Insurance Fraud Weekly ePort: Week Ending January 18, 2008

Jan 18, 2008

Insurance Fraud Weekly ePort
Week Ending January 18, 2008
www.insurancefraud.org

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LEGISLATION & REGULATION

  • The New Hampshire legislature will debate a bill to expand the fraud warning that insurers must print on key documents that reach consumers. SB 500 would require the warning on all insurance applications; right now only claim forms are included. The notice tells consumers that committing insurance fraud is a crime.
  • The New Jersey legislature will consider a bill to expand the state’s immunity law by allowing insurers to communicate with other insurers or with the National Insurance Crime Bureau as part of fraud investigations. The law would grant insurers immunity from civil suits for sharing the case information. SB 248 is identical to a bill that failed in 2007 and a measure the coalition supported.
  • Kentucky and West Virginia are considering restricting outsider access to the information in automobile event data recorders (so-called black boxes). SB 75 in West Virginia would require the vehicle owner’s consent or a court order to allow access by fraud fighters and others. SB 34 in Kentucky is similar, but wouldn’t require owners to release data to insurers as a condition of a claim settlement.

PUBLIC OUTREACH

  • “Investigative reporter John Deutzman found that vans that transport kids to and from a magnet school in Brooklyn are licensed and insured in Pennsylvania (to illegally reduce their auto premiums),” the coalition’s Dennis Jay writes in his latest FraudBlog posting about a Fox 5 TV report in New York City. “Deutzman noted that local officials are powerless to do anything about the fraud, but that a state investigation is underway. Watch the report on the station’s website. It’s very well done. Deutzman, by the way, received an award from the New York Alliance Against Insurance Fraud in 2006 for a great piece on auto underwriting fraud in New York. The fraud-fighting community needs more journalism like this.”
  • The plot sickens: A larcenous gypsy shakes down insurers by chomping on broken glass. A meth addict kills his children while torching his home for insurance money. A teacher fakes terminal cancer to steal disability money. They’re among the extreme schemers demoted to the coalition’s annual Insurance Fraud Hall of Shame. The coalition dishonors the most-brazen convicted swindlers of the year—the fraud world’s rank and vile. Visit the No-Class of 2007 at the coalition’s online cellblock. The Hall of Shame pulls back the curtain on a crime that many people think is merely a victimless prank.

CRIMINAL CONVICTIONS

  • Personal-injury lawyer Gerald Penovich was an all-around organizer for a staged-accident ring, filing more than $100,000 in bogus injury claims in the process. The Chicago man coached fake crash victims to tell doctors their chests, necks, backs and heads hurt after the wrecks. Penovich also told them to see the doctor often, and pile up insurance bills. He paid two other schemers $5,000 to stage a crash, as well. One lower-level ring member turned informant on Penovich, and recorded their conversations. Penovich told the informant that he’d rubbed a co-schemer’s torso to check for a wire and asked if their conversation was being recorded. Penovich received 18 months Wednesday for his troubles. His conviction was the highlight of a federal bust that has earned nearly 200 convictions. An FBI agent even posed as a corrupt lawyer pretending to bilk insurers and car rental companies.
  • Facing eviction and burdened by a history of debt, Lawrence and Patricia Atwood sought relief by burning down their rented LeClaire, Iowa dwelling for insurance money. The couple spent considerable money fixing up the home, which their son-in-law Jeffrey Johnson owned. They tried but failed to finance the purchase of the place themselves when it went into foreclosure. Eviction loomed for the Atwoods, and the house suddenly was destroyed by fire—just days before the couple’s homeowner policy expired. The couple claimed about $17,000 in personal-property losses. But suspiciously, three separate fires had broken out inside. The flames also burned downward through the floors instead of up—a clear sign of accelerant. Some of their supposedly lost items such as jewelry and a coin collection also were found in a nearby shed, along with an overnight bag, two pairs of slippers, medication and family photos. The Atwoods were convicted yesterday, and each faces up to 15 years when sentenced.
  • Two sheriff deputies in Washtenaw County, Mich., chose an unusual way to reconcile after a lovers’ quarrel: He wrote a bogus traffic report and she filed a fraudulent insurance claim. Jennifer Reynolds and Christopher Campbell, a fellow deputy in the midst of a messy divorce, had a heated argument that led to his ramming her car with his SUV. To keep his wife from learning about their affair, Campbell file an official report saying the crash was a hit-and-run in a parking lot. Reynolds used that report to file a bogus claim with her insurer. Reynolds faces up to 14 years in prison. Campbell received probation and community service in October.

CRIMINAL CHARGES

  • A Queens cop who dumped her car at a repair shop so she could tell her insurer it was stolen was among 61 suspects nabbed in a chop-shop sting of insurance swindlers, police said this week. Shantell McKinnies had a crony take her Dodge Charger to the shop, which was supposed to get rid of the vehicle so she could make a bogus theft claim, prosecutors allege. McKinnies collected $26,000 from her insurer. But undercover cops ran the garage during a 16-month investigation of owner giveups. Suspects learned about the chop shop through 15 unsuspecting middlemen who put the word out. The middlemen sold the vehicles to the chop shop. The decoy outfit took in 70 vehicles but kept them as evidence instead of cutting them up. Among the other suspects busted were the security director for a city hospital, a building inspector, a civilian employee for the corrections department, a school safety officer and a federal homeland security worker.
  • Firefighter Laramie McPherson shouldn’t play with fire, Kansas prosecutors charged this week. The wife of the Shawnee Heights man set off fireworks inside their 1999 Toyota Camry to burn up the car for insurance money, officials allege. McPherson was on-duty at the time, but later arrived at the scene and claimed someone had stolen the Camry from his home. McPherson now is on administrative leave.
  • Debra Anne Robinson shot and stabbed herself and torched her RV to steal $30,000 in insurance money, say authorities in Davenport, Iowa. Robinson claimed that an assailant broke into her trailer, attacked her with a knife, shot her in the armpit, and set the place afire as he left. The suspected arson is the latest of four incidents in which Robinson claimed she had been assaulted. The first was in July, when she said someone had attacked her in her garage. At that time Robinson made a claim for $3,000 in damage to a family member’s vehicle, and her insurer paid.
  • Brock Anthony McLeland told his insurer that someone stole his 2006 Suzuki four-wheel ATV from the back of a Dodge truck. Police fruitlessly scoured the Burlington, Iowa neighborhood for the vehicle and a suspect. After pursuing leads for more than a year, officials think they know what happened: McLeland allegedly sold the ATV to another man for $2,500, then made a $5,000 theft claim, on which his insurer paid out.
  • An Irvine, Ky. woman allegedly bilked her insurer of $93,000 by failing to disclose she was receiving Social Security disability income. Treva Caton began receiving disability money from John Hancock in 1984 after a workplace injury. She also began collecting Social Security benefits in 1997, authorities say. Over the next 10 years Caton allegedly failed to disclose the government payments, which would’ve reduced the sum John Hancock was required to pay. Caton faces 20 years in prison and a fine of $60,000 if convicted.

CIVIL & ADMINISTRATIVE ACTIONS

  • Michael Vousden sold phony medical malpractice coverage to women’s clinics around the U.S., California prosecutors charge. Vousden once was licensed to sell insurance in the British Virgin Islands, but his license lapsed and he has no state license in the U.S., officials allege.
  • Two men posed as insurance adjusters to rip off victims of the Angora fire in South Lake Tahoe, Calif. last summer. Steve Slepcevic and Matthew Todd ran a bogus firm called Paramount Disaster Recovery. They weren’t licensed but signed contracts with fire victims anyway. Some victims agreed to have Paramount perform any needed repair work, or pay up to 20 percent of insurance settlements if the homeowners used another company. The insurance department has fined Slepcevic and Todd $200,000. They’ve also agreed to pay the state $75,000 in litigation costs.
  • Massachusetts residents, required by law to have health insurance, probably looked like easy pickings to a fake health insurer variously called National Alliance of Associations, Association Healthcare and Promotion Healthcare. But no more. The company must stop pitching its low-cost premiums in Massachusetts because it isn’t licensed to sell insurance, the state insurance department says in issuing a cease-and-desist order. Numerous consumers complained about Internet and fax sales pitches that touted the coverage at rates far below those charged by legitimate insurers. The company must notify its policyholders that it violated state law, the insurance division ordered. Another New Jersey-based organization, the National Trade Business Association, was ordered to stop selling unlicensed health insurance plans to Arizona residents last October.

ETC.

  • Plans are afoot to launch an international database to target insurance fraud globally, according to news reports. About 140 nations are expected to participate in the effort, which is being spearheaded by the International Association of Insurance Supervisors. The database is expected to be completed within two years. It will let insurers share info internationally, and access lists of known swindlers and cases around the world. The database will focus on claim and agent/broker fraud, and internal schemes.
  • So many vehicles are being torched in scenic parkland near Coventry in the UK that wildlife is endangered and centuries-old trees could be killed by the flames, officials say. A blazing Ford Escort recently was found in a park called Canley Ford. The car fires are burning off tree bark, which eventually kills the trees, officials say.

QUOTE OF THE WEEK

“Go *&@! yourself and the insurance.”
— Ben, a New York City van driver, when confronted by a reporter about having out-of-state plates on his vehicle used to transport kids to a public school [See Public Outreach above].

OTHER HEADLINES THIS WEEK

  • Louisiana jury acquits 2 police officers of fraud charges
  • Fake marriage alleged in N.J. to gain health benefits
  • Fraud arrests up 17% in New York during 2007
  • No jail for Md. cop who helped girlfriend torch her SUV
  • Michigan pediatrician charged with filing false claims

MEETINGS & CONFERENCES

 

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