Florida's Division of Insurance Fraud and Division of Workers' Compensation have issued their joint report to the Legislature on their activities for fiscal year July 1, 2007 – June 30, 2008. In contrast to the dismal news reported by many business and government groups, the divisions enjoyed a year of significant success.
According to the national Coalition Against Insurance Fraud (CAIF), in fiscal year 2007-2008, Florida led the nation in the recovery of insurance fraud related losses through court ordered restitution. Efforts by the divisions resulted in the collection of $94 million, a recovery volume 5.5 times greater than the fraud division's operating budget. Statistics gathered by CAIF further show that Florida's fraud division is second in the nation in number of arrests (816), third in number of cases presented for prosecution (873), and fourth in number of referrals (9,916).
The division opened 1,742 cases for investigation, and of the 816 resulting arrests, secured 663 convictions. The average caseload for each compliance investigator was 32.94 per month.
In addition to numerous charts and graphs detailing cases by incident and major city, the report included a narrative comparison of fiscal year 2006-2007 to fiscal year 2007-2008, noting few changes in trends and conditions. As in the previous year, the recent fiscal year showed employee/claimant fraud accounted for the highest number of referrals. However, that percentage decreased from 60 percent of all referrals to 55 percent. Fifteen percent of all referrals were for working without workers' compensation coverage, the second highest fraudulent activity. The report deemed it "significant" that the third largest category of referrals, 14 percent, was the use of fraudulent Social Security numbers in employment and workers' compensation claims.
The divisions also reported an increase in the illegal sale and brokering of certificates of workers' compensation coverage throughout the construction industry. In the most basic scheme, a contractor would sell his valid certificates of insurance to uninsured subcontractors for an average of five to ten percent of the subcontractor's actual payroll. The subcontractor would then present "his" certificate to the job's general contractor as proof of coverage.
A more sophisticated scenario involved a circle of real and shell companies working in collusion. Someone would file corporation papers to create a shell company and obtain minimal workers' compensation insurance for that company. The coverage would then be sold to an uninsured subcontractor, who would pay between five to 13 percent in fees to the shell company owner. The subcontractor would in turn present the certificate to the general contractor as proof of insurance. When the unwitting general contractor paid the subcontractor with checks made out to the shell company, workers would cash the checks at money service businesses in on the scheme (it is a violation of Florida statute to cash a company check for anyone other than the company's owners). The check cashing service would benefit by receiving the standard two to three percent check-cashing fee, along with an increased amount of business.
In an effort to keep one step ahead of the schemers, the divisions have enhanced their personnel training programs. The fraud division has implemented an investigators' academy that provides new hires with a review of basic law enforcement skills and specialized training. Sworn personnel are earning Certified Fraud Examiner designations, and supervisors are attending executive management classes at the Southern Police Institute. The divisions also sponsor and participate in statewide and district training meetings for select personnel, and monthly and quarterly meetings for management-level staff.
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