Insurance Fraud Weekly ePort: Week Ending August 15

Aug 15, 2008

Insurance Fraud Weekly ePort
Week Ending August 15, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The New Jersey governor is reviewing a bill putting the squeeze on workers comp cheats. SB 1918 would increase the flow of cases to the office insurance prosecutor by setting up a liaison between that office and the state labor department. The bill also would give the prosecutor authority to investigate and prosecute businesses that fail to provide state-required comp coverage.
  • New York has a new law protecting consumers from spam faxes peddling possibly bogus health insurance, medical discount plans and other services. The fax cover page must have a local phone or fax number consumers can contact to opt out of future unsolicited faxes. Faxing to anyone who has opted out would be a crime.

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

PUBLIC OUTREACH

  • “Previous anti-fraud technology has over-promised and under-delivered. Today, falling costs now place predictive analysis within reach of most insurers. Credit card companies and banks have stemmed losses with predictive analytics for years,” the coalition’s Dennis Jay writes in a special feature for Insurance & Technology magazine. “As pressure mounts to shave costs, the ROI in potentially lowering insurance fraud losses can validate the investment. Properly managed, predictive analytics isn’t a cost center but a profit contributor.”
  • Recent negative publicity about unfair policy rescissions by health insurers is creating a bad environment for fraud fighters, according to the coalition’s FraudBlog. State and local governments are taking action, and Congress is threatening to regulate insurance practices. “Unfair policy rescissions call into question the credibility of the fraud-fighting community and give credence to critics who say anti-fraud efforts unfairly target the little guy,” says the blog posting, which encourages insurers to speak out on the issue.

CRIMINAL CONVICTIONS

  • The owner of an auto-body shop will do nine years in the federal slammer for helping fuel a scheme that stole millions from insurers. John V. Cotona submitted fake damage claims to auto insurers from Perfect Touch Auto Body in Red Bank, N.J. The accidents were staged, and Cotona – aka John Bruno – owned many of the cars but titled them to cronies or shell companies he controlled. Cotona laundered the insurance proceeds through bank accounts set up for the shell companies. Bruno also must repay $1.275 million.
  • HVAC mechanic Louis Spadaccino feels the heat. The Delran, N.J. man said he was injured while working for Burlington County, and collected nearly $4,000 in disability money. But he actually worked as an HVAC mechanic repairing air-conditioning and refrigeration units for a variety of employers during this time. Spadaccino received 240 days in county jail this week, and must repay the insurance money.

CRIMINAL CHARGES

  • A federal probe snagged a third Chicago cop suspected of being involved in bribery and owner giveups for insurance money. The latest suspect is officer Scott Campbell, who schemed to have someone “steal” his 1996 green Volkswagen Passat, prosecutors say. He allegedly had the car chopped up, convincing Allstate to pay $4,000 for what seemed like a stolen car. Campbell allegedly had Joseph DeMichael take the Passat home, dismantle it and sell the parts. At least a dozen cops could be involved in the widening investigation, according to news reports.
  • James and Marlene Kernan ran a small insurer that sold bogus workers comp coverage to professional employer organizations (PEOs) in New York, California, Arizona and Pennsylvania, prosecutors in New York allege. The Utica-area couple allegedly ran an insurer called Oriska Insurance Company that wasn’t licensed to sell comp. They also illegally hired a convicted felon as an employee of Oriska Insurance, prosecutors allege. Each Kernan faces up to 20 years if convicted.
  • A Bronx nursing home didn’t provide state-required workers comp coverage for more than 400 employees for 13 months, prosecutors alleged this week. Helen Sieger, who heads up Kingsbridge Heights Rehabilitation Care Center, is charged under a 2007 state law making it a felony to not provide comp coverage. Sieger also is being investigated for Medicaid fraud for allegedly paying kickbacks to an employee at a nearby hospital to refer longterm patients to her nursing home.
  • Marine claims by John Getchius sprung a leak, New Jersey prosecutors charge. The Garfield man allegedly lied that he lost a small fleet of equipment at sea, totaling more than $60,000 in allegedly bogus insurance claims. He claimed five lost dinghies, five outboard motors, a life raft and marine tender. The disbarred former lawyer used a variety of aliases, included Robert Allen, John Gechies, John Gechius, Andrew Grego and others, prosecutors allege. Getchius actually received $25,000 in insurance money.

ETC.

  • Owners of SUVs in New York may be literally driven to illegally unload their road porkers for insurance money as gas prices increase and their vehicle values plunge. The resale value of many SUVs have dropped up to 20 percent over last year – about double the normal decrease. “We’re beginning to see more SUVs being stolen and dumped,” Frank Orlando, director of the New York fraud bureau, told reporters. Paula Parent, for instance, allegedly staged the theft of her leased 2005 Chevy Trailblazer for insurance money. The Buffalo-area woman reported the SUV stolen from her place of employment, but police divers found the SUV drowned in Lake Erie less than month later. A rock was tied to the accelerator and the keys were still in the ignition. She allegedly wanted to buy a less-expensive vehicle with better gas mileage. In Lake Katrine, Rebecca Williams allegedly paid a crony $500 to torch her 2005 Trailblazer to collect on the SUV’s book value.
  • A former police captain says he was fired for outing a suspected scheme by members of the Oakland, Tenn. police department to steal $5,000 in insurance money by lying that a drug dog had died. Capt. Michael Presson was fired several days after exposing the suspected plot in July. Officers reported the black Lab named Kit was run over by a car, but the death was a fake and Kit was secretly sold to another police department, prosecutors allege (see August 8 ePort).
  • Lekenvish Alford blames herself for her six-year-old daughter’s death. Alazia was shot by a 14-year-old boy while riding in a car last October in Omaha, Neb. But Alford couldn’t even attend the trial, and blames herself for Alazia’s death. Lekenvish went to jail for insurance fraud a month before Alazia was shot. “I blame myself every day and I just wish I could’ve been there,” she told reporters. “I still haven’t been through the grieving process because I’m locked up and in my heart I still feel like Alazia’s here.”
  • A Medicare fraud suspect met a gruesome fate by a hungry alligator that was quicker about catching a fraudster than the feds, says a recent Miami Herald series on rampant Medicare fraud. Justo Padron’s South Florida clinic fraudulently billed Medicare $7.4 million for obsolete intravenous HIV treatments. Padron already had earned more than a dozen criminal convictions, including six years for burglary, before setting his sights on Medicare money. The FBI was investigating his clinic when he was spotted trying to steal a car outside a local casino one night. Padron fled on foot and jumped into a nearby lake, where he was promptly chomped to death by a nine-foot alligator.
  • Crooked health care providers who are booted from Medicaid programs in one state can easily set up shop in another state and keep bilking federal health insurance programs. The reason? States routinely don’t report booted providers to the feds despite federal reporting requirements. More than 4,300 medical providers – 61 percent – expelled by state Medicaid agencies in 2004 and 2005 didn’t show up in the federal database of state-banned providers, says a federal survey. New York and Florida, which booted the most providers, had the lowest match rates with the federal database.

QUOTE OF THE WEEK

”It’s not just more government spending for the sake of government spending. That’s a pretty good return on your investment.”

— U.S. Sen. Mel Martinez (R-Fla.) on the need to ramp up spending to fight widespread Medicare fraud.

OTHER HEADLINES THIS WEEK

  • $300K drug, life insurance scam uncovered in Arizona
  • N.J. doc charged with billing for services not performed
  • Calif. insurance broker charged with stealing premiums
  • Owners of N.C. hair salon accused of torching building
  • Two workers in Texas indicted for workcomp fraud

Details at www.InsuranceFraud.org/

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