“Keeping your money in your pocket, where it belongs.”

1. 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.”

2. 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

3. 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

4. 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: • New York City (1,304) • Tampa (562) • Miami (511) • Orlando (422) • Houston

5. * NICB statistics

6. 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 1,461for FY 2009/2010, an increase of 53.1%.

7. 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 3,615for FY 2008/2009, an increase of 14.7%. For the FY 2009/2010the Division received 5,543 PIP Fraud Referrals, an increase over the previous FY of 53.3%.

8. 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 for1,676, and vehicle fraud for 1,237.

9. Fraud Arrests The FY 2009/2010 report also shows 1,035total 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.

10. 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 UrangaGuemes, 32, and YamilkaTurino, 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 OdalysSardinas, 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 ClebsonFils, on multiple counts of insurance fraud.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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.

16. 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. Recent Successes : January 12, 2011 Division of Consumer Services • This Division helps consumers make informed insurance and financial decisions by: • 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 lines of insurance, and tools for helping select appropriate coverage • Operating an insurance library with information to specific insurance questions • Providing information on how to select an insurance company and agent, as well as providing information regarding complaints against carriers

17. 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

18. Division of Consumer Services: Automobile Insurance Statistics • 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.

19. Division of Consumer Services: Automobile Insurance Statistics

20. 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.