Insurance Fraud Weekly ePort–Week Ending Dec. 21

Insurance Fraud Weekly ePort
Week Ending December 21, 2007
www.InsuranceFraud.org

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LEGISLATION & REGULATION

* The Kentucky legislature will consider a bill next year limiting access to vehicle event data recorders (so-called black boxes). Vehicle owners would control the information under the pre-filed Senate bill. Fraud investigators could access the data only with a court order or the vehicle owner’s consent. Insurers also couldn’t require owners to release the data as a condition of a claim settlement. The legislature opens in early January.

* The National Association of Insurance Commissioners and federal Risk Management Agency are jointly targeting widespread illegal rebating in the federal crop insurance program. Rebating a portion of an agent’s commission to the insured as an inducement for the business is a controversial practice that some feel amounts to a bribe, unfairly favors larger insureds and opens the door to other collusive practices. Many farmers caught defrauding the crop insurance program have done so with the advice and assistance of their agent. Putting a little distance between the two thus is a goal of state and federal regulators.

* The NAIC’s anti-fraud task force has finalized its work plan for 2008. The group will update its 1990s-era manual on unauthorized entities such as bogus insurers, and develop guidelines both for state SIU regulations and insurer anti-fraud plans.

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

PUBLIC OUTREACH

* The coalition is working to broker a meeting with Toyota in response to an ill-advised TV ad campaign that encourages insurance fraud. The coalition reached Toyota executives this week and has begun negotiating a possible senior-level meeting between the car company and a delegation of fraud fighters. Pressure has grown rapidly since Toyota launched amusing national ads that encourage vehicle owners to destroy their cars so bogus insurance claims can finance their purchase of a new Toyota. “…these commercials add to that negative environment” that encourages insurance fraud, the coalition’s Dennis Jay says in his blog, which was published in the Boston Globe Wednesday. “Every scene that’s described in the ads is a crime,” adds Dan Johnston, head of the Massachusetts fraud bureau, in the Globe article. The coalition and several board members have written complaints to Toyota. Same with Johnston, several other fraud-bureau chiefs and other coalition members. “…we didn’t intend to create an upsetting experience,” Toyota has replied to several of the letter writers. Everyone in the fraud-fighting community is encouraged to e-mail Toyota and urge the company to abandon this ill-advised advertising.

* A CNBC primetime series on healthcare fraud won a public-awareness award from the National Health Care Anti-Fraud Association (NHCAA). The American Greed series highlights the darker side of health schemes, investigating schemes that led to death and injury in pursuit of insurance money. The award was presented at NHCAA’s annual training conference December 6 in Anaheim. More than 1,000 fraud investigators from government and the private sector attended. 

CRIMINAL CONVICTIONS

* A Houston couple launched an elaborate fake-accident scheme to garner 337 checks totaling $427,622 from an array of insurance companies. Nigerian Peter O. Ezekor and ex-wife Catherine Jacobs used phony driver’s licenses, ID cards and Social Security cards to buy auto policies. Then they staged more than 50 crashes and filed claims for phony injuries. Ezekor received nearly eight years in prison Monday. Jacobs, a naturalized U.S. citizen, received 14 months.

* Two healthcare workers recruited patients for cash and discounted cosmetic surgery in exchange for undergoing unneeded medical treatments so crooked Southern California surgeons could make $34 million in inflated insurance claims. Olga Lilia Toscano and Maria Licea Rosales rounded up low-income immigrants for unnecessary colonoscopies, endoscopies and others procedures. They also coached their recruits to describe false and exaggerated symptoms to gain doctor authorization of the procedures. The patients, often financially desperate, were paid $500 for a colonoscopy. The Millennium Outpatient Surgery Center then charged insurers $10,000 for colonoscopies that normally cost $3,000. Toscano and Rosales were convicted federally Wednesday, and will be sentenced in March.

CRIMINAL CHARGES

* Five auto repair shops in the San Fernando Valley, Calif. defrauded customers with phony repairs, prosecutors charged this week. Auto Shack, for example, advised a woman to replace her engine for $1,800. She paid a $900 deposit, but her supposedly repaired vehicle died on the freeway just two weeks later. The original engine was never replaced, the state Bureau of Automotive Repair alleges.

* A sharp-eyed senior helped bust a tree-removal contractor who offered a forged certificate of liability coverage, New York’s insurance department said this week. The unnamed 78-year-old Village of Horseheads senior contacted Jeremiah Sabol about removing a tree from her property. The woman asked for proof of insurance when obtaining an estimate. She drove to a local insurance agency to verify the insurance certificate Sabol presented. The expiration date had been altered and the kind of liability coverage had been changed from landscaping to tree service, officials allege.

* Aimee Lee Weiss keeps getting into trouble. The Tamarac, Fla. woman processed $18,075 in bogus claims for chiros who fraudulently diagnosed two healthy undercover cops with concussions and a broken neck, prosecutors charged yesterday. The Lauderdale Lakes office never treated the detectives, who posed as patients, but submitted 46 claims and promised the detectives a cut of the insurance money, officials say. The chiros also allegedly wrote fake prescriptions using a dead doctor’s name, and signed off on phantom physicals using the name of a doc who no longer worked at the clinic. Weiss, an office assistant, allegedly helped an undercover detective sign treatment forms so the clinic could bill the insurer. Her arrest allegedly violates probation for her 2001 conviction for killing her newborn baby. Clinic owners Francis Falowski and Christine Falowski face a variety of fraud charges.

* Boxer Edelmiro “Tiger” Martinez ran smack into an uppercut by fraud fighters. Once the world’s No. 2 lightweight boxer, the Bronx man earned thousands of dollars in workers comp money after claiming he hurt his left bicep while picking up garbage while working at an apartment complex. But he actually had ruptured his bicep in a boxing match with Nate “Galaxy Warrior” Campbell just three weeks before, prosecutors allege. Martinez was busted when an employee with the New York workers compensation fund, to which he’d made his claim, recognized his name and remembered the fight.

* Waukegan agent Ruben Collier took liability and workers comp premiums from business clients but never bought them the promised coverage, Illinois prosecutors charged Wednesday. Collier allegedly bilked as many as 75 firms that had paid Collier $5,000 to $7,000 each for the policies. Collier reportedly has surrendered his agent license to the state and closed his office.

* Anthony Profaizer was hurt when a wooden pallet hit him while he was walking on a sidewalk. The Geistown, Pa. man needed medical treatment, and couldn’t drive on extended trips. Erie Insurance paid for a driver to take Profaizer to daily doctor appointments in Baltimore. He billed Erie $31,425 total for the round trips, but he and the driver actually stayed overnight at a hotel instead of taking the trips, prosecutors say. Profaizer also allegedly paid two drivers less than what he charged Erie.

* Richard Cosgrove hurt his neck and back while working as a service technician for an electric firm, and received $8,450 after being declared permanently/partially disabled. But the Bellerose, N.Y. man worked at an oil supply company fulltime and off the books, according to an anonymous tip sent to New York’s state-run comp insurer. Cosgrove also allegedly signed two letters denying he’d returned to work, and never told the state fund he was working again. He faces up to four years in prison if convicted.

* Five patients died when a prescription-drug mill doled out addictive narcotics in a scheme that fraudulently netted former Utah doc Warren Stack $750,000 in insurance payments, federal prosecutors charge. Patients called Stack the “Candy Man.” The Salt Lake City man allegedly prescribed narcotic painkillers for up to 80 patients a day, charged them $70 to $200 each, and billed insurers for medical exams that never took place. Stack has left a trail of drug addicts who must rebuild their lives, prosecutors say. He faces multiple 20-year mandatory sentences if convicted.

CIVIL & ADMINISTRATIVE ACTIONS

* A Kansas City agency issued bogus certificates of insurance for mortgage settlements, the Kansas insurance department charged this week. The Brown Insurance Agency was slapped with a cease-and-desist order after several homeowners discovered the agency allegedly didn’t forward their premiums to the insurers. One owner found he didn’t have coverage after fire destroyed his home this fall, the insurance department says.

* The Medical Center of Central Georgia and some of its doctors defrauded Medicare and Medicaid for years, says a whistleblower suit by four anesthesiologists who once practiced at the Macon hospital. The four lost their contract because they told hospital officials that some anesthesiologists were charging insurance companies for services when no doctor was present, the suit alleges. The hospital also quashed an investigation by the American Society of Anesthesiologists, the suit alleges.

ETC.

* During the recent annual meeting of the coalition, the board elected officers for 2008. Dennis Schulkins of State Farm was elected to a two-year term as co-chair. Doug Ashbridge of Farmers Insurance was re-elected treasurer and Steve Perry, representing the National Association of Insurance Commissioners, was tapped as secretary. In addition, the board appointed Lt. Allen Carpenter of the Louisiana State Police to serve a term on the organization’s executive committee.

QUOTE OF THE WEEK

“We apologize if the humor doesn’t play well for you.”
— Line from e-mail from Toyota replying to a letter complaining about the automaker’s recent ad campaign promoting insurance fraud. [See FraudBlog to read entire letter.]

OTHER HEADLINES THIS WEEK

* Penn. chiro headed to prison for filing false claims
* Connecuticut driver accused of torching his BMW
* Ten charged with workers comp fraud in New York
* Health provider in N.J. admits to 600 false claims
* N.H. driver caught making pre-insurance auto claim

Details at www.InsuranceFraud.org/

MEETINGS & CONFERENCES

* January 30-31 — Insurance Fraud SIU Multiagency Conference
Pleasanton, Calif. (California District Attorneys Association)

* February 4-7 — National Arson Investigation Training Seminar
Las Vegas, Nev. (Insurance Committee for Arson Control)

* March 9-12 — Insurance Fraud Management Conference
Coronado, Calif. (Insurance Services Office)

* April 1-2 — Insurance Fraud Training Seminar

Orlando, Fla. (National Association of Insurance Commissioners)/ <>
For more info, visit online events.