Is Ignoring the Law Fraud?

“Power To Agents" #8
by Dean Auten

Recently I reported an Insurance Company to DOI because they were ignoring a
Georgia Law. This was my first! We tried every way we could to get help from
the Company -- all we wanted was a letter from them telling us in writing what
they were telling us on the phone. While I do not choose to cause them legal
problems, my resources to defend my actions is not the kind of resources the
Company has to defend its actions.

I read with interest some of the Company comments at the credit scoring
hearing (thanks to Eddie Emmett). Under Oath it appears that some companies may have
not told the truth (fraud?). One very laughable comment was from State Farm's
Legal Counsel. Commissioner said, "but State Farm can tell their agents
what to do, can't they?", the legal counsel responded with a "no". The comment was
made under oath.

Of course we all know that we can speak openly to all our companies. If they
are doing something wrong we tell them, don't we? One time one of my people
did tell a company about their bad service -- in policy issuance and with claims.
The field rep evidently called his home office and told them to cancel us when
he left our office as we got the notice in two days (in the good days when
postal system got mail to us in two to three days -- not the 7 to 10 today --
and they want 3 cents more).

Will Company cancel us if we tell them their problems? In the one example I
didnot want to lose the company. I was just not satisfied with current service.
Before a Georgia agent cancels a company, they have to consider Georgia Laws
33-24-45 and 33-24-46.

Will Company cancel us if we tell DOI about possible illegal acts? I am very
concerned about this as there are many issues to consider:

1. If I did not report would I be held liable for not reporting and is that
fraud?
2. If they are fined by DOI and they don't cancel us, will they make our
staying a kind of hell in insurance?

One issue I am sure. If the Company knew that we had ignored (broke) Georgia
Law, they would have reported us. One time I had a fellow local agent
report me for suspected fraud.

The company did a thorough investigation and, for that, I am thankful as the
investigation found the person that committed the fraud was the policyholder.
That agent was, and is now, a friend. I can't blame him for reporting the suspected fraud as told him by a former policyholder of ours. In fact I have been told (I am still trying to find
Georgia law) that for us to not report suspected fraud could cause us to be
charged with fraud. Possibly some FYI reader could help me.

Code 33-1-16 defines "fraudulent insurance act". My wife and her mother
used to talk Pig Latin in front me because they knew I could not understand. If
written I could, however, interpret (which they were not going to do). Differently,
attorneys do their best in written form as they can tell us what the law says
for a price. If anyone ever had any doubt that a large majority of lawmakers
were attorneys, they need only read 33-1-16.

Editor’s note: Dear Dean,

The Internet is turning out to be quite a tool in the hands of concerned
independent agents. No longer does someone have to wonder how the law really
reads ... they can interpret it for themselves at the touch of a keystroke.
I used it extensively in my research for my CE class “The Law ... and the
Loopholes!” It never ceases to amaze me at the misunderstandings which are
rift in our industry.

Interested persons can use the FYI website (www.fyigeorgiaviews.com) as a
one-stop information resource for Georgia law & DOI Rules & Regulations.
On the Home Page of the website, click Links, then Legislative / Government.
You can decide if you want information on GA Department of Public Safety
or GA Insurance Commissioner or GA Legislative Updates among others.
If you want more information on Georgia Law, click GA Legislative Updates,
Legislation, GA Code Search and then Search By Keyword or Search By Code
Number.

The answer to your question about being charged with fraud for not reporting
fraud is true only to the extent that you participated in the fraud or its
cover-up. O.C.G.A. 33-1-16(f) only requires a licensed person to report the
fraud, it doesn’t address penalties.

Fraud, like Beauty, is apparently in the eye of the beholder. I don’t think I
would classify the following scenario as Fraud, but then again, I’m not
Commissioner of Insurance ... yet.

Mitch Schwark, owner of the Esquire Insurance Agency in Buckhead, recently saw
something that didn’t look quite right in a company’s chargeable MVR points
and started a chain of inner-company e-mails!
****************************************
To: Company Rep #1
Subject: GA Seatbelt law
#1,
I was looking at the Georgia seatbelt law (am I bored or what??) and it seems
to me that insurers cannot charge for seatbelt violations in Georgia. I know
that your company and other companies do, however, which makes me believe that
I may be misinterpreting the law. Do you have any input? I have attached a Word document with the law and I have set the pertinent part of the law in bold. Let me know what you think. Thanks again for the Braves tickets!!
Mitch
****************************************
40-8-76.1 J
*** CODE SECTION (DELAYED EFFECTIVE DATE) *** 08/27/01
(e)(2) & (3) -- EFFECTIVE July 1, 2001
40-8-76.1.
(a) As used in this Code section, the term "passenger vehicle" means every
motor vehicle designed to carry ten passengers or less and used for the
transportation of persons but shall not mean pickup trucks, motorcycles, motor
driven cycles, or vehicles equipped for off-road use, provided that the term
"passenger vehicle" includes any sport utility vehicle and also includes
pickup trucks for any occupant who is under 18 years of age.
(b) Each occupant of the front seat of a passenger vehicle shall, while such
passenger vehicle is being operated on a public road, street, or highway of
this state, be restrained by a seat safety belt approved under Federal Motor
Vehicle Safety Standard 208.
(c) The requirement of subsection (b) of this Code section shall not apply
to:
(1) A driver or passenger frequently stopping and leaving the vehicle or
delivering property from the vehicle, if the speed of the vehicle between
stops does not exceed 15 miles per hour;
(2) A driver or passenger possessing a written statement from a physician that
such person is unable, for medical or physical reasons, to wear a seat safety
belt;
(3) A driver or passenger possessing an official certificate or license
endorsement issued by the appropriate agency in another state or country
indicating that the driver is unable for medical, physical, or other valid
reasons to wear a seat safety belt;
(4) A driver operating a passenger vehicle in reverse;
(5) A passenger vehicle with a model year prior to 1965;
(6) A passenger vehicle which is not required to be equipped with seat safety
belts under federal law;
(7) A passenger vehicle operated by a rural letter carrier of the United
States
Postal Service while performing duties as a rural letter carrier;
(8) A passenger vehicle from which a person is delivering newspapers; or
(9) A passenger vehicle performing an emergency service.
(d) The failure of an occupant of a motor vehicle to wear a seat safety
belt in any seat of a motor vehicle which has a seat safety belt or belts shall not be
considered evidence of negligence or causation, shall not otherwise be
considered by the finder of fact on any question of liability of any person,
corporation, or insurer, shall not be any basis for cancellation of
coverage or increase in insurance rates, and shall not be evidence used to diminish any
recovery for damages arising out of the ownership, maintenance, occupancy, or
operation of a motor vehicle.
(e)(1) Except as otherwise provided in paragraphs (2) and (3) of this
subsection, a person failing to comply with the requirements of subsection (b)
of this Code section shall not be guilty of any criminal act and shall not be
guilty of violating any ordinance. A violation of this Code section shall not
be a moving traffic violation for purposes of Code Section 40-5-57.
(2) A person failing to comply with the requirements of subsection (b) of this
Code section shall be guilty of the offense of failure to wear a seat safety
belt and, upon conviction thereof, may be fined not more than $15.00; but, the
provisions of Chapter 11 of Title 17 and any other provision of law to the
contrary notwithstanding, the costs of such prosecution shall not be taxed nor
shall any additional penalty, fee, or surcharge to a fine for such offense be
assessed against a person for conviction thereof. The court imposing such fine
shall forward a record of the disposition of the case of failure to wear a
seat safety belt to the Department of Motor Vehicle Safety.
(3) Each minor over four years of age who is an occupant of a passenger
vehicle shall, while such passenger vehicle is being operated on a public road,
street, or highway of this state, be restrained by a seat safety belt approved under
Federal Motor Vehicle Safety Standard 208. In any case where a minor
passenger over four years of age fails to comply with the requirements of this
paragraph, the driver of the passenger vehicle shall be guilty of the offense of failure
to secure a seat safety belt on a minor and, upon conviction thereof, may be
fined not more than $25.00. The court imposing such a fine shall forward a
record of the court disposition of the case of failure to secure a seat safety
belt on a minor to the Department of Motor Vehicle Safety.
(f) Probable cause for violation of this Code section shall be based solely
upon a law enforcement officer's clear and unobstructed view of a person not
restrained as required by this Code section. Noncompliance with the restraint
requirements of this Code section shall not constitute probable cause for
violation of any other Code section.
****************************************
Editor’s note: Mitch’s inquiry started the wheels of change moving. I suspect
the correspondence and chain of events could happen in any large organization,
so I’m changing the names to #s!
**************************
From: Company Rep #1
10/05/2001
To: Company Rep #2,
Company Rep #3
cc: Head Honcho
Subject: GA Seatbelt law
#2 and #3,
can you give info on this? is the agent thinking of our safety violation here?
I'll get back to this agent w/your info. thanks!
#1
**************************
From: Company Rep #2
10/05/2001 11:50 AM
To: Company Rep #4
cc: Company Rep #5
Subject: Re: GA Seatbelt law
#4,
Do we charge for seat belt violations? The GA seat belt law is pretty clear
that we can't.
Thanks for your help,
#2.
**************************
#2,
I do not believe that we charge for seat belt violations in GA. When I look in
our online procedure document, there is not a corresponding violation code to
go along with a "Seat Belt Violation".
As phone CCR's do not reconcile MVR's, I would feel more confident in my
answer above if this was deferred to Company Rep #5 (Processing BA for GA).
She will be able to confirm with the correct unit responsible for MVR
reconciliation that processors are not coding seat belt violations that
show on the MVR as something else (i.e. Minor Moving Violation, etc.).
Thank you,
#4
**************************
From: Company Rep #2
10/05/2001 07:24 PM
To: Company Rep #5
cc: Company Rep #3,
Company Rep #4
Subject: Re: GA Seatbelt law
#5,
Would you be able to let me know whether or not we charge for seat belt
violations in GA?
Thanks for your help,
#2.
**************************
From: Company Rep #5
10/08/2001 11:48 AM
To: Company Rep #2
cc: Company Rep #3,
Company Rep #4
Subject: Re: GA Seatbelt law
I found policies with the SAF violation code but I am retrieving the archived
MVRs. I should have a response for you tomorrow.
**************************
From: Company Rep #5
10/10/2001 12:17 PM
To: Company Rep #2
cc: Company Rep #3,
Company Rep #4,
Company Rep #6
Subject: GA Seatbelt Law
I reviewed a number of policies and have found that many manually reconciled
MVRs that display a seat belt violation (all were out of state MVRs) have
charged as SAF (Safety violation). This means processors are classifying it as
a chargeable safety violation. We should clarify this is a nonchargeable
violation in OPSS. Company Rep #7 can take care of updating OPSS.
Some of the SAF violations are from the app source which means the agents are
still charging for it also. Of the examples I reviewed, I have not seen a GA policy with a seat belt violation on it. I am still waiting for confirmation that our programs are not
programmed to auto reconcile the seat belt violation for SAF (if it were to
appear on the MVR). Company Rep #8 usually responds quickly. I will update you
as soon as I receive a response.
**************************
From: Company Rep #5
10/16/2001 05:06 PM
To: Company Rep #2
cc: Company Rep #3,
Company Rep #6
Subject: MVR/CLUE Inquiry Completion Notification
Although I reviewed quite a few examples where the seatbelt was charged on the
app and not found on the MVR, we cannot be sure the seatbelt violation will
not display on a GA MVR. If it is a chargeable violation on the MVR,
Company Rep #8 confirmed we will automatically reconcile as an SAF violation
and charge for it. She said she can request a change if we need to
reconcile as an NCL (non-chargeable). We will also need to update OPSS to specifically
state the seatbelt violation is non-chargeable. Let me know if you would like me to proceed with this change.
**************************
From: Company Rep #3
10/25/2001 02:53 PM
To: Company Rep #1
cc: Company Rep #2
Subject: GA Seatbelt Law
Sorry #1, we must have forgotten to forward this on to you. I'm assuming that
#2 is going to proceed with this change (#2, correct me if I'm wrong!).
**************************
Subject: GA Seatbelt Law
To: mschwark@bellsouth.net
From: Company Rep #1
Date: Thu, 25 Oct 2001 15:38:33
hey I JUST got the response on this! let me know if this is unclear, and
thanks for bringing this to our attention! talk to you soon!
#1

Editor’s note: I’m betting Mitch’s inquiry is causing many company reps to
check with their own home office about this little bit of information!

........... Eddie

Is Ignoring the Law Fraud?

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