Insurance Fraud Weekly ePort: April 25

Apr 25, 2008

 

Insurance Fraud Weekly ePort
Week Ending April 25, 2008
http://www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • Maryland’s governor signed into law a measure requiring fraud warnings on insurance claims and applications. The legislature overwhelmingly approved HB 404 during the short 2008 session. Maryland now joins more than 30 other states with a similar law. “Fraud warnings are a deterrent in the fight against insurance fraud,” the coalition’s Howard Goldblatt testified before the legislature in support of the bill in February.
  • The New York legislature is considering dumping a 1970s-era law requiring property insurers to have property-insurance applicants in urban areas fill out extra forms designed to see if the applicants are arson risks. SB 7502 would repeal that law. The current rule is burdensome for insurers, and the fraud plans New York rquires insurers to provide can better identify arson risks, supporters of repeal argue.
  • The Florida legislature is debating raising criminal penalties for agents who target seniors by churning their life policies and annuities. Fines would be $30,000 per scam (now $20,000), up to a maximum aggregate of $150,000 (currently $100,000). Churning also would rise to a third-degree felony, and to a second-degree felony with stiffer sentences for agents who habitually bilk seniors. Churning involves an agent earning a large commission by conning victims into giving up whole life policies with built-up value to buy new coverage they don’t need. The Senate has passed SB 2082. The House is reviewing the Senate version and its companion HB 1003. The legislature is scheduled to adjourn for the year by the end of next week.

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

PUBLIC OUTREACH

  • “The subprime crisis began to hit late in 2006. There’s been an increasing number of cases since then,” the coalition’s Jim Quiggle said in a Los Angeles Times story about a potential spike in homeowners seeking escape from foreclosure by torching their homes for insurance money. “Will it explode as more mortgages are reset? That’s the question.”

CRIMINAL CONVICTIONS

  • Three South Carolina men staged the burning of a GMC 3500 tow truck for insurance money. Joseph Benton of Effingham asked Matthew Cameron to help him burn the truck used in Benton’s towing business so insurance money could pay off the truck’s lien. Cameron agreed, and Benton showed how to loosen the gas lines so the truck could leak fuel while running, the South Carolina News Service says. Amanda Matthews drove the truck, then pulled it over. Benton and Cameron lit a napkin with a cigarette lighter and lowered the napkin with a stick under the leaking truck, which quickly caught on fire. Fireman’s Fund paid out $18,940 for the seemingly accidental blaze. Even so, the trio got off easy. Cameron and Matthews received five years suspended, and each must repay Fireman’s $6,000. Benton received five years suspended and must repay $6,000.
  • A dentist’s addiction to Vicodin and other insurer-paid prescription drugs landed her possible jail time and a 10-year suspension from dentistry. Dr. Tamara J. Lowe used her Farrell, Pa. office as a cover to buy prescription drugs like Vicodin and Vicoprofen from local pharmacies. Lowe used the drugs herself and passed them along to family and friends. Conviction for fraudulently buying prescription drugs triggers a 10-year license suspension in Pennsylvania. Lowe also must reimburse Highmark and Care Mark Insurance $3,387. She’ll be sentenced later.
  • A thieving company stole more than $100 million from the U.S. military’s healthcare program in the Philippines. Health Visions routinely inflated claims by more than 230 percent, ran a fake insurance program and billed for phantom medical services. Health Visions owned and operated hospitals and clinics in the Philippines, and billed the military on behalf of other healthcare providers. The Pentagon waited years to cut off Health Visions after suspecting the company of fraud, a federal investigation also charges. Health Visions must repay the stolen money, a federal court ordered yesterday. The action effectively puts the company out of business.

CRIMINAL CHARGES

  • Willie Ballard and Estela Perez ran vehicles into parked cars, stairs, a utility pole and trees to obtain painkillers through fake injury claims, Pennsylvania officials charged Wednesday. The McKeesport couple stole $69,000 in insurance money from 11 crashes, and sometimes made multiple claims for the same crash, officials say. Ballard and Perez allegedly made six claims for crashing into a tree along their driveway. They allegedly sought medical treatment after each crash and submitted claims to insurers for doctor appointments they didn’t show up for. The insurers paid for multiple prescriptions for Vicodin and Percocet.
  • A suspected bogus rock heist has landed a Manhattan diamond dealer in hot water — and his business partners helped nab him. Alfred Avi Taub allegedly lied that someone shot him with pepper spray on the street, and stole more than $1 million in diamonds he was carrying in a bag. But police executing a search warrant on his parents’ home saw him run into a bedroom closet. There, they allegedly found diamonds and cash, and more diamonds elsewhere in the house. Investigators apparently became suspicious when local diamond dealers who regularly do business with Taub saaid he stole those diamonds plus others — as much as $3.4 million worth. They’ve also sued him for the alleged thefts.
  • Agent Anthony David Medina stole more than $2.5 million in premiums from 18 business clients, California prosecutors charge. The Oxnard man promised restaurants, plumbers, painting businesses and others that he’d buy workers comp and general liability coverage. But he charged the clients more than their real premiums, officials say. Medina also forged documents to obtain premium financing even when the clients had paid their premiums in full. He also allegedly issued fake insurance certificates with bogus policy numbers, and gave insurers policy numbers that belonged to other businesses. Some employees who were injured at work didn’t receive comp benefits because they were uninsured. The employers had to pay for their care instead. Medina faces more than 54 years in jail if convicted of all counts.
  • Police officers found pizzeria owner Ylli Jashari taped to a chair in the front part of his burning eatery. Two black males had broken in and assaulted him, he told Flanders, N.J. officials. Two fire fighters were injured breaking through a plate glass window to rescue him. Jashari had closed his pizzeria for several hours to take care of paperwork, he told police. But the fire in the storage area was intentionally set, prosecutors said this week. He was in debt and had bought a $280,000 policy on the pizzeria just three days earlier, officials say. Jashari faces up to 30 years in state prison if convicted.
  • Four Ohio men and three Iranian nationals allegedly burned up nine businesses and laundered some of $800,000 in stolen insurance money to Iran. The suspected gang usually blamed the fires on competitors to help deflect attention of law enforcement, the feds allege. The suspects also used variations on their names, bought policies from multiple insurers, used straw buyers to obtain the targeted businesses and changed the listed addresses. They also failed to disclose past fire claims on insurance applications, the feds say.
  • A student just one semester from a college electrical engineering degree was among eight more people busted for staging crashes in Lawrence, Mass. The latest arrests bring to 301 the total charged in the blue-collar city since a crackdown on staged-accident rings began about four years ago. Josue Jerez bolted from his college dorm room when police closed in, but later turned himself in. Jerez had deliberately damaged the front end of his girlfriend’s car, then claimed the car rear-ended another car on a ramp to Interstate 93, officials say. Jerez and crony Leo Lopez reportedly got paid by area lawyers and chiropractors to recruit victims of phony crashes. Amica Mutual, which insured one of the cars, denied a claim after determining the crash allegedly was staged.

CIVIL & ADMINISTRATIVE ACTIONS

  • A federal court dismissed fraud allegations Monday in a lawsuit alleging State Farm had altered an engineering report to limit the Mississippi couple’s claim following the storm. Most of the damage to Thomas and Pamela McIntosh’s home was caused by Katrina’s storm surge, the insurer contended. State Farm paid the Biloxi couple $36,228 mostly for wind damage, but flood damage was excluded under the homeowner policy. The causes of the damage and amount owed the couple still are in dispute, however, and the parties return to court in October.
  • Construction firm owner Bob Salter flouted Missouri’s workers comp laws, and paid the price. His St. Louis-area business Housecalls Inc. had at least five employees but didn’t carry workers comp coverage despite being required by the state. Salter received one year and $30,000 in penalties, but didn’t go down easily. Salter took his case up to the state Supreme Court, arguing the law was unconstitutional. The court unanimously shot down Salter in a decision that the state labor department applauded.
  • A federal court sank a yacht owner’s bogus claim that his boat was worth much more than its actual value. That opened the hatch door for a marine insurer to rescind the yacht owner’s policy. The case centered on Lawrence O’Rourke and his yacht, C’est Moi Inc., which he bought for $300,000. O’Rourke made a $450,000 claim with Washington International Insurance after the yacht was severely damaged by a fire in 1992. The insurer cancelled the policy after the payout; O’Rourke bought a new policy from New Hampshire Insurance (NHIC) several years later. But he lied on his application that the purchase price was $450,000, and that Washington International still insured the boat. The yacht later sank and O’Rourke made a claim with NHIC. The insurer balked, and sued to rescind the policy. The U.S. Circuit Court agreed with NHIC. [N.H. Ins. Co. v. C’Est Moi Inc., No. 06-55031 (9th Cir. March 20, 2008)]
  • A towing company has repaid New Jersey Manufacturers for overcharging the insurer. Grone’s Wrecker Service overcharged the insurer more than $7,300 for 81 different tows in the Toms River, N.J. area. The township lists its allowable towing fees, and town officials began cross-referencing its fee schedule against the actual towing charges. The towing company has settled a suit for $75,000. Grone’s also lost its municipal contract for towing vehicles damaged in accidents.
  • A Whirlpool Corp. factory has suspended 39 workers who allegedly were caught smoking cigarettes or chewing tobacco despite signing insurance forms saying they didn’t use tobacco. The Evansville, Ind. refrigerator factory charges tobacco users an extra $500 in health premiums annually, but relies on their honesty in filling out insurance forms. The factory says it doesn’t give blood tests to detect nicotine or follow workers outside. The workers allegedly were seen chewing tobacco on company property or smoking in the company’s outdoor shelters for smokers. They could be fired after hearings.

ETC.

  • An editorial in the Lawrence (Mass.) Eagle Tribune said this about two chiros who recently received just 90 days for making more than $400,000 in bogus insurance claims from staged crashes: “…how is that in any way a deterrent to crime? It’s more like an incentive. Come to Lawrence and commit insurance fraud. You could make millions. At worst, you’ll get 90 days…If courts keep handing out toothless sentences for those who profit most from these crimes, it won’t be long before Lawrence is again the insurance fraud capital of the country.”

QUOTE OF THE WEEK

“People upside-down on their house with variable-interest-rate loans, or upside-down on their cars, are pretty quick to burn their property right now.”

— Dan Bales, Mercury Insurance investigator, commenting on people torching their homes for insurance money to avoid foreclosures.

OTHER HEADLINES THIS WEEK

  • Neb. woman accused of fleecing health insurer
  • Mass. mother sentenced for cheating insurers
  • LA. agent allegedly rips off Katrina victims
  • Mich. doc charged with over-billing Medicaid
  • Australian suspect suicidal after arson attack

Details at www.InsuranceFraud.org/

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