UNITE - The Monthly Publication of the Florida's Specialty Agents
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February 2001 Unite News Magazines' Feature Stories
 

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Here are the headlines in the February UNITE!!

State Auditors: End Tag Bounty Program

Thousands of drivers mistakenly have had their automobile license plates seized in a state pilot program designed to make sure motorists have car insurance.

The program in Hillsborough, Broward and Miami-Dade counties since 1995 allowed private bounty hunters to snag the tags off uninsured cars for a fee. But a review of the program found that about one-third of the tags seized were wrongly taken.

The Office of Program Policy Analysis and Government accountability, an independent auditing arm of the Florida Legislature, is recommending an end to the program.

The audit found that 35 percent of the 427 license plates studied should not have been taken.

Auditors found that human error was the main culprit, because the uninsured cars were tracked using accurate vehicle identification numbers.

Highway officials also blame outdated information from insurance companies.

Legalities: Incentive Compensation For CSRs

Some agencies and agents believe that they can pay an employee a portion of the commission earned on ancillary products sold by the employee as an incentive.

The ancillary products can be hospital indemnity or legal protection policies, for example. The employee is a customer service representative with no higher than a 440 insurance license.

A client recently asked for an opinion about the legality of such a practice. The client indicated that at least one respected attorney, knowledgeable in insurance law, opined that the practice is legitimate because there is a safe harbor in the insurance code for such compensation to the employee.

As with some practices, there is the risk-versus-benefit factor to take into account. The risk is that the Department of Insurance will investigate an agent who compensates non-2-20 customer service representatives in this manner and then suspend or revoke the agent's license for a code violation, if that is the case. The benefit is the additional income earned by the agency or agent through the increased volume of sales of ancillary products.

SA lawyer Jed Berman discusses the issues in this month's column.

Panel Seeks Limit Youths Riding With Teen Drivers

An independent panel will recommend to the Florida Legislature that it limit the number of teens riding in vehicles driven by other teen-agers, officials said.

The Office of Program and Policy Analysis and Government Accountability, an auditing group hired by the state, is making the proposal after studying Florida's Graduated Driver Licensing Program, said Cleo Johnson, a group analyst.

Johnson said the panel's review showed lower crash rates for teens during the restricted time periods, but said they are still the most accident-prone driving group.

Studies by Johns Hopkins University and the Insurance Institute for Highway Safety show vehicles with one or no passengers are less likely to crash, the auditors' report said. Johnson said teens who ride in vehicles driven by their peers increase their crash rate.

Florida Is Fifth Highest For Uninsured Drivers

The chances are about 14 in 100 that, if an insured car occupant is injured in an auto accident in the U.S., an uninsured motorist caused the accident, according to a recent Insurance Research Council (IRC) study. However, the problem varies widely from state to state.

Florida ranks eighth highest among states, with an uninsured rate of 20 percent.

Uninsured Motorists 2000 Edition, an update to a previous IRC study examining the uninsured motorist problem, contains two additional years of the latest available data.

Gallagher Wants To Merge RPCJUA, Windstorm Pools

Commissioner Tom Gallagher will propose combining the Florida Windstorm Underwriting Association and the Residential Property and Casualty Joint Underwriting Association, which provide coverage to people who can't get private coverage, his spokeswoman, Tami Torres, said.

The FWUA provides coverage for some 425,000 policyholders in 29 counties where private insurers refuse to cover wind damage from hurricanes and tropical storms. Most of the policies are in Monroe, Miami-Dade, Broward and Palm Beach counties.

The JUA covers all perils, not just hurricanes, in areas where homeowners can't get private insurance because of high risk. It once had 937,000 polices in 1996 but it has moved customers into the private market and last year was down to just over 60,000 policies, nearly all in South Florida.

One problem may be how to deal with private insurers that have taken policies out of the JUA, but don't want the added exposure of covering homeowners now covered by the FWUA for wind damage. Many companies that took policies out of the JUA refused to cover wind damage, forcing those homeowners to get wind coverage from the FWUA.

Three Plead Guilty To Theft From JUA

Three women pleaded guilty to stealing $580,000 through insurance fraud and were sentenced to community control and probation.

Linda Reynolds and Deborah Cochran, two sisters, each were sentenced to six months of community control and 10 years probation after their guilty pleas, according to a release issued by Commissioner Tom Gallagher.

Merrie Jo Reynolds, daughter-in-law to Linda Reynolds, was sentenced to 18 months probation after her guilty plea in December.

The women's scheme began after a child's leg was broken after she was run over by a golf cart owned by a homeowner insured through the JUA. The claim was subcontracted to the firm that employed Linda Reynolds.

Starting in late 1996, 23 checks totaling $54,670 were written to Cochran for medical services that were never provided in the case. A few months later, Cochran's name was put on the file and over the next 2 1/2 years she received 153 more checks totally nearly $526,000.

Former Clinic Owner Jailed

A former Miami clinic owner suspected of spearheading a scheme to defraud dozens of auto insurance companies of nearly $4 million is in Dade County Jail facing a charge of first-degree grand theft, according to the Department of Insurance.

Pedro Pablo Gonzalez, 67, charged in September, was taken into custody in January by Miami-Dade County Police.

DOI fraud investigators said that between May 1, 1997, and April 30, 1999, Gonzalez and two associates billed 37 insurance companies $3.8 million for treatments that never took place at a Hialeah clinic established for the sole purpose of filing fraudulent claims. The now-defunct clinic operated under the corporate names of Lyme Medical Group Inc. and MVP Mobile Diagnostic Inc.

The two associates - Candido Madrigal, 49, and Julio Valle, 49, both of Miami, identified Gonzalez as the group's leader. Both cooperated with the investigation.

More Arrests In Tampa Fraud Ring

Six more individuals are facing fraud and grand theft charges stemming from a three-year investigation into a Tampa-area ring that staged dozens of auto accidents and bilked insurance companies.

Four of the six suspects were arrested in January by Department of Insurance fraud investigators. Similar charges were filed last June against 22 other suspected members of the group, which investigators infiltrated by working undercover. More arrests are anticipated.

The Tampa ring is suspected of staging about 30 minor, low-speed crashes. Investigators said the group would stage the accidents in a private location and then carefully scoop the debris and relocate the wreckage to a public roadway.

After setting up a staged accident, the participants would call local police, file an accident report and then seek treatment for bogus injury complaints. The ring is suspected of fraudulently billing 10 insurance companies for more than $396,000 in PIP claims and receiving at least $200,000 in payments.


 
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