Insurance Fraud News: Week Ending May 11, 2007

Insurance Fraud Weekly ePort

National news in the fight against insurance fraud from www.insurancefraud.org

LEGISLATION & REGULATION

* The Florida legislature sent a confusing message when it shut down for 2007 last week. On one hand, the legislature passed a budget that funds eight new prosecutors for the fraud division. They’d be based in Tampa, Orlando and Miami. But that’s now a big “if.” The problem is, a separate bill (SB 1880) actually authorizing the positions failed, thus leaving the prosecutors in limbo. The lawmakers hopefully will iron out the confusion when they meet in an expected special session in June.

* Florida’s legislature did approve creating a statewide monitoring program to help slam the door on illegal diversion of addictive prescription narcotics. HB 1155 passed on the final day of the session. It would set up an electronic system to help medical providers, pharmacists and law enforcement track the flow of prescriptions. Florida will become the 34th state with a monitoring program. Insurers are paying billions of dollars a year for legal narcotics such as OxyContin that are diverted to the black market. The coalition will shortly publish a major report on this growing national problem next month.

* Hawaii’s legislature ended its 2007 session without agreeing to expand the jurisdiction of the state’s insurance fraud unit beyond its current focus on auto schemes. SB 1412 was in conference but no agreement could be reached in time. The holdup: whether, or how much, the unit should expand into workers comp. The unit thus will remain an auto-fraud bureau—at least until next session.

Note: Texts of anti-fraud bills are available on the coalition’s website here http://www.insurancefraud.org/bills_intro.html

CRIMINAL CONVICTIONS

* A driver for a staged-accident ring used a McDonald’s parking lot in Lowell, Mass. as a base for several set-up crashes. Eric Bonnette borrowed cars from three people, then met behind the McDonald’s several times to plot the crimes. Two cronies, Mercy Encarncion and Demaris Matos, told Bonnette which cars to follow and hit so the passengers could make phony injury claims. In one case, Bonnette was driving a borrowed Nissan Maxima with the owner as a passenger. He was told to hit a Volvo, and no medical attention was needed even though police were called to the scene. Insurers paid out more than $25,000. Later he was told to ram a borrowed Mercury Sable into a Ford Taurus parked at a nearby mall. Insurers paid $53,000, though no one was hurt. Bonnette met a third time at the McDonald’s, where he was told to crash his borrowed Honda Civic into a Lexus in a nearby town. Insurers paid out $38,000 to four claimants. Bonnette received two to three years in prison. The Massachusetts fraud bureau played a major role in the investigation by an auto-fraud task force.

* More than 1,000 doctors and other medical providers paid a fake insurer $24 million for worthless medical malpractice coverage. William A. Ledee III ran Professional Liability Insurance Co., an outfit based in St. Vincent and the Grenadines. His company had no coverage or loss reserves, and was slapped with cease-and-desist orders by seven states. The Atlanta man received nearly six years in federal prison Tuesday.

* Permission granted, at least that’s what arsonist Jeffrey Truman Jr. says. The central New York man destroyed the Stanton Paper Box Co. by torching its 127-year-old brick building in Oneida for insurance money. Truman says his father—one of the owners—told him to do the deed. So he poured gasoline on stacks of pallets then lit a magazine with a grill lighter. About 200 fire fighters from 17 companies fought the blaze, which caused a power outage and forced the evacuation of a senior citizens facility. Truman Jr. pleaded guilty yesterday, and his father still faces a variety of charges.

* Chiro Kevin Zegel squeezed too hard and will pay a price. The Middleton, Mass. chiro started billing insurers for phantom treatments. The Massachusetts fraud bureau received an anonymous tip and sent him two investigators posing as crash victims. Zegal diagnosed and treated them for injuries neither actually had, and billed for treatment on 11 dates the investigators never even met with Zegel. The AG landed the conviction. Zegel received five years of probation, had his license suspended for two years and must repay nearly $19,100.

* A prominent Washington, D.C. eye doc performed 136 useless cataract surgeries to steal more than $1 million from health insurers. Dr. Douglas F. Greer submitted 108 of those claims for “a scleral graft” to heal burns on the white parts of eyes. But the grafts are needed for only one of every 1,000 cataract operations. Greer faces up to 13 years in federal prison when sentenced.

* A former Boston stripper’s scheme was exposed. Billing herself as a psychologist, Louise Wightman treated hundreds of teens for eating disorders and other serious problems even though she had no license. Wightman was well-known as a stripper in Boston’s Combat Zone in the 1970s and 1980s. She left a state-required doctoral program in psychology after the dean confronted her about her earlier career. Wightman then bought a bogus PhD online from a Dominica-based school for about $1,300, advertised that she had a doctorate, and began making claims against health insurers for treating clients. Wightman faces potentially 90-plus years when sentenced.

* A claims specialist for Universal Underwriters had 139 checks worth more than $400,000 fraudulently written for workers comp claims. Richard Slonchka spent the money on sports cards, memorabilia and cars. The Pittsburgh-area man faces up to 10 years in prison when he’s sentenced in August.

CRIMINAL CHARGES

* A New York City bus driver toured Europe as the drummer for a rock band after claiming she was too disabled by a shoulder injury to work. Valerie Scroggins collected nearly $13,400 in workers comp money but was videotaped allegedly banging her drums with her band in Amsterdam and Dublin. Scroggins was one of four City transit workers recently busted for allegedly cheating on the self-insured comp plan. Bus driver Steven Sanfilippo was caught working as a real estate agent while collecting $23,225 after claiming he hurt his back and neck when his bus hit a stretch of road that was under construction, officials charge. Subway car inspector Ricardo Yolas received $20,840 after saying he hurt his back but was caught running a business cleaning hotel rooms in the Poconos, officials say. Subway train operator Louis Guadani said he hurt his back and leg but was caught allegedly lifting a beer keg and other heavy objects at a Brooklyn supermarket he owned.

* Houston insurance agent Sheila Cunningham left dozens of city employees uncovered after allegedly stealing the plan’s premiums without buying the coverage. Client Harold Stephens says he had a kidney and part of his spleen removed in a cancer operation, but his insurer wouldn’t pay because he was behind on his premium. Another uncovered client’s house reportedly burned down, and the wife of murdered Houston police officer Rodney Johnson also says she’s due some insurance money.

* Georgia agent Pollyanna Johnson is on the run after stealing at least $200,000 in property and taxicab liability premiums from clients, Georgia’s insurance department said this week. The Columbus-area woman allegedly bilked Top Dawg Taxi and Transportation, the Columbus Firefighters Association and the A-Cab Company. The A-Cab owner says he paid more than $61,000 to cover his 52 vehicles, and filed two accident claims that weren’t covered. The suspected scheme surfaced when a Top Dawg cab hit and seriously injured a man. All told, Johnson may have stolen as much as $500,000 in premiums, the insurance department says. Johnson, who is part owner of Action Auto Insurance Agency in Columbus, is being sought in New Hampshire.

* A former agent and his crony killed at least four people to collect more than $1 million in life insurance, the feds charge as the trials of Richard James and Ronald Mallay got underway Wednesday in New York City. MetLife uncovered the suspected scheme after discovering that 21 death claims had been filed on policies written by Richard James within just a few years. That was more than three times the normal rate, and many deaths were violent or unusual. James collected $84,000 after injecting Basdeo Somaipersaud with lethal doses of a sedative while the victim was in a drunken stupor, the feds allege. James also was caught on videotape allegedly paying an informant $25,000 to kill another would-be victim with alcohol and drugs. “The higher the dose, the better,” James allegedly said. Another man drank a cocktail mixed with Drano, and a hitman emptied a clip into the back of another victim’s head, the feds charge. James is a member of the tightly knit Guyanese community in Queens. His alleged scheme mostly targeted run-down alcoholics who didn’t know they were insured. James and Mallay face possible death if convicted.

CIVIL SUITS

* Blue Cross of California agreed to stop canceling individual health policies unless it can prove fraud. Yesterday’s move was an effort to settle a class-action lawsuit by up to 6,000 people who’ve been cancelled since 2001. The decision ends cancellations based on honest mistakes by policyholders who contend the forms are deliberately confusing to increase the chances of mistakes. The consumer-friendly decision could have a major impact because Blue Cross is the largest insurer in California’s individual market, and its parent WellPoint Inc. is the nation’s largest health insurer. The decision also heads off potential efforts by regulators and legislators to curb policy cancellations. No word on the settlements’ financial terms.

* A Louisiana hospital will fork over $7.4 million to help settle a suit accusing a heart surgeon of doing useless angiograms, angioplasties and stents on healthy patients to inflate his insurance billings. Prosecutors say some of the procedures caused complications and serious injuries. Lafayette General Medical Center will pay 350 former patients an average of $12,000 each. The hospital also agreed last year to pay the feds $3.8 million to settle a lawsuit alleging it didn’t act on complaints by one of Dr. Mehmood M. Patel’s associates. Attorneys also are seeking damages against Patel directly, and the feds are deciding whether to charge Patel with insurance fraud for allegedly billing insurers $2.5 million for needless procedures on more than 70 patients.

ETC.

* Schemers are stealing identities by calling family members of deceased persons, lying that they represent insurers and demanding payment of phantom past-due premiums, California officials warn. The cons say they’ll pay the policy proceeds only when they receive their payments. They ask for credit card information, but hang up if anyone starts asking questions. The scheme especially targets surviving spouses of seniors. They believe the surviving wives, especially, may not know their family’s finances or how to pay for funeral expenses.

* Aggressive insurers and agents are using abusive tactics to persuade Medicare recipients to sign up for private health plans that cost the feds up to 20 percent more than traditional Medicare, federal officials warn. Lured by incentives such as Las Vegas vacations, the producers are selling so-called Medicare Advantage plans. The fast-growing plans are replacements for Medicare plans. But they usually don’t coordinate care and don’t save money because co-payments for some services may be higher, the feds say. Some seniors also receive less care because their doctors refuse to take patients in private fee-for-service plans. Agents have forged signatures and even signed up dead people. Much of the growth in private fee-for-service plans comes in rural areas, where doctors and hospitals can be in short supply.

QUOTE OF THE WEEK

“With just a few people on the payroll and a very limited budget, [the Coalition Against Insurance Fraud] has made real progress in the media relations and government affairs arena over the years. The coalition has been able to personalize the problem by putting a face on fraud in the media. They have been instrumental — and successful — in lobbying and legislative efforts. The coalition is focused, has developed expertise, and most importantly, has earned resounding credibility with its anti-fraud legislative and consumer outreach activities. With more resources and greater support, the coalition’s capabilities could be unparalleled and unimaginable in scope.”

— An article in the current issue of Claims magazine by David Rioux of Erie Insurance. The article profiles insurers attempts to enhance fraud-fighting capabilities.

OTHER HEADLINES THIS WEEK

* Louisiana agent accused of stealing policyholder premiums

* Physical therapist in Pa. charged in $1.3M billing scam

* Four in Florida family charged with drug diversion, fraud

* NJ teacher pleads guilty to defrauding health insurer

* West Virginia man charged with torching former home

Details at www.InsuranceFraud.org

MEETINGS & CONFERENCES

* June 13-15, 2007 — Fraud Education Conference Orlando, FL (Florida Insurance Fraud Education Committee)

* June 19-22, 2007 — Health Care Fraud Schemes Scottsdale, AZ (National Healthcare Anti-Fraud Association)

* June 21, 2007 — Board and Membership Meeting Washington, DC (Coalition Against Insurance Fraud)

* July 23-24, 2007 — Advanced Fraud Investigation Seminar San Diego, CA (National Association of Insurance Commissioners)

* September 9-12, 2007 — Annual Seminar & Expo on Insurance Fraud Las Vegas, NV (International Association of Special Investigation Units)

* September 10-11, 2007 — 2007 Annual Meeting Lisbon, Portugal (International Association of Insurance Fraud Agencies)

For more info, visit online events http://www.insurancefraud.org/events_set.html