Insurance Fraud Weekly ePort–Week Ending August 3, 2007

Insurance Fraud Weekly ePort
Week ending August 3, 2007
www.insurancefraud.org

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LEGISLATION & REGULATION

* The Texas chiro board is finalizing a rule to tighten up telemarketing by chiros seeking new patients. Telemarketers would have to identify themselves and who they represent.  Chiros also would be prohibited from misrepresenting themselves as being associated with an insurer. The chiro or clinic also would have to keep the telemarketing script and log all persons contacted, including the date, phone number and persons called. The earliest possible date for board action is early next week.

* The coalition’s government affairs committee meets August 15 to discuss possible states for anti-fraud activity for the 2008 legislative session. Please contact Howard Goldblatt with recommendations by August 10 at Howard@insurancefraud.org.

* A bill in North Carolina would hike penalties for state Medicaid scammers and let whistleblowers sue suspected crooks. SB 179 now is in the state Senate’s appropriations committee. The bill would increase the state’s Medicare recoveries by as much as $10 million annually. Whistleblowers also would receive 15-30 percent of any recovery if they successfully sue wrongdoers in civil court.

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

COURT DECISIONS

* A defendant is innocent of criminal contempt for presenting a bogus auto-insurance card because the judge didn’t try to determine if the man knew he had a fake card, the Illinois Appellate Court has ruled. The unnamed defendant was charged with speeding and operating an uninsured vehicle. He offered an insurance card to the trial-court judge, who thought the card looked suspicious and had a bailiff call the insurer. The insurer confirmed the card was fake, and the judge held him in criminal contempt. The defendant must know he was presenting a bogus insurance card, but the trial court never tried to determine if the defendant’s conduct was knowing and willful, the appeals court ruled. Contempt conviction reversed [People v. Sarud Y. Abdennabi, No. 3-06-0052].

PUBLIC OUTREACH

* Do insurers routinely cheat policyholders in lowballing homeowner claims? They do if you believe a story this morning by Bloomberg News. The 6,000-word piece is filled with horror stories by unhappy claimants, quotes by industry critics and allegations by former insurance company adjusters. It covers everything from software systems to record industry profits to successful lawsuits against insurers. The story is hardly fair and balanced. Just the same, it creates a very negative perception, and that likely will make it harder for fraud fighters to do their jobs. For more insight, visit http://www.insurancefraud.org/blog/index.php.

* A Lowell, Mass. man was a useful mid-level cog in a large-scale staged-accident ring. Sithorn Tith loaned his car to the ring, and took part in a crash. He drove a late-model Lexus with three passengers in Lowell. Eric Bonnette, who drove a Honda Civic, followed him toward Bedford. Bonnette rammed the Lexus several times until Tith drove into a telephone pole. Bedford police responded, and an ambulance arrived to treat Tith and a passenger. Both cars were able to drive away. All four people in the Lexus received about $38,000 total in bogus medical treatment. Tith pleaded guilty and awaits sentencing. He was busted by a Lowell taskforce investigating widespread fraud in the area.

* Steve and Wendalyn Clark faked the theft of $132,000 in jewelry from their Palm Beach, Fla.-area store for insurance money. Steve Clark said a brown-haired man in his 30s entered the jewelry store one morning while Clark was setting up, and stole a box of sapphires and diamonds. Clark received $132,000 from Jeweler’s Mutual. But authorities later found one of the diamonds in Wendalyn’s safe-deposit box. Wendalyn claimed Clark “found” the missing jewels but told her not to call police because he’d already received the insurance money. Clark said Wendalyn was the real thief and had fingered him because he was having an affair with a man. Clark received 15 years Wednesday, but says he’ll appeal. Wendalyn received 10 years in late 2006.

* A sophisticated multi-state ring stole dozens of luxury cars, some of which the owners allegedly dumped for insurance fraud, and shipped them to places such West Africa and the Middle East for sale at up to twice their U.S. sticker price. The suspected ring stole high-end Audis, Mercedes, BMW 7 Series, Infiniti SUVs and others. The vehicles were worth more than $2.25 million the feds say. Eight people have been arrested so far. Charges were filed in New Jersey this week. Officials don’t know how many vehicles were taken, but the toll could be hundreds over several years. The thieves only took cars for which they had keys, giving the vehicles greater value on the black market.

* A former deputy sheriff fraudulently collected about $22,000 in workers comp money after shooting himself in the shoulder then lying that an unknown gunman shot him. Former McCracken, Ky. deputy Benny Harding says someone shot him while checking on a suspicious parked car at a ferry landing. Police launched a regional search and stopped several innocent motorists at gunpoint. Harding finally admitted in February that he shot himself and made up the story. Harding pleaded guilty Wednesday. He’s expected to receive seven years when sentenced in October, but is expected to serve only 20 percent of that time.

* Two owners of an Oklahoma employee-leasing firm sold bogus workers comp to unsuspecting client businesses. Justin Bruner and Paul Voyles Jr. ran Fairway Employment Services, in Norman. Great American Insurance and other insurers had told Fairway it wouldn’t supply the comp coverage. But Fairway invoiced its 34 small-business clients for comp insurance anyway, issuing forged certificates of coverage. One client, May Drilling, was billed nearly $22,700. Voyles and Bruner were convicted, and each faces up to five years in federal prison when sentenced.

CRIMINAL CHARGES

* Who’s the victim and who’s the perp? A tow truck mysteriously dropped off a stripped Chevy Suburban on a neighborhood street in New Orleans. A neighbor told police, who checked out the vehicle, and found the apparent victim’s home about four blocks away. An officer knocked on Patricia Champ’s door. He quickly discovered an alleged neighborhood chop shop. He found parts from several vehicles, plus two vehicles that appeared to have been stolen, and parts from the “stolen” Suburban. Police say they also found parts from yet another stolen vehicle in the garage.

* A cocaine-addicted adjuster for Mercury Insurance stole more than $34,000 by adding friends to accident reports and splitting the claim checks with them, Florida prosecutors charge. Daniel Kantor and his buddies allegedly shared 30 claim checks over a four-month period. No word on the Bradenton-area man’s potential sentence if convicted.

* Agent Josefa Valle Vega stole nearly $4,600 in premiums from two independent truckers, California officials charged this week. The owner of EZ Choice Insurance near Los Angeles allegedly promised to buy coverage to add tractor-trailers to existing commercial policies. But instead, Vega pocketed the premiums and never bought the coverage, officials allege. The insurers later cancelled the policies for nonpayment, exposing the owners to severe liability in addition to the financial losses. The lack of commercial auto coverage also endangered the public, the insurance department says. Vega faces up to three years in prison if convicted.

* State Farm claims specialist Corey Dixon manipulated the company’s claim system to cause four claim checks worth about $20,000 to be issued to him and several cronies, New Jersey’s office of insurance fraud prosecutor charged this week. The alleged thefts took place over about eight months in 2001 and 2002. Dixon and Donovan Thomas face a variety of charges.

* An asbestos-removal firm illegally dodged $138,000 in workers comp premiums by lying that its 2003 payroll was about $1.3 million smaller than it really was, Massachusetts prosecutors charged this week. The Lawrence firm of AG Asbestos allegedly bilked AIM Mutual by telling employees to cash their paychecks for a fee at a Lawrence liquor store. AG Asbestos then bought back the paychecks from the store for 102 percent of their value. None of AG’s 5,000 paychecks worth $1.6 million for that year were processed through a bank. AG Asbestos ultimately reported only $138,000 in payroll to AIM Mutual, prosecutors allege. The Massachusetts fraud bureau played a lead role in the investigation.

* Dr. Gregory Salko continually gave senior Peggy Rogers a clean bill of health, charging Medicare for nine exams he supposedly gave her twice a month. But when Rogers went to a local hospital, staff discovered a 2.5-centimeter lesion on her breast—the result of untreated breast cancer that had metastasized and spread to her lungs, liver and bones. She died of breast cancer about three months later, in November 2006. Salko hadn’t examined her at all. He simply wrote up fake progress reports and billed Medicare for fake treatments, the feds charged Tuesday. Rogers’ breast lesion would’ve been apparent for up to a month before she went to the hospital, though Salk’s records say he examined her just a week before she entered the facility, the feds allege.

* The former head of Salt Lake City’s housing authority fraudulently kept her ex-husband on her health policy for eight years after their divorce, the feds charged Wednesday. Rosemary Kappes, who resigned over the flap, was divorced in late 1996. This should’ve automatically terminated her husband’s health coverage, but she allegedly never told the housing authority or insurance carrier of the divorce. He remained on her policy until well into 2004, and Regence Blue Cross Blue Shield continued paying his medical claims. Kappes says it was merely a technical oversight because she and her husband reconciled after living apart for only six months. Kappes faces up to 20 years if convicted.

CIVIL AND ADMINISTRATIVE ACTIONS

* An unlicensed public-adjusting firm trying to illegally lure clients victimized by the recent Angora fires was shut down, California’s insurance department said this week. Paramount Disaster Recovery and its employees aren’t licensed in California. State rules also prohibit adjusters from soliciting homeowners within seven days after access is granted to the disaster area. But at least twice, Paramount approached property owners in South Lake Tahoe within the seven-day waiting period to contract for public-adjusting services, estimate the homeowners’ losses and negotiate with the insurers, the insurance department alleges. The adjusting contract guaranteed Paramount 20 percent of the negotiated loss amount if Paramount didn’t perform the repair work it recommended. Licensed public adjusters aren’t allowed to build or repair damaged properties, thus removing a conflict of interest, the department says.

* A St. Louis-area industrial-engineering firm is fighting an insurer’s refusal to cover the firm’s burglary losses. Turnell Corp. has sued U.S. Fidelity & Guaranty Co. in federal court for breach of contract. Turnell said it lost more than $78,500 in computer equipment, office equipment, backup data and office furniture in a 2006 burglary. But U.S. Fidelity denied the claim, alleging that owner Victor Turnell staged the burglary and misrepresented material facts during the investigation. The insurer countersued, saying the burglary claims were bogus. Turnell wants Fidelity’s countersuit quashed, saying the charges are too vague: “What facts were misrepresented or concealed, by whom, to whom and when? How was Turnell involved in the burglary?…How did Turnell fail to cooperate with the police? Which officer? When?” Pleadings in suits for contract fraud don’t need those specifics, U.S. Fidelity says.

ETC.

* Insurance-fraud arrests for the first half of this year in Virginia already have passed the entire total for 2006, the Virginia State Police said this week. The department’s 110 current busts compare to 89 for all of last year. Investigations also are up 26 percent, though referrals via the police tollfree hotline fax and mail are down. Online referrals, however, have risen 27 percent.

* West Virginia’s fraud unit is getting on track, landing convictions this year in more than half of its fraud indictments, according to news reports. The unit, which is housed in the insurance department, was created in 2004. It combined with the workers comp fraud bureau in 2005 and now has 30 employees, including 22 field investigators in eight regional offices. The bureau recently tightened its operations. It’s recording and storing more info about the targets of complaints and referrals. So if one case is closed because of lack of merit or resources, investigators can track if those suspects are targets of later complaints. The unit claims good cooperation with local prosecutors and law enforcement, and two state troopers are assigned to the bureau.  

* A South Florida woman recently wrote to the Stuart (Fla.) News that she lightly rear-ended a woman, who received medical treatment and signed an agreement that she wouldn’t sue the driver. A month later, the “victim” sued for negligence anyway. The letter helped quash the suit, but the woman wonders if she could sue the so-called victim, who has a history of spurious suits from crashes. Attorney/columnist Keshya Williams replied: “You should know, at least in civil cases…that the victim’s prior law suits are generally not admissible as evidence in court. Therefore, suing the victim may be difficult, if you base the bulk of your case on the aforementioned. In addition, even if you sue the accident victim, she may not be financially stable enough for you or your attorney to get monetary damages, especially if she is a con artist. You and your lawyer should do your homework to determine if the woman has sufficient finances…If she isn’t financially equipped to pay a judgment in your favor, you may want to view the situation as a bad experience and move on.”

QUOTE OF THE WEEK

“He was good for at least 200 car fires, but didn’t want to tell me more and said the majority of those were owner-involved, leaving money in the glove box for him to pick it up and take it and burn it.”

– Houston fire investigator Scott Clements commenting on a swindler how specialized in stealing cars at the owners’ request, for insurance money.

OTHER HEADLINES THIS WEEK

* Feds indict two in Indiana over wheelchair scam
* Illinois doc accused of billing for exams not performed
* Maryland contractor charged with inflating storm bills
* Florida clinic owner charged with staging car crashes
* Accused N.Y. dentist charged with hiding assets abroad

Details at http://www.insurancefraud.org/news.lasso

MEETINGS & CONFERENCES

* 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)

* September 17, 2007 — Building, Managing and Measuring Your SIU Hartford, CT (International Association of Insurance Fraud Agencies)

* September 18, 2007 — Fraud and Abuse: Quality of Care Issues Las Vegas, NV (Association of Certified Fraud Examiners)

For more info, visit online events.