DESCRIPTION AND PURPOSE OF THE UNIT
The
Division of Insurance Fraud is the law
enforcement arm of the Department of
Financial Services responsible for
investigating crimes associated with
insurance claim fraud, insurance premium
fraud, workers’ compensation claim fraud,
workers’ compensation premium avoidance and
diversions, insurer insolvency fraud,
unauthorized insurance entity fraud, and
insurance agent crimes. The criminal
investigators of the Division of Insurance
Fraud also investigate viatical application
fraud, defalcations of escrow funds held in
trust by title insurance firms, and
non-Medicaid related health care fraud.
The
division receives approximately 13,000 case
referrals annually from insurance companies,
insurance regulators, other law enforcement
agencies, and citizens. Florida’s Division
of Insurance Fraud now arrests approximately
800 offenders each year and is directly
responsible for annual court-awarded
restitution to insurance fraud victims at an
average of $102,265,780. Florida’s
Division of Insurance Fraud has been
recognized by the Coalition Against
Insurance Fraud as the nationwide leader in
referring fraud cases to prosecution since
2003.
PROGRAM
RESPONSIBILITIES OF THE UNIT
·
The
division has the responsibility of receiving
insurance fraud referrals, now totaling
approximately 13,000 per year. These
referrals are primarily from the insurance
industry, since insurers and licensees are
required to refer suspected fraud to the
Division of Insurance Fraud. Once referrals
are received, they are evaluated by crime
intelligence analysts for pattern and trend
analysis and directed to investigative
supervisors who then assign the matters for
investigation, by priority, as resources
allow.
·
The
division must efficiently and effectively
investigate criminal violations referred to
it using its allocated resources. This
requires sworn investigators to engage in
investigative practices including;
interviewing witnesses and subjects,
interrogating suspects and persons of
interest, conducting fixed and mobile
surveillances, obtaining and executing
search warrants, obtaining and managing oral
intercept warrants, obtaining subpoenas for
financial records and other records,
utilizing mobile tracking tools, tracing
monetary transactions, and making both
probable cause (warrantless) arrests and
warrant arrests. Crime Intelligence
Analysts and sworn investigators also
prepare demonstrative evidence
(demonstrative evidence is evidence that
illustrates or helps explain oral testimony,
or recreates a tangible thing, occurrence,
or event) and exhibits for presentation in
court. Crime Intelligence Analysts and
sworn investigators also testify in
depositions and before state and federal
courts.
·
The
division operates a monetary reward program
for the reporting of fraud. The program has
issued rewards totaling $94,000 since 2001.
·
The
division reviews and maintains anti-fraud
plans and Special Investigative Unit (SIU)
descriptions submitted by insurers as
mandated by statute and Florida
Administrative Code.
·
The
division maintains a “designated employee”
database to facilitate the legitimate
information sharing of anti-fraud
information among insurers to combat
insurance fraud and identify fraud trends
and offenders. “Designated employees” of
insurers are allowed to disclose information
to one another and are afforded statutory
immunity in doing so.
·
The
division delivers ongoing training to its
certified law enforcement investigators to
comply with mandatory retraining
requirements and to update and enhance
investigative skills.
·
The
division is required to maintain and update
training records and report disciplinary
matters involving its certified law
enforcement investigators to the Criminal
Justice Standards and Training Commission.
·
The
division performs intelligence analyses
related to its criminal investigations and
has access to other confidential law
enforcement databases. The division is
responsible for maintaining records of usage
of such databases.
·
The
division coordinates and provides staff
support for the Florida Workers’
Compensation Fraud Task Force.
SUPERVISORY
RESPONSIBILITIES OF THE UNIT
The
Division of Insurance Fraud is authorized
128 sworn law enforcement positions to
investigate insurance fraud, supported by 43
non-sworn positions, including crime
intelligence analysts, administrative
secretaries and other professional support
occupations.
·
The
Division Director provides command
supervision, coordination and control of the
Division of Insurance Fraud and its
statewide field offices. Additionally, the
Director oversees all operations of the
division and is accountable for the conduct,
productivity and performance of all subunits
within the division.
·
The
Director supervises the Bureau Chief of the
Bureau of Workers’ Compensation Fraud, the
Law Enforcement Program Administrator of the
Office of Professional Standards, and the
North Florida and South Florida law
enforcement commanders. The Director also
supervises a Senior Attorney who serves as
the division’s legal advisor.
·
The North
Florida and South Florida law enforcement
commanders hold the official rank of Law
Enforcement Major and oversee the North and
South areas of the state, respectively.
Their duties include collectively
supervising five regional captains in five
geographic regions. The North Florida law
enforcement commander also supervises the
Administrative Section (General
Headquarters) of the Division.
·
The Bureau
Chief of Workers’ Compensation Fraud
coordinates all workers’ compensation fraud
investigative efforts and coordinates the
Florida Workers’ Compensation Fraud Task
Force. This bureau chief also immediately
supervises the Public Employee Fraud Unit
and coordinates unauthorized entity
investigative efforts undertaken by the
division.
·
Five
regional Law Enforcement Captains oversee
the operations of 11 statewide field
offices. Within these regions are 17
squads, each supervised by a Law Enforcement
Lieutenant.
·
A Law
Enforcement Captain located in General
Headquarters coordinates all training
efforts, equipment upkeep and disbursement,
fleet management, and emergency response
operations.
·
A Law
Enforcement Program Administrator conducts
law enforcement internal affairs
investigations as assigned by the Inspector
General, and conducts field inspections of
statewide offices and operations. The Law
Enforcement Program Administrator also
manages policy development for the division
and represents the division in collective
bargaining negotiations with the Police
Benevolent Association.
MAJOR
INITIATIVES/WORK IN PROGRESS
·
The
investigations of the division are
confidential while ongoing. However, there
are major investigations taking place in the
Hillsborough, Pinellas, Orange, Duval,
Broward and Miami-Dade areas addressing
personal injury protection (PIP) fraud.
Large-scale workers’ compensation premium
fraud cases are being worked in Duval and
Palm Beach counties.
·
The
insolvency investigation related to the
Aries Insurance Company is scheduled for
trial May 7, 2007. This investigation
resulted in the arrests of 4 officers of the
Aries Insurance Company. The offenses
committed by these officers have resulted in
the Florida Insurance Guaranty Association (FIGA)
being responsible for over $100 million in
claims. FIGA, created by the Legislature in
1970, services pending claims by or against
Florida policyholders of member insurance
companies which become insolvent and are
ordered liquidated. FIGA’s membership is
composed of all Florida licensed direct
writers of property or casualty insurance.
·
The
division is currently working with the
Department of Highway Safety and Motor
Vehicles (DHSMV) in analyzing traffic crash
reports to locate and identify offenders
staging traffic crashes to falsely file PIP
medical claims. DHSMV maintains a digital
data warehouse that catalogs all reported
traffic crashes in Florida.
·
The
Division of Insurance Fraud continues to
investigate false damage claims associated
with the hurricanes of 2004 and 2005.
REPORTS AND
PAPERS UNDER DEVELOPMENT
The
Division of Insurance Fraud is finalizing
revisions to Policies and Procedures to
accommodate changes in Florida law (Chapter
932) that now allow division sworn personnel
to seize and petition for forfeiture those
contraband items used or developed in the
course of insurance fraud offenses.
Forfeited items and funds may then be used
to finance anti-fraud investigations and
efforts. The division is also developing a
digital evidence guide for distribution to
insurance company special investigative
units (SIU’s) to allow transferred
documentary and videographic evidence from
SIU’s to be authenticated in accordance with
Chapter 90 (Florida’s evidence code) for use
in prosecutions.
ANNUAL OR
RECURRING EVENTS/DEADLINES
·
Florida Insurance Fraud Education Committee
(FIFEC) annual conference – Mid June
·
Fraud
Awareness Week - Mid June
·
Law
Enforcement Officers Memorial Week- May 15
·
Workers’
Compensation Fraud Annual Report
CONTROVERSIAL ISSUES
·
Florida’s
no-fault personal injury protection (PIP)
laws are being exploited by sophisticated
criminal organizations in schemes that
involve staging crashes, manufacturing false
crash reports, adding occupants to existing
crash reports, filing PIP claims using
contrived injuries, colluding with dishonest
medical treatment providers to fraudulently
bill insurance companies for unnecessary or
non-existent treatments, and
patient-brokering (referring patients to
medical providers for a bounty). The
Florida Legislature must decide whether to
extend the current no-fault personal injury
protection law before October 2007, or the
no-fault system will sunset and be replaced
by a tort system.
·
Non-compliance of employers in carrying
workers’ compensation coverage has been
prevalent in Florida, but the division has
made tremendous headway, doubling the number
of arrests for workers’ compensation
violations in a period of two years. Still,
fraudulent exemptions, misclassification of
employees and underreporting of payroll
continue to contribute to the premium fraud
problem in Florida, creating an unfair
business advantage for non-compliant
businesses. To exacerbate this problem,
employee leasing firms (PEO’s), with their
complex employment and benefit arrangements,
add to the difficulty in tracking employees
and payroll when a business is suspected of
engaging in workers’ compensation premium
fraud.
·
The
transacting of insurance business by
unauthorized entities (insurers without a
certificate of authority from the Office
of Insurance Regulation or agents and
agencies without proper licensure from the
Division of Agent and Agency Services) is a
major concern to the division.
The
underwriting of insurance by unauthorized
entities that intentionally avoid regulatory
oversight to circumvent lawful policy forms,
rates, claims handling, and, most
importantly, required financial solvency,
leaves policyholders in danger. If an
insurer does not have adequate reserves to
cover its liabilities, many policyholders
may be effectively without insurance
coverage and are not backstopped by an
established guarantee fund. Unauthorized
entities
undermine
the credibility of legitimate insurance
business in Florida and subject citizens and
businesses to potential financial
devastation that can result from the failure
or inability of unauthorized insurers to pay
legitimate claims.
LEGISLATIVE
INITIATIVES AFFECTING UNIT OVER THE PAST 3
YEARS
-
2006:HB 561– Offenses involving
Insurance; Substantive reforms aimed
at enhancing criminal enforcement
actions involving various types of motor
vehicle insurance fraud, workers’
compensation insurance fraud, health
care fraud, fraud relating to natural
disasters, insurance agent fraud, and
unauthorized entity fraud; this
legislation also created a forfeiture
account for Division of Insurance Fraud
detectives to deposit revenues obtained
utilizing Florida’s contraband
forfeiture law, and provided for
enhanced penalties against insurers for
non-compliance with fraud-fighting
requirements mandated by statute and
administrative rule.
-
2003: SB 1694 – Pete Orr Insurance
Anti-Fraud Act; Provided enhanced
penalties (including minimum mandatory
prison sentences) for those who act as
insurers without certificates of
authority, provided a civil remedy for
those citizens damaged by an
unauthorized insurer, made it a felony
for a person to engage in the insurance
business after their removal from
authorization or licensure, enhanced
criminal penalties for crimes committed
by auto body shops relating to the
unauthorized use of used parts and
unwarranted repairs, and broadened the
scope of police powers for law
enforcement personnel employed by the
Division of Insurance Fraud.
-
2003:
SB 50A – An Act Relating to Workers’
Compensation Insurance;
Provided enhanced enforcement measures
in the area of workers’ compensation
such as upgrading the crime of violating
a “stop work” order from a misdemeanor
to a felony, created new felony crimes
relating to workers’ compensation
application fraud and presenting false
evidence of identity, and placed these
crimes in the appropriate criminal
severity code for the purpose of
obtaining more severe sentencing upon
convictions.
-
2003:
SB 32A – An Act Relating to Personal
Injury Protection (PIP) Insurance;
Made it
a second degree felony (with a two-year
minimum mandatory prison sentence) to
organize, plan, or participate in a
staged accident; created a 3-tiered
solicitation statute that includes a
second-degree felony with minimum
mandatory prison for solicitation with
intent to defraud; strengthened
requirements and added penalties to the
law that restricts access to crash
reports for 60 days after the crash;
made it a felony to create, present, or
market false or fraudulent motor vehicle
insurance cards; placed PIP fraud crimes
in the appropriate criminal severity
code; and created a clinic licensing
program for non-physician owned medical
clinics.
CONSTITUENTS/ADVOCACY GROUPS AND INDIVIDUALS
ASSOCIATED WITH THE UNIT
·
The Florida
Workers’ Compensation Fraud Task Force
·
Florida
Insurance Fraud Education Committee
·
Florida
Intelligence Unit
·
National
Crime Information Center
·
Florida
Crime Information Center
·
National
Insurance Crime Bureau (allows division
access to their databases)
·
International Association of Special
Investigative Units
·
Coalition
Against Insurance Fraud
·
National
Association of insurance Commissioners
Anti-fraud Task Force
·
CARCO-
Pre-insurance Inspection Service (allows
division access to their database)
·
State Law
Enforcement Chiefs Association
·
Florida
Police Chiefs Association
·
Police
Benevolent Association (recognized
collective bargaining entity for sworn
investigators)
·
American
Federation of State, County and Municipal
Employees (recognized collective bargaining
entity for non-sworn, included-class
members)
·
State
Attorney Katherine Fernandez Rundle, 11th
Judicial Circuit (2 prosecutors funded)
BOARDS,
COMMISSIONS, ADVISORY GROUPS ASSOCIATED WITH
UNIT
·
National
Association of insurance Commissioners
Anti-fraud Task Force
·
Florida
Insurance Fraud Education Committee
·
Criminal
Justice Standards and Training Commission
·
Florida
Automobile Joint Underwriting Association
(Funding for one fraud prosecutor)
