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
• Acknowledgment 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.

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.

If you have any questions or would like to discuss this issue in greater detail, please feel free to contact Dennis LaRosa at dlarosa@roiglawyers.com or (850) 264-6389.

ROIG Lawyers is a minority-owned litigation firm with a primary focus on Insurance Defense Litigation. We serve as primary counsel for numerous national and regional carriers and corporations related to all aspects of insurance litigation from 7 offices throughout the state of Florida. ROIG Lawyers does not intend to create an attorney-client relationship by offering this information, and anyone's review of the information shall not be deemed to create such a relationship. E-mail list/s from ROIG Lawyers are intended to provide information of general interest to the public and are not intended to offer legal advice about specific situations or problems. You should consult a lawyer with regard to specific legal issues that require attention.