Insurance Fraud Weekly ePort: Week Ending August 8

Aug 8, 2008

 

 

Insurance Fraud Weekly ePort
Week Ending August 8, 2008
http://www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • Regulators and insurers in Indiana are discussing drafting legislation for 2009 to create an insurance fraud bureau within the insurance department. The unit would assist in prosecutions. The department says it has enough money to run a fraud bureau, so any proposal won’t require added assessments on insurers, and that could go a long way to helping enact legislation next year.

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

 

PUBLIC OUTREACH

  • Public awareness programs can deter fraud, encourage people to report crimes and build support for anti-fraud initiatives, but fraud fighters do a poor job of engaging the public, coalition executive director Dennis Jay said this week in a presentation at the annual fraud bureau directors conference. Most states lack the funding, staffing and expertise to sponsor effective public outreach programs. But even the smallest states can earn news coverage of their arrests and convictions, boost their websites with useful consumer info and encourage their investigators to speak to community and school groups. Government agencies, insurers and anti-fraud organizations also must become adept at using new media such as podcasting, texting, rss feeds and YouTube videos to reach younger consumers, Jay said.
  • A fierce hailstorm blows through your neighborhood, pelting houses and potentially causing damage, but your home survives nicely. What to do as 30 to 40 contractors come knocking, insisting you need a new roof and should replace your siding? Many of your neighbors are taking advantage of the situation. Read how one homeowner handled this potential ethical dilemma.

CRIMINAL CONVICTIONS

  • Santa Clara, Cal. has a new prison sentence record for insurance fraud. It’s nine years, and a one-time San Jose baker takes credit. Khai Van Nhin fronted an insurance fraud ring of 27 Vietnamese nationals who staged phony car crashes and then made bogus injury claims. Nhin and his partners filed 31 car accident reports between 2002 and 2005. All involved damaged, used cars the gang purchased. The claimants all told insurers other vehicles forced them off the road into a guardrail as well. The gang made $500,000 in claims, but the money went into Nhin and his partner’s pockets, and none to repair the car damage. Insurers quickly alerted authorities, but language barriers hampered the investigation. Nhin also fled California, and the large number of defendants also slowed the case.
  • Drug rehab was the unusual fate of two insurance swindlers who couldn’t cover their tracks. David and Ann Clark made a $20,000 claim, telling their insurer that someone heisted their car after breaking into their home and stealing the keys. But police had found the car crashed into a tree in a field the day before the Conesville, N.Y. man called in the theft. His footprints even led from the car to the couple’s home. Clark finally admitted he’d driven his car into the tree and left the scene. The couple has an earlier drug conviction, and the court gave them rehab instead of prison this week.

CRIMINAL CHARGES

  • A torched SUV didn’t give a suspected scam artist an insurance payday, but did land her in trouble with the law. Rebecca Williams of Lake Katrine, N.Y. allegedly paid a crony $500 to set her 2005 Chevy Trailblazer on fire to collect insurance money. After Williams left the keys in the vehicle, Nugent and a buddy picked up the SUV in a shopping mall parking lot, drove it to a remote apple orchard and set it ablaze, prosecutors say. Meanwhile, Williams was gambling in Atlantic City to create an alibi, authorities charge. When she returned, Williams filed a theft claim with Allstate, which alerted authorities that the accident was suspicious. Williams faces up to seven years on fraud charges.
  • Turning a car crash into cold cash proved harder than Efrain Colon and his girlfriend Rosita Colon imagined. A security vehicle struck their vehicle in a mall parking lot in Braintree, Mass. It was a minor incident, but the pair collected $59,000 in lost wages and injuries. They claimed they missed work from their jobs in Quincy. But neither was employed, and they gave bogus addresses of supposed employers, officials say. And the home address they gave authorities allegedly was an apartment rented by relatives. The Massachusetts fraud bureau investigated, which led to the Colons being charged with motor vehicle insurance fraud and larceny.
  • Arelis Villa was more worried about the guy who’d supposedly stolen and stripped her 1999 Ford Expedition than she was about her ruined SUV. The Lawrence, Mass. woman kept asking police what would happen to Sergio Estrada after his arrest, even though she denied knowing him when shown his photo. She also never asked any questions about the SUV. That seemed strange, and it turns out Estrada is her nephew and collaborated in a fake theft of the SUV for insurance money, police allege. The steering column and ignition lock also weren’t compromised, a forensic analysis revealed. Someone with a key thus must’ve stolen her SUV, but Villa said she had both sets of keys. She’s the 325th person busted since the city began clamping down on auto schemes 4 1/2 years ago. The Massachusetts fraud bureau played a key role in the investigation.
  • Unsportingly, Phillip Lathrop torched his sports bar for more than $314,500 in insurance money, the feds charged in Wisconsin this week. Lathrop allegedly hired someone to burn down Player’s Sports Bar and Grill in Hayward for $5,000 and cocaine. The place was destroyed one day before his commercial policy was set to expire. The insurer told Lathrop he faced a large premium hike. He also faked a heart attack to avoid suspicion, the feds allege. He faces up to 40 years if convicted.
  • Cedric and Shelna Jackson Matamoros went on a four-year fraud binge that may include murdering a toddler for life insurance, the Louisiana State Police said Wednesday. The Baton Rouge-area couple allegedly torched an apartment plus a Ford Expedition and Explorer for insurance money. The apartment fire could’ve endangered a family of eight that lived next door. Cedric also made a bogus workers comp claim after crashing a truck he drove for a cement company, prosecutors allege. At least five other comp claims also were bogus, officials say. The couple also is being investigated for the death of two-year-old Malysia Chante Matamoros. An intruder broke into the couple’s home and suffocated her, Cedric claimed. But they had more than $165,000 in life insurance on her, and she died just one day before $110,000 was scheduled to lapse and six days before a custody hearing with the child’s mother.
  • On the lam for eight years for allegedly staging crashes, a Dominican man got the shock of his life when he flew into New York City this July. Thinking the statute of limitations had expired, Francisco Madera, a former Union City, N.J. resident, got off the plane and was immediately arrested by customs officials after they checked his green card. Madera allegedly had masterminded a car crash scam where his recruits drove to pre-arranged intersections in the Union City area and crashed their cars into one another. The “victims” were ambulanced to the emergency room, claiming head, neck and back injuries. The fake victims then visited a crooked chiro who gave a cut of the insurance money to Madera, prosecutors say. Participants received up to $500 each for staging the crashes.
  • A hospital CEO paid homeless people to pretend they were patients and bill Medicare and Medi-Cal millions for worthless treatments, Los Angeles prosecutors charged Wednesday. Rudra Sabaratnam, head of City of Angels hospital, may have snagged thousands of homeless people from Skid Row. Many were kept in bed for days for minor problems such as dehydration or exhaustion, officials say. One mentally ill woman was admitted for phantom problems such as shortness of breath, then used her payoffs to buy crack, officials allege. Sabaratnam faces up to 50 years federal prison if convicted. The head of a Skid Row health-assessment center allegedly was part of the suspected scheme.
  • School teachers, government workers and a cop were among 62 people busted this week for their roles in a large OxyContin ring, Miami prosecutors charged this week. Ring members obtained the addictive Oxy by charging their health insurers using phony prescriptions allegedly written by a crooked doctor. More than 130 bogus prescriptions for 12,000 pills were charged to insurers. The pills likely were resold on the streets for large markups, officials say.
  • Raleigh, N.C.-area agent Mary Grantham Hicks took workers comp premiums from a local contractor but didn’t send the money to the insurer. Instead, she falsified an insurance form and presented it as proof of insurance, authorities allege. Hicks was found out when a worker at one company suffered an accident that injured another person who then filed a claim against the comp policy. Hicks already had given up her license over the incident but allegedly continued owning an agency that specialized in selling comp coverage to contractors and subcontractors. The insurance department is investigating to see if other clients were bilked. 

CIVIL & ADMINISTRATIVE ACTIONS

  • An unlicensed insurer sold bogus hole-in-one coverage to golf tournaments in Washington State, the insurance department says. The firm operates under various names such as Golf Marketing Worldwide (visit www.hole-in-won.com). The online firm appears to be operating without a license in any state, the insurance department says. One event at the Royal Oaks Country Club in Vancouver, Wash. bought hole-in-one insurance for $1,333 to cover a $50,000 cash prize being offered. Someone made the hole in one, but Golf Marketing never paid up. The department has slapped Golf Marketing with a cease-and-desist order and $125,000 in fines. You can download a copy of the department’s complaint from the coalition’s website.

COURT DECISIONS

  • The New York state Supreme Court has dismissed a fraud suit by Progressive Insurance against an independent body shop in Bedford Hills. North State Custom Auto had tried to defraud Progressive on repairs of a one-year-old Mercedes that had rolled down an embankment, the insurer argued. Progressive had estimated damage at $26,000 but the shop invoiced for more than $34,000. The family-run North State is one of the few repair shops CL Class certified by Mercedes-Benz in the state. Progressive says it plans to appeal.

ETC.

  • Employers in California may be a larger source of workers comp cheating than bogus injury claims by employees, and the state has begun clamping down on wayward businesses. State fraud investigators and local DAs filed 567 comp complaints against employers in FY 2006-2007, but 473 cases were against employees. The state has increased enforcement actions against businesses in recent months. Dozens of state agents raided 22 garment shops in Southern California and San Francisco last month, and they hit farm labor contractors in the San Joaquin Valley this week. The state has conducted 46 sweeps of 706 garment shops, construction sites, car washes, hotels and other employers this year. About $4 million in fines have been imposed.
  • The Oakland, Tenn. police department is being hounded by talk of K-9 criminality. Did the department fake the death of its drug dog for a $5,000 insurance payoff? That’s what officials are investigating. The black Lab named Kit supposedly went to that dog pound in the sky after being run over by a car during training. Officers returned only with a bloody collar and leash. The department promptly spent the insurance money on a new drug dog. But then Kit allegedly turned up alive. A local trainer of police dogs says he sold another town’s police department a dog matching Kit’s description for $5,000 around that time. The Tennessee Bureau of Insurance is investigating.
  • Unlicensed agent Isaac “Clarence” Chandler peddled bogus auto policies across Michigan, the insurance department warns. Chandler may have sold as many as 500 bogus insurance certificates for about $40 each. He hijacked the names of legitimate insurers, selling policies supposedly issued by Citizens Insurance, Meridian Insurance and Nationwide Mutual. Chandler also placed the names of local agencies on the policies. Many drivers thought they were getting a good deal, but others knowingly bought the fake coverage to show police proof of insurance if they’re pulled over. Chandler tacked flyers onto telephone poles, handed out business cards and told out-of-towners they could get coverage in just 2-3 days. An 88-year-old woman was killed in a crash but the other driver had invalid coverage Chandler had sold. Chandler was convicted in April, but the insurance department still is alerting drivers that they may have no coverage.
  • Immigrants are forming gangs that get rich looting a Medicare program that’s an easy target because it’s an honor system that pays claims quickly with little review, reveals an expose by the Miami Herald this week. Cuban gangs in Miami and Hialeah, Armenians in Los Angeles, West Africans in Houston and Russians in New York form small-scale rackets that steal hundreds of millions total a year with little chance of getting caught. Many Miami-area gang members get rich then flee to Cuba, Latin America or Europe. Carlos, Jose and Luis Benitez billed Medicare $110 million in bogus claims for HIV treatments at their dozen Miami-Dade clinics. They bought Mediterranean-style homes, apartments, hotels, boats, a helicopter and even a water park before fleeing to Cuba. Most of the 700 Medicare fraud suspects charged since 2004 are immigrants who created small criminal rings in South Florida, the Herald’s series says.

QUOTE OF THE WEEK

“Employers who are operating legitimately are getting undercut by those who are operating on the margin.”
— John Duncan, Director of California’s Department of Industrial Relations, commenting on the abuse of workers comp insurance by dishonest businesses. 

 

OTHER HEADLINES THIS WEEK

  • Electronic prescriptions could limit some drug fraud
  • N.Y. doc admits to massive drug and fraud scheme
  • N.J. woman jailed for using neighbor’s health ID card
  • Ex-OK senator accused of illegal insurer ownership
  • Mississippi cop charged with filing false fire claim

Details at www.InsuranceFraud.org/

 

MEETINGS & CONFERENCES

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