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A State Lawmaker Who Defended Insurance Companies Relies On Industry Contributions

A BuzzFeed News investigation found that insurers have co-opted law enforcement to intimidate and prosecute their own customers.

Posted on September 5, 2019, at 2:03 p.m. ET

Mladen Antonov / AFP / Getty Images

The Pennsylvania Capitol.

A state lawmaker who vocally defended the practice of insurers paying salaries of law enforcement agents who investigate and prosecute their own customers for fraud has for years received substantial financial support from the insurance industry.

The official, Pennsylvania state representative Tony DeLuca, called a recent BuzzFeed News investigation of the practice, which is widespread in the Keystone State, “unfounded and false.” Campaign contribution data show that more than 20% of all the money DeLuca raised in elections over the past five years came from insurance companies and related organizations.

In an interview with BuzzFeed News regarding his comments, DeLuca, democratic chair of the House Insurance Committee, defended his criticisms. “I am not in the pocket of the insurance industry,” he said.

The BuzzFeed News report found that Erie Insurance, State Farm, Farmers, and other large home and auto insurers around the country co-opted law enforcement to intimidate and prosecute their own customers — tactics that can help companies boost their profits and avoid paying claims. In Pennsylvania, insurance companies even cover the salaries of dedicated prosecutors, detectives, and other investigators whose caseloads consist primarily of referrals provided by those same companies.

The system has ensnared innocent people, including a Vietnam veteran living outside Pittsburgh who was wrongly accused of faking the theft of his truck to collect insurance money and faced seven years in prison before he was ultimately found not guilty.

In a statement released a week after the article was published, DeLuca said the state’s Insurance Department would never tolerate the insurance industry misusing fraud reporting to avoid paying claims.

“The accusations, and I reiterate, the accusations made by this news organization claiming the existence and use of a co-opt plan by major insurance companies and law enforcement to falsely prosecute insurers to boost company profits — which, as a result, pay police salaries — are unfounded and false,” DeLuca said in the statement.

In his interview, DeLuca said that he had not spoken to any of the people wrongly accused of fraud described in the article, but asserted he was on the consumers’ side. A review of his legislative history shows that he has supported industry-friendly bills, including several addressing insurance fraud, but has also backed legislation that could potentially be costly to insurers, such as a 2009 bill that would prohibit auto insurers from using policyholders’ educational background to set premiums.

Campaign finance data from the National Institute on Money in Politics, a transparency organization that tracks campaign finance filings, show that dozens of DeLuca’s donors are part of the insurance industry, including Erie Insurance, State Farm, and Farmers, all of which were named in the BuzzFeed News story. In the three most recent election cycles, the lawmaker has received at least $48,000 from insurance interests. His other large supporters include lawyers, labor unions and health care providers, the data show.

Others have been critical of insurance companies working so closely with law enforcement, particularly in Allegheny County, which includes Pittsburgh, where several people were wrongly accused of insurance fraud.

The district attorney “has the power and discretion to prevent these abusive tactics and stop the insurance companies from exploiting local residents. Instead, he’s facilitating it,” said Lisa Middleman, a candidate currently running against incumbent Allegheny County District Attorney Stephen Zappala.

A spokesperson for the Allegheny County District Attorney’s Office said its efforts to fight fraud are fair, and the industry-funded operation “not only helps to hold people who abuse the system accountable, but also serves as a deterrent to others contemplating similar behavior.”

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