Legislative News


* The South Carolina legislature is moving forward with an effort to double the state’s anti-fraud funding. SB 269 has cleared 1 hurdle, with more coming before the session closes at the end of May. The bills (HB 3410 is the House companion) would set a minimum appropriation of $400,000 — double the current minimum. There’s also a $500,000 maximum, though with limited discretion to exceed the max. Current law imposes a strict $500,000 cap.

* Shady contractors are in the sights of the Kentucky legislature. SB 128 would restrict contractors from offering gifts, rebates or referral fees in excess of $100 to induce property owners to sign repair contracts. Damaging a roof to land the repair job also would be illegal. Property owners also could sue contractors for damage, and receive twice the value of the actual loss plus attorney fees. The bill unanimously passed the Senate and is under review by the House. The bill came out of an advisory committee created by fraud fighters in the state after the 2016 session. The Coalition is a member of the committee.

* Public adjusters would be boxed out of illicitly taking over claims and settling them under a bill being considered in Maryland. HB 136 would flat-out prohibit public adjusters from being involved in settling the insured’s claims, or settling claims among insurers. Adjuster commissions also would be limited if the insurer pays, or commits to pay, a claim within 72 hours after the loss.

* Requirements for insurers to submit fraud plans to Florida regulators would be expanded under 2 bills a legislator has introduced. SB 1012 requires insurers to have an anti-fraud plan or contract for investigative services. Insurers also must notify the state fraud bureau of their key anti-fraud contact person. Detailed reporting to the state also is spelled out in the bill. SB 1014 says fraud plans filed with the state aren’t open to the public under the state’s strict open-records law. Both bills were crafted by the Division of Investigative & Forensic Services. Insurers plan to offer clarifying changes, Coalition sources say. The 60-day session opens March 7.


* A bill unfairly limiting insurer use of insurer EUOs in Washington state has tanked amid strong opposition from the Coalition, state insurance department and other allies. It’s a major victory. The ill-advised measure sought narrow time limits for conducting EUOs. A 3-year statute of limitations would’ve started ticking when the fraud crime happens, instead of when it’s discovered. Organized rings could operate more freely, since breaking them down can take several years. Companion House and Senate bills quietly died in committee this week. “The bill’s unintended consequence would restrict insurers from adequately reviewing and investigating suspected fraud...” the Coalition told Senate committee leadership. “It is more than likely that most fraud would not be identified under the strict time limits in the bill.”

* Contractors who take over home-repair claims and abuse homeowners with inflated insurance bills will face a push for reforms in the Florida legislature. The statehouse opens March 7. So-called assignment of benefits is a contentious and prominent legislative line item. Contractors convince homeowners to legally assign repair claims to them. The contractors pump up bills, often suing insurers behind the homeowners back. Insurers are raising homeowner premiums around the state in response to the large losses. Many residents will have trouble affording premiums or getting mortgages if abuse keeps raising rates. Many consumer advocates, insurers and insurance regulators are lining up behind reforms. Contractors and the trial bar are among the lobbies expected dig in against reforms. Expect a hotly contested reform bill this session.

* Bills are off to a brisk start with three measures readying for debate in New York. ...

  • AB 2288 targets drivers who use out-of-state addresses to register and insure autos garaged and driven in New York. Scammers are trying to illicitly lower their auto premiums. The bill makes it an insurance fraud to avoid paying New York insurance. The bill got stuck in Albany last year because key legislative staff opposed adding new criminal penalties that could add to the jail population. The bill is likely a non-starter this year as well. 
  • AB 2551 would let the insurance superintendent pay rewards to tipsters who report suspected insurance scams to the state fraud bureau. Several other states successfully use rewards to attract tips that lead to convictions. However useful, reward bills have gone nowhere in New York. Convicting and jailing criminals — even crash-ring leaders — takes second fiddle to avoiding packing the state’s jails. Action for 2017 thus is uncertain.

    2/10/2017 * Funding of 2 new fraud prosecutors in Virginia took decisive steps forward. The state House and Senate each passed bills authorizing the Virginia State Police to spend the needed funds from the state agency’s insurance-fraud budget. Dedicated prosecutors would impose more focus and resources on insurance crime. Prosecutors now must divide time among a wide range of crimes. “Dedicated prosecutors will help in efforts to reduce the amount of fraud in the Commonwealth,” the Coalition and NICB wrote in a joint letter to the chairs of the budget committees in each state chamber. “It already has been in use in a number of states successfully, such as New Jersey and Texas, to name a couple. We believe Virginia is ripe to follow what has been successful in these and other states.” The Coalition and NICB are members of the state police’s insurance-fraud advisory board. The $400,000 can be spent after July 1. The governor is expected to sign once the chambers iron out minor differences in their umbrella state budget bills.

    * The Washington state Senate has taken up a bill to limit insurer use of examinations under oath (EUO). The House is debating a similar measure. At a hearing yesterday, legislators were told SB5521 is unneeded and could hinder anti-fraud efforts in the state. Like the House bill, the measure sets a tight timeline for when insurers could compel claimants to testify. It also would prohibit use of EUOs involving underinsured motorist coverage. The Coalition questions the bill’s purpose. No evidence has been offered that insurers abuse EUOs or invoke them too often. The bill was initiated by trial lawyers in the state.

    * Will Michigan finally get a fraud bureau to chase after crash rings? Will New York lawmakers stop squabbling and criminalize being a recruiter for crash rings? Will a healthcare partnership that’s saving millions of dollars continued to be fully funded? Check out the latest online quarterly FraudWire for news and analysis of legislation and regulation around the U.S.

    * Workers-comp penalties are included in a bill that’s part of larger comp reform package in Illinois. False injury claims stealing more than $100,000 of comp benefits would be a Class 1 felony. Providing a false insurance certificate as proof of comp coverage would be a Class 3 felony. Providing false info to prevent a worker from claiming comp benefits would be a Class 4 felony. The low end of the penalty range would be a Class A misdemeanor for stealing $500 or less. The measure is linked to the larger passage. It will be enacted only if the other bills are enacted, news reports say.

    2/3/2017 * The statute of limitations would be extended so Arkansas can better target complex fraud rings. Fraud prosecutions would have to start within 5 years of a scam being committed — with an extra 3 years allowed if fraud fighters couldn’t realistically discover the scam during the 5-year limit. Taking down staged-crash rings and other complex rings can require years to gather enough evidence to prosecute.

    * Insurance prosecutions would move to the Kansas AG’s office. The bill would centralize prosecutions of insurance and securities cons under a single umbrella. Insurance investigations would stay with the fraud bureau in the insurance department.

    * Contractors who bilk homeowners after storms will feel the heat when a bill takes off in New York as expected. It would penalize contractors who a) offer deductible rebates, gift cards or other perks to lure consumers into signing contracts; or b) take over the homeowner’s claim — in effect acting as unlicensed public adjusters. Consumers also would have a 3-day grace period to cancel contracts after signing. An alliance of fraud-fighting groups — with the Coalition as a founding member — is marshaling the lobbying effort. The revised bill reboots last year’s promising effort, which ran out of time after the contractor lobby sought changes. Those changes are being negotiated, giving the bill a better chance of enactment. Introduction is expected later this winter.

    * “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,” the Coalition’s Howard Goldblatt blogs about an ill-conceived bill in Washington state that would seriously limit insurer use of examinations under oath.

    * New state leaders, new administration in D.C. How will it all affect fraud legislation? “The late David Bowie sang about “ch-ch-ch-ch-changes in his memorable rock song. This theme speaks to anti-fraud legislation in 2017,” the Coalition says in the latest review and preview of anti-fraud legislation in the online quarterly FraudWire. “... Anti-fraud bills already are docketed for debate. All amid the many ch-ch-ch-ch-changes in leadership this election year.”

    * The insurance department will have jurisdiction over auto theft if a bill in New Mexico becomes law. A New Mexico county ranks high among the nation’s worst jurisdictions for auto thefts, the head of state enforcement division director told the Coalition. That was the impetus bgoogeehind the measure.

    1/27/2017 * Insurer use of EUOs would be unfairly limited under an ill-conceived bill in the Washington state House, the Coalition told a key committee on Wednesday. The bill would set tight time limits for insurers to conduct EUOs. “This would set up a system where insurers would be forced to pay suspected claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote in a letter. Organized rings could operate more freely, given the lengthy timelines for breaking them down. The insurance department and other members of the anti-fraud community vocally oppose the bill.

    * The Virginia State Police needs to fund a dedicated fraud prosecutor, the Coalition and NICB said in a joint letter to Virginia legislators. The groups want to free up the funds. The money exists, and needs official approval for use via a budget amendment. A dedicated prosecutor would impose more focus and resources on fraudsters. Prosecutors now divide time among a wide range of crimes. The Coalition and NICB are members of the state police’s insurance-fraud advisory board.
    * Insurers in Mississippi would gain immunity for sharing case info during fraud investigations under a bill in the state House. Mississippi wants insurers to report suspected fraud to the state fraud unit, yet doesn’t give them immunity from libel suits. The bill would let insurers freely share info with the state AG, insurance department or NICB. A second bill would let insurers trade info among themselves. The legislature is in session only through early April, which makes enactment uncertain. Immunity bills have fizzled in recent years.

    * The NAIC has appointed the Coalition’s Howard Goldblatt as an unfunded consumer liaison rep for 2017. The reps advise the NAIC on consumer-related insurance issues. Goldblatt is the only consumer rep that brings the insurance fraud issue to the table. He has been the fraud advisor for several years. Goldblatt also advises the NAIC’s Antifraud Task Force.