* How do schemes by contractors and others operate after floods and other natural disasters? How do fraud fighters and legislators combat them? The Coalition and NICB will review disaster scams for an insurance task force of state legislators this weekend in San Diego. It’s a part of the National Conference of State Legislatures. The task force studies a wide range of insurance issues — including fraud. The impact of disaster scams on consumers and insurers will be highlighted. The Coalition will stress the need for strict laws protecting consumers and insurers from shady contractors who prey on homeowners after floods and wind barrel through. NICB also will discuss efforts to prevent flooded, unsafe Harvey and Irma vehicles from hitting the market for unsuspecting drivers to buy.
* Tackling thieving contractors who prey on homeowners and insurers could be an issue in several states next year. The Coalition projects bills will be debated in New York, Ohio and North Carolina. Contractors also will be front and center for abusing so-called assignment of benefits. The contractors take control of home-repair claims, then do shoddy repairs and sue insurers behind the homeowner’s back. Abuses are widespread in Florida, driving up home premiums. A reform bill stalled in Tallahassee this year. Bills tackling AOB scams by contractors and auto-glass firms already are filed for 2018 in Florida. AOB scams are problems in Georgia and Nebraska as well, so we’ll watch closely to see if legislation perks up there.
* NCOIL is moving into 2018 with a name change, new president and an urgency to work with the Coalition on stopping rapidly spreading compound creams. NCOIL now is called the National Council of Insurance Legislators, and elected Arkansas state Sen. Jason Rapert as 2018 president. He’s sponsored insurance-fraud bills in the statehouse. Compound creams are near the front of NCOIL’s anti-fraud agenda for 2018. Dishonest pharmacies are mixing creams, and charging workers-comp insurers inflated claims for stuff that patients often don’t even need. Auto and health insurers are seeing problems with compound creams as well. This trending scam is ripe for scrutiny and action. … Pennsylvania is moving on legislation that would restrict how compound creams are used in comp treatments. NCOIL also re-approved its auto insurance fraud model act earlier this year. The Coalition and NCOIL jointly drafted the measure a decade ago.
* A key Florida House committee approved a bill to thwart illicit contractor takeovers of repair claims that scam homeowners and insurers. Contractors are widely abusing so-called assignment of benefits (AOB) in Florida. Cheating contractors lure homeowners into signing over repair claims, especially after storms like Irma. The contractors abuse that power to inflate claims and falsely sue insurers — all behind a homeowner’s back. Under the bill … homeowners could rescind AOB deals they sign, without penalties. Contractors also must give insurers and insureds written notice before suing insurers in the homeowner’s name. And attorney fees in those suits could be limited. AOB scams are so prolific that they’re raising homeowner premiums in the state. The reform bill is freshly filed for 2018. It’s scheduled for early debate — a positive sign. Legislators may gain time to fashion a version everyone can live with during the brief 60-day session.
* State insurance legislators honored the Coalition’s Howard Goldblatt for more than 24 years of advising NCOIL on legislative strategy and fraud awareness. Goldblatt was presented an award at NCOIL’s annual meeting in Phoenix this week. The Coalition’s longtime legislative chief has counseled the state legislators for 24 years on needed state fraud laws, and even wording. Goldblatt especially has helped grow legislator awareness of insurance fraud as a financially draining $80-billion crime. NCOIL has adopted numerous model fraud model laws that state legislators have used to propose bills. Two of NCOIL’s biggest moves were to endorse the Coalition’s model insurance fraud law and auto-fraud model. Howard retires at the end of 2017. He has attended every NCOIL meeting since 1993. His large shoes will be filled by well-known insurance attorney Matthew Smith.
* Wisconsin lost millions in Medicaid settlement money when the state’s whistleblower law was quietly repealed, a news watchdog says. Wisconsin would’ve qualified for an estimated $11 million in added settlement money from Medicaid fraudsters if the state had left its False Claims Act in place, alleges the Wisconsin Center for Investigative Journalism. Whistleblowers received up to 30 percent of state Medicaid fraud penalties. The national average is about 16 percent. Business groups pushed Gov. Scott Walker and the legislature to get rid of Wisconsin’s law, the watchdog says. Wisconsin is the only state to repeal its False Claims Act, the group claims.
* Penalizing scammers who market and install counterfeit airbags will be debated by a Massachusetts legislative committee next week. The Coalition has joined with Honda America to support passage. The bill would protect consumers from phony and unsafe airbags installed during repairs. Motorists’ lives are jeopardized by cheap knockoffs that don’t deploy properly in crashes. Dishonest body shops also charge insurers full freight for manufacturer originals — $1,000 or more. The useless knockoffs actually installed cost only a few dollars from Internet suppliers. Some 15 states have enacted similar airbag laws in the past several years. The Coalition is pushing for Massachusetts to join the club this year.
* Dodgy compound creams and federal probes of the severe impact of insurance fraud will be the main anti-fraud line items at NCOIL’s annual meeting in Phoenix next week. The Coalition will speak for the anti-fraud community to state lawmakers. Howard Goldblatt will report on a U.S. Senate subcommittee hearing on insurance fraud, held last August. Matthew Smith will join NCOIL’s planned dialogue on the spreading abuse of overpriced and often useless compound creams in workers comp. The Coalition also plans to meet with Florida legislators to discuss abusive contractor takeovers of home damage claims — also called assignment of benefits. We’ll also meet with New York legislators. We’re helping develop a strategy for passing a bill clamping down on sleazy roofers in 2018.
* Down in flames went a Michigan reform bill that would’ve created an auto-fraud authority to help stanch widespread crash cons and other auto swindles. The umbrella measure was a large reform of Michigan’s cost-ridden no-fault system. It would’ve rolled back auto premiums … set stricter fee schedules that providers could charge … allow consumers to choose lower-cost insurance … and let seniors opt to use Medicare instead of auto insurance to pay for injury treatments. The anti-fraud agency was embedded as a provision. The Coalition helped draft the original wording creating an authority several years ago. The bill lost 45-63 in the Republican-led House last night. That appears to finish off the anti-fraud agency’s prospects this year. We expect a reform reboot in 2018.
* Virginia is for lovers, and fraud fighters too … State fraud-bureau directors from across the U.S. gathered this week in Charlottesville for their annual conference. They discussed wide-ranging fraud trends and issues. Strategies for halting scams by shady contractors were reviewed. Widespread contractor abuse of “assignment of benefits” in Florida was a special topic. The Coalition and other leaders also reviewed 2018 statehouse issues. Among the states … Michigan: Creating a new state anti-fraud auto authority. Ohio: Consumer protections against abusive contractors, such as contract cancellation provisions. Florida: Limit contractor takeover of homeowner insurance claims after disasters (assignment of benefits).
* Kentucky may move next year to close a loophole that unfairly stifles insurers in civil court, and to impose stiffer penalties on fraudsters. This would greatly strengthen medical and similar recovery actions. Current law allows fraud victims such as insurers to sue fraudsters only after they’re criminally convicted. Insurers thus could wait for a lengthy time while the criminal case winds through the system before they can sue. In effect, that means a potential civil litigant is unfairly held captive by the criminal burden of proof — “beyond a reasonable doubt.” It’s much higher than the civil standard of “preponderance of evidence.” The bill would let insurers go more swiftly to civil court to recover against fraudsters. It also would impose longer jail terms and steeper fines for criminal fraud convictions.
* Legislation clamping down on fraud and abuse in expensive compound creams is moving through the Pennsylvania legislature. A state House bill would curb abuse of questionable compound cream prescriptions often used for auto personal-injury and workers-comp claims (see FNW, Oct. 27). The Senate wasted no time, however, in passing SB 936. It would create a prescription drug formulary and certification of Utilization Review Organizations as part of the state’s workers-compensation insurance law. Showing legislators can move quickly on fraud legislation … the bill was introduced, came out of committee and passed overwhelmingly on the floor. This all happened in a single week — despite numerous attempts at amendments. The House next takes up legislation, with expected passage soon.