Signs anti-fraud reforms that target crooked clinics and providers

• Requires clinics to be licensed to treat auto-crash passengers;
• Makes it a crime to run a clinic without a license;
• Allows insurers 90 days to investigate claims (up from 30);
• Allows insurers to require examinations under oath; and
• Creates an agency under the state CFO to accept grants and gifts to help fund investigations and prosecutions

———————

Capitol Office

222 the Capitol – 402 South Monroe Street
Tallahassee, FL 32399-1300

Re: HB 1101 and other Senate and House bills with possible amendments eliminating the 80% Threshold for declaring Total Loss Vehicles to include non-repairable branding

By way of introduction, my name is Ryan Toole and until my recent retirement from the FBI in August 2010, I was a Supervisory Special Agent assigned at FBI headquarters. From 2005-2010, I was the National Program Manager for the Auto Theft Unit in the Criminal Investigation Division of the FBI. Auto theft has historically been the focus of the FBI, as a dangerous gateway crime and a significant health and safety risk to the public.

I have received a copy of language that has currently been amended into HB 1101 and which I understand the proponents may seek to amend into additional pending legislation, including legislation that may have been referred to your Committee. This proposed language would remove the section of Section 319.30 Florida Statutes that requires a total loss vehicle that is damaged over 80% of its retail value to receive a Certificate of Destruction which prevents this vehicle from returning to Florida’s roads and highways.

It is our belief that this very important section of the statute, which has been created through extensive meetings and discussion amongst consumers, law enforcement, the auto recycling industry, the insurance industry, the auto auction industry and all of the stakeholders impacted by these laws, has up to now played an extremely important role in protecting consumers in Florida. The current law provides a level of protection to the consumer by insuring that heavily damaged total-loss vehicles are designated as non-repairable. It also provides a foundation for insuring that there are true standards for branding to meet the concerns of consumers and law enforcement.

One cannot stress the extent of the moral hazard involved with eliminating testable standards for branding. Without these impartial standards there can be few ways to protect the public from fraudulent practices that harm the pubic either financially or physically. That is one of the main reasons for title branding to exist, and without such standards it makes it nearly impossible for law enforcement to hold an industry to any reasonable standards of behavior.

Vehicles that are damaged over 80% are typically not safe to be repaired and by allowing these vehicles to branded by insurers as repairable salvage would create an incentive for parties to bypass non-repairable branding in the interest of maximizing their profits on the resale of such vehicles. If a vehicle made sense to be repaired for an insured, and the repair is actually made for that insured, then such vehicle does not have its ownership transferred and we agree it need not get a non-repairable brand.

However, this amendment as written would apply in the case of a total-loss vehicle that has been reclaimed by the insurance company from the insured, and which has not been repaired for the insured. The insurance company can then resell it in its wrecked condition for the benefit of the insurance company and the salvage auction that shares in the proceeds of the sale. This creates a moral hazard where it is in the interest of both the insurance company and the auction to avoid a non-repairable brand on a wrecked total-loss vehicle in order to maximize their returns at auction. This will then allow unscrupulous bidders to purchase these heavily damaged vehicles and make substandard repairs in order to cut the cost of the repairs to a lower level. They then can resell the unsafe vehicles to private citizens – often over Craig’s List, EBay or by curb-stoning to individuals who will be unaware of the extent of prior damage, and who will be without warrantee or recourse. These risks are greatly contained in Florida right now due to the automatic non-repairable branding of high damage total-loss vehicles.

In addition, there will be cases where parties will purchase such heavily damaged vehicles for the value of the paperwork. This paperwork can then be used for purposes of VIN cloning – which is the practice of stealing another vehicle and retagging that stolen vehicle with the identity of the first massively damaged vehicle that was purchased at auction for just that purpose. It is also going to cause an increase in the theft of vehicles for the purpose of obtaining the Vehicle Identification Numbers and documentation to facilitate VIN swapping and auto theft. This dramatic change will also create a market for the stolen parts needed to repair these vehicles.

The temptation for parties to avoid a non-repairable branding is very significant. One example exists of an insurance total loss vehicle by a major insurer that appears to have been appraised to have a repair cost of $19,792. The actual damage to this vehicle is so severe that it is impossible to repair it any price. There is literally nothing that can be reused on the vehicle when making a repair. All the metal is either crushed or burnt, and the remainder has been heated to such an extent that its integrity as been structurally destabilized and would not meet any standards for repair. There is no wiring left, the wheels are all melted, and the engine compartment is completely burnt and crushed. By having a patently fraudulent damage appraisal at below the 80% mandatory threshold, the insurance company was able to receive a repairable salvage title. The vehicle was then auctioned off at the Jacksonville Florida IAA auction. IAA is the second largest salvage auction chain in the United States and auction roughly 1 million vehicles a year from its many locations. They would be quite well able to recognize that this should not have been sold by them under a repairable title.

A second documented example is of a different vehicle that was also greatly under-appraised for damage and given a clean title. This vehicle was a total-loss recovered from the insured by another major national insurer, and this one was auctioned off by the largest salvage auction chain out of another state. As a result of under declaring damage, this virtually worthless vehicle was acquired at auction for several thousand dollars with the auction proceeds being shared between the insurer and the salvage auction. In addition to the auction sale price the buyer had to pay a buyer’s fee to the auction, as well as any transportation costs. In this particular case, the buyer appears to have purchased this vehicle for the paperwork since there now is a vehicle registered in a third state under the VIN of the paperwork of the burnt vehicle that was sold at auction.

Clearly this is an intolerable situation where substantially wrecked vehicles can be purchased for their paperwork to cover subsequent thefts or for substandard repairs to unsuspecting buyers.

This would be a dramatic and significant change to Florida’s titling laws, and which has not been publically aired with the law enforcement community, consumers or most other parties that would be impacted by these changes. This legislation threatens consumer safety and increasing the potential for auto theft and consumer fraud.

All of the stakeholders in Florida’s automobile salvage related industries and the law enforcement community together with consumers and Florida’s Department of Motor Vehicles have consistently worked together to develop Florida’s laws. Including Section 319, into an efficient and effective legal framework for the titling and disposition of “Total Loss” vehicles in Florida and this process should not be abandoned to allow specific participants in the industry to promote legislation for their individual financial gain at the expense of Florida’s citizens safety and protection.

Those interest groups that support amending the change to Section 319-30 Florida Statutes do not have the best interests of the Florida consumer in mind. Their objective is to maximize their profits, even at the expense of consumer safety. The law as it currently stands is an impediment to these individuals and they are attempting to remove as much of the law as they can get away with. The amendment to this law is unacceptable. This law was written to protect the citizens of Florida from those individuals who want to usher this amendment. Let the law stand as it is written.

Yours very truly,

/RT/

Ryan Toole

FBI (Retired)

——————–

Capitol Office
222 the Capitol – 402 South Monroe Street
Tallahassee, FL 32399-1300

Re: HB 1101 and other Senate and House bills with possible amendments eliminating the 80% Threshold for declaring Total Loss Vehicles as non-repairable

By way of introduction, the National Salvage Vehicle Reporting Program (NSVRP) is a leadingnot-for-profit law enforcement support organization dedicated to reducing auto theft, title fraud and abuse, and helping to control criminal activities related to the exportation of stolen andfraudulently obtained vehicles. NSVRP works closely with the Department of Justice, the FBI, Customs and Border Patrol and other parties to help further these objectives. In addition, NSVRP is a recognized third party standards body for NMVTIS the National Motor Vehicle Title Information System (NMVTIS) which was created as a result of the Anti-Car Theft Acts of 1992and 1996. NSVRP’s board is composed of representatives of local and national law enforcement organizations.

We have received a copy of language that has currently been amended into HB 1101 and which we understand the proponents may seek to place this same language into additional pending legislation, including legislation that may have been referred to your Committee. This proposed language would remove the section of Section 319.30 Florida Statutes that requires a total loss vehicle that is damaged over 80% of its retail value to receive a Certificate of Destruction which prevents this vehicle from returning to Florida’s roads and highways.

It is our belief that this very important section of the statute, which has been created through extensive meetings and discussion amongst consumers, law enforcement, the auto recycling industry, the insurance industry, the auto auction industry and all of the stakeholders impacted by these laws, has up to now played an extremely important role in protecting consumers in Florida. The current law provides a level of protection to the consumer by insuring that heavily damaged total-loss vehicles are designated as non-repairable. It also provides a foundation for insuring that there are true standards for branding to meet the concerns of consumers and law enforcement.

One cannot stress the extent of the moral hazard involved with eliminating testable standards for branding. Without these impartial standards there can be few ways to protect the public from fraudulent practices that harm the pubic either financially or physically. That is one of the main reasons for title branding to exist, and without such standards it makes it nearly impossible for law enforcement to hold an industry to any reasonable standards of behavior.

Vehicles that are damaged over 80% are typically not safe to be repaired and by allowing these vehicles to branded by insurers as repairable salvage would create an incentive for parties to bypass non-repairable branding in the interest of maximizing their profits on the resale of such vehicles. If a vehicle made sense to be repaired for an insured, and the repair is actually made for that insured, then such vehicle does not have its ownership transferred and we agree it need not get a non-repairable brand.

However, this amendment as written would apply in the case of a total-loss vehicle that has been reclaimed by the insurance company from the insured, and which has not been repaired for the insured. The insurance company can then resell it in its wrecked condition for the benefit of the insurance company and the salvage auction that shares in the proceeds of the sale. This creates a moral hazard where it is in the interest of both the insurance company and the auction to avoid a non-repairable brand on a wrecked total-loss vehicle in order to maximize their returns at auction. This will then allow unscrupulous bidders to purchase these heavily damaged vehicles and make substandard repairs in order to cut the cost of the repairs to a lower level. They then can resell the unsafe vehicles to private citizens – often over Craig’s List, EBay or by curb-stoning to individuals who will be unaware of the extent of prior damage, and who will be without warrantee or recourse. These risks are greatly contained in Florida right now due to the automatic non-repairable branding of high damage total-loss vehicles.

In addition, there will be cases where parties will purchase such heavily damaged vehicles for the value of the paperwork. This paperwork can then be used for purposes of VIN cloning – which is the practice of stealing another vehicle and retagging that stolen vehicle with the identity of the first massively damaged vehicle that was purchased at auction for just that purpose. It is also going to cause an increase in the theft of vehicles for the purpose of obtaining the Vehicle Identification Numbers and documentation to facilitate VIN swapping and auto theft. This dramatic change will also create a market for the stolen parts needed to repair these vehicles.

The temptation for parties to avoid a non-repairable branding is very significant. One example exists of an insurance total loss vehicle by a major insurer that appears to have been appraised to have a repair cost of $19,792. The actual damage to this vehicle is so severe that it is impossible to repair it any price. There is literally nothing that can be reused on the vehicle when making a repair. All the metal is either crushed or burnt, and the remainder has been heated to such an extent that its integrity as been structurally destabilized and would not meet any standards for repair. There is no wiring left, the wheels are all melted, and the engine compartment is completely burnt and crushed. By having a patently fraudulent damage appraisal at below the 80% mandatory threshold, the insurance company was able to receive a repairable salvage title. The vehicle was then auctioned off at the Jacksonville Florida IAA auction. IAA is the second largest salvage auction chain in the United States and auction roughly 1 million vehicles a year from its many locations. They would be quite well able to recognize that this should not have been sold by them under a repairable title.

A second documented example is of a different vehicle that was also greatly under-appraised for damage and given a clean title. This vehicle was a total-loss recovered from the insured by another major national insurer, and this one was auctioned off by the largest salvage auction chain out of another state. As a result of under declaring damage, this virtually worthless vehicle was acquired at auction for several thousand dollars with the auction proceeds being shared between the insurer and the salvage auction. In addition to the auction sale price the buyer had to pay a buyer’s fee to the auction, as well as any transportation costs. In this particular case, the buyer appears to have purchased this vehicle for the paperwork since there now is a vehicle registered in a third state under the VIN of the paperwork of the burnt vehicle that was sold at auction.

Clearly this is an intolerable situation where substantially wrecked vehicles can be purchased for their paperwork to cover subsequent thefts or for substandard repairs to unsuspecting buyers.

This would be a dramatic and significant change to Florida’s titling laws, and which has not been publically aired with the law enforcement community, consumers or most other parties that would be impacted by these changes. This legislation threatens consumer safety and increasing the potential for auto theft and consumer fraud.

All of the stakeholders in Florida’s automobile salvage related industries and the law enforcement community together with consumers and Florida’s Department of Motor Vehicles have consistently worked together to develop Florida’s laws. Including Section 319, into an efficient and effective legal framework for the titling and disposition of “Total Loss” vehicles in Florida and this process should not be abandoned to allow specific participants in the industry to promote legislation for their individual financial gain at the expense of Florida’s citizens safety and protection.

We ask that you prevent any such language to move forward through your Committee and if such language is presented or proposed that you will invite NSVRP and all of the stakeholders to participate in any discussion or debate about these significant changes being proposed to Florida’s “Total Loss” titling and salvage motor vehicle processing laws.

On behalf of the Board of the National Salvage Vehicle Reporting Program,

Howard Nusbaum

Administrator, NSVRP

The National Salvage Vehicle Reporting Program (NSVRP) is a not-for-profit 501 (C) (3). The organization was founded to support law enforcement and to promote and support efforts to advance the National Motor Vehicle Title Information System (NMVTIS). NSVRP’s mission is to support initiatives to control auto-theft and title abuse. NSVRP’s Board of Directors consists of representatives of major law enforcement groups, and is an independent third party standards provider for NMVTIS. NSVRP has been recognized both by the Department of Justice and the FBI for ‘Exceptional Service in the Public Interest’ for its public policy efforts.

——————–

Capitol Office
222 the Capitol – 402 South Monroe Street
Tallahassee, FL 32399-1300

Re: HB 1101 and other Senate and House bills with possible amendments eliminating the 80% Threshold for declaring Total Loss Vehicles as non-repairable

By way of introduction, I am James Spiller, President and CEO of the National Vehicle Service (NVS). NVS is a 501 C(3) law enforcement support agency that is the primary national depository and law enforcement access portal to current vehicle lien data. NVS also is the main license plate reader (LPR) portal for the tracking of stolen vehicles and for amber alert license plate tracing. In addition, I have previously served as Executive Vice President and Chief Administrative Officer of the National Insurance Crime Bureau, and presently I am a member of the National Motor Vehicle Title Information System (NMVTIS) Federal Advisory Board. NMVTIS was created as part of the 1996 Anti-Car Theft Act, and is operated under the U.S. Department of Justice.

We have received a copy of language that has currently been amended into HB 1101 and which we understand the proponents may seek to place this same language into additional pending legislation, including legislation that may have been referred to your Committee. This proposed language would remove the section of Section 319.30 Florida Statutes that requires a total loss vehicle that is damaged over 80% of its retail value to receive a Certificate of Destruction which prevents this vehicle from returning to Florida’s roads and highways.

It is our belief that this very important section of the statute, which has been created through extensive meetings and discussion amongst consumers, law enforcement, the auto recycling industry, the insurance industry, the auto auction industry and all of the stakeholders impacted by these laws, has up to now played an extremely important role in protecting consumers in Florida. The current law provides a level of protection to the consumer by insuring that heavily damaged total-loss vehicles are designated as non-repairable. It also provides a foundation for insuring that there are true standards for branding to meet the concerns of consumers and law enforcement.

One cannot stress the extent of the moral hazard involved with eliminating testable standards for branding. Without these impartial standards there can be few ways to protect the public from fraudulent practices that harm the pubic either financially or physically. That is one of the main reasons for title branding to exist, and without such standards it makes it nearly impossible for law enforcement to hold an industry to any reasonable standards of behavior.

Vehicles that are damaged over 80% are typically not safe to be repaired and by allowing these vehicles to branded by insurers as repairable salvage would create an incentive for parties to bypass non-repairable branding in the interest of maximizing their profits on the resale of such vehicles. If a vehicle made sense to be repaired for an insured, and the repair is actually made for that insured, then such vehicle does not have its ownership transferred and we agree it need not get a non-repairable brand.

However, this amendment as written would apply in the case of a total-loss vehicle that has been reclaimed by the insurance company from the insured, and which has not been repaired for the insured. The insurance company can then resell it in its wrecked condition for the benefit of the insurance company and the salvage auction that shares in the proceeds of the sale. This creates a moral hazard where it is in the interest of both the insurance company and the auction to avoid a non-repairable brand on a wrecked total-loss vehicle in order to maximize their returns at auction. This will then allow unscrupulous bidders to purchase these heavily damaged vehicles and make substandard repairs in order to cut the cost of the repairs to a lower level. They then can resell the unsafe vehicles to private citizens – often over Craig’s List, EBay or by curb-stoning to individuals who will be unaware of the extent of prior damage, and who will be without warrantee or recourse. These risks are greatly contained in Florida right now due to the automatic non-repairable branding of high damage total-loss vehicles.

In addition, there will be cases where parties will purchase such heavily damaged vehicles for the value of the paperwork. This paperwork can then be used for purposes of VIN cloning – which is the practice of stealing another vehicle and retagging that stolen vehicle with the identity of the first massively damaged vehicle that was purchased at auction for just that purpose. It is also going to cause an increase in the theft of vehicles for the purpose of obtaining the Vehicle Identification Numbers and documentation to facilitate VIN swapping and auto theft. This dramatic change will also create a market for the stolen parts needed to repair these vehicles.

The temptation for parties to avoid a non-repairable branding is very significant. One example exists of an insurance total loss vehicle by a major insurer that appears to have been appraised to have a repair cost of $19,792. The actual damage to this vehicle is so severe that it is impossible to repair it any price. There is literally nothing that can be reused on the vehicle when making a repair. All the metal is either crushed or burnt, and the remainder has been heated to such an extent that its integrity as been structurally destabilized and would not meet any standards for repair. There is no wiring left, the wheels are all melted, and the engine compartment is completely burnt and crushed. By having a patently fraudulent damage appraisal at below the 80% mandatory threshold, the insurance company was able to receive a repairable salvage title. The vehicle was then auctioned off at the Jacksonville Florida IAA auction. IAA is the second largest salvage auction chain in the United States and auction roughly 1 million vehicles a year from its many locations. They would be quite well able to recognize that this should not have been sold by them under a repairable title. There are many other such examples available.

A second documented example is of a different vehicle that was also greatly under-appraised for damage and given a clean title. This vehicle was a total-loss recovered from the insured by another major national insurer, and this one was auctioned off by the largest salvage auction chain out of another state. As a result of under declaring damage, this virtually worthless vehicle was acquired at auction for several thousand dollars with the auction proceeds being shared between the insurer and the salvage auction. In addition to the auction sale price the buyer had to pay a buyer’s fee to the auction, as well as any transportation costs. In this particular case, the buyer appears to have purchased this vehicle for the paperwork since there now is a vehicle registered in a third state under the VIN of the paperwork of the burnt vehicle that was sold at auction.

Clearly this is an intolerable situation where substantially wrecked vehicles can be purchased for their paperwork to cover subsequent thefts or for substandard repairs to unsuspecting buyers.

This would be a dramatic and significant change to Florida’s titling laws, and which has not been publically aired with the law enforcement community, consumers or most other parties that would be impacted by these changes. This legislation threatens consumer safety and increasing the potential for auto theft and consumer fraud.

All of the stakeholders in Florida’s automobile salvage related industries and the law enforcement community together with consumers and Florida’s Department of Motor Vehicles have consistently worked together to develop Florida’s laws. Including Section 319, into an efficient and effective legal framework for the titling and disposition of “Total Loss” vehicles in Florida and this process should not be abandoned to allow specific participants in the industry to promote legislation for their individual financial gain at the expense of Florida’s citizens safety and protection.

NVS asks that you prevent any such language to move forward through your Committee and if such language is presented or proposed that you will invite my organization and all of the stakeholders to participate in any discussion or debate about these significant changes being proposed to Florida’s “Total Loss” titling and salvage motor vehicle processing laws.

Respectfully,