Most state legislatures have shut down for the year. In many cases, lawmakers are returning to their “regular” homes and jobs until their statehouses reopen next winter. Adjusters who want to have an impact on fraud by pushing for laws with teeth now have several months to design initiatives for 2010.
This is the critical time to plan for success. Legislation is the backbone of fraud fighting. Prosecutors are more likely to take on fraud cases when they have strong laws by which to convict miscreants, and tough sentences serve as effective deterrents—the big win for insurers.
Equally important, legislative activism can elevate the visibility and public image of adjusters as professionals who are fighting for the greater good of society. Involvement also creates a platform for educating the public, legislators and your clients about what you do and how your work benefits consumers.
Most state legislatures are trying to balance their shaky state budgets. This overrides the importance of most bills of any kind because legislators have only so much time for non-budget issues. Thus, fewer fraud bills than normal have been passed this year, so adjusters should have a solid action plan ready when statehouse doors start opening next winter. There will be no time for ad-libbing.
Some Issues at Hand
While each state has its own set of hot-button insurance issues for the legislature to contend with, a few are getting broad-based attention and can aid adjusters and investigators nationwide.
Maryland made being an unlicensed public adjuster an act of insurance fraud, but those who hold licenses in other fields also can act as schemers when they ply their trade in unscrupulous manners. Such “ambulance chasers” are on the verge of being restricted from accessing automobile accident reports in Texas through a law passed at the end of the 2009 legislative session this spring. By containing the dissemination of auto accident information, the state hopes to prevent lawyers, chiropractors and other medical professionals from recruiting often-unsuspecting accident victims into schemes to make fake injury claims against auto insurers. The bill awaited the governor’s signature at press time.
Another approach that could add potency to the anti-fraud arsenal is to require drivers to sign affidavits of loss for claims of car theft. The goal is to make would-be insurance schemers think twice before lying that someone stole their vehicle. Currently, claimants in many jurisdictions are not required to sign, under penalty of perjury and associated criminal prosecutions, that the information they are providing on a claimed auto theft is true. Arizona, Louisiana, Massachusetts and some agencies in Florida and Michigan have required affidavits, and Miami-Dade has reported a 6.5% drop in auto theft rates since implementing the requirement.
On the health front, prescription-monitoring programs can aid in identifying claims fraud. These can vary in detail, but, at their most basic, they cut down on prescription abuse and resale by using a statewide database to cross-match pharmacies, doctors and consumers on numbers and types of prescriptions. HIPAA has a law enforcement carve-out, so there shouldn’t be a problem with federal privacy infractions.
How to Lobby
Claims advisors can make a difference in passing fraud legislation. Your credibility as an insurance claims professional can translate into a lobbying strength. A complete political planning guide would fill several encyclopedias, but here are 11 steps to success:
- Form a leadership group. Create a planning council. These are the committed, politically astute adjusters who will form your legislative leadership. Keep it reasonably lean to allow swift decision-making.
- Identify gaps in fraud laws. Determine the gaps in your state’s fraud laws. Does a fraud law need overhauling or just tweaking? Is an entirely new law needed? Have you seen a problem with owner give-ups, auto rate evasion, workers’ comp premium fraud or another scheme?
- Draft your bill. Have your proposed bill, or at least detailed talking points, in place before approaching potential bill sponsors. Groups such as the Coalition Against Insurance Fraud can assist with drafting.
- Research the issue. What evidence supports the need for your bill? How many people might be victimized by targeted schemes—especially in the sponsor’s district? How will they be harmed? Any loss figures? Also, gather compelling, real-life cases.
- Enlist bill sponsors. Do your homework. Make sure possible sponsors have clout and commitment. Do they have a history of support for fraud or other crime bills? Do they have the ear of key committees? Are they on key committees? Also see if anyone on your planning council knows potential sponsors through past personal or legislative dealings.
- Learn the legislative leaders. Know the doorways into the legislature. What committees decide which fraud bills reach the statehouse floor? You’ll probably also need companion bills in two chambers, such as a senate and assembly.
- Tap local insurance groups. Seek to involve insurer state/regional government affairs offices and insurer associations (e.g., American Insurance Association), insurance federations or councils, and agent/broker associations. They should know the political climate well.
- Enlist other allies. The more groups that throw their weight behind your bill, the more likely that legislators will listen. Consider seeking the buy-in of your state insurance department, fraud bureau, attorney general’s office and local prosecutors.
- Tap national experts. National groups can provide valuable support throughout your campaign. Reach out to experienced groups such as the Coalition Against Insurance Fraud, the National Insurance Crime Bureau and the National Association of Insurance Commissioners for advice and practical tools.
- Promote your bill. Send news releases and backgrounders to reporters, and consider a news conference. Line up compelling data and memorable examples. But note: Some bill sponsors prefer to maneuver quietly behind the scenes. Work this out in advance.
- Educate legislators. This should be ongoing, not just one lobbying campaign. Invite key legislators to discuss fraud issues at association chapter meetings. Have them tour insurer facilities and talk with other adjusters. Take part in legislative days held by insurance groups in state capitols, or consider holding one yourself.
With adequate planning and targeted information, claims professionals can make a significant imprint on state laws, and even national legislation, that make investigating claims and identifying fraud activity easier and that permit or mandate effective penalties for insurance fraud.
Insurance Fraud Is Not a Victimless Crime
Who hasn’t equated the losses from insurance fraud with profits, bottom lines and premiums? But there’s another, even more compelling story of victims of insurance fraud—a story that gets nearly no publicity, a story that in some cases is almost too gruesome to read. It’s the story of children who suffer at the hands of adults committing insurance fraud.
Children often are disposable props to help make scams work, and other times they simply are caught in the wrong place at the wrong time. When you are lobbying in the legislature or the press, don’t forget that the horrid truth can be a potent force of change. Here are some of their stories.
Leo Lopez and Elsa Moure stuffed their six-year-old son into a car, then rammed another car in a staged accident in Lawrence, Mass. They’d planned for the child to pretend he was hurt and make bogus injury claims through a shady clinic. But the boy was injured for real and ended up in the hospital. The child also lost his dad for nearly a year when Lopez received nine months for the scam.
Members of the Gipson family also used children as young as age seven for props in staged accidents in Ft. Smith, Ark. Adults carefully coached them on how to act hurt. Few insurers would challenge an injured child, they reasoned. But one parent took realism to a new level by hitting a boy in the head to create a real injury.
Nobody tried to hurt two-year-old Joanna Lopez during a setup crash on the Long Beach, Calif., freeway. Two insurance swindlers just didn’t care what happened to her. The conmen braked their car, trying to maneuver a big rig into rear-ending them so they could make bogus claims. A car driven by Joanna’s parents was crushed between the frantically braking rig and another rig behind them. She and her entire family died in the flaming wreck.
In another con, Timothy and Deborah Nicholls were deeply in debt to a drug-dealing motorcycle gang. Timothy’s home-framing business also was failing, and the Colorado Springs, Colo., couple saw only one way out: Torch their home for insurance money. Timothy didn’t care what happened to their three children. He sprinkled lighter fluid on their pajamas, and the couple left them to die in the blaze. They received life in prison.
Meanwhile, five-year-old Brandon Dillbeck thought he was getting routine teeth cleaning at a North Carolina dental clinic. But the dentist strapped him to a board, then drilled and replaced 16 teeth with stainless steel caps during a two-hour ordeal. The clinic used Brandon to make inflated claims for worthless dental treatment. The clinic owners paid $10 million to settle a variety of charges.
Insurance fraud is far from a nameless, faceless crime. Let the legislatures and the public know that anti-fraud legislation does more than reduce losses. Behind the numbers are real victims, and often they’re the littlest ones.
Howard Goldblatt is director of
Government Affairs for the Coalition Against Insurance Fraud. He can be reached at (202) 393.7332 or
howard@insurancefraud.org.