State Lawmaker Wants All Insurance Fraud To Be A Felony

DENVER (CBS4) – Insurance fraud is getting to be an even bigger problem. Colorado has no crime of insurance fraud, but that could soon change.

Last year the attorney general won settlements of more than $3 million, but many cases didn’t go to court in part because of loopholes in the law.

The National Insurance Crime Bureau found questionable claims in Colorado rose 19 percent between 2011 and 2012.

“And that may be very well likely attributed to some of the disasters that we’ve had in Colorado,” said Rep. Angela Williams, D-Denver.

Williams worked 14 years in the insurance industry. Now she’s behind legislation to crack down on false claims.

“I saw a lot of that and can clearly understand what we need to do,” she said.

Williams says insurance fraud needs to be a felony regardless of the dollar amount. Right now Colorado doesn’t even have an insurance fraud statute, so investigators can only prosecute under theft or forgery statutes, which Attorney General John Suthers says don’t always fit.

“The problem has become that as the threshold for felony offense for things like theft has gone up, and it’s now $2,000, we think that there are cases below that threshold that are fairly serious,” Suthers said.

Some involve dangerous cartels, according to Suthers.

Insurance fraud nationwide has grown to an $80 billion a year racket.

“That’s just going to go back to persons like me and you and other consumers, and our rates are going to go up,” Williams said.

“We’ve got to send very strong message that this is the price we all pay when people do it successfully,” Suthers said. “One of the ways to do that is to make it a felony for any type of insurance fraud.”

The bill also applies to fraud by insurance agents.

The FBI estimates insurance rates have increased between $400 and $700 a year for the average family as a result of fraud.

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