Runestad bill would strengthen penalties against insurance fraud

LANSING, Mich. — Sen. Jim Runestad testified before a Senate panel on Tuesday on his bill to strengthen the penalties for insurance fraud.

Senate Bill 295 would add insurance fraud to the list of crimes that can be prosecuted under the racketeering statute in Michigan.

“Experts have noted that auto insurance fraud in the state has risen to the level of organized crime, and legislation is needed to provide the resources to prosecute these criminal enterprises,” said Runestad, R-White Lake. “This bill will support the efforts of the anti-fraud unit and make sure that the unit and allied departments have the resources needed to identify, pursue, charge and prosecute insurance fraud to the fullest extent possible.”

The Racketeer Influenced and Corrupt Organizations Act (RICO) is a federal law that penalizes ongoing acts committed by criminal organizations.

RICO focuses specifically on racketeering crimes. Racketeering is usually defined as dishonest and fraudulent business dealings, including extorting money.

“By adding insurance fraud to the list of crimes that can be prosecuted under the racketeering statute, we will be giving law enforcement the necessary tools to make it easier to go after criminals who perpetuate fraud in our insurance system,” Runestad said. “We will be able to prevent the situation in which an attorney who owns a shell company that oversees the transportation of a victim steers that victim toward certain providers and caregivers for a kickback.”

The Senate Committee on Insurance and Banking approved SB 295 on Tuesday. It now heads to the Senate floor.

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