Insurance Fraud Weekly ePort

Insurance Fraud Weekly ePort  

Week ending June 29, 2007
http://www.InsuranceFraud.org  

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LEGISLATION & REGULATION

* A bill creating an insurance fraud unit in Maine has gone belly-up. The state Senate passed LD 713 but the measure died in the House. On the surface, the chambers fought over whether the fraud unit would be housed in the insurance department or AG’s office. But in truth, House members of the joint committee that agreed to place the unit in the insurance department didn’t support the bill at all. They used the housing issue as an excuse to oppose a new unit.

* In a surprise move, the Texas governor vetoed a bill forbidding medical providers from contacting auto accident victims within 31 days of a crash. Some state political pundits wondered if the governor vetoed the bill because chiros opposed the bill or the state trial lawyers supported the bill. Either way, the legislature doesn’t meet until 2009. So the issue will remain on the shelf until then, if it resurfaces at all.

* The Louisiana Senate voted down a bill allowing health insurers more time to investigate suspicious claims. HB 968 would’ve given insurers four years to investigate if there was “a sufficient basis for a reasonable, professionally trained person to believe that fraud has occurred.” The House had overwhelmingly approved the measure.

* The Oregon legislature passed a bill (HB 2568) giving vehicle owners control over the information in the auto’s event data recorder, or black box. Fraud fighters will need a court order or the owner’s permission to access the data.

PUBLIC OUTREACH

* “Staged-crash rings likely will persist for years to come—the insurance money is too easy and profitable—but fraud fighters are learning what works. Often it boils down to coordinated shows of intimidating force involving multiple agencies,” the coalition’s Executive Director Dennis Jay wrote in a column in this week’s National Underwriter. Jay explored best practices by fraud fighters around the U.S. who are working to gut staged-accident rings that, collectively, steal at least $1 billion in fake injury claims a year.

* Boating scams appear to be thriving across America, in part because many frauds go undetected and are hard to investigate, according to the cover story in the summer edition of Fraud Focus, the coalition’s quarterly publication. “Boat schemes could be pulled from the playbooks of auto swindlers. Much like the ‘owner giveup,’ shady boat owners often sink and burn their vessels for insurance cash. Then they’ll claim someone stole it, or that it sunk in an accident,” the article says. Vessel owners also have crooked boatyards pad repairs by including the cost of upgrades or routine maintenance, or disguise a mechanical repair as an insured accident,” says the article, “Boat Owners Hoisting Salty Stories of Fraud.”

* See the hand grabbing the money? That’s your hard-earned cash in the mitts of an insurance swindler, the stark homepage image seems to say. Welcome to www.InsuranceFraud.org. The coalition has completely redesigned its website. The nation’s largest online source of insurance-fraud info is bigger, better and brighter than ever. The site is packed with more consumer information, plus expanded anti-fraud tools for investigators, researchers and others. We’ll highlight specific new website features in future issues of ePort. But meanwhile, visit InsuranceFraud.org. Spin through the many consumer advisories in the Consumers section. Probe the latest arrest data and check out Fraudblog in the expanded Tools section. Insurance fraud is a large crime. But with 441 easy-to-navigate web pages, InsuranceFraud.org provides more ways to fight this crime. More details in the current issue of Fraud Focus.

CRIMINAL CONVICTIONS

* Personal-injury lawyer Bruce Corrigan will serve time for encouraging an undercover FBI agent to bilk an insurer. The Fairfield, Conn. attorney told the agent to obtain a false loss-of-earnings statement from a friend who ran a landscaping business. The agent sought Corrigan’s help, claiming he suffered neck and lower-back injuries after being rear-ended by a hit-and-run driver while exiting I-95 near Norwalk. The agent then sought treatment from a chiro, who made fake treatment claims for insurance money. Corrigan received eight months in federal prison this week. He’ll also pay a $10,000 fine, plus repay $6,258 to MetLife. That’s the fee Corrigan took out of the $18,500 settlement he negotiated for the FBI agent. The chiro pleaded guilty earlier.

* A Kentucky coal-mining firm bilked workers comp insurers out of $1.5 million in premiums by telling the insurers he had only half as many employees as he really did. Firm owner Harold Simpson paid some employees through checks, but kept a hidden payroll to pay many miners in cash. He said he was struggling to survive during a time of low coal prices and high operating costs, including comp coverage. Simpson also said insurers suffered no losses because he paid the hidden miners’ medical bills out of his own pocket. But the federal court was unmoved, especially because he tried to avoid restitution by transferring ownership of one of his two mining firms to his wife. Simpson received three years, and must repay the $1.5 million in avoided premiums.

* The deputy counsel for New York’s power authority fraudulently added his ex-wife to his state-paid health policy after they divorced. Carmine Clemente claimed he was married to Hermina Clemente from March 2000 to last December, which made her eligible for health coverage under his policy. But they actually had divorced in early 2000, thus disqualifying her for benefits. Clemente said her remaining on his policy was just a mistake, but that didn’t persuade the court. He pleaded guilty on to a misdemeanor Monday, and will avoid prison time. He also resigned and must repay more than $21,000 in stolen insurance money.

* The claims didn’t add up. A former math teacher bilked her school district’s health insurer out of $1,754 by submitting claims for 45 psychotherapy sessions she neither received nor paid for. Beth N. Gurtov taught at Central Middle School in Parsippany, N.J. She received three years of probation and lost her teaching license.

CRIMINAL CHARGES

* Two claims managers of The Hartford received millions in bribes to settle a Houston plaintiff lawyer’s lawsuit involving silicosis cases, the feds charged this week. Rachel Rossow and John Prestage agreed The Hartford would pay $34 million for about 1,000 cases handled by lawyer Warren Todd Hoeffner. But Rossow and Prestage allegedly received more than $3 million total plus shiny new BMWs under the table, the feds allege. Hoeffner received more than $5.3 million in legal fees. Silicosis is a serious occupational lung disease cause by exposure to tine particles of silica, usually from industrial sandblasting. Hoeffler allegedly wrote Rossow more than $2.6 million in checks, and more than $750,000 to Prestage. Hoeffer, who also was indicted, wired $97,000 to a BMW dealership for two BWM 530i sedans, the feds say.

* Gina Driscoll told Liberty Mutual her barn had collapsed, and she sought about $27,500 to rebuild the place. But an anonymous tipster told Liberty that the Middleborough, Mass. woman’s live-in boyfriend Dennis Bell had wrecked the place himself so they could make a bogus claim. The Massachusetts fraud bureau investigated, and found a witness who says Bell toppled the barn with a snowplow attached to his pickup truck. Liberty hired a structural engineer who agreed. Driscoll and Bell now face state fraud charges.

* A Brooklyn dentist billed Medicaid for filling 52 cavities of one patient during one visit, prosecutors charged this week. Mohinder Mayell allegedly told auditors he filled the 52 cavities in just an hour or two. Since most humans have only 32 teeth, auditors wondered why Medicaid paid Mayell in the first place.

* An Indianapolis chiro recruited crash victims for free evaluations, then billed insurers for treatments the victims never received, prosecutors charge. Robert Ekin got into hot water when one victim contacted the insurance department. A lawyer allegedly in cahoots with Ekin had written an insurer. The lawyer, David Wood, purported to represent the victim and demanded payments from the insurer. But the patient says he never visited Ekin or met the lawyer. Both Ekin and Wood face a variety of charges. Liberty Mutual played a lead role in investigating and busting the alleged scheme. The judge set Ekin’s bail at $1 million.

* Two suspects stole more than 200 AT&T cellphones by making fake theft claims for the phones, Florida officials charged Wednesday. Customers who appeared to make insurance claims had addresses in Palm Beach County, but the phones were shipped to three addresses in Davie. An AT&T employee may have supplied Luckenson Judi and Shenikah Graham with insider info about insured cell phones. After making the fake claims, Jeudi, who worked for a courier service, would drive by the homes of the apparent claimants to drop off new phones and tell his central dispatch the delivery was completed, prosecutors say. Then he’d allegedly deliver the phones to Graham in Davie. The real AT&T customers didn’t know a claim had been filed in their names.

ADMINISTRATIVE DECISIONS

* Policyholders bilked by a North Dakota agent who killed herself will receive full refunds of their stolen premiums. Insurance Commissioner Jim Poolman ordered the $675,000 repaid to 10 victims of Diane Cottingham, who committed suicide while being investigated in the largest theft of client premiums in the state’s history. Cottingham’s family will pay the money as directors of her agency. The insurance department also decided not to shut down her Underwood agency because that would damage a dozen employees and hundreds of policyholders.

* The North Dakota insurance department has fined Farmers Insurance Group $750,000 for allegedly creating incentives for auto-insurance adjusters to underpay some claims and deny others. The department alleges Farmers imposed quotas for denying claims and referring others for fraud investigations. Injury claims also were settled using a pre-set range of payments instead of reviewing each claim on its own merits, the department says. The insurance department also alleges adjusters could have paychecks cut if they didn’t follow the insurer’s guidelines. Farmers denies the charges. The insurance department found no evidence that individual customers were harmed, Farmers responds. The insurer says it only agreed to pay the fine to get the dispute out of the way.

ETC.

* About six percent of Brits admit they’ve padded insurance claims, a new report says. “Politicians refer to them as the ‘law-abiding majority’, ignoring the fact that the majority do not abide by the law, or at least are highly selective about when and when not to comply,” says the report by the Centre for Crime and Justice Studies. In fact, three of five Brits say they committed at least one of several scams against businesses, the government or their employers, according to the study. Among the listed offenses include paying cash to tradesmen to avoid taxes, stealing from their employers, and asking bureaucrat friends to bend the rules for them.

QUOTE OF THE WEEK

“There is a presumption of regularity and legality in the business of insurance litigation, which, when corrupted, damages our confidence in the integrity of the system.”

— U.S. Attorney Don DeGabrielle, after the indictment of a Houston and two insurer employees in connection with an alleged kickback scheme that involved millions of dollars in settlement proceeds from silicosis cases. [see CRIMINAL CHARGES above]

OTHER HEADLINES THIS WEEK

* Pair in Florida used insurance to steal 200 cell phones
* Murder-for-insurance case goes to jury in NYC
* Two Florida pharmacy owners convicted in $20M case
* N.J. man admits to participating in give-up scheme
* N.Y. sheriff’s deputy accused of comp fraud

Details at www.InsuranceFraud.org/

MEETINGS & CONFERENCES

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

* July 24-25, 2007 — Legal Issues in Health Care Fraud
Chicago, IL (National Health Care Anti-Fraud Association)

* July 26-27, 2007 — Best Provider Defenses in Health Care Fraud Cases and How to Combat Them Chicago, IL (National Health Care Anti-Fraud Association)

* 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)