1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A bill to be entitled An act relating to insurer anti-fraud efforts;; amending s. 440.50, F.S.;; removing the Justice Administrative Commission as an entity whose funds revert to the Worker's Compensation Trust Fund under certain conditions;; reordering and amending s. 626.9891, F.S.;; requiring every insurer to designate at least one primary anti-fraud employee for certain purposes;; requiring certain insurers to adopt an antifraud plan under certain circumstances;; revising insurer requirements in providing anti-fraud information to the Department of Financial Services;; requiring anti-fraud plans and statistics to be filed annually with the department;; revising the information to be provided by insurers who write workers' compensation insurance;; requiring each insurer to provide annual anti-fraud education and training;; requiring insurers who submit an application for a certificate of authority after a specified date to comply with the section;; providing penalties for failure to submit the annual anti-fraud statistical report;; creating s. 626.9896, F.S.;; creating a grant program to fund the dedicated insurance fraud prosecutor program within the department;; requiring moneys that appropriated for the program be used to Page 1 of 13
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 fund specific attorney and paralegal positions;; specifying procedures to be used by state attorney's offices when applying for biennial grants;; specifying that grants are for two years but authorizing the division to renew the grants;; specifying procedures to be used by the department in awarding grant funds;; requiring the Division of Investigative and Forensic Services to provide an annual report to the Executive Office of the Governor and Legislature;; specifying information to be contained in the report;; authorizing the department to adopt rules to administer and implement the insurance fraud dedicated prosecutor program;; amending s. 641.3915, F.S.;; deleting obsolete provisions;; providing an effective date. Be It Enacted by the Legislature of the State of Florida: Section 1. Subsection (5) of section 440.50, Florida Statutes, is amended to read: 440.50 Workers' Compensation Administration Trust Fund. (5) Funds appropriated by an operating appropriation or a nonoperating transfer from the Workers' Compensation Administration Trust Fund to the Agency for Health Care Administration, the Department of Business and Professional Regulation, the Department of Management Services, and the First Page 2 of 13
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 District Court of Appeal, and the Justice Administrative Commission remaining unencumbered as of June 30 or undisbursed as of September 30 each year shall revert to the Workers' Compensation Administration Trust Fund. Section 2. Section 626.9891, Florida Statutes, is reordered and amended to read: 626.9891 Insurer anti-fraud investigative units;; reporting requirements;; penalties for noncompliance. (1)(a)(5) For purposes of this section, the term "unit or division" includes the assignment of fraud investigation to employees whose principal responsibilities are the investigation and disposition of claims. If an insurer creates a distinct unit or division, hires additional employees, or contracts with another entity to fulfill the requirements of this section, the additional cost incurred must be included as an administrative expense for ratemaking purposes. (b) Every insurer shall designate at least one primary anti-fraud employee to be responsible for meeting the requirements set forth in this section. (2)(1) Every insurer admitted to do business in this state who estimates it wrote in the previous calendar year, at any time during that year, had $10 million or more in direct premiums in the previous year written shall: (a) Adopt an anti-fraud plan and establish and maintain a unit or division within the company to investigate possible Page 3 of 13
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 fraudulent insurance acts claims by insureds or by persons making claims for services or repairs against policies held by insureds;; or (b) Contract with others to investigate possible fraudulent insurance acts claims for services or repairs against policies held by insureds. An insurer subject to this subsection shall electronically file with the Division of Investigative and Forensic Services of the department on or before September 1, 2017, and annually thereafter July 1, 1996, a detailed description of the unit or division established pursuant to paragraph (a) or a copy of the contract and related documents required by paragraph (b). (3)(2) Every insurer admitted to do business in this state, which in the previous calendar year had less than $10 million in direct premiums written, must adopt an anti-fraud plan and file it electronically with the Division of Investigative and Forensic Services of the department on or before September 1, 2017, and annually thereafter July 1, 1996. An insurer may, in lieu of adopting and filing an anti-fraud plan, comply with the provisions of paragraph (2)(b) subsection (1). (4)(3) Each insurers anti-fraud plan must plans shall include: (a) An acknowledgement that the insurer has established Page 4 of 13
101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 procedures for detecting and investigating possible fraudulent insurance acts relating to the different types of insurance by that insurer A description of the insurer's procedures for detecting and investigating possible fraudulent insurance acts;; (b) An acknowledgment that the insurer has established A description of the insurer's procedures for the mandatory reporting of possible fraudulent insurance acts to the Division of Investigative and Forensic Services of the department;; (c) An acknowledgement that the insurer provides A description of the insurer's plan for anti-fraud education and training to of its claims adjusters or other personnel;; and (d) A description of the anti-fraud education and training required under subsection (7) that is provided to the designated anti-fraud investigative unit or contractor, as applicable, that is designed to assist in identifying and evaluating instances of suspected fraudulent insurance acts in underwriting or claims activities;; (e)(d) A written description or chart outlining the organizational arrangement of the insurer's anti-fraud personnel who are responsible for the investigation and reporting of possible fraudulent insurance acts;; (f) The rationale for the level of staffing and resources being provided for the anti-fraud investigative unit, which may include objective criteria, such as the number of policies written, the number of claims received on an annual basis, the Page 5 of 13
126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 volume of suspected fraudulent claims detected on an annual basis, an assessment of the optimal caseload that one investigator can handle on an annual basis, and other factors;; and (g) A description of the insurer's public awareness efforts focused on the costs and frequency of insurance fraud and methods by which the public can prevent such fraud. (5) Every insurer shall also submit anti-fraud statistics annually by September 1 for the lines written by that insurer for the calendar year. The statistics must include, at a minimum: (a) The number of policies in effect;; (b) The amount of premiums written for policies;; (c) The number of claims received;; (d) The number of claims referred to the anti-fraud investigative unit;; (e) The number of other insurance fraud matters referred to the anti-fraud investigative unit that were nonclaim related;; (f) The number of claims investigated or accepted by the anti-fraud investigative unit;; (g) The number of other insurance fraud matters investigated or accepted by the anti-fraud investigative unit that were nonclaim related;; (h) The number of cases referred to the Division of Investigative and Forensic Services;; Page 6 of 13
151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 (i) The number of cases referred to other law enforcement agencies;; (j) The number of cases referred to other entities;; and (k) The estimated dollar amount of damages on cases referred to the Division of Investigative and Forensic Services or other agencies. (6) In addition to providing the information required under subsections (2),(3), and (5), each insurer writing workers' compensation insurance shall also report the following information to the department, on or before September 1 August 1 of each year, on its experience in implementing and maintaining an anti-fraud investigative unit or an anti-fraud plan. The report must include, at a minimum: (a) The estimated dollar amount of losses attributable to workers' compensation fraud delineated by the type of fraud, including claimant, employer, provider, agent, or other type. (b) The estimated dollar amount of recoveries attributable to workers' compensation fraud delineated by the type of fraud, including claimant, employer, provider, agent, or other type. (c) The number of cases referred to the Division of Insurance and Forensic Services, delineated by the type of fraud, including claimant, employer, provider, agent, or other type. (a) The dollar amount of recoveries and losses attributable to workers' compensation fraud delineated by the Page 7 of 13
176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 type of fraud: claimant, employer, provider, agent, or other. (b) The number of referrals to the Bureau of Workers' Compensation Fraud for the prior year. (d)(c) A description of the organization of the anti-fraud investigative unit, if applicable, including the position titles and descriptions of staffing. (d) The rationale for the level of staffing and resources being provided for the anti-fraud investigative unit, which may include objective criteria such as number of policies written, number of claims received on an annual basis, volume of suspected fraudulent claims currently being detected, other factors, and an assessment of optimal caseload that can be handled by an investigator on an annual basis. (e) The inservice education and training provided to underwriting and claims personnel to assist in identifying and evaluating instances of suspected fraudulent activity in underwriting or claims activities. (f) A description of a public awareness program focused on the costs and frequency of insurance fraud and methods by which the public can prevent it. (7) Every insurer shall provide at least 2 hours of initial anti-fraud training to the designated anti-fraud investigative unit or contractor, as applicable, and shall provide an annual 1-hour refresher course that addresses detection, referrals, investigations, and reporting of suspected Page 8 of 13
201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 insurance fraud for the types of insurance lines written by the insurer. In addition, the insurer shall require the anti-fraud investigative unit or contractor, as applicable, to complete an annual 1-hour training provided by the department. (8)(4) An Any insurer who submits an application to obtain obtains a certificate of authority after September 1, 2017, must July 1, 1995, shall have 18 months in which to comply with the requirements of this section before receiving such authority. (9)(7) If an insurer fails to timely submit a final acceptable anti-fraud plan or anti-fraud investigative unit description, fails to implement the provisions of a plan or an anti-fraud investigative unit description, fails to submit the annual anti-fraud statistical report, or otherwise refuses to comply with the provisions of this section, the department, office, or commission may: (a) Impose an administrative fine of not more than $2,000 per day for such failure by an insurer to submit an acceptable anti-fraud plan or anti-fraud investigative unit description, or the anti-fraud statistical report, until the department, office, or commission deems the insurer to be in compliance;; (b) Impose an administrative fine for failure by an insurer to implement or follow the provisions of an anti-fraud plan or anti-fraud investigative unit description;; or (c) Impose the provisions of both paragraphs (a) and (b). (10)(8) The department may adopt rules to administer this Page 9 of 13
226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 section. Section 3. Section 626.9896, Florida Statutes, is created to read: 626.9896 Dedicated Insurance Fraud Prosecutor Program. (1) LEGISLATIVE INTENT. The Legislature recognizes the increasing problem of insurance fraud, the need to adequately investigate and prosecute insurance fraud, and the need to create a program dedicated to the prosecution of insurance fraud. The Legislature recognizes that the Division of Investigative and Forensic Services of the department can efficiently and effectively manage and monitor such a program, and can direct and reallocate resources as insurance fraud trends change and demand for prosecutorial resources shift between judicial circuits. (2) ESTABLISHMENT OF THE INSURANCE FRAUD DEDICATED PROSECUTOR PROGRAM. There is created within the department a grant program to fund the Insurance Fraud Dedicated Prosecutor Program. The Division of Investigative and Forensic Services of the department shall administer appropriated moneys to fund attorney and paralegal positions dedicated to the prosecution of insurance fraud. The program shall consist only of funds appropriated by the state specifically for this program. (3) GRANT APPLICATIONS. Beginning in 2018, a state attorney's office seeking grant funds must submit an application to the Division of Investigative and Forensic Services detailing Page 10 of 13
251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 the proposed number of dedicated prosecutors and staff requested for the prosecution of insurance fraud. Applications must be received by July 1 of each even numbered year and shall identify funding needs for two years. Contingent upon legislative appropriation, the grants shall be for a period of 2 years and subject to renewal by the department. The division shall compile and review the timely submitted applications to establish its legislative budget request for the program for the upcoming two years. (4) AWARD OF GRANTS. Contingent upon legislative appropriation, the Division of Investigative and Forensic Services shall award grants to state attorney's offices according to prosecutorial needs, using an allocation formula composed of internal metrics and data compiled by the division. The division may alter the allocation formula to achieve the most effective and efficient allocation of funds necessary to meet the purpose of the program. Each grant that is awarded to a state attorney's office shall be equal to the total annual salary, including benefits, for each attorney and paralegal whose duties are solely dedicated to the prosecution of insurance fraud. The grants are subject to the provisions of s. 215.971. The department shall establish the annual maximum grant amount, based on funds appropriated to the department for funding the Insurance Fraud Dedicated Prosecutor Program. (5) REPORTING. The Division of Investigative and Forensic Page 11 of 13
276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 Services must track and report on the effectiveness and efficiency of each state attorney's office's use of the awarded grant funds. In completing its report, the division shall require each state attorney's office that is awarded a grant under this section to submit performance and output information as determined by the division. The report must be provided to the Executive Office of the Governor and to the Legislature annually by December 30. The report must include, but is not limited to, the following: (a) The amount of grant funds received and expended by each state attorney's office;; (b) A description of the purposes for which the funds were expended, including payment of salaries, expenses, and any other costs needed to support delivery of services;; (c) The prosecutorial results achieved from the expenditures made, including the number of complaints filed, the number of investigations initiated, the number of arrests made, and the number of convictions resulting from the cases presented for prosecution. (6) RULES. The department may adopt rules pursuant to ss. 120.536(1) and 120.54 for the administration and implementation of the Insurance Fraud Dedicated Prosecutor Program. Such rules may establish procedures for the Insurance Fraud Dedicated Prosecutor Program, including forms to be used by the state attorney's offices. The department may establish eligibility Page 12 of 13
301 302 303 304 305 306 307 308 309 310 311 312 313 criteria, renewal requirements, and standards for evaluating the effectiveness and efficiency of expended funds. Section 4. Section 641.3915, Florida Statutes, is amended to read: 641.3915 Health maintenance organization anti-fraud plans and investigative units. Each authorized health maintenance organization and applicant for a certificate of authority shall comply with the provisions of ss. 626.989 and 626.9891 as though such organization or applicant were an authorized insurer. For purposes of this section, the reference to the year 1996 in s. 626.9891 means the year 2000 and the reference to the year 1995 means the year 1999. Section 5. This act shall take effect July 1, 2017. Page 13 of 13