A bipartisan bill to rein in fraudsters that prey on accident victims and cost families millions in increased premiums is a small but integral step what lawmakers hope will become broad reforms to Minnesota’s insurance laws.

The bill presented Thursday would enable information sharing and easier prosecution of bad actors who use insured drivers as pawns in schemes to defraud companies of thousands of dollars in benefits. It’s part of a package of proposed reforms that lawmakers say could stop the throngs of criminals who prey on accident victims and defraud the state’s no-fault insurance system by offering unnecessary medical procedures or drastically marking up prescription costs.

It’s just the beginning to reversing what Mark Kulda of the Insurance Federation of Minnesota calls “grim statistics” for the state. Fraud costs Minnesota an average of $1,400 per year, not just in premiums but other costs driven up by the loss.

The fraud works often like this: Victims involved in an accident are bombarded with solicitations from chiropractors or trial lawyers with offers for free evaluations or services. If a victim comes in, the perpetrator will obtain insurance information and provide a minor service, then start billing providers for multiple times that. Under no-fault insurance, consumers don’t receive an explanation of benefits and will never know how much the provider was billed.

“This is organized crime. This is not someone trying to get away with it.” Kulda said. “These are people who do it as their full-time job and have moved out of drugs and guns and into insurance fraud because it’s easy and lucrative and hard to catch.”

The sweeping recommendations stem from an effort headed by Sens. Vicki Jensen, DFL-Owatonna, Jim Metzen, DFL-South St. Paul and Paul Gazelka, R-Nisswa. They range from limiting insurance reimbursement for prescription drugs to wholesale costs to repealing a law that allows the sale of accident reports to the general public to prevent criminals from access to databases of potential marks. Lawmakers hope to address the reforms piece by piece in legislation to be authored down the road.

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