Lawmakers call for more funds for insurance fraud unit

Michigan’s legislators are calling for the creation of a new agency that would get to the bottom of the state’s pressing auto insurance fraud issues.

The lawmakers’ call follows the shaky establishment of the anti-fraud unit within the Department of Insurance and Financial Services last month by Gov. Rick Snyder. According to DIFS senior deputy director and general counsel Randall Gregg, the anti-fraud unit came with no additional money or employees to investigate fraud, which meant the DIFS had to move around and rely upon its own personnel for investigations.

Notwithstanding the limitations of Snyder’s anti-fraud unit (and its seemingly rushed creation near the end of his term), the unit has renewed interest in the creation of a proper state agency that would investigate fraud.

“The Legislature still needs to act in order to give (the anti-fraud unit) the teeth and the direction it needs to be effective,” said state Rep. Lana Theis, R-Brighton, who also chairs the House Insurance Committee.

The candidates set to replace Snyder already have some ideas for a state fraud authority, and they involve the establishment of entirely new regulatory bodies.

“We have to have a real department that is funded with actual employees to have any success on that - not just announce something with a department that already exists without any extra resources dedicated to it,” Democratic gubernatorial candidate Gretchen Whitmer told Crain’s in an interview.

Michigan Attorney General and Republican gubernatorial candidate Bill Schuette, on the other hand, has called for the passage of Senate Bill 1014. Under SB1014, a Michigan Automobile Insurance Fraud Authority will be established within the attorney general’s office. The bill had been voted out of the Senate earlier this year in June.

SB1014 was sponsored by Senate Insurance Committee Chairman Joe Hune, R-Hamburg Township.

According to Hune, the bill would make the anti-fraud unit a bureau within the Attorney General’s office that would have authority to investigate insurance fraud perpetrated by medical providers, motorists, insurance companies and agents

“It takes that argument off the table that it’s only a one-way investigative body,” Hune explained. “And I’m sure the opposition is still not happy with that.”