Florida Chief Financial Officer Jeff Atwater’s Money Services Business Workers’ Compensation Fraud Work Group Holds First Meeting
Aug 25, 2011
The Florida Chief Financial Officer’s Money Services Business Workers’ Compensation Fraud Work Group (“Work Group”) held its first meeting in Tallahassee today, August 25, 2011, to discuss the relationship between perpetrators of workers’ compensation fraud and the money services businesses.
Florida CFO Jeff Atwater had announced the Work Group’s creation at the August 2 Florida Cabinet meeting. At that time, he explained that the Work Groups’ purpose is to accomplish an in-depth review of check cashing services industry practices that are believed to aid in workers’ compensation premium fraud. Through research and hearings, the Work Group will then identify the loopholes that allow “shell” construction companies to be established, evaluate the operation of check cashing services, identify any ambiguity related to enforcement of the laws governing these entities and identify any potential revisions to the statutory framework that would serve to eliminate workers’ compensation premium fraud.
Led by newly appointed Florida Insurance Consumer Advocate Robin Westcott, the Work Group includes representatives from the CFO’s Division of Insurance Fraud (“DIF”), as well as the Florida Office of Financial Regulation, the Florida Attorney General’s Office, and the construction and money services industries.
In his presentation, Geoffery Branch, DIF Chief of Workers’ Compensation Fraud, illustrated how construction subcontractors enter into agreements with shell corporations that have produced and maintain fraudulent certificates of insurance. The subcontractor then takes the falsified insurance documents to a general contractor and tells the general contractor that the subcontractor is owned by the shell company and uses the shell companies’ workers’ compensation insurance. The shell company owner will then direct the subcontractor to take the checks provided as payment by the general contractor to the subcontractor to a specified check cashing business. The check cashing businesses works with the shell company by charging the sub-contractor a fee on behalf of the shell company, in addition to the customary fee charged by the check cashing business. It was explained that this practice is having a severe negative impact on competition in the insurance industry, and that this type of fraud has become so pervasive that the State does not have enough investigators to deal with the current level of fraudulent activity.
The idea of increasing the amount of company information contained on certificates of insurance and prohibiting its transfer or use by other entities was proposed. It was also suggested that enhanced auditing procedures may be necessary in order to indentify the schemes mentioned earlier. Due to the high turnover of these shell companies, it was also suggested that the DIF work closely with the Florida Division of Corporations to identify potential shell companies by matching contact information and registered agents with those of known shell companies.
The Work Group’s next meeting is September 8, 2011. For complete meeting materials and presentations from today’s meeting, click here.
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