Legislative Update


We knew 2019 would be busy, coming off last year’s midterm elections. But even we are surprised to be monitoring a record 178 state fraud bills across the nation. Not to mention enacting more than 50 new laws … so far.

If we’ve learned anything, it’s the value of persistence. Florida booked a new law cracking down on widespread abuses of assigned benefits after 7 years of steady effort by fraud fighters. Contractor and staged-crash reforms finally cleared the New York legislature after years of stalling.

You’ll find more newsworthy updates in Advocate! to inform your fraud-fighting efforts, such as:

• How those 53 new fraud laws tighten our safety net.
• Prosecutors gain more powers under the Coalition’s model fraud law.
• Sham no-fault clinics take a big hit in a major New York court ruling.
• Why should legislators worry about insurance fraud? A state senator tells all.

You also have a standing invite: Help us enact more fraud laws. Be part of the action … whether you’re an insurer, consumer advocate or other Coalition member.

Read all the latest legislative news and analysis in Advocate! — so you know what’s happening around the states, and how it affects your work.


Catherine A. Rankin
State Farm Insurance
Chair, Government Affairs Committee


“Never give in. Never, never, never, never,” Winston Churchill famously said in the darkest days of Word War II.

Years of persistence also gained fraud fighters hard-earned success in earned long-sought contractor reforms in Florida. Also positively, staged-crash and storm-chaser bills advanced decisively in New York.

Assigned benefits cleaning up in Fla.

Florida took its biggest step yet to clean up the state’s long-abused assignment-of-benefits system. Bills were roadblocked for 7 years until the governor signed a major reform package, which became law on July 1.

The measure brings relief to hard hit insurers and consumers, who’ve seen AOB abuse and fraud drive-up homeowner premiums around Florida.

Reducing large and undeserved attorney fees from often-spurious contractor AOB lawsuits against insurers is key. Many lawsuits were based on bogus or inflated contractor repair claims. Insurers were forced to pay all attorney fees in a contractor’s AOB suit — even when the contractor prevails for only a single penny above the insurer’s pre-suit offer.

Insurers gained considerable relief. They no longer must pay all attorney fees in AOB suits by contractors. A sliding scale now determines attorney fees. Plus, consumers gain greater anti-fraud protections.

Other AOB reforms include:

• Mandatory 10-day notice by contractor AOB holders before filing suit — including notifying the named insured.

• Allowing insurers to issue certain policies containing restricted or no assignment rights.

• Requiring insurers to report AOB claims and settlements to the DOI to monitor new law’s impact on insurance rates and lawsuit filings.

Citizens Property Insurance, the state’s home insurer of last resort, says it’s scaling back a proposed rate hike.

The Coalition will work to apply the same needed AOB reforms to auto-glass claims and lawsuits as well next year.

Setup crashes closer to being specific crime in N.Y.

A beloved grandmother named Alice Ross died when she crashed after losing control of her car in a botched staged wreck in 2003, in Queens, N.Y.

Alice’s death galvanized action against widespread staged crashes that hiked auto premiums and endangered drivers in New York. A bill making staging crashes for bogus insurance claims a specific crime, with tough penalties, was proposed years ago. It was called Alice’s Law — a name the Coalition inspired.

Yet bills bogged down year after year until finally clearing the Senate and Assembly in late May. The Coalition-backed Alice’s Law earned overwhelming support in both chambers. It awaits Gov. Andrew Cuomo’s signature. When, or even, if he’ll sign is an open question. New York differs from other states in that it can take months after a bill passes before it is sent to the Governor, who then has 10 days to sign or veto the bill.

Storm-chaser penalties advance in Empire State

New York edged closer to better protections against contractor repair scams with Albany’s passage of a storm chaser bill the Coalition has pushed for several years. Among the key provisions:

• Consumers have three days to rescind the repair contract.
• Contractors can’t offer to waive or rebate deductibles.
• Contracts must include proof of liability and workers-comp insurance.

Like Alice’s Law, the Coalition and our partners persisted until support reached critical mass in the statehouse. The Coalition met with legislators to lobby for passage during a legislative action day sponsored by the New York Insurance Association in Albany this spring. That joint effort helped push votes through the legislature. This bill also awaits Cuomo’s decision.


Kentucky strengthened criminal penalties for insurance fraud — and for bombarding consumers with irritating robocalls, most of which involve health scams. Robocalls were also on the minds of Arkansas legislators, along with a bill passed there to stiffen criminal penalties for Medicaid fraud in the Razorback State. The Kentucky and Arkansas bills have all now been signed into law.

Georgia residents now are protected by what may be the nation’s strongest criminal law against staging crashes. The Peach Tree State also has a new law authorizing the AG’s Medical Fraud Control Unit to access the state Medicaid Rx database to identify fraudulent activity.

Public adjusters were on radar screens in MarylandLouisiana and North Dakota. These states enacted stricter oversight and educational requirements.

While many state legislatures have wrapped up their 2019 sessions, 38 bills remain active. States including New JerseyPennsylvaniaOhio and California have sessions on deck for the second half of this year. The Coalition will be active in those states, and many more.

*** Click here to view all fraud bills, with updates posted daily.

More firepower: Coalition updates landmark model fraud law

The Coalition’s model insurance fraud act has wielded a large impact on the fraud fight since we first created the measure in 1995.

More than 20 states have adopted the model in whole or in part. Even today, it’s the nation’s most comprehensive fraud law. Insurers and their personnel can be convicted under the model, giving it balance and fairness.

Yet times change, and the Coalition updated this landmark model in June. A select committee worked for months, with input from all sectors of Coalition membership.

The new model reflects societal changes that affect fraud, and how we combat this crime. Advancing technology and internet connectivity have created new avenues of vulnerability for insurers, and opportunities for scammers. International fraud rings also remain on the march. The model’s updates meet the fraud fight’s changing needs of today, and for years to come.

Among the new provisions:

• Increased prosecutorial authority to secure convictions based on eliminating multiple requirements to prove an intent to defraud.

• Allowing non-bankruptcy discharge of restitution for insurance-fraud victims, and for insurer recovery of attorney fees.

• Addressing the rising use of independent contractors and outsourcing of investigations by insurers to allow for sharing of fraud information and data.

• Including both fraud in part and fraud in whole to expand the ability to investigate and prosecute fraud so the Act now applies where only a portion of the claim is fraudulent but intent to fraud was still present.

The updates could inspire more states to revise their own laws, or adopt the Coalition’s provisions directly. NCOIL already has adopted the model, giving it added potential influence in states. The updated Coalition model also will be rolled out during the meeting of the NAIC Antifraud Task Force in August, in New York City.


Passage of 53 new laws enacted in only 6 months is a notable achievement, but we continually work to improve our legislative efforts. One of the best ways is to analyze why 86 bills missed out this year.

Some bills deserved to fail because they were clunkers — and could’ve undermined the fraud fight. Perhaps the biggest came in Washington state. The legislature would’ve virtually abolished insurer rights to take all-important EUOs. The Coalition vocally opposed the bill, and it was deservedly torpedoed this again year after a prior attempt in 2017.

Some legislation seeks to increase anti-fraud funding, which can be hard pass in this era of tight state budgets. Funding measures for increased anti-fraud efforts in South CarolinaNevada and Washington all gained too little support. Only conservative, anti-crime Texas staved off an exodus of state fraud investigators by voting to raise their annual salaries.

After years of trying, Michigan finally acted to create a fraud bureau. It was part of a package to reform the state’s expensive unlimited lifetime no-fault medical benefits — with the nation’s highest auto premiums. Details are still being hammered out as to who will have ultimate authority for both investigation and prosecution of Wolverine state fraudsters.

Some bills go to the graveyard despite seemingly good intentions to protect consumers from fraud. A bill making it a crime to recruit patients for crash rings and other medical frauds was thwarted in New York. Repeal of Florida’sexpensive and fraud-ridden no-fault auto insurance system also was frustrated.

Well-organized and funded lobbies such as chiropractors and trial attorneys, and sometimes insurers as well, can play a big role in torpedoing some fraud bills. All too often backroom efforts, donations or support from those directly or indirectly profiting from scams lead to consumers’ best interests not prevailing.

Some bills also faltered because legislators didn’t grasp fraud’s damaging impact, or the size of their own state’s fraud problems.

We met with the leadership of the Ohio House and Senate in February to urge refiling of roofer reforms that failed last year. Amazingly, some lawmakers said Ohio doesn’t need protections. The state hasn’t suffered natural disasters for years, they claimed.

So, fast forward to this Memorial Day weekend, when 11 deadly tornados broke apart people’s homes. As we told legislators months before, it’s too late to pass a law to fix the problem after a disaster. You must act in advance. We are working to get a new bill passed yet this year.

Equally, are we educating and earning the buy-in of lawmakers about the damaging impact of insurance fraud on American citizens? Legislators often use bills to react to real or perceived problems. Unless we convince elected leaders that America needs strong anti-fraud laws, they may wrongly believe fraud is merely a victimless white-collar crime.

One of our best tools to combat such misperceptions is the research done by the Coalition. Our most recent Four Faces study shows 80% of all Americans are very to somewhat concerned about insurance fraud and its impact on their lives. A good solid measure to deliver to legislators is simply “If 80% of your voters are concerned about insurance fraud shouldn’t you be also?”


June 11 wasn’t a great day for Dr. Andrew Carothers — or the ringleaders who installed him as the illegal straw owner of clinics that bilked insurers with 38,000 false no-fault injury claims. But it was for the Coalition and other fraud-fighters.

New York’s highest court struck down the corporate practice of medicine by unlicensed laymen. The court also confirmed insurer rights to suspend PIP payments when they reasonably suspect fraud.

The unanimous decision set a strong precedent that will strengthen protections against corrupt no-fault clinics that drain insurers and take advantage of consumers.

The Coalition submitted in an amicus “friend of the court” brief to help influence a favorable decision supporting fraud fighters. The court agreed with our broad contentions.

The Coalition has a thriving amicus program — the only one of its kind in the anti-fraud world. We submit briefs in potentially landmark fraud cases like Carothers. We’re bringing our voice to the courts on important court decisions with precedent-setting impact that could spread to other states.

The Carothers decision helped shut down a chain of unlicensed MRI clinics working the New York City area. Dr. Carothers raked in millions from his slew of false PIP claims. His sham owner of clinics that were actually run by laymen violated New York law requiring licensed providers to own and operate clinics. Still, Carothers unwisely sued insurers when they balked at paying.

Letting unlicensed persons secretly run medical clinics “would undermine the longstanding public policies in New York of combatting fraud … and preventing the corporate practice of medicine,” the Coalition urged in our amicus brief.

New York’s highest court agreed: “Control of medical service corporations by unlicensed individuals leads to higher costs, less effective medical treatment, and mistrust of the no-fault insurance system. More generally, the common law in New York has long recognized the need to ensure that providers of professional services are not unduly influenced by unlicensed third parties who are free of professional responsibility requirements and may disregard patient care in operating a corporation … organized simply to make money.”

Bad faith liability. Investigators and and other fraud fighters can be personally sued for bad-faith, the appeals court in Washington state ruled. The Coalition is working to overturn that dangerous Keodalah precedent with an amicus brief to the state Supreme Court.

Strong bad-faith laws protect consumers. But imagine investigators, adjusters, attorneys, physicians and many others working a fraud case being sued just for doing their jobs. The mere threat of being sued will diminish the willingness of many fraud fighters to work cases. Bad claims might slide on through, thus increasing fraud in Washington, the Coalition contends.

A decision is expected later this year.

Assignment of benefits. Written consent of all named policyholders must be required for a claim to be assigned over to a home-repair contractor or other third party, the Coalition contends in an amicus filed with the Florida Supreme Court.

Two Florida appellate districts reached opposite rulings on the matter. The state Supreme Court is working to straighten out the confusion. We’re waiting for oral arguments to be scheduled.

Provider right to sue insurers. Back in New York … Does the state’s law requiring insurers to report suspected medical fraud also give medical providers a private right to sue the insurer if the state medical board doesn’t act when the provider is reported?

The Coalition is drafting an amicus for the state’s high court on a question certified from the federal court of appeals.

Our position: Immunity laws are a shield to protect consumers from fraudulent medical providers. They aren’t a sword for filing lawsuits. However, insurers must report suspected medical fraud with the utmost good faith, and only after a thorough and fair investigation.

Suggest an amicus case. The Coalition seeks amicus cases that can advance the fraud fight around the U.S. You can be our eyes and ears. Suggest strong cases our Amicus Committee might consider for an amicus brief. It can be a state or federal case, civil or criminal. Contact Matthew Smith with case ideas or questions.

Get involved: Planning for 2020 campaigns underway

Yes, it’s the middle of summer, but we’re still thinking ahead. We’ll start identifying our legislative game plan for 2020, beginning in September.

Your ideas for fraud bills are important.

With 2020 being a major election year, we expect fewer bills to be filed than this year’s record pace. But 2020 still could be full of surprises.

Some bills are certain to return for another go-around. Look to funding bills, extending AOB reforms to auto glass claims in Florida, and continuing efforts at strengthening immunity protections in several states.

We’ll also work with our partner Honda North America to enact more airbag fraud laws. Some 22 states have passed airbag laws in recent years. They include three in 2019, with North Carolina pending.

If you’d like to suggest a bill to pursue in your state, first gain the support of your government affairs team if you’re with an insurer — then let us know.

Send your suggestions to Matthew Smith by Sept. 15.

We’ll reach out for ideas again this fall as we finalize our 2020 legislative priorities.