Fla. Announces New Strategy for Fighting Auto Fraud

Continuing efforts to put an end to reported spiraling auto insurance premiums by combating fraud, Florida’s Chief Financial Officer Tom Gallagher recently joined Miami-Dade State Attorney Katherine Fernandez-Rundle in announcing that a prosecutor will soon be hired to specifically prosecute auto insurance fraud cases. The prosecutor will be hired within 90 days and will be based in Miami, where more than 510 arrests have been made since 1999.

“We have vigorously pursued stiffer penalties for scam artists who stage automobile crashes and set up bogus clinics. We now have meaningful laws on the books that require prison time for offenders. Prosecution of these cases is critical,” said Gallagher, who oversees the Division of Insurance Fraud within the Department of Financial Services. “A full-time prosecutor dedicated to getting at the root of the problem will ensure that scam artists are put behind bars and help put an end to escalating auto insurance rates.”

The Florida Automobile Joint Underwriting Association (FAJUA), the insurer of last resort for consumers who can’t get auto insurance coverage through the private market, is partnering with the department’s Fraud Division and the Miami-Dade State Attorney’s Office to develop a special prosecutor’s position to handle automobile fraud cases in Florida. Gallagher brought the idea to the FAJUA board after learning that the policyholder costs reportedly had nearly doubled in the last year.

“This is a unique and creative public-private partnership idea that will help the FAJUA and help fight insurance fraud in Florida,” said Eli Feinberg, chair of the FAJUA Board of Governors. “PIP fraud costs Floridians millions each year and we are convinced that creating a role for a full-time prosecutor will have a direct and positive impact.”

“Insurance fraud lets criminals put their hands into the pockets of every Floridian” said Rundle. “These criminals are quick to exploit the smallest loopholes in Florida’s laws, so prosecutors and law enforcement must be able to move swiftly in developing battle strategies and tactics to fight these crooks. Creative public-private partnerships, stiffer criminal penalties and tough prosecutions will make a difference that will send more of these scammers to prison where they belong.”

It is estimated that $1.1 billion in fraudulent auto insurance claims are filed annually in Florida, with an alarming number of cases attributable to personal injury protection (PIP) fraud. Florida law requires motorists to carry a minimum of $10,000 in PIP coverage and $10,000 in property damage liability coverage. PIP coverage provides $10,000 per accident for medical bills, regardless of who is at fault.
PIP benefits have become the target of fraud schemes by unscrupulous lawyers, doctors, chiropractors and clinic owners who bill insurance companies up to $10,000 for medical services that are unnecessary or never rendered. This type of fraud traditionally surfaces in the form of illegal solicitation of accident victims and patient brokering. In many cases, the automobile crash is reportedly staged.

Two years ago, the Legislature passed reforms to put a stop to rising auto insurance fraud.

The legislation established a fee schedule for certain diagnostic tests, including MRIs, and gave insurance companies more time to investigate suspicious claims. It also restricted the release of police accident reports, which were frequently the primary source for illegal solicitation of accident victims.

During the 2003 session, legislation passed requiring a minimum mandatory two-year prison sentence for those convicted of organizing or participating in staged auto collisions.

The legislation also increased penalties for solicitation with “intent to defraud” to a second-degree felony and made it a felony to create, market or present a false or fraudulent insurance card. These new laws went into effect last week.