AUTOMOBILE INSURANCE FRAUD
A presentation for the Florida House’s Insurance & Banking Subcommittee
Department of Financial Services:
John Askins, Director, Division of Insurance Fraud
Ashley Mayer, Director, Office of Legislative Affairs
“Keeping your money in your pocket, where it belongs.”
About the Division of
Insurance Fraud
• The Division of Insurance Fraud is the law enforcement arm
of the Department of Financial Services. It investigates:
• Insurance fraud
• Crimes associated with claim fraud
• Insurance premium fraud
• Workers’ compensation claim fraud
• Workers’ compensation premium avoidance and diversions
• Insurer insolvency fraud
• Unauthorized insurance entity fraud
• Insurance agent crimes
• Viatical application fraud
• Defalcations of escrow funds held in trust by title insurance firms
• Non-Medicaid related health care fraud
Insurance Fraud, in general…
According to a 2007-2008 report by the Coalition
Against Insurance Fraud, the Division leads the nation
in the recovery of insurance fraud-related losses
through court ordered restitution.
The Division of Insurance Fraud has locations across
the state to protect Floridians from insurance fraud.
Insurance fraud affects ALL Floridians: the FBI reports that non-health care
fraud costs the average U.S. family between $400-$700 annually. It costs the
country as a whole more than $40 billion/year.*
In 2008-2009, cases presented for prosecution by the Division of Insurance
Fraud resulted in more than $34 million in court-ordered restitution.
During fiscal year 2009-2010, the Division’s investigations helped lead to 706
convictions. Court-ordered restitution from those cases totaled $62,061,289.39
*http://www.fbi.gov/stats-services/publications/insurance-fraud
Florida is Ranked #1 in Staged Accidents by the NICB
“Questionable Claims” are those in which indices of behavior associated with
staged accidents are present. According to the National Insurance Crime
Bureau (NICB), the top five states producing Questionable Claims are:
Florida, California, New York, Texas, and Illinois.
According to NICB, of the top five cities for
staged-accident fraud, three are in Florida:
1.
2.
3.
4.
5.
New York City (1,304)
Tampa (562)
Miami (511)
Orlando (422)
Houston
•
* NICB statistics
The Division of Insurance Fraud has also seen an increase
in Staged Accident referrals. The latest published statistics
show the Division received 776 Staged Accident referrals
for FY 2008/2009, and 1,461 for FY 2009/2010, an increase
of 53.1%.
The Division of Insurance Fraud has also seen a
growing increase in the number of PIP Fraud
referrals…
The latest published statistics for the Florida Division of Insurance Fraud show
the Division received 3,151 PIP Fraud referrals for FY 2007/2008, and 3,615 for
FY 2008/2009, an increase of 14.7%. For the FY 2009/2010 the Division received
5,543 PIP Fraud Referrals, an increase over the previous FY of 53.3%.
5543
3151
3615
Personal Injury Protection (PIP)
FY 2007/2008
FY 2008/2009
FY 2009/2010
Fraud Referrals
The Florida Division of Insurance Fraud ‘s published FY 2009/2010 report shows
the Division received 12,415 referral complaints, of those, 5,543 were complaints of
Personal Injury Protection fraud. Workers’ Compensation Fraud accounted for
1,676, and vehicle fraud for 1,237.
FLORIDA DIVISION OF INSURANCE FRAUD
TYPES OF REFERRALS FY 2009/2010
AVIATION FRAUD
MY SAFE FLORIDA HOME
TITLE FRAUD
LIFE INSURANCE FRAUD
DISABILITY FRAUD
BANKING AND SECURITIES
COMMERCIAL
APPLICATION FRAUD
PERSONAL INJURY…
0
1000 2000 3000 4000 5000 6000
Fraud Arrests
The FY 2009/2010 report also shows 1,035 total arrests. Of those 337, or 32% ,
were for Personal Injury Protection Fraud . Workers’ Compensation Fraud was
the second highest with 280 arrests, or 27% of the total. The two types of fraud
account for 617, or 59% of the total FY arrests.
Florida Division of Insurance Fraud
Arrests FY 2009/2010
LIFE INSURANCE FRAUD
FINANCIAL INVESTIGATION
OTHER AGENCY ASSISTANCE
BANKING AND SECURITIES
COMMERCIAL
LICENSEE FRAUD
VEHICLE FRAUD
PERSONAL INJURY PROTECTION…
0
50
100 150 200 250 300 350 400
Recent Successes (Jan. 12th news release):
Chief Financial Officer Jeff Atwater Announces Seven Insurance Fraud Arrests in Two Days in Keeping with
his Promise to Attack PIP Fraud
TALLAHASSEE—In keeping with his promise to fight Personal Injury Protection (PIP) fraud and its effect on driving up auto insurance costs,
Florida Chief Financial Officer Jeff Atwater today announced the arrests of seven suspects in Miami and Naples accused of participating in nearly
$170,000 worth of fraudulent auto insurance billings.
Detectives in CFO Atwater’s Department of Financial Services, Division of Insurance Fraud, made the arrests today and Tuesday. The arrests
include six individuals accused of staging or participating in fake auto crashes in Miami, and a Naples massage therapist who submitted fraudulent
billings on two patients. Collectively, these suspects face a maximum of 300 years in prison if convicted on all charges, which include grand theft,
filing false or fraudulent insurance claims, staging an accident and patient brokering.
“PIP fraud perpetrators may find the crime easy to commit, but I am putting the word out that they will do hard time if convicted,” said CFO
Atwater. “I am committed to working with law enforcement agencies throughout the state to combat this costly crime and bring financial relief to
Florida insurance consumers who foot the bill for fraud when they pay premiums.”
PIP fraud, which involves a variety of crimes including staged car accidents, fake injuries and fraudulent insurance claims, costs the average Florida
family as much $400 a year. Four Florida cities – Tampa, Miami, Orlando and Hialeah – are now listed among the top 10 in the nation for PIP fraud.
Six suspects were arrested today in Miami. Ricardo Uranga Guemes, 32, and Yamilka Turino, 30, were arrested on third-degree felony charges
stemming from an investigation that determined they recruited five participants in a staged accident. The investigation determined that nearly
$78,000 in fraudulent PIP claims were filed. Marlene Linda Mendez, 49, was arrested on felony charges stemming from a May 2009 staged car crash
that resulted in $70,000 in fraudulent billings. Santos Colero, 40, and Odalys Sardinas, 42, were arrested and a third man, Michael Perez, 25, is
being sought on various felony charges stemming from an August 2010 staged car crash that was reported as a hit-and-run with a phantom vehicle.
Two individuals were recruited and paid $1,400 each to participate and file fraudulent injury claims at two medical clinics.
Yesterday, Serenity R. Toler, 24, a massage therapist, was arrested on charges of submitting more than $10,000 in fraudulent claims for two patients
who never received treatment. Toler is facing third-degree felony charges.
On December 29, detectives with the Collier County Sheriff’s Office arrested the clinic owners, Jacqueline Fils and Clebson Fils, on multiple counts
of insurance fraud.
Cost Drivers & Solutions
Ease of clinic ownership
Chapter 400, Part X, Florida Statutes, is manipulated by
some practitioners who pose as the owner of a clinic. The
clinic will then solicit mostly uninjured accident victims or
invite staged-accident participants to utilize the services of
the clinic. Many times treatments are not provided, but
“accident victims” are encouraged to attest that they were
given treatment due to monetary kickbacks from the clinic.
Strengthening the requirements for owning a clinic would
help address some of this activity.
Cost Drivers & Solutions
Aggressive Solicitation
Unfortunately, some health care practitioners and attorneys will work with
other entities, such as medical and legal referral services, to solicit patients
for whom they can submit bills for treatment or represent in a legal action.
They are incentivized by the promise of payment for “medical” services, or
by the expectation of attorneys’ fees in a future lawsuit. Strengthening
billing practices to ensure that only appropriate services that are actually
rendered are billed would likely result in a reduction in inappropriate and
aggressive solicitation, because the likelihood of receiving money for
fraudulent or inflated claims would be curtailed.
Cost Drivers & Solutions
Inability to Detect All Passengers in a Vehicle
Chapter 316, Florida Statutes, provides that some written reports of
crashes completed at accident scenes do not need to include the
names of all passengers in the involved vehicles. This makes it easier
for perpetrators of PIP fraud to later assert that there were additional
passengers in the vehicle (in order to claim eligibility for more PIP
benefits).
Many local law enforcement agencies are helping address this issue
and encouraging others to follow their lead, and the Department also
appreciates prior legislative efforts to tackle this issue.
Cost Drivers & Solutions
Litigation Costs
The fees associated with litigation affected this problem in two ways:
First, attorneys’ fees can be relatively expensive, particularly in relation to the amount
recovered for the plaintiff. The Sun Sentinel recently reported that the current structure of
payment has resulted in attorneys’ fees that appear disproportionate to the actual amount
recovered. For example, in Broward County, a $3,700 dispute meant a payout of $90,000 for the
lawyers. In one case, only $1 was recovered, but the attorney collected $5,500 in fees. In
Broward County alone, more than 23,500 PIP-related suits have been filed against insurers
since 2006—one-third of those cases were to recover amounts less than $500.
Second, many insurance companies may make a decision for a particular case that, based on
the costs of defending that case in court, it is more cost-effective to settle the case and pay a
potentially fraudulently claim.
Cost Drivers & Solutions
Enforcement
Law enforcement agencies are overwhelmed with this type of fraud. In fact,
PIP fraud represents nearly 40% of the cases referred to the Division of
Insurance Fraud.
Similarly, local law enforcement officials deal with many other cases as well,
making it difficult to fully dedicate resources to pursuing automobile
insurance fraud.
With the help of our dedicated prosecutors in certain counties across the
state, and local law enforcement agencies, we pursue this fraud as
aggressively as possible with the resources available, and will continue to do
so.
Enforcement to the fullest extent of the law is KEY to reducing fraud.
Recent Successes : January 12, 2011
Chief Financial Officer Jeff Atwater Announces Seven Insurance Fraud Arrests in Two Days in Keeping with his Promise to Attack PIP
Fraud
Division of Consumer Services
TALLAHASSEE—In keeping with his promise to fight Personal Injury Protection (PIP) fraud and its effect on driving up auto insurance
costs, Florida Chief Financial Officer Jeff Atwater today announced the arrests of seven suspects in Miami and Naples accused of
participating in nearly $170,000 worth of fraudulent auto insurance billings.
Detectives in CFO Atwater’s Department of Financial Services, Division of Insurance Fraud, made the arrests today and Tuesday. The
arrests include six individuals accused of staging or participating in fake auto crashes in Miami, and a Naples massage therapist who
submitted fraudulent billings on two patients. Collectively, these suspects face a maximum of 300 years in prison if convicted on all
charges, which include grand theft, filing false or fraudulent insurance claims, staging an accident and patient brokering.
This Division helps consumers make informed insurance and
financial decisions by:
“PIP fraud perpetrators may find the crime easy to commit, but I am putting the word out that they will do hard time if convicted,” said
CFO Atwater. “I am committed to working with law enforcement agencies throughout the state to combat this costly crime and bring
financial relief to Florida insurance consumers who foot the bill for fraud when they pay premiums.”
• Allowing consumers to call our help desk or visit us online regarding
any insurance or financial issue
• Providing consumer guides to help consumers understand various
PIP fraud, which involves a variety of crimes including staged car accidents, fake injuries and fraudulent insurance claims, costs the
average Florida family as much $400 a year. Four Florida cities – Tampa, Miami, Orlando and Hialeah – are now listed among the top 10
in the nation for PIP fraud.
lines of insurance, and tools for helping select appropriate coverage
•Operating an insurance library with information to specific insurance
Six suspects were arrested today in Miami. Ricardo Uranga Guemes, 32, and Yamilka Turino, 30, were arrested on third-degree felony
charges stemming from an investigation that determined they recruited five participants in a staged accident. The investigation
determined that nearly $78,000 in fraudulent PIP claims were filed. Marlene Linda Mendez, 49, was arrested on felony charges
stemming from a May 2009 staged car crash that resulted in $70,000 in fraudulent billings. Santos Colero, 40, and Odalys Sardinas, 42,
were arrested and a third man, Michael Perez, 25, is being sought on various felony charges stemming from an August 2010 staged car
crash that was reported as a hit-and-run with a phantom vehicle. Two individuals were recruited and paid $1,400 each to participate and
file fraudulent injury claims at two medical clinics.
questions
• Providing information on how to select an insurance company and
agent, as well as providing information regarding complaints against
carriers
Yesterday, Serenity R. Toler, 24, a massage therapist, was arrested on charges of submitting more than $10,000 in fraudulent claims for
two patients who never received treatment. Toler is facing third-degree felony charges.
On December 29, detectives with the Collier County Sheriff’s Office arrested the clinic owners, Jacqueline Fils and Clebson Fils, on
multiple counts of insurance fraud.
In 2010, the Division of Consumer Services:
• Served over 230,000 consumers via our helpline
• Served over 135,000 consumers via our website
• Opened over 21,000 consumer complaints
• Identified over 2,100 regulatory issues
• Coordinated over 5,300 mediations
• Received over 23,000 civil remedy notices
• Conducted over 1,100 outreach events
Division of Consumer Services: Automobile
Insurance Statistics
Division of Consumer Services: Consumer Complaints
# of Complaints
25,000
20,666
20,747
21,272
20,000
15,000
Total Complaints
10,000
6,283
Total Auto Complaints
5,263
5,000
4,963
0
2008
2009
2010
Year
Of the total number of consumer complaints reported to the Division :
•In 2008, 30.4% were auto-related,
•In 2009, 25.37% were auto-related, and
•In 2010, 23.33% were auto-related.
Division of Consumer Services: Automobile
Insurance Statistics
Reasons For Auto Complaints
2008
2009
#
%
#
%
4,02 64.09 3,26
Claim Issue
7
%
7
62.07%
1,02
Premium Issue
9
16.38% 883 16.78%
Cancellation Issue
400 6.37%
392
7.45%
Company Issue
260
4.14%
246 4.67%
Coverage Issue
236
3.76%
214
4.07%
Agent Issue
198
3.15%
168
3.19%
Underwriting Issue
131
2.08%
87
1.65%
Adjuster Issue
2
0.03%
6
0.11%
2010
#
3,06
4
%
61.74%
901
374
196
193
148
67
20
18.15%
7.54%
3.95%
3.89%
2.98%
1.35%
0.40%
THANK YOU
To report insurance fraud, call our toll-free hotline at
1-800-378-0445 or visit us online at
http://www.myfloridacfo.com/fraud
For consumer assistance, please call our toll-free helpline at
1-877-MY-FL-CFO or visit us online at
http://www.myfloridacfo.com/Consumers/needourhelp.htm.