Legislative News


* The Florida Senate is moving on a bill setting up a grant program to help fund more dedicated fraud prosecutors. “By having dedicated prosecutors, fraud fighters will know that their cases will have a hearing and will move forward,” the Coalition wrote the sponsor. The state Division of Investigative Services would oversee the grants, which will come from the state budget. Exact grant amount, and for how many prosecutors, is being worked out. Insurers also would have to develop fraud plans and identify investigators who’d serve as key contacts with the state. Requiring fraud plans would clearly define the minimum anti-fraud effort expected of Florida insurers. Passage is expected before the legislature adjourns in early May.

* Two fraud analysts would be hired under an omnibus budget bill moving steadily through Minnesota’s legislature. The measure would transfer $1.3 million into the insurance-fraud account. The money would provide ongoing funding for the analysts and their support infrastructure. They’d be housed in the state fraud bureau. The money comes from a state auto-theft surcharge. The House and Senate are working out their versions of the budget bill. A final package should be ready shortly.

* New Mexico closed its 2017 session by enacting penalties for insurers that delay or fail to pay the required fee to fund the state’s anti-fraud program. The fine is $1,000 per month. The annual fee depends on the size of direct-written premiums in the state. The legislature missed a chance to stiffen fraud penalties against wrongdoers. A bill fizzled that would’ve let judges aggregate frauds in determining sentences. Seems health-provider groups feel they’re being targeted by the bill, Coalition sources say.

* “With many lawmakers reluctant to strengthen criminal penalties, maybe it’s time to go after more ringleaders in civil court ...” the Coalition’s Howard Goldblatt blogs this week. “Maybe we should seek more civil actions when the winds of change for tougher criminal penalties blow in our faces. Enacting large civil penalties gets inside the wallets of fraudsters and remove their profit motive.”


* Consumers would gain valuable protection against dishonest roofers thanks to companion bills in the New York statehouse (SB 3987/AB 3246). Roofers couldn’t dangle inducements to get contracts ... Consumers could cancel contracts within 3 days of signing if the insurer won’t cover repairs ... Roofers couldn’t act as unlicensed adjusters by taking control of the claims. A similar version stalled in 2016. General-repair contractors thought it was too broad, so the current version deals solely with roofers. Dishonest contractors routinely prey on homeowners after storms. News stories are rife with tales of stolen down payments, and lousy or unfinished work. The Coalition is partnering with insurers and consumer groups in an alliance that’s leading the push for passage.

* The Kansas insurance department’s fraud unit would refer all cases to the state AG for potential prosecution under SB 23. The fraud unit currently must prepare cases for designated special assistant AGs. The change would give the AG’s office more leeway in prosecuting cases.

* California legislators want to create an anti-fraud unit in the workers-comp division. It would coordinate with the insurance department’s comp fraud unit under AB 1697. It would be point of contact with the insurance department’s fraud unit, and oversee researching fraud in the state’s comp system. The goal is to better coordinate comp anti-fraud efforts in California, and better understand the extent of thievery in the system.

* “The problem with insurance fraud is that the crime usually is not discovered until down the road,” the Coalition’s Howard Goldblatt told Claims Journal about the need for statutes of limitations to start ticking when the fraud is discovered, instead of when the scam happens. “[The fraud] may happen, say, in January, but an insurer may not discover it until much later, maybe even a year later. If the clock starts ticking from the moment the false claim is submitted, they could lose quite some time before the clock runs out.”


* Dedicated fraud prosecutors have been funded in Virginia for FY 2017-18 under a budget agreement. This is a clear victory for fraud fighters in the Commonwealth. Funding comes from the Virginia State Police. One prosecutor will operate in the Richmond area, and the other in the Tidewater area of Southeast Virginia. The Coalition and other fraud fighters urged the legislature to let the state police’s insurance-fraud unit use existing funds to pay for the prosecutors. The money vests July 1.

* Fraud analysts, search warrants and civil penalties are at stake in the Minnesota statehouse. A budget bill would transfer $1.3 million from funds collected by the state auto-theft surcharge into the state insurance-fraud account. This would allow the hiring of 2 state fraud analysts. An omnibus bill would let the state fraud unit serve search warrants. Insurers also would be reimbursed by civil penalties to repay their investigation costs.

* “Obvious insurance crooks who’d normally be convicted can go free on what amounts to a technicality,” the Coalition’s Howard Golblatt blogs about overly narrow state statutes of limitation. “Colorado and Arkansas recently gave fraud fighters more time to build cases against larger-scale scammers.”

* Expanding statutes of limitations for bringing fraud cases took the front burner in Arkansas and Colorado, the Coalition’s Howard Goldblatt will tell the NAIC’s Antifraud Task Force at the NAIC spring meeting this weekend in Denver. Both states passed laws allowing the “prosecution clock” to start ticking when the fraud is discovered. The current statute starts when the crime is committed. ... New laws protecting homeowners from shady contractors after storms were key legislative victories in Virginia, Kentucky and Wyoming this year. The measures were enacted in all 3 states in the opening months of 2017.

* “The legislature has allowed AOB abuse to fester for too long ... the state needs to get this right,” the Daytona Beach, Fla., News-Journal says in an editorial about festering abuse of so-called assignment of benefits. Deceitful contractors are widely luring homeowners into legally letting them handle all claim details. That opens the door for shady billing, lousy repairs and fraudulent lawsuits against insurers. It’s a big problem in areas of Florida. Homeowner premiums are rising thanks to the large insurance losses. A key state Senate committee passed a bill penned by a trial attorney. It limits AOB contracts, yet maintains attorney fees and forbids insurers to pass legal costs to consumers when the insurer loses in court. The consumer protections are too weak and could discourage insurers from writing policies, the News-Journal contends.


* Kentucky has nixed bogus newsletters masquerading as real news outlets designed to illicitly access police crash reports and lure crash victims for inflated whiplash treatment. The governor signed HB 215 into law. Trade outlets no longer can access the potentially lucrative reports. Current law allows legit news outlets to get the crash info for news stories. Medical rings create shoddy little trade newsletters. The outlets purport to have insider news for, say, attorneys and docs. Yet they’re mere fronts for criminals. They exploit the crash reports to identify and badger crash victims for worthless insurer-billed injury treatment. The new law sees through the subterfuge. The Coalition is part of an alliance that worked for successful passage.

* Homeowners in Wyoming and Virginia are gaining valuable protections against sleazy repair contractors. In Wyoming, homeowners can now cancel repair contracts within 3 business days if they think repairs are inflated or unneeded. Repair contracts also must have a clear notice about the cancel option. Virginia booked a new law from identical contractor bills (HB 1422/SB 839). It’s now a fraud for contractors to engage in dishonest conduct to seek repairs during a declared state of emergency.

* Colorado and Arkansas expanded their statutes of limitations for prosecuting crash rings and other complex fraud cases. Arkansas extends its 3-year limit to 5 years for staged crashes. The clock starts ticking when the last scam occurred. The statute of limitations remains 3 years for other suspected frauds. There’s a wrinkle — fraud fighters have 6-10 years if they couldn’t reasonably have discovered the scam in time. In Colorado, the gong sounds when fraud fighters discover the crime, instead of when it happens. Fraud fighters thus buy extra time to unravel often-complex rings.

* “Pre-inspection is a useful anti-fraud tool that should continue in Florida. Allowing for insurer opt-outs would undermine this element of the state’s anti-fraud effort,” the Coalition’s Howard Goldblatt wrote to the chair of a Florida state Senate committee considering a bill that could water down the state’s effective pre-inspection law. “Drivers have a much harder time making false claims for prior damage or for a phantom auto once the vehicle is well-documented at policy inception.”


* Contractors will be forbidden to dangle perks for luring homeowners into signing potentially unfair repair contracts under a bill the Kentucky governor signed this week. The Coalition is part of an alliance that pushed for passage. Contractors cannot offer gifts, rebates or referral fees of more than $100. Damaging a roof to land the repair job also will be a specific crime. And homeowners can sue contractors for damage. They’d receive twice the value of the loss, plus attorney fees. The bill takes effect in late June.

* Fake reporters for equally bogus trade newsletters will be denied access to police crash reports in Kentucky. The Coalition-backed alliance also supported this bill, which cleared the statehouse. Mainstream reporters already can legally get crash reports to write news stories. Yet some tiny trade newsletters supposedly for medical providers and attorneys, for example, are mere fronts. Shysters pretending they’re journalists get the reports to identify and hound crash victims into inflated injury treatment with little medical value. Auto insurers pay the large tabs. The governor is expected to sign shortly.

* Georgia legislators are taking the air out of airbag scams. The statehouse passed a bill making marketing and installing phony airbags a misdemeanor. The Coalition worked with Honda America for passage. Dishonest body shops install junk airbags during vehicle repairs. The cheap counterfeits won’t deploy in crashes, placing motorists’ lives at risk. Insurers are billed full freight for knockoffs that cost just a few dollars on the black market. The governor is expected to sign the bill into law shortly, Coalition sources say.

* Consumers would be vulnerable to fake health coverage under a bill that passed the U.S. House this week. HR 1101 would exempt association health plans from state and federal consumer protections. The bill passed on a near-partisan vote this week as part of the intended Obamacare rollback. The Coalition plans to vigorously oppose the consumer-unfriendly bill. Scammers have used such oversight voids to sell fake health coverage. The stuff was peddled as affordable group health plans, though the sponsoring associations or unions were phony. Consumers were stuck with huge bills after their bogus plans refused to cover expensive hospital procedures. Consumer groups widely oppose the bill. Dissolving oversight opens the door for weak health coverage for small businesses and individual consumers. The bill heads to the Senate, where its fate is uncertain. Nearly identical measures have stalled in recent years.