Insurance Fraud Weekly ePort

 

Week ending May 18, 2007

www.InsuranceFraud.org

 

LEGISLATION & REGULATION

* Maryland Gov. Martin O’Malley yesterday signed a law making staging auto crashes a specific crime. HB 1409 also limits access by outsiders to police accident reports for 60 days. Only crash victims, their reps and reporters can have immediate access. The law takes effect in October. Criminalizing staged accidents gives prosecutors a focused legal tool to nail a ring’s kingpins. And limiting access to police reports helps keep fraud rings from using the data to fish for victims to file phony injury claims. The coalition worked closely with the sponsor in drafting the law. It closely tracks a similar law in Florida.

* The Texas House passed a bill limiting outsider access to police accident reports. Only accident victims, their representatives and reporters can view the reports within 30 days after a crash. The goal is to keep fraud rings from using the reports to identify and recruit victims to file fraudulent injury claims. The measure is similar to a law passed in Maryland yesterday, and to Florida’s existing law.

* The North Carolina House is tackling cheaters who illegally lower their auto premiums by lying about where they garage their vehicles. HB 729 would make it a specific crime, and require auto-insurance applicants to show proof of residence before receiving coverage. North Carolina has seen a large increase in out-of-staters claiming residence to exploit the state’s low auto premiums. Insurers support the bill’s broad goals, but question whether agents should be the gatekeepers for verifying proof, as the bill would require. HB 729 has just cleared a committee, and now the full House must pass the bill before the end of next week to continue being considered for the 2007 session.

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

 

CRIMINAL CONVICTIONS

* Prosecutors bit into Bruce Basile’s tooth-injury claim. The Minotola, N.J. man said he was thrown from his bike and lost four front teeth after riding over a loose piece of sidewalk. He even sued the Borough of Buena and the owner of the property where the supposed accident happened. Basile received $4,500 from Buena and $10,000 from Ohio Casualty Insurance. Maybe Basile did lose his teeth, but not in this mishap. He received a year of probation and must repay the stolen money.

* Former Donaldsville (La.) fire chief Kirk Landry forged 27 fire reports to land the city a better fire-insurance rating and thus lower premiums for the city and residents, a jury concluded yesterday. In the reports, Landry doubled the manpower that actually fought building fires, and inflated the number of responding firetrucks. The reports went to the Property Insurance Association of Louisiana, a state agency that rates fire departments and issues fire ratings that help insurers determine premiums. He faces up to five years in prison when sentenced.

* After her son died in Iraq, a pastor stole more than $250,000 from a military life policy her son had intended for his six-year-old daughter. Army Spc. Roy Buckley died in a vehicle accident in Iraq, and his mother Janine Lee Espinoza became guardian of his life policy. The money was supposed to go to his daughter when she turned 18, but Espinoza blew all the money on cars, jewelry, a timeshare in Florida, church pews and a baby grand piano. Espinoza faces up to four years when sentenced, and must repay the stolen money.

* A sham employee-leasing firm left a trail of wrecked lives. Florida-based Miralink Group handled workers comp, taxes, payroll and other services for 2,200 small businesses with 33,000 employees in eight states. But owner Thomas King knowingly bought comp coverage from a fake insurer, leaving employees uncovered when they were hurt. An injured grandmother lost her horse farm when her comp checks stopped coming; she had to sleep in her truck outside a convenience store for weeks. King, meanwhile, drove a Mercedes and $50,000 Hummer, and bought a $37,000 diamond ring for his wife. Miralink collapsed in 2002, sparking a nationwide FBI probe of employee leasing. King received 14 years in federal prison this week.

* Sheryl Reynolds claimed she couldn’t work after being injured as a secretary for B-K Company in Houston. She raked in nearly $22,000 in workers comp money until investigators caught her barrel racing. She received 10 months of probation and must repay the money.

* Three members of a Colonie, N.Y. family accused of staging car crashes were acquitted yesterday of more than 100 fraud charges while two members were convicted of low-level felonies. Local prize fighter Frank Houghtaling, his mother Donna and his sister Brenda Warner were found innocent. The suspected ringleaders, Joseph and Renee Houghtaling, were convicted yesterday only of falsifying business records in one crash, and were acquitted of numerous other crimes that could’ve sent them to prison for decades. Joseph and Renee each faces up to four years in prison when sentenced. Moments before the verdict was read, Joseph Houghtaling reportedly downed antifreeze in the courthouse men’s room, and shortly after was taken to the hospital. The 11-week trial was the longest in Albany County history, and involved more than 10,000 documents and pieces of evidence. Jurors spent five days deliberating. Charges against two other family members were dismissed two weeks ago. A family friend, Willie Cook and the family patriarch Alfred Houghtaling pleaded guilty last fall. Alfred has since died and Cook turned state’s evidence.

 

CRIMINAL CHARGES

* The owner of a Green Bay grocery store torched the overinsured building for nearly $795,000 in insurance money, the feds charged yesterday. May Nen Xiong’s son Danny allegedly used alcohol and gasoline to destroy the building. Cell phone records placed Danny in downtown Green Bay the night of the fire, even though he denied being there, prosecutors allege. There were no signs of forced entry and the alarm system was deactivated, officials say. Valuables also were removed from the store and taken to the Xiongs’ home before the fire, prosecutors allege. Wal-Mart’s security video also shows May buying the bottles of alcohol the evening the fire broke out. Empty plastic bottles of alcohol were found inside the ruins, and investigators are testing DNA found inside Latex gloves found at the site. The $140,000 building also was over-insured. May sought $397,000 for the building, $350,0000 for loss of inventory and $28,833 for business interruption. May faces up to 45 years in federal prison if convicted, and Danny faces up to 55 years. His girlfriend also is implicated.

* Real-life body snatchers? Three docs billed insurers about $30 million for more than 1,000 worthless and invasive procedures on 940 patients, officials charged this week. So far 17 people have been arrested in the “rent-a-patient” scandal operated from the Unity Outpatient Surgery Center in Buena Park, Cal. Drs. Michael Chan, William Hampton and Mario Rosenberg are now in the hot seat. Recruiters brought in patients—often Hispanic and Vietnamese immigrants—from around the nation. They were paid for unneeded colonoscopies, dangerous operations for sweaty palm disease, and other nonexistent maladies. The patients received cash, vacations, tummy tucks and facelifts. All told, more than 2,000 patients participated in related scams involving several surgeons, officials allege, causing $90 million in bogus claims. The coalition first reported the scheme to national media, causing coast-to-coast news coverage that earned an Emmy nomination for the ABC Primetime investigative show.

 

ADMINISTRATIVE DECISIONS

* New York City’s crooked “Dyno Gyno” can’t stay out of the news. Niels Lauersen disguised uninsurable fertility treatments as insured gynecological care. The fertility specialist serviced a wealthy, high-society clientele but was convicted in 2001. The celeb doc was released from jail in April 2006, but could end up back in the slammer for violating probation, prosecutors said this week. He twice refused to let his probation officer past his doorman, hid $270,000 in rental income, hasn’t gotten a job since his release, and hasn’t tried to repay $3.2 million in insurance and other money he owes, officials allege. Lauersen must convince the court he’s on the up-and-up during a June 18 hearing, or possibly head back to the graybar motel.

 

ETC.

* Eurasian crime syndicates are funding international empires by stealing billions from Medicare, Medi-Cal and other taxpayer-funded programs, officials warn. Much of the Eurasian activity stems from the Los Angeles area. Since 2000, law enforcement has busted more than 110 Eurasian, Middle Eastern, Nigerian and Asian organized-crime members allegedly involved in healthcare fraud. Another crime-fighting team has busted about 100 suspected perps. More than 2,500 members and associates of Russian and Armenian crime syndicates operate in Los Angeles County alone—twice as many as a decade ago. The gangs are violent and often murder rivals. Investigators busting Burbank and Glendale clinics suspected of stealing $25 million from Medicare discovered 41 firearms. They ranged from high-caliber assault rifles to secret-agent-style .22-caliber pen guns.

* Al MacKenzie has been named prosecutor of the year by Llorente SIU, an investigative firm. MacKenzie is Deputy District Attorney in Los Angeles County. He has nailed growing numbers of health, workers comp and auto swindlers on tax-fraud charges. This has opened a new avenue for prosecutors, thus bypassing the often-complex and time-consuming trials under traditional fraud laws.

* Agents working for Humana have peddled health insurance to Medicare recipients that were not understood or wanted, Oklahoma’s insurance commissioner says. At least 68 agents didn’t have Oklahoma licenses, and the insurer exploited a new market without properly supervising its producers, officials allege. Humana is the second-largest Medicare provider nationally, behind UnitedHealth Group. Some 39 of 41 states in an NAIC survey say they’ve received complaints about abusive marketing of Medicare-related products by agents and insurers. Twenty-two states have reported complaints of fraud, such as falsifying signatures on applications. One senior was switched to a Humana plan from traditional Medicare. He lost the extra benefits that he had under a Medicare supplement policy from Blue Cross and Blue Shield of Oklahoma, and incurred added costs when he became ill. He had to borrow against his house to pay for these uninsured hospital and medical expenses. The agent failed to explain his existing coverage and the impact of purchasing a Medicare Advantage plan. Georgia’s insurance commissioner has formed a commission to study abusive tactics, and the U.S. Congress held a hearing on the issue this week.

 

QUOTE OF THE WEEK

“DA: 2 for 107 in fraud trial”

— Headline in this morning’s Albany Times-Union about a much-publicized fraud trial involving eight mostly family members accused of staging car crashes. The trial, which was the longest in county history, ended when jurors acquitted defendants on 105 of 107 counts [see Criminal Convictions above].

 

OTHER HEADLINES THIS WEEK

* Calif. columnist provide tips on avoiding staged crashes

* U.S. Senate hearing held on insurer Medicare sales practices

* Georgia agent surrenders to face premium theft charge

* Housing official in Utah accused of stealing health benefits

* California chiro on trial over claims for rare procedure

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