Florida Senate - 2017                        COMMITTEE AMENDMENT
       Bill No. SB 1012
       
       
       
       
       
       
                                Ì883346:Î883346                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  04/03/2017           .                                
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       The Committee on Banking and Insurance (Brandes) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Section 626.9891, Florida Statutes, is reordered
    6  and amended to read:
    7         626.9891 Insurer anti-fraud investigative units; reporting
    8  requirements; penalties for noncompliance.—
    9         (1)(5)As used in For purposes of this section, the term:
   10         (a) “Anti-fraud investigative unit” means the designated
   11  anti-fraud unit or division, or contractor authorized under
   12  subparagraph (2)(a)2.
   13         (b) “Designated anti-fraud unit or division” includes a
   14  distinct unit or division or a unit or division made up of the
   15  assignment of fraud investigation to employees whose principal
   16  responsibilities are the investigation and disposition of claims
   17  who are also assigned investigation of fraud. If an insurer
   18  creates a distinct unit or division, hires additional employees,
   19  or contracts with another entity to fulfill the requirements of
   20  this section, the additional cost incurred must be included as
   21  an administrative expense for ratemaking purposes.
   22         (2)(1)By December 31, 2017, every insurer admitted to do
   23  business in this state who in the previous calendar year, at any
   24  time during that year, had $10 million or more in direct
   25  premiums written shall:
   26         (a)1. Establish and maintain a designated anti-fraud unit
   27  or division within the company to investigate and report
   28  possible fraudulent insurance acts claims by insureds or by
   29  persons making claims for services or repairs against policies
   30  held by insureds; or
   31         2.(b) Contract with others to investigate and report
   32  possible fraudulent insurance acts by insureds or by persons
   33  making claims for services or repairs against policies held by
   34  insureds.
   35         (b) Adopt an anti-fraud plan.
   36         (c) Designate at least one employee with primary
   37  responsibility for implementing the requirements of this
   38  section.
   39         (d) Electronically An insurer subject to this subsection
   40  shall file with the Division of Investigative and Forensic
   41  Services of the department, and annually thereafter on or before
   42  July 1, 1996, a detailed description of the designated anti
   43  fraud unit or division established pursuant to paragraph (a) or
   44  a copy of the contract executed under subparagraph (a)2., as
   45  applicable, a copy of the anti-fraud plan, and the name of the
   46  employee designated under paragraph (c) and related documents
   47  required by paragraph (b).
   48  
   49  An insurer must include the additional cost incurred in creating
   50  a distinct unit or division, hiring additional employees, or
   51  contracting with another entity to fulfill the requirements of
   52  this section, as an administrative expense for ratemaking
   53  purposes.
   54         (2)Every insurer admitted to do business in this state,
   55  which in the previous calendar year had less than $10 million in
   56  direct premiums written, must adopt an anti-fraud plan and file
   57  it with the Division of Investigative and Forensic Services of
   58  the department on or before July 1, 1996. An insurer may, in
   59  lieu of adopting and filing an anti-fraud plan, comply with the
   60  provisions of subsection (1).
   61         (3) Each insurers anti-fraud plan must plans shall include:
   62         (a) An acknowledgement that the insurer has established
   63  procedures for detecting and investigating possible fraudulent
   64  insurance acts relating to the different types of insurance by
   65  that insurer A description of the insurer’s procedures for
   66  detecting and investigating possible fraudulent insurance acts;
   67         (b) An acknowledgment that the insurer has established A
   68  description of the insurer’s procedures for the mandatory
   69  reporting of possible fraudulent insurance acts to the Division
   70  of Investigative and Forensic Services of the department;
   71         (c) An acknowledgement that the insurer provides the A
   72  description of the insurer’s plan for anti-fraud education and
   73  training required by this section to the anti-fraud
   74  investigative unit of its claims adjusters or other personnel;
   75  and
   76         (d) A description of the required anti-fraud education and
   77  training;
   78         (e) A written description or chart outlining the
   79  organizational arrangement of the insurer’s anti-fraud
   80  investigative unit, including the position titles and
   81  descriptions of staffing; and personnel who are responsible for
   82  the investigation and reporting of possible fraudulent insurance
   83  acts
   84         (f)The rationale for the level of staffing and resources
   85  being provided for the anti-fraud investigative unit which may
   86  include objective criteria, such as the number of policies
   87  written, the number of claims received on an annual basis, the
   88  volume of suspected fraudulent claims detected on an annual
   89  basis, an assessment of the optimal caseload that one
   90  investigator can handle on an annual basis, and other factors.
   91         (4) By December 31, 2018, each insurer shall provide staff
   92  of the anti-fraud investigative unit at least 2 hours of initial
   93  anti-fraud training that is designed to assist in identifying
   94  and evaluating instances of suspected fraudulent insurance acts
   95  in underwriting or claims activities. Annually thereafter, an
   96  insurer shall provide such employees a 1-hour course that
   97  addresses detection, referral, investigation, and reporting of
   98  possible fraudulent insurance acts for the types of insurance
   99  lines written by the insurer.
  100         (5) Each insurer is required to report data related to
  101  fraud for each line of insurance written by the insurer during
  102  the prior calendar year. The data shall be reported to the
  103  department by March 1, 2019, and annually thereafter, and must
  104  include, at a minimum:
  105         (a)The number of policies in effect;
  106         (b)The amount of premiums written for policies;
  107         (c)The number of claims received;
  108         (d)The number of claims referred to the anti-fraud
  109  investigative unit;
  110         (e)The number of other insurance fraud matters referred to
  111  the anti-fraud investigative unit that were not claim related;
  112         (f)The number of claims investigated or accepted by the
  113  anti-fraud investigative unit;
  114         (g)The number of other insurance fraud matters
  115  investigated or accepted by the anti-fraud investigative unit
  116  that were not claim related;
  117         (h)The number of cases referred to the Division of
  118  Investigative and Forensic Services;
  119         (i)The number of cases referred to other law enforcement
  120  agencies;
  121         (j)The number of cases referred to other entities; and
  122         (k)The estimated dollar amount or range of damages on
  123  cases referred to the Division of Investigative and Forensic
  124  Services or other agencies.
  125         (6) In addition to providing information required under
  126  subsections (2), (4), and (5), each insurer writing workers’
  127  compensation insurance shall also report the following
  128  information to the department, on or before March 1, 2019, and
  129  annually thereafter August 1 of each year, on its experience in
  130  implementing and maintaining an anti-fraud investigative unit or
  131  an anti-fraud plan. The report must include, at a minimum:
  132         (a)The estimated dollar amount of losses attributable to
  133  workers’ compensation fraud delineated by the type of fraud,
  134  including claimant, employer, provider, agent, or other type.
  135         (b)The estimated dollar amount of recoveries attributable
  136  to workers’ compensation fraud delineated by the type of fraud,
  137  including claimant, employer, provider, agent, or other type.
  138         (c)The number of cases referred to the Division of
  139  Investigative and Forensic Services, delineated by the type of
  140  fraud, including claimant, employer, provider, agent, or other
  141  type.
  142         (a)The dollar amount of recoveries and losses attributable
  143  to workers’ compensation fraud delineated by the type of fraud:
  144  claimant, employer, provider, agent, or other.
  145         (b)The number of referrals to the Bureau of Workers’
  146  Compensation Fraud for the prior year.
  147         (c)A description of the organization of the anti-fraud
  148  investigative unit, if applicable, including the position titles
  149  and descriptions of staffing.
  150         (d)The rationale for the level of staffing and resources
  151  being provided for the anti-fraud investigative unit, which may
  152  include objective criteria such as number of policies written,
  153  number of claims received on an annual basis, volume of
  154  suspected fraudulent claims currently being detected, other
  155  factors, and an assessment of optimal caseload that can be
  156  handled by an investigator on an annual basis.
  157         (e)The inservice education and training provided to
  158  underwriting and claims personnel to assist in identifying and
  159  evaluating instances of suspected fraudulent activity in
  160  underwriting or claims activities.
  161         (f)A description of a public awareness program focused on
  162  the costs and frequency of insurance fraud and methods by which
  163  the public can prevent it.
  164         (7)(4)An Any insurer who obtains a certificate of
  165  authority has 6 after July 1, 1995, shall have 18 months in
  166  which to comply with subsection (2), and one calendar year
  167  thereafter, to comply with subsections (4), (5), and (6) the
  168  requirements of this section.
  169         (8)(7) If an insurer fails to timely submit a final
  170  acceptable anti-fraud plan or anti-fraud investigative unit
  171  description, fails to implement the provisions of a plan or an
  172  anti-fraud investigative unit description, or otherwise refuses
  173  to comply with the provisions of this section, the department,
  174  office, or commission may:
  175         (a) Impose an administrative fine of not more than $2,000
  176  per day for such failure by an insurer to submit an acceptable
  177  anti-fraud plan or anti-fraud investigative unit description,
  178  until the department, office, or commission deems the insurer to
  179  be in compliance;
  180         (b) Impose an administrative fine for failure by an insurer
  181  to implement or follow the provisions of an anti-fraud plan or
  182  anti-fraud investigative unit description; or
  183         (c) Impose the provisions of both paragraphs (a) and (b).
  184         (9)(8) The department may adopt rules to administer this
  185  section.
  186         Section 2. Section 626.9896, Florida Statutes, is created
  187  to read:
  188         626.9896Insurance Fraud Dedicated Prosecutor Program.—
  189         (1)LEGISLATIVE INTENT.—The Legislature recognizes the
  190  increasing problem of insurance fraud, the need to adequately
  191  investigate and prosecute insurance fraud, and the need to
  192  create a program dedicated to the prosecution of insurance
  193  fraud. The Legislature recognizes that the Division of
  194  Investigative and Forensic Services of the department can
  195  efficiently and effectively implement and monitor such a
  196  program, and can direct and reallocate resources as insurance
  197  fraud trends change and demand for prosecutorial resources shift
  198  between judicial circuits.
  199         (2)ESTABLISHMENT OF THE INSURANCE FRAUD DEDICATED
  200  PROSECUTOR PROGRAM.—There is created within the department a
  201  grant program to fund the Insurance Fraud Dedicated Prosecutor
  202  Program. The purpose of the program is to provide grants to
  203  state attorneys’ offices to fund attorney and paralegal
  204  positions that are dedicated exclusively to the prosecution of
  205  insurance fraud. The program shall consist only of funds
  206  appropriated by the state specifically for this program.
  207         (3)GRANT APPLICATIONS.—Beginning in 2018, a state
  208  attorney’s office seeking grant funds must submit an application
  209  to the Division of Investigative and Forensic Services detailing
  210  the proposed number of dedicated prosecutors and paralegals
  211  requested for the prosecution of insurance fraud. Applications
  212  must be received by July 1 of each even-numbered year and shall
  213  identify funding needs for 2 years. Grant awards are contingent
  214  upon legislative appropriation in the Insurance Regulatory Trust
  215  Fund and Workers’ Compensation Administration Trust Fund and
  216  subject to renewal by the department. The division must compile
  217  and review the timely submitted applications to establish its
  218  legislative budget request for the program for the upcoming two
  219  years.
  220         (4)AWARD OF GRANTS.—The division is authorized to award
  221  grants to state attorneys’ offices using a formula adopted by
  222  rule of the department and based on metrics and data compiled by
  223  the division which allocate funds to the judicial circuits based
  224  on trends in insurance fraud and the performance and output
  225  measures reported as required by this section. A grant awarded
  226  to a state attorney’s office may only be used to fund attorney
  227  and paralegal positions that are dedicated exclusively to the
  228  prosecution of insurance fraud. Grants are subject to the
  229  provisions of s. 215.971. The division shall establish the
  230  annual maximum grant amount, based on funds appropriated to the
  231  department for funding the Insurance Fraud Dedicated Prosecutor
  232  Program.
  233         (5)REPORTING.—The division must track and report on the
  234  effectiveness and efficiency of each state attorney’s office’s
  235  use of the awarded grant funds. To help complete the report,
  236  each state attorney’s office that is awarded a grant under this
  237  section must submit performance and output information as
  238  determined by the division. The report must be provided to the
  239  Executive Office of the Governor, the Speaker of the House of
  240  Representatives, and the President of the Senate by September 1,
  241  2020, and annually thereafter. The report must include, but is
  242  not limited to, the following:
  243         (a)The amount of grant funds received and expended by each
  244  state attorney’s office;
  245         (b)A description of the purposes for which the funds were
  246  expended, including payment of salaries, expenses, and any other
  247  costs needed to support the delivery of services;
  248         (c)The results achieved from the expenditures made,
  249  including the number of complaints filed, the number of
  250  investigations initiated, the number of arrests made, the number
  251  of convictions, and the amount of restitution or fines paid as a
  252  result of the cases presented for prosecution.
  253         (6)RULES.—The department may adopt rules pursuant to ss.
  254  120.536(1) and 120.54 for the administration and implementation
  255  of the Insurance Fraud Dedicated Prosecutor Program. Such rules
  256  may establish procedures for the Insurance Fraud Dedicated
  257  Prosecutor Program, including forms to be used by the state
  258  attorney’s offices. The department may establish a formula for
  259  allocating grant funds, eligibility criteria, renewal
  260  requirements, and standards for evaluating the effectiveness and
  261  efficiency of expended funds.
  262         Section 3. Section 641.3915, Florida Statutes, is amended
  263  to read:
  264         641.3915 Health maintenance organization anti-fraud plans
  265  and investigative units.—Each authorized health maintenance
  266  organization and applicant for a certificate of authority shall
  267  comply with the provisions of ss. 626.989 and 626.9891 as though
  268  such organization or applicant were an authorized insurer. For
  269  purposes of this section, the reference to the year 1996 in s.
  270  626.9891 means the year 2000 and the reference to the year 1995
  271  means the year 1999.
  272         Section 4. This act shall take effect September 1, 2017.
  273  
  274  ================= T I T L E  A M E N D M E N T ================
  275  And the title is amended as follows:
  276         Delete everything before the enacting clause
  277  and insert:
  278                        A bill to be entitled                      
  279         An act relating to insurer anti-fraud efforts;
  280         reordering and amending s. 626.9891, F.S.; defining
  281         and revising definitions; requiring every insurer to
  282         designate at least one primary anti-fraud employee for
  283         certain purposes; requiring insurers to adopt an anti
  284         fraud plan; revising insurer requirements in providing
  285         anti-fraud information to the Department of Financial
  286         Services; requiring specified information to be filed
  287         annually with the department; revising the information
  288         to be provided by insurers who write workers’
  289         compensation insurance; requiring each insurer to
  290         provide annual anti-fraud education and training;
  291         requiring insurers who submit an application for a
  292         certificate of authority after a specified date to
  293         comply with the section; providing penalties for
  294         failure to comply with requirements of the section;
  295         creating s. 626.9896, F.S.; providing legislative
  296         intent; creating a grant program to fund the Insurance
  297         Fraud Dedicated Prosecutor Program within the
  298         department; requiring moneys that are appropriated for
  299         the program be used to fund specific attorney and
  300         paralegal positions; specifying procedures to be used
  301         by state attorneys’ offices when applying for biennial
  302         grants; specifying that grants are for two years but
  303         authorizing the division to renew the grants;
  304         specifying procedures to be used by the department in
  305         awarding grant funds; requiring the Division of
  306         Investigative and Forensic Services to provide an
  307         annual report to the Executive Office of the Governor,
  308         the Speaker of the House of Representatives, and the
  309         Senate President; specifying information to be
  310         contained in the report; authorizing the department to
  311         adopt rules to administer and implement the insurance
  312         fraud dedicated prosecutor program; amending s.
  313         641.3915, F.S.; deleting obsolete provisions;
  314         providing an effective date.