HOME LEADERSHIP REPRESENTATIVES NEWS RADIO ADDRESS CONTACT US

Rep. Fossel Will Appeal Bill to Create Insurance Fraud Unit

AUGUSTA – State Rep. Les Fossel will appeal a decision by legislative leaders to block a bill that would create an insurance fraud division in state government. The bill was rejected by the Legislative Council on October 15 by a 6-4 vote. All Democrats in leadership voted to block the legislation, while all Republicans supported it.

“We have a major insurance fraud problem in Maine, and it has been made worse by the recession,” said Rep. Fossel (R-Alna), a first-term legislator who serves on the Insurance and Financial Services Committee. “The fraud unit would be funded by insurance companies, so it wouldn’t cost taxpayers a dime. Maine is one of only a few states without a fraud investigation unit.

“We should keep in mind,” he added, “that insurance fraud hits all of us in higher rates for homeowner’s insurance, auto insurance and other standard insurance products. This is not a victimless crime.”

The Legislative Council consists of leaders of both parties, including the speaker of the House and the president of the Senate. The Council convened on October 15 to vote on whether to accept or reject each of the 374 bills submitted for the Second Regular Session, which begins in January. The Council accepted 44 percent of bills proposed by Democrats and 19 percent of Republican submissions. It will reconvene on November 5 to hear appeals from legislators whose bills were rejected.

“Bills accepted for the Second Session supposedly must be of an emergency nature,” Rep. Fossel said. “The Council makes many exceptions to that rule, but my bill clearly qualifies under the emergency consideration. State Fire Marshal John Dean supports this bill because arson has broken out in a big way across the state, mainly for economic reasons. His investigators are literally running from fire to fire. And to make the situation worse, the Legislature took $2.75 million from his dedicated revenue account to help balance the budget; so his agency is in a financial crisis.”

Rep. Fossel’s bill would establish the Insurance Fraud Division within the Bureau of Insurance, part of the Department of Professional and Financial Regulation. It requires insurers with knowledge or suspicion of fraudulent insurance acts to report them to the Bureau of Insurance. The bill permits the Insurance Fraud Division to share investigatory information with certain national and international agencies. It also extends the immunity provision in current law to certain communications between insurers with respect to insurance fraud.

Insurance fraud units typically investigate and prosecute a wide range of offenses. While cases involving a single instance of fraud may be pursued, fraud units around the country also are active against organized, ongoing activity, such as staged auto accident rings and phony and inflated claims rings that may involve a variety of people, including insurance professionals, lawyers, health care professionals and others.

In Maine, arson has escalated during the recession, as some homeowners and business owners burn down their buildings and use the insurance money to get out from under debt. According to the State Fire Marshal’s office, Maine had 116 cases of incendiary fires in 2006. The number increased to 127 in 2007 and 148 in 2008.

###