Insurance Fraud Weekly ePort: Week Ending August 1

Aug 1, 2008

 

Insurance Fraud Weekly ePort
Week Ending August 1, 2008
www.InsuranceFraud.org
_______________________________

   

LEGISLATION & REGULATION

  • Ohio is going after bogus auto registrations to thwart insurance schemes and other auto-related crimes. Drivers now must present an Ohio driver license or official state ID when registering. If drivers don’t have these documents, they need two other official documents from a state list, such as birth certificate, passport or certified copy of a court order.

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

 

PUBLIC OUTREACH

  • The online face of insurance fraud fighting in Virginia – StampOutFraud.com – has a new look and a new feature. The website run by the State Police has been revamped and has set up shop on the popular social networking site Facebook.com. Visitors can click on the Facebook link on StampOutFraud’s homepage and access two videos posted there. A consumer video helps people protect themselves from being scammed, and a second video highlights how fraud investigators and law enforcement can better network on cases. 
  • And you wonder why so many people view insurance fraud as a parlor game and a ticket to an easy payday? Just check out this online announcement for the Travelmate portable fireplace. “What better way to ‘accidentally’ burn down your home and all of your loved ones sleeping peacefully inside than with this Travelmate portable fireplace by Conmoto. Oops! I didn’t mean to kick it over…” the webpage reads. “At $3,300, you better hope that insurance fraud bit you’re trying to pull will pay off.” The coalition placed a comment on the page, warning visitors that torching your home is a lousy idea.

CRIMINAL CONVICTIONS

  • Four members of a New York family that illegally lowered premiums by lying about where they’d registered their commercial vans were sentenced Monday. The Berrios family registered 14 vehicles in Pennsylvania but garaged and operated 12 of them in New York City, where premiums are much higher. The family signed up with one insurer that doesn’t write policies in New York and another that doesn’t cover commercial vehicles. The scheme likely saved the family several thousands of dollars in lower premiums a year, investigators believe. Two vans transported middle-school children in Brooklyn. Berrios jeopardized them by failing to obtain proper coverage. One van was involved in an accident, though no kids were injured. The mastermind, Benito Berrios, Sr. received up to 23 months in county jail. Three other family members received a year of probation.
  • Kim LaPorte burned down her house to steal $38,000 under her renter’s policy, but didn’t exactly cover up her crime very well. The Albany, N.Y.-area woman was tripped up when investigators discovered she’d moved many of her possessions out of the two-story home before setting the fire. She also falsified an earlier claim stemming from the collapse of a garage on the property. LaPorte faces up to seven years when sentenced. The case was investigated by Travelers Insurance.
  • A Massachusetts temp agency illegally evaded millions in workers comp premiums by paying employees $40 million in cash wages under the table and hiding them in shell companies. It was the largest under-the-table payroll scheme in the state’s history. Daniel and Aimee McElroy’s temp agency in Easton provided hundreds of laborers to factories and food processors. After a federal court ordered the McElroys to stop secretly paying cash wages, they created straw firms called ProTemp and Precission (sic) Temp, through which they funneled most cash payrolls. To hide their ownership, the McElroys installed two employees as nominal heads of the straw firms. They also filed bogus tax returns, and fooled their insurance auditors by creating fake payrolls that were smaller than even reported in the bogus tax returns. Daniel McElroy received 108 months in federal prison. Aimee awaits sentencing. The Massachusetts fraud bureau played a key role on the state-federal team that cracked the scheme.
  • A Russian immigrant was a key recruiter for a staged-accident ring in Buffalo, N.Y. that stole hundreds of thousands from auto insurers. Radislav Lankin was the gang’s third-ranking member and the latest of 29 ring members convicted. Lankin recruited Buffalo-area residents who agreed to lie that they were hurt in car crashes. The ring ran a fake clinic that helped the so-called victims file bogus claims, and sold them useless crutches and other insurer-paid medical equipment. But Lankin, who’s now an American citizen, received no jail time — only five years of probation and restitution of $439,000. 
  • The downward spiral for scheming skin doc Robert Stokes continues. The Grand Rapids, Mich.-area man recently received 10 1/2 years in the federal slammer after billing Medicare more than $820,000 for falsely diagnosing and treating adults for a bacterial skin infection called impetigo. Stokes stumbled badly, however, because impetigo rarely occurs in adults. Now the feds also are suing him civilly for $2.48 million, and trying to seize $1.4 million from his retirement accounts. On top of that, Stokes lost his medical license, his wife is divorcing him and he’s had at least 18 malpractice claims.
  • To Blue Cross of Georgia, a back pain treatment known as Vax-D is a crackpot scheme with no medical benefits. But that didn’t stop two chiros from fleecing the insurer out of more than $3 million by mis-coding the back stretches on a mechanical table as a valid surgical nerve procedure. Arthur Hargraves, of Douglassville, Ga. and Daniel Puffenberger, of Kissimmee Fla. each faces up to 50 years when sentenced – thus making their scheme quite a stretch.

CRIMINAL CHARGES

  • Chopped-up parts of a so-called stolen truck triggered insurance fraud charges against three suspected Maryland con artists. James Hyung Wom and his wife Choom Hyum Kim, both of Bowie and James Brawner of Fort Washington allegedly staged the theft of a truck, broke it down into valuable parts for resale, and claimed the $37,000 insurance on the stolen vehicle. Brawner reported his 2007 Chevy Silverado was stolen from a local home improvement store parking lot. But two days earlier, Brawner, who’d had trouble making vehicle payments, had sold the truck for $1,000 to Wom and Kim, owners of a local auto used parts store, police say. With an inside tip, police raided the auto parts store as the truck was being dismantled.
  • A Poughquag, N.Y. auto mechanic got more engine trouble than he bargained for. Sean Bogart, owner of Michael Bogart & Sons auto repair center, received $5,000 from a customer’s insurer for replacing an engine in a Honda Civic. But Bogart only repaired instead of replaced the engine, and soon the customer was back with more problems. Bogart then allegedly punched a hole in the Civic’s oil plan, told the customer the engine had seized up, and tried to convince the insurer to replace it. Bogart allegedly had forged documents saying he’d purchased a new engine. Now he’s up on grand larceny and fraud charges.
  • Working in a greenhouse has Michelle Stuart seeing red. The Roxbury, Conn. woman collected more than $200,000 in workers comp money after suffering a work injury at Laidlaw Transit. But all the while she was involved in the day-to-day management of a greenhouse for five years despite signing affidavits saying she wasn’t employed or receiving other earnings while receiving comp money, prosecutors alleged Tuesday. The case is being prosecuted by the Workers’ Compensation Fraud Control Bureau of the Chief State’s Attorney’s Office.
  • A doc peddled illegal narcotic prescriptions until he was stumped by an undercover cop posing as a crooked patient, Broward County, Fla. officials charge. Dr. Robert Hunt wrote numerous prescriptions without any medical purpose until he allegedly prescribed anabolic steroids to the cop. The Fort Lauderdale doc allegedly told the cop he’d faked medical info on his patient chart to support a medical problem that required the steroids.

CIVIL & ADMINISTRATIVE ACTIONS

  • An Indiana health insurer pocketed $2 million in premiums from customers who were entitled to more coverage than they received. But now it’s the insurer that must pay up. Medical Savings Insurance Company (MSIC) relied on hidden policy wording to calculate its coverage payouts. Consumers thought they had full coverage for a $5,000 premium, but the insurer paid only 30 or 40 cents on the dollar. John Cook, an Oklahoma City cancer patient, was billed $19,500 for treatment but the insurer paid only $6,970. Cook’s hospital came after him for the entire amount. But Cook got the last laugh – a jury upheld a lower-court decision awarding him $1.1 million from MSIC.
  • A rogue insurance broker played both sides of the street – and vulnerable seniors who bought duplicate home health service policies were steamrolled in the process. Thomas Piccirillo, an Auburn, N.Y. broker, told seniors they’d go to nursing homes unless they bought his home health policies. The premiums were based on the number of home health care hours purchased for things like meal preparation. But Piccirillo confused seniors. He often double-sold them similar policies for Americare Home Care Services and Homeward Bound Services of North America, and then fraudulently added service hours to the contracts. Neither insurer knew Piccirillo was double-selling. He earned $117,000 in commissions from both companies last year. A court has ordered Piccirillo to repay the seniors $500,000. He also received more than $100,000 in other fines stemming from the AG’s suit.
  • Dentist Alan Zukor bled Medicaid out of more than $1.4 million by billing for massive amounts of phantom cavity fillings and invasive tooth extractions, a Medicaid audit reveals. The Brooklyn man allegedly billed for 243 fillings on one day. Zukor billed for another 256 fillings on another day – meaning he did one filling every six minutes for 24 hours nonstop, says a state Medicaid audit. Zukor also allegedly charged for filling all 32 teeth of seven patients, then later billed for yanking their teeth by the mouthful. Most patients lived hundreds of miles from his Brooklyn office, and his office manager allegedly couldn’t even produce records to document the procedures. Zukor shouldn’t even have received Medicaid money because he lied about having his Florida license suspended in 2000 when enrolling in the New York Medicaid program, the state AG says.

ETC.

  • Fraud fighters must push for tough but more-creative sentences because states increasingly may lowball prison terms to shave expenses during their current budget crises, the coalition’s Dennis Jay writes in his latest Fraudblog posting. “Doctors and lawyers could perform extensive pro bono services – and in a very public way that warns other would-be crooks,” Jay writes. “Convicted swindlers also could speak out against fraud to civic, church and other citizen groups…Fraudsters should be required to fully divulge their tactics so fraud fighters can hone their skills.”
  • More than 800 suspicious auto claims worth potentially $5.6 million in losses were lodged in Sacramento County, Calif. in the fiscal year ending June 30, the insurance department says. The 802 claims are down from 856 a year ago, but up from 788 in 2005-06. Statewide, more than three of every five case referrals involved suspicious auto claims last year. That’s 14,623 out of 23,734 total referrals.
  • Georgia’s largest health insurer potentially opened the door to medical identity theft by sending about 202,000 letters containing personal and health info to the wrong addresses last week. The explanation-of-benefit letters sent by Blue Cross and Blue Shield of Georgia contained patients’ names, ID numbers, treatments and other personal info. Some letters also included Social Security numbers. The mixup was caused by a new computer system that wasn’t properly tested, according to news reports. Blue Cross says it will remove Social Security numbers from future mailings.
  • From our “Nowhere to Hide” files: Britain’s famous “canoe man” con artist may face more trouble behind bars than he did in the courtroom. John Darwin faked his death for $500,000 in life insurance money by pretending to die in a canoeing accident (see July 25 ePort). He received six years last week in the highly publicized case. But Darwin’s problems are only beginning: He’s a former prison guard, and thus faces years of misery at the hands of fellow inmates. Thus he’ll need special protection from prison guards, which leads to his next problem: Darwin also looted the prison guards’ pension fund. His wife, who was part of the insurance scam, collected £66,000 as a “widow” and spent the pension money on luxury items for them both. On top of that, Darwin’s two adult children had disavowed him.

QUOTE OF THE WEEK

“Why no jail time? Why is he allowed to stay in this country? What kind of message does this send to criminals around the world?”

— Questions raised on Fraudblog this week about the sentencing of a Russian immigrant who stole $439,000 staging accidents in Buffalo, N.Y. [see Criminal Convictions above].

 

OTHER HEADLINES THIS WEEK

  • Ex-police chief in Texas convicted for auto fraud
  • Jury acquits Mass. couple of workcomp premium fraud
  • Homeowner in Alaska charged with arson for profit
  • Florida medical supply firm called “total fraud”
  • Mich. agent may have sold 500 bogus auto policies

Details at www.InsuranceFraud.org/

 

MEETINGS & CONFERENCES

For more info, visit online events.

News Library

RSS Subscribe

Get Our Latest News In Your Email