Insurance Fraud Weekly ePort

Insurance Fraud Weekly ePort
Week ending June 22, 2007
http://www.InsuranceFraud.org

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LEGISLATION & REGULATION

* The New Jersey legislature is debating broadening the information that organizations can receive and share under the state’s immunity law. HB 2634 would allow the information sent to the NAIC and NICB to be protected under the state’s immunity law. The bill comes from ideas that were first floated in the latest annual report of the state’s office of insurance fraud prosecutor.

* Also in New Jersey, legislators passed a bill this week requiring new residents to register their vehicles within 60 days after moving into the state. Many new residents from lower-premium states fail to register their vehicles to save on auto insurance. First-time offenders could be fined $250, and repeat offenders could have their vehicles impounded. A-3372 passed the Assembly unanimously, and awaits the governor’s signature.

* The South Carolina legislature passed a workers comp reform package this week that includes provisions clamping down on premium fraud by employers. SB 332 makes it a felony for a business to lie in order to lower its premiums. Any comp scheme—whether it’s a premium scam or bogus claim—that steals more than $10,000 in insurance money also would be a felony. The measure also funds a forensics accountant to help unravel the often-complex premium scams. The accountant would be housed in the AG’s office.

* The coalition’s government affairs committee is beginning to consider states it will target for potential legislative activity next year. If you have recommendations, please contact Howard Goldblatt, the coalition’s government affairs director, at 202-393-7332 or howard@InsuranceFraud.org.

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

PUBLIC OUTREACH

* The Poughkeepsie (N.Y.) Journal said this about Albany’s stalemate over auto-fraud reforms in Monday’s edition: “Fraud costs New York drivers dearly. It is one reason the state is always on the national list of the highest vehicle insurance premiums. The state Senate has proposed a fairly modest solution… one that would increase penalties for people who help stage fake accidents. The Senate also wants to go after so-called ‘runners’… But, once again, these ideas will more than likely die a slow death, as the Assembly won’t address the issue without a larger debate about rate cuts for consumers… Cutting down on fraud won’t mean New York will enjoy the lowest auto insurance rates in the country… But lawmakers should be doing all they can to stop fraud and to ensure those savings reach consumers.”

* The Albany Times-Union commented Monday about a looming state crackdown on New York firms that misclassify employees to avoid paying full workers comp premiums: “After 12 years of neglect, New York state is about to clamp down on employers who wrongfully classify workers as independent contractors… [But] the large number of misclassified workers doesn’t necessarily reflect employer wrongdoing. In many cases, it may simply reflect confusion over state standards, or even ignorance of them. That, too, must be addressed… This is not to justify willful evasion of the law. But even the Cornell report urges the state to clarify its definitions of an independent contractor—a task that must be specific to each industry. Clarity, in short, must come before a crackdown.”

COURT DECISION

*An insurer was a fraud victim despite convicted agent Ryan Wingler’s insistence to the contrary. The South Dakota producer appealed his court-ordered restitution after being convicted of bilking clients, but South Dakota’s Supreme Court turned a deaf ear on his plea that Allianz Insurance Company wasn’t a victim under the state’s laws. The former Allianz producer convinced clients to cash in their annuities and buy new ones. The clients incurred penalties, but Wingler assured them the new products would give them larger returns. But instead of buying the new annuities, Wingler had his clients write checks to a fake insurance agency and spent the money on himself, including motor vehicles and other big-ticket items. He pleaded guilty in lower court and was ordered to repay Allianz nearly $330,000. He appealed the restitution order, however. But the Supreme Court agreed that Allianz, indeed, was victimized. The insurer had reimbursed most of Wingler’s victims for the cost of the annuities, plus interest. Allianz thus suffered a loss that was a “direct and proximate” result” of Wingler’s scam, the Supreme Court ruled this week.

CRIMINAL CONVICTIONS

* Former Baltimore cop Michael Nelson and his wife Tierra created and sold fake police accident and theft reports to make bogus insurance claims. They lied to the Baltimore police that someone stole Michael’s personal car. They also reported the theft to State Farm, and received a payout. The couple also created and sold fake police reports to an FBI informant for two phantom burglary claims worth $9,775 and an auto-accident claim alleging personal injury. The informant paid the Nelsons $850 for the police reports. The informant also paid the Nelsons $725 to help grease another fake theft for the informant’s “cousin.” The Nelsons agreed to store the car and forge a police theft report. The car actually was owned by the Baltimore Police Department. The Nelsons pleaded guilty yesterday, and each faces up to 20 years in federal prison when sentenced.

* A Pittsburgh pharmacist made up to $7 million in bogus claims for HIV/AIDS medicine and helped sell fraudulent painkiller prescriptions over the Internet. Anthony A. Grejda filed claims for the drugs, which he never dispensed to patients, through his Crafton pharmacy called TDI. He also filled hundreds of painkiller prescriptions for patients who doctors never saw. The prescriptions were based only on a brief Internet questionnaire the patients filled out. Grejda dolled out 3.7 million pills. He pleaded guilty Monday, and faces up to 40 years in federal prison when sentenced in October.

* This injury claim is washed up, Oklahoma’s AG says. Wayne Hill said he was hurt when he fell into a drain grate while spiffing up his car at a car wash in Gans. But the firm’s security camera shows a clear view of Hill and the bay in which he washed his car, prosecutors say. He never fell or appeared to hurt himself, prosecutors charge. Hill faces up to three years in prison if convicted.

* Love runs thicker than attempted murder. Santhosh Paul hired a hitman to try and kill his wife Tina for $3.8 million in insurance money just before last Christmas. The New Jersey man received 15 years in prison, but Tina says she still loves him and wants to visit him in jail often. Paul says he wants to put the plot behind him and get on with his marriage as well. Paul, who owned a mortgage insurance firm, had promised to pay an undercover detective posing as a hitman $200,000 to stab Tina through the heart. Paul gave him a $2,500 deposit, Tina’s photo, business card, license plate number and daily schedule. Paul said he wanted Tina dead before the holidays. Paul and the hitman met in his car in a Uniondale McDonald’s parking lot, with Paul’s three-year-old son sitting in the backseat. No word on how the plot unraveled.

CRIMINAL CHARGES

* New charges keep piling onto a man who became the first lawyer charged with violating a New Jersey law criminalizing the paying of runners (or recruiters) to solicit people to help staged accidents for insurance mnoney. Irwin Seligsohn and his law partner Allen Goldberger were indicted in 2005 for racketeering and using runners. But more charges were thrown at Seligsohn this week, adding details to the original indictment. He paid cronies to report a bogus hit-and-run accident in Newark in an scheme to make fraudulent $32,500 in injury claims against Allstate in 1998, the newest charges say. Three more indictments against nonlawyer cronies also were handed down.

* A Yuma, Ariz. couple billed Medicare $695,000 for leg braces, walkers, scooters and other equipment they never provided to seniors, officials charged this week. Robert and Mary Roman’s firm Tu Casa Medical Supplies made up to 1,400 bogus claims in only about eight months, prosecutors allege. The suspected scheme was exposed when a Medicare patient discovered a charge on his yearly account for some equipment he never received.

ADMINISTRATIVE DECISIONS

* An Erlanger, Ky. agent may have sold fake auto policies to clients, the state insurance department is warning residents. Michael Fleckinger of Amtrek Two Insurance sold policies to at least 60 people over the last 18 months, the department says. Atrek isn’t authorized to sell insurance in Kentucky, and Fleckinger isn’t a licensed agent, the insurance department says. The insurance department is notifying affected consumers by mail.

* Insurance agent Estrella Ramos says she’d never lie about health coverage she sold seniors. The Hawaii insurance department disagrees, and suspended her license. Customers who bought Medicare Advantage plans from Ramos lost their current Medicare coverage after she inaccurately told them they could have “dual coverage” and keep their old Medicare policy, regulators say. She also allegedly didn’t notify seniors their doctors might not accept the plan she was selling. One senior would’ve paid $770 more for a cataract surgery under Ramos’ coverage. Another senior’s hospital bill leapt from $275 under the old Medicare plan to $2,715 under the new coverage Ramos sold. Ramos says she has sold policies to about 300 people. The state says it has received 11 complaints so far. Ramos says she only did what her insurer, AlohaCare, told her to do. She still could face a $10,000 fine and permanently lose her license.

CIVIL SUITS

* Jerry Cochrane said he hurt his back while digging a water main at a gas station. The Fort Lauderdale-area plumber started collecting workers comp money. He claimed he couldn’t walk without a cane, and earned no income after his injury. Cochrane even showed up at doctor appointments leaning on his cane. But surveillance video caught him installing glass panels for an auto-glass repair firm. He was filmed climbing, reaching and bending without any problem. He even told an undercover investigator he worked for the glass firm, and handed out a business card. Cochrane’s comp benefits were cut off, and he sued his first employer, Kyle Plumbing. Claim denied [Cochrane, Jerry v. Kyle Plumbing, Inc., 14 FLWCLB 53 (Fla. JCC, Ft. Lauderdale 2007)].

* A chiro accused of billing an insurer full fare for nerve tests illegally done by technicians—including a 15-year-old boy—will pay the insurer $1 million to settle the suit, New Jersey Manufacturers Insurance said Monday. The tests help determine nerve damage, and must be conducted by a certified doctor or chiro. But Newark-area Dr. Sean Nisivoccia didn’t gain his certification until December 2005 even though he had billed the insurer since 1999. The state chiro board says it plans to review Nisivoccia’s record. The state fraud bureau is having a look-see for possible criminal charges.

ETC.

* The Coalition’s board appointed three new organizations to board seats yesterday. They include the Office of Attorney General in Pennsylvania, Erie Insurance and the National Fraud Information Center. Coalition membership now stands at record levels. Coalition members also received a briefing on the NICB pillar project, and heard from a leading prosecutor and a researcher on workers comp premium fraud. A full meeting summary will be posted on InsuranceFraud.org next week.

* Pressure to cut the Lawrence police department’s budget could jeopardize a task force that has successfully rolled up widespread staged-accident rings in the city. Police Chief John Romero must slice $1.1 million from his $15-million budget request for next year. That would require him to dump its special-enforcement units, including the auto-fraud unit that’s working with the state fraud bureau to nail the accident rings, according to news reports. “Lawrence’s anti-fraud task force has been used as a model in other communities. They are seeing similar results,” the Lawrence Eagle-Tribune wrote in an op-ed Wednesday. “It’s important to keep the pressure on those who would commit fraud. As soon as they see there is little risk from engaging in fraud, they’ll be back to their old tricks. And the savings that Lawrence residents are seeing on their insurance bills will evaporate.”

* Several large insurers are voluntarily suspending selling coverage alternatives to Medicare in California after complaints about fraudulent and abusive sales tactics by their agents. UnitedHealth Group, Humana and WellCare were among the insurers agreeing to stop selling the private fee-for-service plans. Some agents have violated Medicare rules by marketing the products uninvited at senior centers, misleading Medicare beneficiaries about the coverage, and even forging seniors’ signatures to policies. Some agents also inaccurately told seniors that their doctors would accept the policies. About 1.3 million Medicare recipients are enrolled in the Medicare fee-for-service policies, the fastest-growing form of Medicare managed-care plans. The insurers say they’ll test their agents’ knowledge of the products, and place more disclaimers in marketing material.

QUOTE OF THE WEEK

“This is a pretty egregious offense in this day and age.”

— U.S. District Judge Richard D. Bennett said following the conviction of a Baltimore cop and his wife who admitted to faking an auto theft, falsfying an auto accident claim and staging a burglary [see Criminal Convictions above].

OTHER HEADLINES THIS WEEK

* Pennsylvania chiro convicted, facing 95 years in prison
* Kentucky funeral director indicted for insurance fraud
* W.V. woman accused of filing false prescription claims
* California worker accused of filing false comp claim
* “5th Ave.” doc allowed to avoid $3.2M in restitution

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)

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