At a news conference at the Minnesota Capitol this week, the National Insurance Crime Bureau (NICB) expressed its strong support for the efforts of the Senate Commerce Committee’s Working Group on Insurance Fraud. The Group has spent the last nine months taking testimony about insurance fraud’s impact on the state and is introducing a legislative package to combat the problem.
The reform efforts are an outgrowth of the 2012 Insurance Fraud Summit sponsored by the NICB and the Insurance Federation of Minnesota which highlighted the increases in no-fault auto insurance fraud and other insurance fraud schemes in the state over the past few years.
“Minnesota’s no-fault system was founded with the best of intentions but it has been hijacked by individuals who’ve managed to exploit no-fault’s weaknesses to feed their greed—and every insurance customer is paying for it through higher premiums,” said Tim Lynch, NICB government affairs director.
NICB has seen significant increases in questionable no-fault activity as organized criminal rings migrate from Florida and New York to other states like Minnesota that have no-fault laws in place. Tougher laws and increased scrutiny on these rings, particularly in Florida, have caused them to move elsewhere to continue their efforts to take advantage of no-fault loopholes.
Last October, a federal lawsuit was filed in Minnesota against a diagnostic imaging company and 46 chiropractors accusing them of engaging in a kickback scheme to defraud the no-fault system to the tune of nearly $2 million.
“I really see a lot of shift in our criminal activity where you’ve got people who may have been involved in dealing drugs who are now engaged in financial fraud schemes and we see insurance fraud being a part of that,” said Ramsey County Attorney John Choi. “No one should ever be left with the impression that these are victimless crimes. This affects everybody.”
“We don’t want Minnesota to be a magnet state for people who want to commit crime to come here,” said State Sen. Paul Gazelka (R) District 9. “What we’ve found is that there are not many states that are like Minnesota as far as not holding people more accountable than they should.”
“We should send a strong message to folks that come here from out of state and even other countries to defraud Minnesota consumers,” said Mark Kulda of the Insurance Federation of Minnesota. “That message is ‘go home, because you’re stealing our money’ and we need to stop that.”
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