Insurance Fraud Weekly ePort: Week Ending August 22

Aug 22, 2008

Insurance Fraud Weekly ePort
Week Ending August 22, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The California legislature has passed a bill extending the assessment on insured vehicles to help fund the state’s auto insurance anti-fraud program. AB 2143 will keep the insurer assessment at 50 cents per insured vehicle, and extend the program from 2009 until 2015. The program was scheduled to expire in 2010.
  • Thwarting auto schemes such as staged accidents will be the focus of legislation in several states in 2009, the coalition’s director of government affairs Howard Goldblatt told PCI’s anti-fraud subcommittee this week. Indiana also will debate setting up a fraud bureau. Bills recruiting accident victims and limiting access to police accident reports will be debated in Ohio and Texas. Michigan will discuss a variety of auto-fraud bills to thwart a growing problem in the hard-hit state, Goldblatt added. Stricter license review of medical providers who commit insurance fraud also is needed around the U.S., Goldblatt said. But progress in yanking licenses of dishonest providers will require a closer partnership among insurers and other fraud-fighting groups.

PUBLIC AWARENESS

  • “[Medical identity theft] is the fastest-growing form of identity theft in America today…” the coalition’s Jim Quiggle said in a story in today’s Chicago Tribune. “With almost 50 million people considered uninsured today, medical identity theft may become a growing problem as more people become desperate enough to turn to crime to find treatments that they cannot otherwise get.”

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

CRIMINAL CONVICTIONS

  • The owner of a San Jose, Calif. body shop received three years this week for bilking insurers with fraudulent repairs. Gian Van Tran, who owns Tommy’s Auto Body, billed insurers for repairs that weren’t done, and for replacement parts that weren’t installed or were merely repaired, plus other scams. At least 12 vehicles were involved. Farmers Insurance noticed unusual billing patterns and inspected the 12 vehicles. The related invoices contained large amounts of fraud, Farmers discovered. That investigation led to the criminal probe and eventual conviction. Farmers also sued Tran and his suspected co-owner. The insurer settled with Tran for $180,000 and with Sam Phan for $20,000.
  • Mark Anthony Boone pawned his cement tools but told Zurich American Insurance that someone stole them. The Bozeman, Mont. man tried the tool-theft scheme six times, cheating Zurich out of $20,738. Boone faces up to 60 years and $300,000 in fines when sentenced in October.
  • A lawyer stole $3.5 million in insurance checks from his personal-injury and workers comp clients. Stephen Conrad represented the clients in claims against insurers. But the Woodbridge, Va. man forged his clients’ signatures to their insurance checks and used the money to pay his mortgage, credit card bills and travel expenses. Conrad was convicted Tuesday, and faces up to 20 years in federal prison when sentenced in November.
  • A controversial back-pain treatment called Vax-D is at the heart of a scam by two chiros. Arthur Hargraves of Douglasville, Ga. and Daniel Puffenberger of Kissimmee, Fla. ran clinics in Tennessee and Georgia called Associated Spinal Care Network. Working with an orthopedic surgeon, they falsely billed Blue Cross/Blue Shield of Georgia more than $3 million for Vax-D, which stretches the spine. But the treatment wasn’t reimbursable, so the pair used a billing code for another treatment. Hargraves and Puffenberger told employees not to mention Vax-D when speaking to insurers. Each chiro faces up to 50 years when sentenced.

CRIMINAL CHARGES

  • Nawathia Mills had the worst luck with thieves or is an insurance thief himself. The Raleigh, N.C.-area man bought a lawnmower and trailer from Furniture Fair in Rocky Mount, and took out insurance sold by the store. Just a few days later he said the items were stolen. But in fact he’d hidden them on his property, the North Carolina insurance department alleged this week. Mills also allegedly staged an earlier home burglary and filed a bogus claim for a TV, digital camera, computer and printer. Investigators discovered that suspected scheme while probing Mills’ lawnmower claim.
  • Renetta Lowe invented an insured hit-and-run crash to hide an uninsured hit-and-run she’d earlier caused, police in Louisiana said yesterday. The Kenner woman allegedly rear-ended another vehicle, causing a three-vehicle crash in New Orleans. All vehicles sustained moderate to severe damage. She used one driver’s cell phone to make a call, then suddenly bolted without leaving any info, officials allege. Then 39 minutes later she allegedly staged a crash in Kenner that made her seem like the victim of a hit and run. The suspected motive: Lowe only had liability and uninsured motorist coverage. Her policy didn’t cover the damage she caused in New Orleans, but did cover her if she was the victim of a hit-and-run, prosecutors say. She received nearly $4,400 for the allegedly setup Kenner crash until the suspected ruse was uncovered.
  • A Frontier, Pa. man collected $120,000 from a fire that demolished his home and killed his dog. But Donner VonRitter and a crony set the fire themselves to collect insurance money after VonRitter fell behind on his mortgage and risked losing the home. He first said an overflowing trash can next to stove, which was on low-burn at the time, might’ve caused the blaze. But he changed his story the next day and said the can was empty. Neighbors also said VonRitter showed “strange behavior” minutes before the fire, and shouted something like “woo-hoo” when the fire broke out.
  • Disguising an auto arson for insurance money isn’t one of David Lanpher’s strengths, if prosecutors are right. The Marin County, Calif. man said someone stole his vehicle. He made an insurance claim, but investigators quickly found the vehicle. It was burned out, and several plastic cups smelling of gasoline lay nearby. Fingerprints on the cups were Lanpher’s, prosecutors allege. He became upset and denied any knowledge of the cups when confronted with the fingerprint evidence, officials say.
  • Peter David Padilla twice reported his 2007 Cadillac Escalade stolen from his Tampa home. The first time, investigators used the vehicle’s OnStar tracking system to find the Escalade at a crony’s home. Padilla quickly recanted his theft story. He again reported the Escalade stolen about six months later. It was found burned up in woods the next day. Padilla received $38,638 from his insurer, but a crony told officials he and Padilla had teamed to get rid of the car. Padilla was arrested Wednesday.
  • A claim for an expensive model airplane never should’ve left the ground, Minnesota prosecutors said this week. Three vehicles crashed in front of David Schwantz’s Burnsville home. One careened into his pickup, which was parked in the driveway. The driveway collision wrecked a $12,000 model airplane sitting in the back of the pickup, Schwantz told the insurer. But the back of Schwantz’s truck was empty, the responding police officer says. Investigators then allegedly found the missing plane safely stashed in his garage.
  • Both the car window and insurance claim are broken, New York prosecutors said Tuesday. Mark Davis told State Farm that vandals had smashed the rear window of his 2001 Mitsubishi Eclipse. The Schenectady, N.Y. man filed a $3,298 claim. An adjuster inspected the car and allegedly found the window was unbroken. But Davis stuck with his story and asked the adjuster to return for a second look. Davis allegedly then broke the window himself before the adjuster showed up again. He faces up to seven years if convicted.
  • An asbestos removal contractor forged a workers comp certificate to make it appear he was covered, New York prosecutors charged this week. Jose Montas allegedly inserted a false coverage time period and insurance number on a New York State comp certificate to create the illusion that his Yonkers firm was current in its comp coverage. The state requires businesses with more than five employees to carry comp insurance. Failure to have insurance recently became a felony in New York. Montas faces up to seven years if convicted.
  • Drugs and cash were at the heart of an alleged insurance scam that paired two suspected grifters. Charles Desplanques and Anders Hallstrom, both of Glendale, Ariz., allegedly scammed $300,000 from health insurers and scored addictive prescription drugs from docs and hospital emergency rooms. Hallstrom posed as a health care specialist. He pushed Desplanques around medical facilities in a wheelchair, telling doctors that Hallstrom was dying of cancer and needed the drugs, officials allege. A phony diagnosis from Canada and fake paperwork helped land the drugs. The pair bilked Aetna out of $144,000 and United Healthcare out of $107,000, officials say. A local doctor grew suspicious and tipped off police.
  • A sheriff’s deputy put an 18-year career on the line with a suspicious comp claim. Deputy Audrey Rodrigues said she hurt her back in the line of duty in Mount Hope, N.Y. She collected $50,000 in comp money, but during this time she allegedly worked as a supervisor for a business that rehabs homes and sells them.

CIVIL & ADMINISTRATIVE ACTIONS

  • An outfit called Underwriter Reinsurance Co. is selling unlicensed and unauthorized insurance in Oklahoma, the insurance department says. Also calling itself The Underwriter Group, the entity provided an unauthorized performance bond to an Oklahoma business seeking to secure a bank loan. The bank tried to collect after the business defaulted on the loan, and had to sue The Underwriter Group to collect.

COURT DECISIONS

  • Brandon Tuschak crashed his car into a dumpster after leaving a nightclub. He walked home instead of calling the police, and later told State Farm the vehicle was stolen. The Pennsylvania man was convicted of insurance fraud, but still sued State Farm for breach of contract when the insurer denied his claim. The U.S. District court granted the insurer summary judgment for a bad-faith claim. Tuschak’s lies gave State Farm a reasonable basis for denying the claim under the auto policy’s fraud clause, the court ruled. [Tuschak v. State Farm Mut. Auto. Ins. Co., No. 07- 0589 (W.D. Pa. July 14, 2008)]

CIVIL SUITS

  • A Chicago-area whistleblower landed a $56-million payday for ratting out a health insurer that bilked Medicaid out of many more millions. Cleveland Tyson of Buffalo Grove, Ill. filed a federal whistleblower suit against Amerigroup in 2002, claiming the health insurer charged the feds for treating high-risk patients that it actually turned away. Tyson named Amerigroup employees who took part in redlining patients and denying them coverage. Many were pregnant women and unhealthy patients that Uncle Sam paid Amerigroup to insure. The feds joined Tyson in the suit, which cost Amerigroup $225 million in damages. Tyson earned 25 percent of that settlement. “The federal false-claims remedy is a useful tool for uncovering insider fraud of the most egregious sort,” the coalition’s Dennis Jay writes in FraudBlog today. He suggests an interesting idea about how states could adopt similar civil statutes for people who defraud insurers.

ETC.

  • Medicare failed to detect that more than a third of bills for wheelchairs, oxygen supplies and other medical equipment in FY 2006 were improper, says the draft of a federal general inspector’s report. That amounts to $2.8 billion in undetected improprieties. Medicare told outside auditors to ignore federal requirements that would’ve accurately measured fraud, according to news reports. Auditors, for instance, were ordered not to compare invoices from salespeople against doctors’ records to ensure the equipment went to real patients. Medicare denies the charges and says the agency works closely with the inspector general.

QUOTE OF THE WEEK

“I hope that this result will encourage others who know about fraud against the government and come forward.”

— Cleveland Tyson, who was awarded $56 million for blowing the whistle on fraud by Chicago health insurer Amerigroup.

OTHER HEADLINES THIS WEEK

  • Feds indict barred Missouri doctor for Medicare fraud
  • Doctor in NYC charged with auto no-fault fraud
  • Insurer employee in Conn. accused burning her car
  • N.J. woman sentenced for $9,400 disability fraud
  • Kansas agent gets probation for defrauding elderly

Details at www.InsuranceFraud.org/

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