Category Archives: Florida Division of Insurance Fraud

Florida Insurance Rates Rise Thanks to Windshield-Replacement Schemes

According to Insurance Business America, your auto insurance premiums are going up, all because of ongoing windshield-replacement schemes.  As reported by Ryan Smith of Insurance Business America, these windshield schemes involve drivers with cracked windshields signing over insurance benefits to windshield repair and replacement shops.  These shops, through an “assignment of benefits”, will then submit an inflated invoice for the work allegedly rendered.

The Tampa Bay area has become the hub of the fraud and abuse involving these schemes.  More often then not, the fraudulent schemes are no fault of the insureds.   Florida law states that a deductible cannot be applied to windshield replacement and repair services.  This allows these shops to advertise that the work being done is “free” to the insureds.  The result of these “free” services has led to over 1900 windshield-claim lawsuits in Florida in 2016 alone; increasing litigation costs and ultimately hitting everyone’s pocket.

Click here for full article.

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Filed under auto insurance, Auto Insurance Fraud, Florida, Florida Division of Insurance Fraud, Insurance, Insurance Defense, Insurance Fraud, Windshield, Windshield Damage Scam

New Amendments Affecting Anti-Fraud Investigative Units

The Legislature has passed some amendments that are likely to affect your SIUs. We have reviewed the new law and would like to provide you with a summary of some of the most important points.

Chapter 2017-178, Laws of Florida, primarily amended § 626.9891, Florida Statutes and went into effect June 26, 2017, when the Governor signed the bill. These amendments deal with insurer “anti-fraud investigative units.” There is very little, if anything, that must be done now other than learn the law and know what your responsibilities and timelines are.

Although you have an SIU to cover the main features of the law, some new reporting requirements and designation of an anti-fraud unit with at least 2 hours of initial anti-fraud education and 1 hour per year after that, will require all insurers “to investigate and report possible fraudulent insurance acts” to Florida government. The amendments to § 626.9891 [insurer anti-fraud investigative units; penalties for noncompliance], Florida Statutes, provide the who, what, how, when and where.

SUMMARY

*There is no legislative staff analysis of this law

By December 18, 2018, DIFS shall create best practices for the detection, investigation, prevention, and reporting of insurance fraud and other fraudulent insurance acts. The report must be updated as necessary but at least every 2 years. The report must contain specified criteria set forth in the section.

The Department of Financial Services is authorized to create rules for the administration this section. This is neither the Office of Insurance Regulation nor the Financial Services Commission (Governor and selected cabinet).

While there are compliance dates for insurers and agencies, the bill became effective upon becoming a law on June 26, 2017. By December 31, 2017, each insurer must:

  • If not in-house, contract with others to provide anti-fraud services
  • Adopt anti-fraud plan (discussed below)
  • Designate at least one employee to provide these services
  • Electronically submit reports of anti-fraud plan with the name and contact information of designated person to DIFS
  • The additional cost to the insurer for compliance may be added as an administrative expense in rate requests

Each anti-fraud plan shall include:

  • Procedures for mandatory reporting of insurance fraud
  • Acknowledgement that the insurer provides education and training required by section
  • Description of anti-fraud education and training
  • Description or flow chart of anti-fraud unit
  • Rationale and justification for level of staffing and resources used by anti-fraud unit based upon specified criteria

By December 31, 2018, each insurer shall provide staff of the anti-fraud investigative unit at least 2 hours of initial anti-fraud training that is designed to assist in identifying and evaluating instances of suspected fraudulent insurance acts in underwriting or claims activities.

Annually, after the initial training, an insurer must provide such employees a 1-hour course that addresses detection, referral, investigation, and reporting of possible fraudulent insurance acts for the types of insurance lines written by the insurer.

The insurer shall report to DIFS specified information by December 19, 2019, and annually thereafter for each line carried:

  • Number of policies in effect
  • Amount of premiums written
  • Number of claims received
  • Number of claims referred to anti-fraud unit
  • Number of fraud related matters referred to anti-fraud unit that were not claim related
  • Number of cases referred to DIFS
  • Number of case referred to other LE agencies
  • Number of cases referred to other agencies
  • Estimated dollar exposure submitted to DIFS or other agencies

In addition to reporting for all lines, workers compensation lines shall also report by December 19, 2019, the following information:

*This is a decrease in the amount of information currently required for workers compensation fraud before the amendment

  • Estimated dollar amount lost due to workers comp fraud]
  • Estimated dollar amount recovered attributed to workers comp fraud for several designated criteria
  • Number of workers comp fraud cases referred to DIFS for several designated criteria

Creating § 626.9896 Dedicated insurance fraud prosecutors:

  • DFS shall collect specified data from each state attorney who has designated attorneys and paralegals exclusively for the prosecution of insurance fraud.  [criteria omitted]
  • DIFS shall report the data to the house and senate leaders by September 1, 2018, and annually after that.

Other provisions not discussed; viatical contracts; HMO anti-fraud unit requirements; stranger-originated insurance policies are now statutorily considered void and unenforceable; an insurer may opt out of preinsurance inspection of private motor vehicles.  Preinsurance inspection reports of DIFS are eliminated.

 

These are the highlights of the bill as it applies to automobile insurance.  It does affect other lines as mentioned and we would be happy to explain the law in greater detail should you request it. If you have any questions, suggestions or reservations, please do not hesitate to contact us so that we may assist you in not only understanding the new law but how it ought to be implemented and when.

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Filed under FL Legislation, Florida, Florida Division of Insurance Fraud, Insurance, Insurance Claims, Insurance Defense, Insurance Fraud

GEICO Files RICO Suit Alleging Windshield Repair Fraud

A federal lawsuit filed by GEICO on June 9 provides an inside look at an elaborate windshield repair fraud scheme.

The suit, filed in the Middle District of Florida, makes claims of fraud, unjust enrichment and RICO (Racketeer Influenced and Corrupt Organizations Act) violations against at least two companies and their owners.

The complaint explained the scheme as follows:

A company called Cornerstone Mobile paid kickbacks to car dealerships and car wash companies to work off their properties. Cornerstone would offer to fix even the slightest damage to windshields for free. It would obtain the car owner’s insurance information and, more importantly, the owner’s signature to transfer assignment of benefits. Sometimes, GEICO alleges, the Cornerstone owners would steal insurance information from glove boxes of cars and forge the owners’ signature.

Eventually, Cornerstone Network was incorporated. The two entities had separate tax identification numbers but operated in an identical manner. GEICO says the two companies were used in hopes of reducing the number of fraudulent claims from Cornerstone Network alone, and thus avoid detection. Both companies claimed to do windshield repairs, but neither had a physical address—one was just a post office box in Tavernier.

Once Cornerstone got insurance information from automobile owners, the employees used a liquid formula from a window repair kit to coat over cracks and chips. Afterward, Cornerstone charged GEICO and other insurers for a full windshield replacement. The complaint alleges that Cornerstone would wait two to four weeks to file for reimbursement. Florida law allows insurers 30 days to make windshield replacement reimbursements, meaning GEICO was rushed to pay the claims on time and didn’t have a chance to investigate them.

GEICO presented exhibits showing more than 600 fraudulent windshield claims from each Cornerstone company, costing GEICO in excess of $223,000.

The case is Government Employees Insurance Company, et al. v. Jason Fry, et. al.

Click here for full story.

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Filed under Auto Insurance Fraud, Florida, Florida Division of Insurance Fraud, Insurance, Insurance Fraud, Middle District of Florida, Windshield Damage Scam

Five South Floridians Enter Pleas in Insurance Fraud Case

Five defendants arrested on insurance fraud charges as part of the Division of Insurance Fraud’s Operation Cold Call have been sentenced after entering guilty pleas, according to The PIP Source, a newsletter of the Florida Division of Insurance Fraud.

The crimes – which were prosecuted by the 15th Judicial Circuit (Palm Beach County) and the 19th Judicial Circuit (Martin, St. Lucie, Indian River and Okeechobee counties) – took place in 2014 and 2015. A yearlong undercover investigation turned up illegal activity at two healthcare clinics: Accident Recovery Centers and Active Recovery Centers. Patients were illegally recruited and bills were sent for services that were never rendered.

Here are the five pleas and their punishment:

  • Runner Douglas Anthony Santiago was sentenced to three years probation for patient brokering.
  • Runner Alejandro Jose Marin was sentenced to two years probation for patient solicitation and patient brokering.
  • Attorney Brian Greenspoon was sentenced to 18 months probation for patient solicitation.
  • Chiropractor Roger Toby Hughes Bell was convicted of patient brokering and surrendered his license.
  • Attorney Cory Meltzer was convicted of patient solicitation and agreed to disbarment.

Two chiropractors are scheduled for trial later this year, while the final defendant is negotiating a plea.

 

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Filed under Florida Division of Insurance Fraud

Man Charged With Staging Traffic Accidents for Insurance Money

The Florida Division of Insurance Fraud arrested a man in Orlando who was charged with orchestrating automobile accidents for the purpose of defrauding insurance companies.

Alma Germain was accused of buying used junk cars to intentionally cause wrecks. Channel 9 in Orlando said one car was in such bad shape, Germain had to stop several times to add water to the radiator on the way to a staged crash.

Germain was charged with using cash to recruit people to get into crashes with him, then telling them to seek treatment at a local healthcare clinic. The clinic would then bill the insurance company.

In one particular case, Germain had three people in the car with him during a crash. He ran from the wreck site but told the three passengers to go to Family Practice and Rehab in Orlando for treatment. Family Practice billed the insurance company for nearly $25,000.

Click here for full story.

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Filed under Florida, Florida Division of Insurance Fraud, Insurance Fraud, Personal Injury Protection, PIP/No Fault