_2017Voters will cast their Election Day ballots in a few days. We’re electing more than a President and members of Congress. A good number of state governors, insurance commissioners and legislators are on ballots as well.

They’ll barely be settled in when statehouses start opening for 2017. Quite a few fraud bills could be on tap — a lot of early chatter is making the rounds in several states.

Many policymakers know little or nothing about insurance fraud or how this crime damages their constituents. We’ll have many opportunities to convince state legislators to vote “yes” for bills that support fraud-fighting efforts.

I’ll share a secret that can open doors and increase your own impact.

But first, here’s what we know so far about 2017 — and more bills are sure to be introduced throughout the year. …

Restrict assignment of benefits. Insurers are concerned about contractors in Florida. Scofflaws inflate repair bills, and typically sue the insurer if the claims are denied or not paid quickly. All this happens behind the unsuspecting claimant’s back.

The vast damage damage caused by Hurricane Matthew will bring out legions of swindling contractors. That has vaulted the issue higher on insurer legislative agendas in the state.

Crashing staged crashes. Penalties for staging crashes in Nevada are pretty weak. The state AG is considering drafting a bill stiffening jail terms and fines. The Las Vegas area, especially, is a hotbed of crash rings and inflated whiplash claims.

Some rings target big-rig trucks. Current law does little to deter hardened fraud rings, many fraud fighters in the state believe. The AG is listening and may seek legislation to add more teeth in 2017, Coalition sources say.

Widening statute of limitations. Firming up the statute of limitations will be high on the Colorado AG’s 2017 agenda: Start the clock when the scam is discovered. The clock now runs for five years after the fraud occurred. The enhancement would be more realistic: The fraud crime often is detected well after it occurs. Also being looked at is adding insurance fraud as a crime to be covered under the state’s RICO, racketeering laws. Both would help the anti-fraud effort in the state.

More hotspot states. Look for action in Kentucky (expand immunity/information-sharing; limit access to crash reports; contractor cons). The Coalition is working with Kentucky fraud fighters to help strengthen the state’s anti-fraud laws … and New York (contractor scams and crash rings).

This is where fraud fighters come in. You need to start planning for 2017 right now. This means identifying current bills and the committees that will move the measures.

It also means thinking about introducing bills with friendly committee members or other legislators as the sponsors.

I’ve seen fraud bills start moving within days after the statehouse doors swung open. All the more reason to start thinking now.

Now about that secret — your impact in legislation is all about personal relationships. It’s the same principle you use so often to build close ties and contacts when pursuing fraud cases.

One fraud fighter I know convinced a state legislator to co-sponsor a bill simply by having a friendly chat about a fraud problem in his state. So few legislators know much about insurance crime in any real detail. You can be the trusted eyes and ears of legislators on scams that must be stopped to protect honest consumers.

You’ll have a strong leg up if lawmakers already know and trust your expertise as a frontliner. You can help educate them about an issue … weigh in about bill wording that makes sure the measures help shut down targeted scams.

You’ll find a great deal of support from the Coalition. I can personally assist in many ways — bill wording, overall bill strategy, effective talking points, helping set up meetings with key movers. You can easily reach me at Howard@InsuranceFraud.org with any ideas or questions.

More resources are tucked away on the Coalition’s website.

Check out suggested state legislation for laws other states enacted on your hot-button fraud issues. Auto rate evasion and tighter limits on using check-cashing stores in workers-comp scams are new additions. Model bills also take on crash-ring recruiters, immunity and other concerns.

Get involved through groups such as IASIU and NSPII. Check with me about what’s happeing in your state, and how you can get involved. 

Grassroots efforts work. You’re the roots of grassroots.  Once the November balloting is done, we’ll soon move into a election cycle: electing fraud laws. Let’s move fraud bills together as partners. We can pass smart fraud bills that are good for insurers, and right for the residents of your state.

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

Fraud fighters must get in legislative game

Play strong role in enacting stronger state fraud laws Continue reading

Two truths will govern our success in getting strong state fraud laws onto the books: We must prepare our 2017 legislative agenda now; waiting until December or January is too late. Fraud fighters also can play a pivotal role in getting fraud bills on the front burner in many states.

We’re in an election year, with less than 90 days until we vote for a new president and Congress. We’ll also vote for quite a few state legislators, and a handful of governors.

We tend to be Washington-centric, thinking that who we put into the White House and Congress will affect us the most.

Actually, most of us are directly affected more by what happens in our state capitals than in Washington. Fraud fighters thus should be alert to creating opportunities in our own backyards.

The Coalition is using the summer to plan the states where there’s the  strongest need for new fraud laws — and a solid chance we can get bills enacted into law.

The Coalition’s government affairs committee meets this week to discuss the best hotspot states. Later this month, I’ll be on a conference call with state IASIU chapters. We’ll discuss the grassroots role that fraud fighters can play in writing their legislators in key target states next year.

The best way to convince insurers to make anti-fraud bills a priority in a given state is to make a business case why statehouse efforts are in everyone’s best interests.

Let me know if you think your state is a prime candidate for strong fraud bills in 2017. Partnerships among fraud fighters and other allies give us the best chance of success.

Together, we can make a difference.

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

Dodging auto premiums should be crime

Lying about garaging vehicles burdens honest drivers Continue reading

Summer driving season is in full swing. It’s a reminder that dishonest drivers are illicitly registering their vehicles in states where premiums are lower. The Coalition is calling for states to go after these drivers.

Using out-of-state addresses to insure a car illegally reduces the driver’s auto premiums. It also burden honest insurance consumers who insure their vehicles with their real address. They may pay higher auto premiums thanks to drivers who cheat the system.

North Carolina was the first state to tackle this issue by requiring new insureds to show proof of residence before an insurer could write a policy. Out-of-staters were registering their vehicles in North Carolina for the lower auto premiums.

North Carolina recently went a step further and put more teeth in the existing law. Trucking firms are falsely registering their fleets in the state yet have no operations there. The new law requires businesses to prove they ply the roads in the Tar Heel state.

Falsely registering vehicles in New Jersey is a specific insurance crime.

The Coalition seeks a similar law in New York. Bills have stalled, though we and our partners there are planning to reboot in 2017.

A Maryland bill would’ve let insurers rescind policies of drivers who falsely registered their vehicles in the state. The state held a public meeting. An insurer told about a claimed loss in Maryland by an insured who lived in New York — where the insurer doesn’t write coverage. The insurer paid the claim to avoid a baseless yet potentially costly bad-faith suit.

The statehouse will revisit legislation in 2017.

The Coalition strongly supports targeting auto rate evasion. Tough state laws can remove a driver’s incentive to take the risk.  Consumers who lie about where they drive to lower their auto premiums add burdens to the many thousands of honest drivers. This undermines the integrity of the auto-insurance system.

Fraud fighters have taken the forefront on this issue. Stay alert to auto-premium evasion in your state. Tell the Coalition and your state insurance department. Falsely registering a vehicle should be a ticket to jail, not an easy source of summer spending money.

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

New fraud laws start with open dialogue

Md. public meeting helped focus on needed reforms Continue reading

Last week I took part in a public meeting the Maryland Insurance Administration held in Baltimore to review anti-frauds effort in the state. Part of the discussion surrounded anti-fraud bills that stalled this year when the 2016 session closed in mid-April.

The state insurance commissioner Al Redmer Jr. chaired the meeting. He stayed the entire time. He went beyond simply giving an opening statement, then handing the meeting to the fraud unit’s chief. Redmer’s lengthy presence showed a strong interest in strengthening state’s anti-fraud efforts.

I called for the state to redouble its efforts to target drivers who lie where they garage their cars to illicitly lower their auto premiums.

Maryland drivers should register and insure their vehicles in the state. Similarly, out-of-state drivers should pay a steep penalty for lying that they drive and garage their vehicles in Maryland to lower their auto premiums.

Maryland should be applauded for last week’s effort. The session started dialogue for targeting auto-premium evasion and other insurance crimes. This could spark renewed pushes for anti-fraud legislation next year. The 2017 legislative session opens in January.

Other states can learn from sessions like this one. A state’s anti-fraud effort is organic. Fraud fighters and the insurance department must continually review its direction and impact. No state should rest on its laurels, thinking it’s doing a great job. Nor should a state grow reluctant to act, believing the anti-fraud environment can’t be changed so why talk about it.

Maybe such a meeting in New York could help break up the logjam in Albany that has stalled so many worthwhile anti-fraud measures in recent years. Or, a state like Oregon which has no insurance fraud law or anti-fraud infrastructure. Imagine what the insurance departments and governors would learn if they held such meetings. Same with Michigan, which needs a fraud bureau.

More often than not, legislatures act in a vacuum when they look at anti-fraud laws. Too often they’re pulled in several directions, making it hard to focus on enacting anti-fraud laws.

Fraud fighters should assume leadership and start action-driven dialogue. Reach out to the state insurance department, insurance commissioner and state attorney general. Co-sponsor open meetings to review their state’s fraud trends, and where new fraud laws are needed.

These joint efforts can go a long way toward enacting needed laws and regulations that make a state’s anti-fraud efforts stronger than ever.

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