Capitol hearing: Insurance fraud on the riseby Martin Moylan, Minnesota Public Radio
ST. PAUL, Minn. — Insurance industry and law enforcement officials told a Minnesota Senate committee Monday that insurance fraud is a growing problem in the state.
Insurance company representatives said crooks are especially intent on exploiting Minnesota's no-fault auto insurance system, milking insurers with exaggerated or false injury claims.
"The medical coverage sections are very deficient and don't contain any modern medical cost controls," said Bob Johnson, with the Insurance Federation of Minnesota. "It's an invitation to perpetrators of fraud."
Ramsey County Attorney John Choi said some criminals are deciding that it's smarter to commit financial fraud than other crimes like dealing drugs.
"There really is a need to have more investigation, more prosecution," Choi said. "I see kind of a criminal enterprise shift. And I think they do that because they recognize the chances of them being caught are a lot less. And if they do [get caught] the penalties are going to be less severe."
Choi said he's devoted one prosecutor to fraud and praised the state Commerce Department for focusing more on financial crimes. But Choi said as fraud increases, local prosecutors need more money to finance investigations and prosecutions.
The National Insurance Crime Bureau, another industry trade group says there has been a tripling of suspicious auto accident injury claims in Minnesota since 2008. By 2011, Minnesota ranked 10th in the nation, with 53 such claims.
The Senate committee said it would further investigate fraud.