Insurance Fraud Weekly ePort–Week Ending Jan. 4

Insurance Fraud Weekly ePort
Week Ending January 4, 2008
www.InsuranceFraud.org 
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LEGISLATION & REGULATION

* The New Hampshire legislature will consider a bill to fine any insurer up to $2,500 for failing to report suspected scams to the insurance department, as required by state law. HB 1578 would close a loophole that allows insurers to dodge penalties for non-compliance.

* A Wyoming legislator plans to introduce a bill to strengthen the state’s prescription monitoring program, which relies on a database that tracks prescriptions filled in pharmacies around the state. Such state programs are valuable in helping uncover suspicious prescription patterns that could involve illegal diversion of addictive narcotics such as OxyContin. Wyoming’s system now has a 30-day delay before prescriptions are posted. The planned legislation would shorten the timeframe.

* Florida’s no-fault auto law took effect this week after the legislature reinstated the expiring law last October. The law’s anti-fraud provisions work to contain medical costs of people injured in auto crashes. The goal is to reduce money paid for padded claims, and quash schemers’ profit motives. More anti-fraud measures likely will be debated when the legislature opens in March.

* Another new law kicked in as well: A California law targets employers that stonewall access to payroll records during state workers comp audits. Employers must pay the state-run workers comp insurer a premium equal to three times the most recent estimated annual premium if they fail to provide access to payroll records.

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

PUBLIC OUTREACH

* One columnist highlighted some of the year’s worst auto ads: “It’s New Year’s Day and the road construction business is a little slow,” writes Detroit News auto columnist Tom Greenwood, “so I’m going to revisit a subject that I haven’t penned in quite a while: the worst and best car commercials…The ad that shows people destroying their current vehicle (pushing it off a parking garage) so they can purchase a new Toyota. What kind of a message is that? Can you say ‘insurance fraud?’”

* Fraud fighters are scoring local news coverage by publicizing their top—or bottom—swindlers for 2007. The Pennsylvania Insurance Fraud Prevention Authority has weighed in with its 13 biggest miscreants of the year. Among them: charter-bus passengers who filed bogus injury claims after allegedly staging a crash with an uninsured vehicle…Harley owner who told his insurer that a swerving minivan caused him to crash into parked cars. Actually he was drunk and crashed the chopper himself…woman who claimed a burglar stole $13,500 in electronics, jewelry and clothing—but actually altered receipts to make it seem she’d bought the phantom goods.

CRIMINAL CONVICTIONS

* Terri Chase damaged the front end of her car in an accident, but her policy had lapsed. She reinstated the policy and immediately filed a $4,097 damage claim, lying about the crash date. The Freemont, N.H. woman received six months (deferred), must repay Allstate and write the insurer a letter of apology. She could’ve received 15 years.

* The scheme was a no-brainer. Michael Biscotti made more than $31,000 in insurance money for brain surgery he and his wife never underwent. The Staten Island, N.Y. man is one cog in a larger scheme that Charles Pritchett set up. He tapped into a medical billing company’s system and invented claims using details from real patient records, including doctored post-op reports. The scheme netted more than $300,000 in insurance money from Group Health Incorporated over three years. Biscotti faces up to 10 years in federal prison when sentenced later this month. Pritchett and other cohorts also await sentencing.

* Grand Rapids, Mich. dermatologist Robert Stokes got 10 years for bilking insurers of more than $1 million by charging for procedures he didn’t perform. He also double-billed for visits by lying that patients had impetigo, a highly contagious bacterial infection. Stokes also used recycled sutures and unclean equipment. The doctor also billed for removing growths—sometimes merely freckles or blemishes—after scaring patients into believing the growths were pre-cancerous. Stokes also used recycled sututes, unsanitary syringes and other dirty equipment. He was sentenced the same day the county health department sent letters to about 8,500 former patients, suggesting that they get tested for blood-borne diseases such as HIV, hepatitis B and hepatitis.

* Five swindlers set up sham stores that billed Medicare more than $28.6 million for unneeded durable medical equipment and infusion therapy. Miami-Dade County is a hotbed of insurance fraud for durable medical equipment (DME): The average Medicare patient in Miami-Dade receives $6,200 worth of DME every year, compared to about $1,200 per year elsewhere, the feds say. Miami-Dade alone accounted for more paid DME claims than 44 states. Sentenced were Rodolfo Aenlle (84 months); Simon Seruya (50 months); Alberto Gourie (51 months); William Garcia (41 months); and Marina Ruiz (24 months). Aenlle and Seruya paid cash kickbacks to phony patients, and Aenile conspired with pharmacists to submit claims for medically unnecessary “compounded” aerosol medication. They also must repay more than $13 million.

CRIMINAL CHARGES

* Michigan trucker James Laurino claimed someone had rigged a bleach bomb in the cab of his semi, causing $10,000 in damage. But the bleach stain on his shirt allegedly looked more like a spill than a splash, and investigators found bottles of mineral spirits and turpentine inside the cab. Laurino filed an insurance claim the day of the fire, but cancelled it two days later. He said he’d decided not to continue as an owner-operator and was letting his truck be repossessed. His claim withdrawal came too late: Laurino faces up to five years in prison and a $10,000 fine if convicted of torching the truck for insurance money.

* With the holidays just around the corner, an insurance payoff was mighty tempting. And Patrick Steven Steiner and Daisy Lynne Helsel couldn’t resist, authorities say. They allegedly torched their apartment in Johnstown, Pa. to collect $20,000 on a renter policy they’d bought just six days earlier. The four-unit apartment complex—which housed two other people—was destroyed, with damage estimated at $50,000. Steiner allegedly set the December 16 fire at two locations in their living room.

* Richard Way pushed his 2004 Ford Mustang off a cliff just 1 1/2 hours after reporting that someone had stolen it, Pennsylvania prosecutors charge. The Claysburg man sought $26,000 in insurance money until State Farm noticed he was selling the supposedly stolen car stereo, DVD player and performance parts on eBay. Way also had removed the items from the car before pushing it off Wopsononock Mountain, police determined after examining the wreckage at the base of the cliff. Someone also had set the Mustang on fire because vehicles normally don’t spontaneously combust when pushed off a cliff, police say. Way faces up to 21 years in prison if convicted.

* Waylon Bryant Gregory and Chrystal Giluso stole $3.4 million by staging crashes in northern Florida, the feds charged this week. Hiding behind a variety of aliases and stolen identities, the pair allegedly bought the maximum  auto coverage allowed by Progressive, State Farm and Geico. Gregory then crashed the vehicles, filing bogus claims for injuries, property damage and uninsured motorist coverage, the feds say. Once the claims were paid out, Gregory would cancel the policies.

* Brian Stone lied about where he lived when applying for auto insurance so he could get coverage despite a long history of DUIs, Pennsylvania’s AG charges. The West Virginia man bought a 1986 Subaru and rented a P.O. Box in Gans, Pa. He listed that as his address on an auto policy and vehicle registration, prosecutors charge. But the P.O. address was merely a small store and rural postal station. Stone then bought a 2007 Ford F150 pickup. He used the Gans address to register the truck, and allegedly lied that it was insured. In fact, he never added the vehicle to his existing policy, which was canceled about two months later. Stone crashed last July 8 in West Virginia, allegedly while DUI, killing five people and injuring seven others. The bust came from leads provided by Erie Insurance’s special investigation unit.

* A Ghana-born con artist and two women cohorts faked his death for $500,000 in life insurance money, New Jersey authorities charge. Arrest warrants have been issued for Kofi Boakye, Irene Addai and a third, unidentified woman. Using fake personal information and pretending they were engaged, Boakye and Addai allegedly bought two $500,000 term life policies from Massachusetts Mutual. Later the unnamed accomplice, representing herself as Addai, told Mass Mutual that Boakye had died in Ghana. They submitted a phony death certificate to collect on one of the policies, officials charge. Boakye and Addai also allegedly used fake information to collect more than $38,000 in student loans, which they used to buy the life policies.

COURT DECISIONS

* KRCR-TV didn’t defame a body-shop owner charged with felony insurance fraud, a Shasta County, Calif., court has ruled. Richard K. Hammerbeck, owner of Golden Auto Body in Anderson, was acquitted after being among 19 people arrested in a sting in Shasta and Butte counties. He sued the ABC affiliate last year, alleging the station’s reporting had libeled him. But the broadcast was a “fair and true report of the events” that authorities had described in a news conference, the court ruled this week. Hammerbeck says he’ll appeal.

CIVIL & ADMINISTRATIVE ACTIONS

* Mississippi will receive a slice of $72 million in assets seized from Martin Frankel, who was convicted of siphoning off $200 million from several ailing insurers he secretly gained control over. Frankel received 17 years in federal prison in 2002. States have been tracking down his assets since he was busted. Forfeiture accounts include funds from the sales of two swanky homes in Connecticut, the auction of 21 automobiles, and money seized from numerous bank accounts. Mississippi’s insurance department was instrumental in discovering and unraveling Frankel’s complex scheme. The insurance department also helped the FBI and IRS uncover his hidden assets. No word on how much Mississippi will receive.

ETC.

* Ohio’s workers comp fraud unit solved nearly 3,000 cases in FY 2007, a 10.3 percent increase over the previous year and a saving of more than $100 million. The unit says it generated $8.33 in savings for every dollar spent. More than a fourth of the dollar savings—$22.6 million—stemmed from drug-related schemes.

QUOTE OF THE WEEK

“(Insurance fraud) is a crime we all pay for, because the losses incurred by insurance companies eventually are passed on to our premiums. Fraud jacks up the cost of our insurance. When fraud happens, everyone loses.”

— Ralph Burnham, executive director of the Pennsylvania Insurance Fraud Prevention Authority, commenting on the group’s Top 13 swindlers of 2007 in Wednesday’s Pittsburgh Tribune Review.

OTHER HEADLINES THIS WEEK

* Indiana woman accused of torching her SUV for cash
* Idaho insurance department hits Toyota over fraud ads
* Mass. woman accused of using toddler in staged crash
* N.H. truck driver accused of workers comp fraud
* Convicted Mass. chiro allowed to continue practicing

Details at www.InsuranceFraud.org

MEETINGS & CONFERENCES

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

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

* February 20-21 — Insurance Fraud SIU Multiagency Conference Riverside, CA (California District Attorneys Association)

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

* April 1-2 — Insurance Fraud Training Seminar Orlando, FL (National Association of Insurance Commissioners)

For more info, visit online events.