New Wyoming Insurance Fraud Legislation Signed into Law

By David Lindsey Attorney of David Lindsey, Attorney at Law posted in Fraud on Tuesday, April 3, 2012.

The Wyoming State Legislature has approved a bill intended to target insurance fraud by allowing law enforcement to speak to insurance companies without first getting a subpoena. It also allows insurers to communicate more openly with law enforcement, giving them immunity when dealing with law enforcement agencies.

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A more broadly worded version of the bill that included a “whistle-blower” provision was scrapped in favor of this narrower version because of what Rep. Kermit Brown (R-Laramie) called constitutional concerns. The 2011 version of the bill would have provided civil immunity for anyone who gave information about insurance fraud or unfair trade practices, which would have presented potential problems. This version, which Brown called “the most succinct version we considered”, is limited in scope only to communications between insurers and law enforcement. Because law enforcement does not need to demonstrate probable cause and obtain a subpoena, the insurance industry feels that schemes will be far easier to detect and prosecute.

Wyoming was one of only four states without such a provision on the books. The previous law provided protection only to the Wyoming State Insurance Commissioner in order to speak with insurers about suspected cases of fraud. All other communication was barred.

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According to the Property Casualty Insurers Association of America (PCI), insurance fraud costs the average American family between $400 and $700 a year in order to cover these losses. Just last month, the New York Police Department made several dozen arrests in an auto insurance scheme; the crime ring is alleged to have stolen nearly $300 million by exploiting a loophole in the state law which allows both drivers and passengers to receive benefits of up to $50,000 per person for injuries incurred in an auto accident.