Fla. Outpaces Nation in Fraud Convictions

December 19, 2003

Florida once again leads the nation in the number of insurance fraud convictions and cases presented for prosecution, according to a study released this week (see National news) by the Coalition Against Insurance Fraud, a national alliance of consumer organizations, insurance companies and government agencies working to combat insurance fraud.

Chief Financial Officer Tom Gallagher noted the study showed the Department of Financial Services, Division of Insurance Fraud, has outpaced other state fraud bureaus – including posting the largest gain in the number of insurance fraud convictions – while working with a staff and budget two-thirds smaller than other key states.

“Our investigators work long hours on complex cases that often involve multiple organizations and even multiple states and countries,” Gallagher said. “This report is evidence that the dedication of these investigators, other law enforcement agencies and state prosecutors is making a real difference in the battle against insurance fraud.”

It is estimated that insurance fraud costs the average Florida family as much as $1,400 a year in increased premiums and higher costs for goods and services. Gallagher said insurance fraud schemes not only are getting costlier and more complex, but also more dangerous.

This year the Legislature passed the Pete Orr Insurance Anti-Fraud Act, named after a former central Florida NASCAR-circuit driver who died of cancer last year while his health care claims were denied by his insurer, TRG Marketing Group. TRG was never reportedly licensed to transact insurance in Florida or any other state. Sen. Bill Posey, R-Rockledge, sponsored the legislation to significantly increase penalties for transacting unauthorized insurance in Florida. The two principals of TRG now face up to 60 years in prison if convicted on the charges.

“Florida continues to lead the nation, as it has for several years, in the number of cases (771) referred for prosecution in 2002,” the Coalition report stated. California presented the second highest number with 687.

“The fraud bureau in the Florida insurance department continues to lead the nation with 458 convictions in 2002,” the report also noted. New York was second with 389 convictions. The average number of convictions among the 43 reporting states was 74.

Florida’s division, with an $11.2 million budget, follows California’s $34 million and New Jersey’s $29.9 million. The fourth-largest budget was reported by Pennsylvania at $9.5 million. Florida spends 65 cents per capita on insurance fraud investigations, according to the Coalition’s calculations, but more than that was ordered returned to the department or victims through court-ordered restitution of $11.6 million.

The study also showed Florida’s insurance fraud division works with far fewer employees than other states. New Jersey reported 302 employees, California 284 and Florida 168.

A South Florida insurance fraud investigator was recognized Tuesday at the state’s Cabinet meeting as one of the state’s top 14 law enforcement officers. Investigator Violeta Serrano, one of 90 sworn officers with the Division of Insurance Fraud, posted 97 insurance fraud arrests in the last fiscal year.

The department has captured national attention with a campaign launched two years ago urging consumers to “Verify Before You Buy.” Using radio and television advertising, billboards, hundreds of articles, columns and news reports, Gallagher has worked to educate Floridians on the importance of being sure of what they are buying and from whom they are buying it.

“We will continue to arrest and prosecute those who prey on our citizens,” Gallagher added. “We are equally committed to giving consumers the tools they need to make good financial decisions.”

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