Legislative News


* Kentucky is about to make it easier for victims, including insurers, to sue fraudsters and recover their ill-gotten gains. A bill has cleared the statehouse, and the governor is expected to sign. Fraud victims — whether consumers, insurers or others — will be empowered to file civil-recovery actions against fraudsters before they’re criminally convicted. Successful litigants can recoup the stolen money, plus expenses for investigation, litigation and attorney fees. This erases an odd and antiquated law allowing victims to file civil-recovery actions only after a criminal conviction. The higher burden of criminal proof plus the often-lengthy time needed to criminally convict raise serious hurdles to the victim’s ability to recover. The law thus is an important new anti-fraud tool. Especially to forcefully apply civil actions against crash rings that infest the Louisville-Jefferson County area. Kudos to Mark Treesh and the Insurance Institute of Kentucky for persistence in helping enact this needed anti-fraud measure. Stiffer criminal penalties and jail terms for fraudsters, however, fell by the wayside in recent statehouse voting.

* Fraud fighters in Pennsylvania can help enact a much-needed law clamping down on sleazy pharmacies that traffic in overpriced and worthless compound meds. It just takes one press of a button. Here’s the full story: It took a determined effort and courage for the Pennsylvania statehouse to pass a bill fighting back against compound pharmacy abuse. The bill cleared the state Senate last fall, and seemed dead in the House after a tie vote. House leaders bucked powerful special interests, bringing the bill back to gain passage. The bill awaits Gov. Tom Wolf’s signature. Big-money special interests are urging him to veto the bill and go on with “business as usual.” Consumers and insurers will pay a high price for medically useless and fraudulently overpriced tubes that can cost up to $30,000 apiece. And law firms will continue to legally own the pharmacies that dispense them. We need your help now: The Coalition and IASIU are urging all Pennsylvania fraud fighters to tell Gov. Wolf to sign the bill. He could sign — or veto — any day. If you live in Pennsylvania, or know someone who does, make your voices heard now. We make it easy. Just click here.

* Cheaters trying to lure consumers into unsafe sober homes and rehab facilities in Arizona will face stiff fines and jail terms under a law signed by Gov. Doug Ducey. It’s now unlawful to traffic in kickbacks and other bribes to refer addicts for substance-abuse treatment. Arizona is among the nation’s hotspots in a burgeoning crooked drug-rehab industry that’s feasting off the misery of addicts to steal insurance money. Recruiters pull addicts off the streets. They funnel the addicts to sober homes and rehab facilities. The sober homes often are grimy flophouses that hand out drugs to keep addicts coming back. Rehab firms offer little useful treatment, often over-billing insurers for phantom services. Fraudsters use the addicts’ IDs to buy them health policies to overbill for thousands of dollars. Seven states are debating patient-brokering bills, and Arizona is the first state to pass a law.


* Missouri’s statehouse passed a bill protecting insurers from allegations of bad faith and extra-contractural damages when multiple parties try to collect under the same policy limits. Insurers are protected if, within 90 days of receiving a demand, they file an interpleader action and deposit their policy limits with the court. The insurer then is liable only for the policy’s contractual limits if the carrier defends insureds in good faith from claims or lawsuits allegedly caused by the incident. So what’s the anti-fraud impact? Some fraudulent claims are inter-mixed with real injuries. The bill would protect insurers and policyholders from exposure, while using the interpleader to notify the court and other injured parties of the potential need to investigate suspected fraud. Once before the court, fraud fighters gain power of subpoenas and depositions to determine whether to deny the fraudulent part of the claim — and compensate those truly in need. The bill awaits the governor’s signature.

* Pharmacy benefit managers (PBMs) control 80 percent of the distribution of prescription drugs in America. Debate is raging over whether PBMs save or hurt consumers, and insurers that often pay for the meds. Most debates focus mainly on abuses. Why should fraud fighters care? Insurers pay for many drugs prescribed for fake injuries from bogus auto accidents, slip-and-falls and workplace injuries. A lot of insurance money is on the line. Americans will spend $360 billion on meds this year — more than any other nation in the world. As for the related non-fraud abuses … Ohio now prohibits health insurers and PBMs from charging consumers more for their prescription drugs than what they’d pay without insurance. The action was taken by state insurance director Jillian Froment. Some PBMs also prohibit pharmacists from telling consumers lower prices may be available if a drug is bought with cash — sometimes for less than the co-pay. Ohio also now has freed pharmacists to discuss affordable drug options with customers. … Congress also introduced the “Patient Right to Know Drug Prices Act” last month. It tackles potential PBM abuses nationally. Three similar bills (HR 1038HR 1316S.3308) already are filed. They attempt to ensure pharmacists can disclose lower costs for prescription meds to consumers, with or without insurance plans. The Coalition is exploring whether some PBM actions are mostly abuses of America’s insurance system, or involve wider and systemic fraud. Stay tuned for more on this important issue.


* When Maryland House of Delegates member Erek Barron read a Washington Post editorial lamenting a parent killing his infant son for life insurance, he knew he had to act. Last week his efforts came to fruition when a welcome reform bill passed both chambers. Insurers can reject questionable life insurance applications for juveniles, and must follow specific standards when writing life policies on kids. The bill awaits the expected signature of Gov. Larry Hogan. The Coalition strongly supports the changes. In fact, a Coalition letter to the editor published in the Post called for tighter underwriting — warning against parents using life policies as murder weapons. Citing the Coalition, the Post responded with the editorial that captured Barron’s attention.

* As America grapples with the opioid crisis plus billions of dollars worth of bogus treatment and testing falsely billed to insurers, Georgia has stepped in to tamp down the costly insurance schemes. The Georgia statehouse passed a bill to protect against excessive and unneeded testing. The bill would expand the definition of insurance fraud to include such practices. The bill is broadly written to include unnecessary or inflated billing for treating anyone afflicted by pain, substance abuse, addiction or any related disorder. The proposal has cleared the Senate and House. It’s now in conference committee to work out variations.

* While Americans pondered yet another federal government shutdown last month, the U.S. Congress passed the “Bipartisan Budget Act of 2018.” That keeps the government funded … for now. What earned little attention were increased penalties for Medicare and Medicaid fraud and abuse, buried in the bill. Fines are doubled and even quadrupled. Fraudsters also will enjoy more time viewing the world through bars thanks to stiffer jail terms. Signed by the President, the budget also increases funds for federally qualified health centers and for research and public health initiatives. The Coalition is studying those latter provisions for potential anti-fraud impact.


* Three trends to watch: Privacy & police crash reports … authorizing insurer civil actions … and clamping down on patient brokering. Those are trends the Coalition’s Matthew Smith reviewed in a presentation to the NAIC’s Antifraud Task Force this week. It was part of the NAIC’s spring meeting in Milwaukee. Privacy & police crash reports: Access to police crash reports is galvanizing a growing debate over personal privacy limits. Local law enforcement continues selling the reports to bolster budgets. The reports go to crooked clinics that lure crash victims for useless and inflated treatment that gouges consumers and auto insurers. An important Tennessee lawsuit seeks to prevent access by invoking privacy protection under the federal Driver Protection Privacy Act. … Insurer civil actions: There’s been a dramatic increase in state bills allowing victimized insurers to seek criminal restitution against scammers to recover the stolen money. Key is for bills to balance legitimate insurer recovery when the insurer pays and is the victim, while protecting consumer rights. … Patient brokering: State legislation limiting the trafficking of addicts for inflated rehab and urine testing claims increasingly is surfacing. Sober homes, rehab facilities and testing labs exploit addicts for large scams. Ringleaders are hiring recruiters and paying cronies illegal kickbacks to funnel patients for false claims. South Florida and Philadelphia are among the brokering hotspots around the U.S.

* The NAIC adopted a model act seeking stronger oversight of pharmacy benefit managers (PBMs). Some are complicit in potentially overcharging for meds or enabling the illegal flow of insurer-paid opioids. Such cons enlarge the nation’s medical and prescription drug cost crises, and add to insurer fraud losses from inflated and unneeded prescriptions. NCOIL also discussed reigning in PBM abuses and fraud at its recent meeting in Atlanta. NCOIL likewise is considering a model. The Coalition is assessing the impact of PBMs on our insurer and consumer members. 

* The Coalition also sits on the NAIC Consumer Liaison Committee, which held one of the best-attended sessions. Burgeoning use of algorithms and Big Data, and their impact on all aspects of insurance, were among the main presentation topics. The NAIC Executive Committee also will look deeper to assist state regulators in managing emerging technology.

* Surveillance could be seriously hindered by an anti-stalking bill in New Hampshire. The House-passed measure is before the Senate. It would amend the current anti-stalking law. While well-intended, the measure also could limit aerial and “elevated” surveillance in fraud probes. The bill may forbid photographing or videotaping of motor vehicles while the surveillance “target” or an immediate family member is in the vehicle. Arguably a “ground-level” exemption would permit reasonable surveillance, yet the bill’s problematic aspects imply an attempt to more-broadly prohibit surveillance. The Coalition seeks to protect personal privacy while allowing reasonable surveillance to combat scams. We’ll continue monitoring this and similar bills. Note … this bill came to our attention thanks to a longtime Coalition member and supporter. We encourage all members and Fraud News Weekly readers to send any legislation that could affect the fraud fight — positive or negative. Bills may not even contain key words such as “fraud” or “insurance,” yet may affect anti-fraud efforts. As always, contact Matthew Smith.


* Iowa and Nebraska signed new anti-fraud legislation into law. Iowa Gov. Kim Reynolds put her pen to HB 2238, allowing victimized insurers to seek civil restitution from fraudsters. Insurers gain the right to seek direct restitution from scammers, who are compelled to pay for their crimes. … And public adjusters in Nebraska now must be licensed. This will impose a higher standard of professionalism for public adjusters, who often are accused of dishonest claim practices. The Coalition is tracking 90 fraud bills across the U.S. Coalition members can stay abreast of bill progress as well. We’re always on the lookout for new fraud bills, and encourage members to notify Matthew Smith of bills we should follow closely.

* Impactful change in fighting fraud comes when legislators and regulators work together. Look to North Carolina, where the General Assembly secured $2.4 million for more investigators for the state fraud bureau in 2017. Insurance commissioner Mike Causey recently oversaw the swearing in of 15 anti-fraud special agents — made possible by the new budget funds. The state receives 400-500 criminal fraud complaints each month. His team arrested 334 suspects (up 60 percent over the prior year), so the future looks all the more challenging for fraudsters in the Tar Heel state.

* A Coalition legislative priority is to help secure adequate funding for state anti-fraud efforts. This includes new funding, and ensuring existing programs stay funded or avoid being eliminated. Often these actions are difficult to track. They may be buried deep in budget bills, or are obscure administrative or regulatory proposals. We’re tracking a bill in Delaware to increase by $200 the annual insurer assessment for fraud-fighting efforts. In Louisiana, state Senator Dan “Blade” Morrish has introduced a bill to continue funding the state’s fraud unit, which is scheduled to sunset. The unit is housed in the Louisiana State Police. The Coalition also is an active member of the Advisory Board of the State Police.