Legislation aims to curb insurance fraud by lawyers on clients

March 22, 1995|By Amy L. Miller | Amy L. Miller,Sun Staff Writer

Increasing incidents of insurance fraud by unscrupulous lawyers could easily be curbed by a simple notification of claimants, members of the Senate Finance Committee were told yesterday.

"This bill is designed to protect people from lawyers that cheat and steal," said Del. Richard N. Dixon, sponsor of the proposal that would allow insurance companies to notify claimants when a settlement check has been sent to their attorney.

Supporters of the bill -- which passed the House of Delegates Feb. 24 with a 130-5 vote -- have said such legislation would discourage lawyers from forging a client's settlement check and stealing the money.

Opponents have said the bill would cost insurers too much to implement.

"It is a simple matter of sending a notice out," said Mr. Dixon, a Democrat from Westminster. "There has been a significant increase in this type of crime."

From 1991 to 1992, the Client's Security Trust Fund -- which pays claims to people cheated by lawyers -- paid $61,000 to cheated clients, Mr. Dixon said. That figure increased to $210,000 from 1993 to 1994.

"I feel it is important to note that the largest insurer in the state of Maryland, State Farm, supports this bill," Mr. Dixon said. "They feel it would be beneficial to their customers."

In the House Economic Matters committee hearing Feb. 1, a representative of State Farm Insurance was the only insurer to speak in support of the bill.

During the hearing, Sen. Decatur W. Trotter, a Democrat from Prince George's County, questioned why members of the House had weakened the bill by making notification voluntary rather than mandatory.

"That is a difficult thing to explain," Mr. Dixon said. "But, I feel they made a mistake."

"I think they did, too," Mr. Trotter said.

Mr. Dixon then urged members to adopt Sen. John C. Astle's amendments that would restore the original intent of the bill. Mr. Astle, a member of the Finance Committee, is a Democrat from Anne Arundel County.

"This is a break for us," Mr. Dixon said. "It just happened [in the Senate]."

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