Speak Out Against Insurance Fraud

Insurance fraud is a lucrative occupation, just ask any insurance commissioner or state attorney general and they will agree insurance fraud is rampant.

The fraud stories on page 35 are only a few crossing my desk in recent weeks–and keep in mind that we can only mention fraud cases documented by state officials, usually after the culprit has been apprehended.

I often hear fraud complaints weeks or months before the perpetrators are apprehended. Usually I hear about such cases from readers who urge me to write a story to warn people about it. Usually readers report fraud has been on-going, carried out by an unlicensed person or persons, who are selling non-existent policies, or under-reporting and carrying out workers’ compensation fraud.

I always contact the appropriate authorities and almost always hear the same response: “We know all about it, it is an active case, so we can not tell you anything until after charges are filed.”

Such responses make me wonder, why isn’t anyone doing anything about insurance fraud? When they do, why does it take so many months?

Members of professional associations are all licensed, take regular classes and their peers make sure they know the proper way to conduct business.

I asked representatives of several associations, “Isn’t there anything you can do about fraud?” Their response was “we police our members, but it is up to the state to apprehend lawbreakers.”

The state’s response is, “We can’t do anything until we have undisputable proof of fraud.”

In Florida, CFO Tom Gallagher maintains more fraud cases are going to court and judges now have the ability to sentence criminals to more jail time. But, what does it take, and how long does it take to obtain “indisputable proof?”

Last month at the Professional Insurance Agents Association of Florida meeting in St. Petersburg, Fla. one of the featured speakers was Hazel C. Muhammad, bureau chief of the Florida Department of Licensing. Muhammad transferred to her current position after nine years as a lead investigator with the state’s Fraud Division, so I asked her how to combat fraud.

Muhammad said that if an individual knows fraud is taking place it should be reported to the local Fraud Division. She said Florida and other states have Fraud Division offices in many major cities. If these offices receive an insurance fraud complaint, Muhammad said they report the details to the nearest State Attorney’s Office and work with their investigators to apprehend the culprit.

If association members hear about someone operating without a license or committing fraud, they should complain loudly to the Fraud Division and motivate them to investigate and stop to the illegal operation. If the insurance industry is apathetic and doesn’t report crime, then how can the state fraud divisions or attorney’s general be expected to do any better?