Florida House Passes Workers’ Comp Fraud Bill Involving Check-Cashing Companies

The Florida House of Representatives has unanimously passed legislation that would help curtail the use of checking-cashing companies by individuals hoping to get out of paying workers' compensation premiums.

The bill, HB 1277, would do away with a law that requires regulators to give such firms up to 15 days notice before examining the firm's financial records. The bill would keep in place an existing requirement that firms undergo an examination of their records every five years. But it would eliminate another requirement that check-cashing firms must submit to an examination within six months of a firm's licensing.

Under the bill, the companies would be required to deposit all checks they receive into an account hosted by a FDIC-backed financial institution. HB 1277 would also end an existing practice whereby companies cash third-party checks.

"As a result of bringing all stakeholders to the table last fall, we were able to recommend policy solutions to the legislature that protect the responsible players in the marketplace while ensuring those who are diverting more than a billion dollars from Florida's economy are caught and held accountable," said Jeff Atwater, chief financial officer for the state of Florida, in a statement. Atwater added the fraud scheme was putting pressure on rates and "crippling" the business community.

The Florida Senate is currently considering a companion bill. That bill, SB 1586, is currently before the Budget Subcommittee on General Government Appropriations.

In October, Florida Insurance Commissioner Kevin McCarty said an 8.9% rate hike for workers' compensation in 2012 is justified. While McCarty indicated he would approve the rate hike, he did not accept a requested 14.8% increase for employees covered by the Longshore and Harbor Workers' Compensation Act. Separate increases for roofers, as well as ambulance and emergency medical service workers, must also be revised.

Even with the increase, Florida has the lowest workers' compensation rates among the large states and the lowest rates in the Southeast (Best's News Service, Oct. 25, 2011).

In 2010, the top five writers of workers' compensation in Florida were: Liberty Mutual Insurance Cos., which had a market share of 19.74%; American International Group, with 7.07%; FCCI Insurance Group, with 6.52%; Hartford Insurance Group, with 6.46%; and Fairfax Financial Group, with 5.33%.

(By Jeff Jeffrey, Washington Correspondent: [email protected])