This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0749.IBS
DATE: 1/16/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 749 Fraud Prevention
SPONSOR(S): Clemons
TIED BILLS: IDEN./SIM. BILLS: SB 1292
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Luczynski
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The bill makes the following changes to existing law to help prevent insurance fraud:
Service Contracts and Agreements –
o Contracts – establishes that sellers of service contracts that include automatic renewal provisions
must allow consumers to cancel these contracts in the same manner and by the same means as the
consumers entered the contracts;
o Agreements – expands the advertising violations for which a service agreement company or
salesperson can be subject to licensure discipline or criminal penalties; requires that a service
agreement company’s or salesperson’s disclosures in written advertisements be made in at least 12-
point, boldface type and include a Florida Company Code; requires such company or salesperson
disclose the full name of the company or salesperson in radio or television advertisements; requires
that a service agreement salesperson must identify his or her full legal name and license number
when beginning a solicitation call and his or her telephone number when ending such a call.
Public Adjusters and Public Adjuster Apprentices – establishes a new maximum fine amount, not to
exceed $20,000 per act, for a public adjusters or public adjuster apprentices who commit certain prohibited
acts during a state of emergency declared by the Governor; implements the same penalties for individuals
who engage in these prohibited acts, but are not public adjusters or public adjuster apprentices, and are not
otherwise exempt from licensure.
Investigation by the Division of Investigative and Forensic Services (DIFS) and the State Fire Marshal
(SFM) –
o Public Records Exemptions for Active Investigations – amends the definition of “active” as it
pertains to investigations of fraudulent insurance acts by DIFS and of fires and explosions by SFM
so that it has the same meaning as “active” in the public records law;
o Compliance with Investigations – removes language that makes it a misdemeanor for a person
who violates the statute regarding investigation of fraudulent insurance claims and crimes related to
a fire or explosion loss; establishes that the Department of Financial Services may fine an insurer up
to $2,000 per day if the insurer fails or refuses to comply with the investigation of a fraudulent
insurance act by DIFS, or a fire or explosion by the SFM.
Prosecution of False and Fraudulent Insurance Claims – replaces the word “and” with the word “or” that
violations of certain statutes are separate crimes, and criminal prosecution for violation of either section
must begin within five years of the violation; allows an insurer that has been damaged by a false or
fraudulent insurance act to recover investigation and litigation expenses, including attorney fees, if the
insurer has reported the false or fraudulent act to DIFS and there has been a criminal adjudication of guilt.
The bill has no impact on state or local government revenues or expenditures and no direct economic impact on the
private sector.
The bill as effective upon becoming law except as otherwise provided within the bill. STORAGE NAME: h0749.IBS PAGE: 2
DATE: 1/16/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Service Contracts and Agreements
A service contract is a written contract for the performance of services over a fixed time period or for a
specific duration of time.
1
A service agreement is a contract or agreement indemnifying the agreement
holder for the motor vehicle listed on the agreement and arising out of the ownership, operation, and
use of the motor vehicle against loss cause by failure of any mechanical or other component part, or
any mechanical or other component part that does not function as it was originally intended.
2
Cancellation of Service Contracts
A consumer may enter a service contract in a variety of ways. Sometimes entering a service contract is
accomplished easily by a consumer, but the consumer may have difficulty cancelling the contract
because the service contract requires cancellation by a different method.
3
Any seller that sells or offers
to sell a service contract to a consumer that has an automatic renewal provision must “disclose the
automatic renewal provision clearly and conspicuously in the contract or contract offer.”
4
However,
current law does not require that a service contract or offer for a contract to provide a specific method
of contract cancellation.
5
Effect of the Bill
The bill establishes that sellers of service contracts that include automatic renewal provisions must
allow consumers to cancel these contracts in the same manner and by the same means as the
consumers entered into the contracts.
Advertising Disclosures by Service Agreement Companies and Salespersons
Current law provides that a service agreement company or salesperson that engages in certain acts is
subject to denial, suspension, revocation, or refusal to renew or continue any appointment or license, or
is guilty of a second-degree misdemeanor.
6
These acts include limited violations of advertising
requirements.
7
Effect of the Bill
The bill expands the advertising violations for which a service agreement company or salesperson can
be subject to licensure discipline or criminal penalties. The bill requires that a service agreement
company or salesperson make disclosures in written advertisements in at least 12-point, boldface type.
Such written advertisements must include a Florida Company Code, in addition to the name and
address of the company. The bill requires that a service agreement company or salesperson disclose
the full legal name of the company or salesperson in radio or television advertisements. Additionally,
the bill requires that a service agreement salesperson must identify his or her full legal name and
license number when beginning a solicitation call and his or her telephone number when ending such a
call. The bill specifies that the phone number may be either the telephone number on file with the
Department of Financial Service (DFS) or another number at which the salesperson may be reached.
Violation of any of these requirements by a company or a salesperson may result in the denial,
1
S. 501.165(1)(d), F.S. This statute does not apply to warranty associations licensed under ch. 634, F.S.
2
S. 634.011(8), F.S.
3
Department of Financial Services, Agency Analysis of 2022 House Bill 749, p. 1 (Dec. 16, 2021).
4
S. 501.165(2)(a), F.S.
5
DFS, supra, note 3, at 1.
6
S. 634.095, F.S.
7
S. 634.095(3), F.S. STORAGE NAME: h0749.IBS PAGE: 3
DATE: 1/16/2022
suspension, revocation, or refusal to renew or continue an appointment or license, or a second-degree
misdemeanor. These portions of the bill are effective January 1, 2023.
Public Adjusters and Public Adjuster Apprentices
Public adjusters and public adjuster apprentices are prohibited from engaging in a list of practices in
current law and can be fined up to $10,000 per act for engaging in these practices at any time,
including a declared state of emergency.
8
Any person who engages in the same acts, but is not a
public adjuster or public adjuster apprentice, and who is not otherwise exempt from licensure, is guilty
of the unlicensed practice of public adjusting and may also be subject to the same fines.
9
Effect of the Bill
The bill establishes a new maximum fine amount, not to exceed $20,000 per act, for a public adjusters
or public adjuster apprentices who commit certain prohibited acts during a state of emergency declared
by the Governor through an executive order or proclamation. The bill implements the same penalties for
individuals who engage in these prohibited acts, but are not public adjusters or public adjuster
apprentices, and are not otherwise exempt from licensure.
Investigations by the Division of Investigative and Forensic Services (DIFS) and the State Fire
Marshal (SFM)
Public Records Exemptions for Active Investigations
Chapter 119, F.S., contains the state policy on public records, including specifics about when
documents are exempt from release in response to public records requests. In general, documents
related to an investigation by a state agency are exempt while the investigation is “active.” Under s.
119.011(3)(d), F.S., “active” has the following meaning:
1. Criminal intelligence information shall be considered “active” as long as it is
related to intelligence gathering conducted with a reasonable, good faith belief
that it will lead to detection of ongoing or reasonably anticipated criminal
activities.
2. Criminal investigative information shall be considered “active” as long as it is
related to an ongoing investigation which is continuing with a reasonable, good
faith anticipation of securing an arrest or prosecution in the foreseeable future.
In addition, criminal intelligence and criminal investigative information shall be
considered “active” while such information is directly related to pending
prosecutions or appeals. The word “active” shall not apply to information in cases
which are barred from prosecution under the provisions of s. 775.15 or other
statute of limitation.
However, the statutes regarding investigations of fraudulent insurance acts by DIFS
10
and
investigations of fires and explosions by the SFM
11
contain their own definitions of an active
investigation. These statutes provide that an investigation is “active” while the investigation with being
conducted with a “reasonable, good faith belief” that it might lead to the filing of administrative, civil or
criminal proceedings.
12
Additionally, an investigation does not cease to be active if DIFS or SFM is
“proceeding with reasonable dispatch, and [has]…a good faith belief that action” might be initiated by
DFS or another administrative or law enforcement agency.
13
8
S. 626.854(22), F.S.
9
S. 626.854(22)(c), F.S.
10
See s. 626.989, F.S.
11
See s.633.112, F.S.
12
Ss. 626.989 and 633.112, F.S.
13
Id. STORAGE NAME: h0749.IBS PAGE: 4
DATE: 1/16/2022
Effect of the Bill
The bill amends the definition of “active” as it pertains to investigations of fraudulent insurance acts by
DIFS and of fires and explosions by SFM so that they have the same meaning as “active” in the public
records law.
14
Compliance with Investigation by DIFS and SFM
Statutes require insurers to report knowledge of fraudulent insurance acts or any other act or practice
which constitutes a crime to DIFS
15
and knowledge that an intentional act resulted in a fire or explosion
loss to its insured’s real or personal property.
16
However, these statutes do not provide consequences
for an insurer’s failure to report this knowledge.
Effect of the Bill
The bill specifies that DFS may fine an insurer up to $2,000 per day, until it deems the insurer to be
compliant, if an insurer fails or refuses to comply with the DIFS’s investigation of a fraudulent insurance
act or SFM’s investigation of a fire or explosion, including the requirement to report fraudulent acts to
DFS. The bill removes language that makes it a misdemeanor for a person who violates the statute
regarding investigation of fraudulent insurance claims and crimes related to a fire or explosion loss.
Prosecution of False and Fraudulent Insurance Claims and Crimes
Criminal Charges for Insurance Fraud
Section 775.15(11), F.S., specifies that felony violations of two specific statutes
17
regarding criminal
insurance fraud must be commenced within five years after the violation is committed. However, the
present statutory construction could be interpreted to mean that someone must violate both of these
statutes before they are prosecuted for a felony violation of s. 775.15(11), F.S.
Effect of the Bill
The bill replaces the word “and” with the word “or” between two statutory sections to clarify that
violations of either section are separate crimes, and that criminal prosecution for violation of either
section must begin within five years of the violation of that section.
Recovery of Costs by Insurers
Section 817.234, F.S., provides criminal penalties for any person who commits insurance fraud by
engaging in certain acts with intent to injure, defraud, or deceive any insurer. An insurer that has been
damaged as a result of a violation of this statute has a cause of action to recover compensatory
damages, plus reasonable investigation and litigation expenses, including attorney fees, at a trial or
appellate court, if the violation has resulted in a criminal adjudication of guilt.
18
Effect of the Bill
In addition to the requirement under existing law that there has been a criminal adjudication of guilt, the
bill adds the requirement that, in order to recover reasonable investigation and litigation expenses,
14
S. 119.011(3)(d), F.S.; This change may have the effect of expanding a public records exemption. Please see Drafting
Issues for further detail.
15
S. 626.989(6), F.S.
16
S. 633.126(2), F.S.
17
See ss. 440.105 and 817.234, F.S.
18
S. 817.235(5), F.S. STORAGE NAME: h0749.IBS PAGE: 5
DATE: 1/16/2022
including attorney fees when it has been damaged due to a false or fraudulent insurance claim, an
insurer must report the false or fraudulent claim to DIFS.
B. SECTION DIRECTORY:
Section 1. Amends s. 501.165, F.S., relating to automatic renewal of service contracts.
Section 2. Amends s. 626.854, F.S., relating to “public adjuster” defined; prohibitions.
Section 3. Amends s. 626.989, F.S., relating to investigation by department or Division of Investigative
and Forensic Services; compliance; immunity; confidential information; reports to division;
division investigator’s power of arrest.
Section 4. Amends s.633.112, F.S., relating to State Fire Marshal; hearings; investigations;
recordkeeping and reports; subpoenas of witnesses; orders of circuit court.
Section 5. Amends s. 633.126, F.S., relating to Investigation of fraudulent insurance claims and
crimes; immunity of insurance companies supplying information.
Section 6. Amends s. 634.095, F.S., relating to prohibited acts.
Section 7. Amends s. 775.15, F.S., relating to time limitations; general time limitations; exceptions.
Section 8. Amends s. 817.234, F.S., relating to false and fraudulent insurance claims.
Section 9. Provides that the bill is effective upon becoming law except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
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DATE: 1/16/2022
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill requires DIFS to adopt rules to administer the statutory sections regarding investigation of
fraudulent insurance acts and fire or explosion claims or crimes, but the bill provides DIFS with the
authority necessary to adopt these rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The changes to the definition of “active” in sections 3 (lines 158-166) and 4 (lines 255-263) of the bill
may have the unintended consequence of expanding existing public records exemptions for
investigations by DIFS and SFM such that a separate public records bill might be required. However,
this concern has been discussed with the bill sponsor and he intends to file an amendment to remove
the language that changes the definition of “active” from the bill.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES