Anti-Fraud Legislation Kicks Up in 3 States

By Denise Johnson | March 9, 2015

Tim Lynch, government affairs director, for the National Insurance Crime Bureau, recently spoke to Claims Journal to discuss anti-fraud legislation in 2015.

Although all is quiet on the federal level, there is significant activity among three key states.

Minnesota has been very active, said Lynch, as legislators focus on three key areas: putting a 30 day hold on accident reports except for those directly involved, imposing a civil penalty on fraud rings, and imposing a deauthorization provision – similar to New York’s – for medical providers found guilty of bilking the no fault system via excessive billing fraud.

This is the second year of aggressive legislative efforts in the state to attack the fraud problems there, he said.

One reason for the push on additional anti-fraud measures, is that the state suffers from a very steep rise in reverse migration of fraud.

“Meaning as states such as New York, Florida and others have put into place strong anti-fraud legislation, these organized criminal rings are pretty smart. They look for states with particular loopholes to where it’s a less aggressive fraud environment. They have seized on Minnesota, said Lynch.

There has also been a steep rise in organized crime in Minnesota.

“It’s starting to impact innocent Minnesotans in terms of schemes that are victimizing elderly populations, immigrant populations,” Lynch said.

Kentucky, too, is working on legislation, House Bill 153, to place a modest 30 day hold on the availability of accident reports. The hold would not apply to those involved in the accident or to their insurers.

“If insurance fraud was considered a set of dominoes that fall, often times the accident report is the first domino,” said Lynch.

Texas, according to Lynch, is focusing on three main issues:

  • Adding additional resources for the Texas Anti-Fraud Unit.
  • Cracking down on shady contractors that scam homeowners after storm losses.
  • Cargo theft – the state is ranked number one in the nation.

Illinois, Iowa, Georgia, Virginia have passed roofing contractor oversight legislation and Texas is considering similar legislation, Lynch said.

Illegally seized cargo, like baby formula and pharmaceutical equipment, are sold on the black market, he said.

“Some states including Georgia, Kentucky and others over the past couple of years have passed legislation to make sure that cargo theft is specified as a crime and has strong penalties on the books to put the people that commit those crimes…well if not behind bars, at least prosecuted. Texas is considering cargo theft legislation this year,” Lynch said.

One state without any infrastructure to fight fraud is Michigan, said Lynch, who noted the state ranks high among all states with severe issues relative to medical fraud abuses.

NICB is working with state trade groups to pursue legislation in Michigan to create a fraud authority.

“The bottom line is Michigan lacks any anti-fraud infrastructure to effectively investigate and effectively prosecute [fraud]”, said Lynch.

The NICB will hold an insurance fraud summit in Greenville, South Carolina this fall. The goal, Lynch said, is to improve the insurance fraud environment, ensure there is an anti-fraud agenda that can be enacted and executed, as well increase public awareness of insurance fraud within the state.

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