Insurance Fraud Weekly ePort

Insurance Fraud Weekly ePort

Week ending June 15, 2007

www.InsuranceFraud.org

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LEGISLATION & REGULATION

* The New York Senate passed two more auto-fraud bills as the legislature rushes to end the 2007 session. SB 2634, which is similar to a new Maryland law, would make it a specific crime to stage an auto accident. SB 4040 would suspend the driver license of anyone convicted of auto-insurance fraud. The actions aren’t likely to have much impact, however, because the bills likely will die in the Assembly. The legislature shuts down for the year at the end of June.

* The Alabama legislature shuttered for the year without moving a bill making insurance fraud a specific crime and creating a fraud unit in the insurance department. HB 333 is similar to bills that have failed numerous times over the last 10 years. Alabama is one of three states without a specific insurance-fraud law (Oregon and Virginia are the others).

* The New Jersey Senate will vote shortly on whether to make it a crime to stage an auto accident. SB 2426 was reported out of committee, and targets auto fraud rings in the Garden State. The bill is similar to Florida’s law, and a law that recently passed in Maryland.
Note: Texts of anti-fraud bills are available on the coalition’s website here.

PUBLIC OUTREACH

* “Swallowing glass for insurance money is definitely an over-the-top way to scam a few extra dollars,” the coalition’s Jim Quiggle told the Boston Herald in a story yesterday about a couple charged with swallowing glass to extort insurance money from businesses (see story below). “People have resorted to even worse schemes than this. They cut off their legs, fingers. There’s a ghoulish side to many insurance schemers. They don’t mind spilling blood, whether it’s their blood or the blood of innocent victims.”

* A seemingly routine radio interview helped break open a large staged-accident ring that has bilked auto insurers out of at least $300,000 in South Florida. Investigators have busted 27 suspected perps in the ongoing probe, the state’s Division of Insurance Fraud said yesterday. The action began after a Miami radio station interviewed investigators from the fraud bureau. Afterward, a caller provided details about the ring, and helped detectives infiltrate the outfit. The ongoing investigation is called Operation TGIF because the staged crashes always happened on Fridays. Among the latest busts was Aramys Lopez, manager of T&A Diagnostic Center, who allegedly recruited fake crash-injury victims and filed bogus claims. Also nabbed was Gerardo Melenez, a paralegal who often passed himself off as a lawyer and coached “victims” how to lie to insurers. Warrants also were served at two clinics, an attorney’s office and a home that served as corporate addresses of two businesses.

* Insurance Fraud Prevention Day is coming to a New York town near you on June 27, thanks to the New York Alliance Against Insurance Fraud. A statewide pr campaign will treat New Yorkers to well-timed info about insurance fraud—what it is, the damage schemes cause, and how to avoid getting scammed. Gov. Eliot Spitzer has signed a statewide proclamation, and Mayor Michael Bloomberg has done the same for New York City. The effort was successfully piloted in the City last year, and now is going statewide. A big part of the effort will encourage residents around the state to turn in schemers via the state’s tollfree hotline—1-888-FRAUD.NY, or the alliance’s newly created interactive website www.fraudny.com. For more info, contact the Alliance at 1-518-432-3576.

CRIMINAL CONVICTIONS

* Wendy Gail Hayman will pay dearly for not planting her sweet potatoes on time. To qualify for federal crop insurance, the Oak Grove, La. woman was required to plant before June 30, 2000. She hadn’t done it, but lied to her crop insurer that she’d planted more than 100 acres of sweet potatoes in time. The lie got her the coverage, which also qualified her for a USDA farm loan. Hyman received 16 months in federal prison Tuesday.

CRIMINAL CHARGES

* Self-described gypsies Robert and Mary Evano swallowed glass to extort $200,000 from insurers covering restaurants, hotels and supermarkets in Massachusetts, Maryland and the District of Columbia, the feds say. But Robert is about to change his innocent plea to guilty, while Mary is still on the run, according to news reports. They willingly put up with internal bleeding and trips to the emergency room for about eight years in their grab for insurance cash. Mary claimed she swallowed broken glass with pork fried rice in a Boston restaurant, a plate of beans at a Burlington eatery, and a tub of potato salad from a supermarket in Quincy. Robert said he swallowed glass mixed into a waffle in Quincy, and a daiquiri at a hotel bar in Braintree. Mary has at least eight known aliases, including Lisa Benton, Nancy Dixon and Connie Hill.

* In a nervy move, Alexander Israeli, a doc at a Queens, N.Y. clinic, billed insurers $21,000 for phantom nerve-conduction tests on real crash victims, prosecutors charged this week. The tests measure the flow of electrical currents across nerves, and electrical activity in muscles and nerves. New York’s no-fault law allows crash victims to receive up to $50,000 in medical treatment.

* Several fraud suspects need swift legal help after being nabbed by the Louisiana State Police recently. John Henry Strong said someone heisted his 2004 Dodge Ram pickup while he was fishing near Jones, La. His insurer paid out $20,555, but Strong actually had lent the truck to his daughter. The lid came off his suspected scheme when she was stopped for speeding in Kansas… Then there’s Patrick Richard, who gave his insurer a handwritten receipt and letter seemingly from his mother saying he’d paid her $300 a day to stay at her home after Hurricane Rita wrecked his own place. But family ties didn’t run deep enough: Richard forged the entire $10,500 in receipts, his mother allegedly told police… Michael Donald Graves refused to give up his auto claim. The Bossier City man said the front bumper, lower cowling and undercarriage of his 1996 BMW were damaged when he hit a curb. His insurer denied the claim because, well, he had no insurance. So Graves allegedly activated his coverage the next day and filed another claim. Denied. He bought auto coverage from another insurer several months later, and soon made a claim for the same damage. The insurer paid out $3,800 before learning of Graves’ alleged scam.

* Former Denver SWAT officer David Holt said he was badly hurt on an obstacle course in 1986, and received at least $667,000 in disability money from the city. He adopted a shuffling gait, and one doctor said he appeared to be a frightened child clinging to his mother’s skirt. Others diagnosed Holt with dementia. So now he has to explain how he soon killed a world-record white tail deer in Wyoming with a bow. And how he formed a safari company called Dave Holt’s Africa and led hunters on bowhunting expeditions to Africa. And how he wrote two bowhunting books, writes for magazines, consults with archery-related firms, does endorsements, makes videos and travels extensively. Former girlfriends say Holt is faking his injuries, but Holt insists 20 years of medical records prove he really is disabled.

* This suspected scheme has real punch: Hegins (Pa.) Township police officer Shannon Tietsworth told Erie Insurance he fractured his right hand when his son accidentally closed a van door on it. His auto policy would’ve covered the injury. But Tietsworth actually hurt his hand punching a refrigerator while arguing with his wife, prosecutors said this week. Erie denied his claim, and he now faces criminal charges.

* An agent steered the contract for the employee health coverage of Lafayette County (Miss.) to a crony in exchange for a $235,000 bribe thinly disguised as consulting fees, the feds charge. Gary Massey was the county’s agent of record, and allegedly used his influence to get Ken Nowlin named the agent of record. In return, Nowlin slipped him the policy commission feds say. Nowlin received his commissions in two checks made out to his office, then told his office to write a separate check to Massey for a “consulting fee,” the feds allege.

* Joyce Sarte Fuller stole prescription pads from physicians’ offices and had a crony help her fraudulently enroll in his employer’s health plan in a scheme to obtain and distribute addictive narcotic prescription drugs, New Jersey’s AG charged Tuesday. The Mount Laurel woman allegedly wrote fake prescriptions for the insurer-paid drugs, obtained them from pharmacies and sold many on the streets. Fuller heads up a narcotics-trafficking network that deals in Xanax, Vicodin and other prescription narcotics, officials allege. Fuller also lied to USAA that $137,250 in artwork, porcelain figurines and other items were stolen from her home, prosecutors allege. She faces charges that could land her life in prison if she’s convicted.

ETC.

* New York State is planning a crackdown on thousands of employers who try to illegally avoid workers comp premiums by misclassifying workers as independent contractors. The practice is widespread in the state because employers don’t have to pay workers comp coverage for contractors. More than 39,500 employers misclassify workers in the state each year, the report says. About 704,000 of seven million private-sector workers in New York have been misclassified as independent contractors, a report by Cornell University researchers said in February. The problem is especially acute in the construction industry, officials say. Aside from robbing workers comp insurers, New York loses $175 million in unemployment-insurance taxes a year, the report says. Crackdown details will be announced later.

* How much do SIUs make? Do insurers provide investigators with enough resources to do the job right? Insurance Compliance Insight newsletter is conducting an online survey of SIUs to find out. SIUs can weigh in confidentially by clicking here. Two thirds of compliance professionals say they’re satisfied with their resources, the newsletter found out in its February survey.

QUOTE OF THE WEEK

“There’s plenty of blame to go around for the fraud problem, but not enough creative and innovative ideas to reduce it.”

— SIU director David Rioux writing in the June issue of Claims magazine about the unsuccessful attempt to merge anti-fraud organizations.

OTHER HEADLINES THIS WEEK

* Missouri city official guilty of funeral commission scam
* Kentucky agent accused of selling bogus auto polices
* New Jersey man admits to lying on disability application
* Massive viatical case ends for $3.93 million judgment
* Texas chiro board said to be slow to discipline docs

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.