House committee hears bipartisan package to strengthen insurance-fraud reporting, penalties

The Michigan House Insurance Committee heard testimony on a bipartisan package of bills (House Bills 4713–4719) aimed at strengthening reporting, civil penalties and criminal penalties for insurance fraud, and members said they plan to take the package up for a vote at the committee's next meeting.

Committee members and witnesses said the package is intended to improve information sharing, give the Department of Insurance and Financial Services (DIFS) additional civil-authority tools, and enable prosecutors to pursue organized fraud rings under the state's racketeering laws. Craig Sepich, director of strategy, policy and government affairs at the National Insurance Crime Bureau, testified that "insurance fraud is not a victimless crime" and cited a joint industry estimate that the total cost of non-health, non-life insurance fraud in the United States is $306,000,000,000 per year.

The bills would: make reporting of suspected insurance fraud mandatory (bringing Michigan in line with 45 states, the District of Columbia and Puerto Rico, according to testimony); enhance Michigan's fraud immunity statute to encourage information sharing; add insurance fraud to the state's racketeering statute; and create tiered criminal penalties and separate civil fines and restitution authorities. Representative Leitner described the change to the racketeering definition as straightforward and said it would make insurance fraud eligible for a 20-year felony sentence under the racketeering provision.

Testimony and sponsor remarks Craig Sepich of the…