Insurance Fraud Weekly e-Port: Week Ending Aug. 10

Insurance Fraud Weekly ePort
Week Ending August 10, 2007 
www.insurancefraud.org
 
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LEGISLATION & REGULATION

* The North Carolina legislature adjourned for the year without passing SB 179, which would’ve created a whistleblower law targeting Medicaid scams in the state. But the legislature did pass HB 729, which nails drivers who try to lower their auto premiums by lying where they live and garage their cars. The new law requires stricter proof of residency to acquire a driver license, auto registration and insurance.

* The coalition’s Howard Goldblatt has been appointed to the consumer council of the Connecticut insurance department. The council will advise the insurance commissioner on consumer-oriented insurance issues. The commissioner and Goldblatt also serve on the NAIC’s consumer liaison committee.

Note: Texts of anti-fraud bills are available on the coalition’s website here.

PUBLIC OUTREACH

* The so-called rent-a-patient swindle is still alive and well, Idaho’s Better Business Bureau warns in a consumer alert. ”Body buyers” are befriending people via email, chatrooms and weblogs, convincing them to rent their bodies to sleazy surgeons for a fee. The surgeons perform needless surgery, then make large and inflated insurance claims. Sometimes the “patients” know they’re part of a scam, and sometimes they’re convinced they actually need medical treatment. Many targets are immigrants with limited English skills. Removal of sweat glands is a favorite surgery. A string a major busts of clinics, surgeons and recruiters in Southern California over the last several years hasn’t quashed the costly and dangerous scheme. Avoid come-ons that promise free travel or cosmetic surgery in exchange for access to your health policy, the BBB warns consumers. Also, investigate the reputation and licensing of physicians and clinics with your state medical licensing agency.

CRIMINAL CONVICTIONS

* Lawyer Ira Seligsohn is nothing if not brash. The Kennelon, N.J. man admitted paying runners to rustle up fake crash victims to make bogus injury claims against auto insurers. He also helped several of the so-called patients make their claims and sue insurers. But Seligsohn also told the IRS that his payments to the runners were tax-deductible investigative expenses. No go, the state court said. He faces up to 10 years in prison when sentenced in December.

* Connie Raybourn shot her husband for $1 million in life insurance, but claimed she killed him in self-defense. The St. Louis-area woman said Mike was about to stab her when she killed him. But at trial, the clincher was that she shot him both in the chest, and in the back as he left. He was found on the front lawn of their complex. She’d also obtained the concealable.32-caliber derringer from her father just two days earlier. She and Mike also were supposed to meet to notarize their divorce settlement. Instead, she invited him to lunch at their condominium, where she shot him. Raybourn was sentenced to 18 years in prison as part of a plea and sentencing agreement.

* A former agent in Hong Kong helped three cronies arrange fraudulent claims after they deliberately had themselves blinded in one eye to scam health-insurance money. A crime syndicate arranged for a doctor to surgically blind three mainland Chinese in their right eyes. The patients used identities fabricated by a ring member who bought ID cards from a pickpocket and helped them buy coverage from Hong Kong insurers. Agent Kwok Yan-sang was convicted this week for his role in the HK$8-million plot.

CRIMINAL CHARGES

* Three agents in Southern California have been arrested for a variety of suspected crimes. Farid Mohammed Afzali allegedly stole more than $4,000 in premiums from two policyholders. He collected $821 from a homeowner customer and $3,755 from a trucker seeking commercial coverage, but never bought the promised coverage, the insurance department alleges…Jose Felipe Escalante collected $1,920 from a commercial trucker, but allegedly altered the premium check by changing the payee’s name from the agency to Escalante’s aunt. The money helped pay off a family debt, prosecutors allege. The owner of the Van Nuys insurance agency discovered his agent’s suspected theft only after the alleged victim sued the agency…Unlicensed agent James C. Taylor said he bought a construction surety bond for Bailey’s Excavating & Environmental to cover a $1.1-million contract. But Bailey’s couldn’t obtain supporting documentation from Taylor when the primary contractor asked for proof of bonding. Bailey’s lost a great deal of money when it had to settle for a smaller part of the contract. Taylor was ordered to pay Bailey’s $223,021, and received three months in county jail (suspended).

* Urologist Ali Moayed inflated his insurance billings by doctoring lab reports to convince healthy patients they needed risky cancer treatments, California officials charge. His alleged victims were seniors. The San Jose-area Moayed also doctored files on other patients to confirm prostate cancer, officials say. He injected as many as 13 healthy patients with radioactive seeds used to destroy prostate malignancies, officials allege. Moayed also gave some patients hormone injections to prevent their prostate cancer from growing, but their files didn’t appear to show the effects of the treatment, as if they’d received a placebo, investigators say. The suspected scheme surfaced when a colleague examined the post-treatment plan of a Moayed patient who had had prostate cancer treatment. He discovered that the file lacked a crucial lab report confirming cancer, officials say. No word on how much insurance money was at stake.

* Georgia insurance agent Cynthia Crews bilked her clients, promising to buy them workers comp coverage but stealing their premiums instead, the state workers comp fraud unit said Monday. The Valdosta producer allegedly took money from at least three clients and issued them fake certificates of insurance with the carrier’s name, policy numbers and policy dates. Investigators were alerted by complaints from her clients. 

* A workers comp claim by an ice cream firm’s employee has melted, Virginia prosecutors charged this week. Edward M. Wood said he injured his elbow when he slipped on a freezer floor while unloading pallets of ice cream for Dari Farms Ice Cream. The Stafford man went on temporary total disability, claiming he was in excruciating pain and couldn’t work. Wood received $10,000 in benefits from The Hartford, but a witness observed Wood using a portable drill on a home project, and mowing his lawn using a large commercial mower, prosecutors allege. The surveillance firm Claims Verification Inc. then caught Wood loading 80-pound bags of dry cement mix at a Home Depot, prosecutors say.

* A Denver minister forged several designation-of-beneficiary forms to funnel more than $575,000 in life-insurance money from dead Baptist congregation members to his church and other groups he controlled, prosecutors charged this week. Acen Phillips allegedly forged signatures of dead policyholders, backdating the forms to create the illusion of authenticity, prosecutors allege. One claim was from the policy of Shely Marie Lowe, who died of heart failure. She was the stepmother of a missing child, and Phillips allegedly altered her policy to make his New Birth Church the primary beneficiary. Philips also changed other policies to make sure family members received less money than they were due, and that more money went to New Birth or other groups affiliated with Phillips. He allegedly took out a group life policy for a group of Baptist ministers, but later allowed anyone to be covered for a monthly $50 fee. He faces up to 81 years in prison and up to $5 million in fines if convicted.

* Anthony Myers Jr. never died. It only seemed that way, New Jersey prosecutors charged this week. The boy’s Newark father Anthony Sr. lied that his son had died of an asthma attack so the father could fraudulently collect $25,000 in life insurance from State Farm, officials say. But in fact young Anthony was quite alive in North Carolina the whole time, New Jersey’s Office of Insurance Fraud Prosecutor says. Myers Sr. faces up to five years if convicted.

CIVIL SUITS

* Major insurers, adjusters and engineering firms are being sued in federal court for allegedly charging the federal flood program hundreds of millions of dollars for Hurricane Katrina claims the plaintiffs contend insurers should’ve paid. The suit, which was unsealed in Mississippi this week, says the insurers misallocated legitimate hurricane-damage claims as flood claims. Named as defendants in the whistleblower case are State Farm, Nationwide, Allstate and USAA, plus an independent adjusting firm and engineering firms that examined Katrina property damage. The suit seeks three times the alleged overcharges to the federal flood program, plus up to $11,000 for each alleged violation of the federal false claims act. The suit was brought by two sisters who had adjusted Katrina claims.

* A St. Louis-area man received a $1-million civil verdict after alleging Allstate had defamed him by implying he had defrauded the insurer when seeking a claim after a fire destroyed his home. John Johnson’s claim was denied, and the denial letter included statements about misrepresentation of facts, fraud and concealment, according to news reports. Johnson says he cooperated with the insurer’s investigation and didn’t hire an attorney until after lawyers for the company questioned him under oath about the fire. No word on whether the insurer will appeal.

ETC.

* California businesses in high-risk activities such as construction may be hiding 75 percent of their payroll for those risky jobs to avoid paying full workers comp premiums. This is forcing comp rates eight times higher for honest employers, says a study planned for release later today. Dishonest firms may have hidden up to $100 billion in payroll in 2002, says the study by researchers at the University of California Berkeley. The problem is at least as large today as it was during the time covered by the study (1997-2002), the researchers say. Fraud is a major problem in construction, especially roofing, officials warn. Crooked firms either fail to report their full payroll or misclassify roofers, whose workers comp rate account for more than $40 per $100 payroll in California, according to small-business advocates in the state. Some firms pay day laborers cash and fail to report their pay to workers comp insurers.

* Drivers with little connection to the countryside are claiming farm discounts on their auto premiums, according to a new study by Quality Planning Corportation. Drivers are seeking premium breaks for thousands of unlikely farm vehicles such as Chevy Camaros, Jaguars and Porsche Carreras. Of 151,022 vehicles for which a farm discount was claimed, 11,699 (or 7.7 percent) were in non-agricultural areas, Quality Planning found in a national study. New Jersey, Massachusetts and Connecticut were the top three states for improper discounts, Quality Planning says. Abuse of the farm discount, however, totals only about $16 million of $163 billion in auto premium errors for 2005, Quality Planning says. Some of the premium leakage may be honest mistakes, and some involves deliberate deception by drivers and agents, the firm says.

* Vicki Cutcliffe has been named the new head of Florida’s insurance fraud unit, the state Department of Financial Services said this week. Cutcliffe brings more than 30 years of law-enforcement background to her position. Most recently, Cutcliffe was chief of Law Enforcement Support for the Motor Carrier Compliance Office of the state transportation department. She succeeds Eric Miller, who was named the state’s Deputy Chief Financial Officer earlier this year.

QUOTE OF THE WEEK

“He poked his finger in a hornet’s nest and on the other side were the insurance companies.”

– Houston lead defense lawyer Casey Keinan, commenting on a doctor who was sentenced to 11 years in prision for health insurance fraud.

OTHER HEADLINES THIS WEEK

* Georgia doc accused of murder suspected of fraud
* Deputy in Michigan on trial for falsifying crash report
* Handyman in N.Y. charged with filing false claim on house
* New Hampshire driver indicted for false auto claim
* Mother of N.Y. staged crash family sentenced to 1 year

Details at http://www.insurancefraud.org/news.lasso

MEETINGS & CONFERENCES

* 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)

* September 17, 2007 — Building, Managing and Measuring Your SIU Hartford, CT (International Association of Insurance Fraud Agencies)

* September 18, 2007 — Fraud and Abuse: Quality of Care Issues Las Vegas, NV (Association of Certified Fraud Examiners)