Insurance Fraud Weekly ePort: Week Ending July 25

Jul 25, 2008

 

 

Insurance Fraud Weekly ePort
Week Ending July 25, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The Massachusetts Senate approved a bill meant to clarify when and for what reasons a life insurer can deny a claim and rescind a policy. SB 2818 came about after an insurer denied a death claim in which there was a pre-existing medical condition that the policyholder and her family most likely were not aware of when the policy was purchased. The new bill permits the denial of a claim if an insurer can prove deception or fraud by an insured in the application or claim.
  • California Governor Arnold Schwarzenegger signed into law a bill that prohibits health insurers from giving bonuses to employees for canceling or limiting a patient’s coverage. AB 1150 was passed by the legislature in response to several reports that insurers had rewarded employees who searched through an insured’s application to find a loophole to cancel coverage retroactively and avoid paying for costly health services. “Patients should not have to worry about losing their health insurance – simply because an employee can make some extra bonus money,” said the sponsor of the new law. The issue of health insurance rescissions has been an ongoing dispute in the state. Last week the state’s managed health care agency fined two insurers a total of $13 million for unlawfully rescinding policies.

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

 

PUBLIC OUTREACH

  • If you’re a fraud investigator dealing with property claims, you might want to check the receipts filed with those claims very closely. Enterprising claim cheats have a new source for the fake receipts they use to convince insurers they owned expensive stuff. A website  based in Europe will provide authentic-looking receipts from any store worldwide, for any good or service, at any price tag — no questions asked. Designed, printed and delivered, for only $29.95. Plus, the receipt is printed on a point-of-sale thermal printer — the same sort most stores use. The website says the receipts should not be used to commit insurance fraud. The coalition contacted the owner of this business in Switzerland, and he said he’s only receiving about 10 orders a week, mostly from the U.S.

CRIMINAL CONVICTIONS

  • Louis Cordasco and his crew of co-conspirators had a unique way of making home flooding pay off: They’d break the water pipes themselves and file flood insurance claims on the damage. Cordasco, of Harrison, N.Y., pleaded guilty to insurance fraud in connection with the flooding of plush, multi-million-dollar mansions in the New York area. The ruse was basic: Cordasco’s partners would purchase a pricey home using false financial documents; then the crew would engineer flood damage to the home and claim the insurance money. Cordasco’s business, Crystal Restoration Enterprises, was an emergency clean-up “front” that would validate the flooding and process the claims. Afterward, the co-conspirators would split the loot. Cordasco was a hands-on fraudster. In 2005, he made plans to personally bust a water pipe, trigger a flood and file for damages, authorities allege. He faces five years in jail.
  • Two insurer employees in Georgia are headed to federal prison for running a claim diversion scheme that cost their employer nearly $400,000. Susan Denise Harper, 43, of Lithonia, was sentenced to four years for masterminding the insider fraud scheme. As a claims adjuster and supervisor at Underwriters Safety & Claims, she was able to manipulate the company’s claims system to issue checks to her cohorts. One method she used was to open existing claims and change the name and address of real claimants to her fellow schemers. Also sentenced this week was claims handler Kevian Bateman, 27, of Atlanta, who worked under Harper. Bateman received three years in federal prison. A third person who cashed the checks, Ojineka Jones Godwin, 51, of Alpharetta, was sentenced to two years and nine months. The case was investigated by the U.S. Secret Service and the Postal Inspection Service.
  • It may have been the longest canoe trip in history. John Darwin of England left in a canoe in 2002. When he returned last year, he walked into a police station and said he had no recollection of the last five years. Darwin, 57, had planned an elaborate ruse with his wife, Anne, 56, to fake his death and re-unite in Panama and live off the $500,000 insurance money. But apparently he missed his two sons and decided to become undead. The case was broken by a British citizen who alerted police after finding a recent photo of the couple in Panama through a Google search. Both Darwins were sentenced this week to more than six years in prison.

CRIMINAL CHARGES

  • Erik Teong escaped jail after his first fraud conviction, but may not be so lucky the second time around. Last year Teong pleaded guilty to faking a robbery of $7,295 in cash from the Gardner, Mass. gas station he managed. He convinced a buddy to punch him hard in the face to help convince police the robbery was real. Police weren’t convinced and after a three-month investigation charged Teong with faking the crime. In the meantime, Teong said he couldn’t work because of the injury and collected $3,000 in comp benefits. After Teong’s guilty plea to staging the robbery, the comp insurer investigated the claim and referred the case to the Mass. fraud bureau. Teong was charged by the AG’s office this week with comp fraud.
  • Two scam artists in Lawrence, Mass. couldn’t get their stories straight on a phony auto accident. Now, they’re not only stiff-armed on the insurance money, but they also may face jail time, too. The two men, both named Jose Villa, claimed they were injured in a 2002 car crash in Lawrence. But the insurance companies investigating their case smelled a rat when the two con men gave conflicting stories. After a six-year investigation, authorities concluded the accident never happened and arrested both men on fraud charges, along with six co-conspirators. The not-so-dynamic duo may have paved their own path to prison by waiting months to file insurance claims. Massachusetts has a six-year statute of limitations on criminal charges. But the Villas’ file delay pushed the statute’s time limit into 2008 – within the time frame for authorities to file charges.
  • Using a convenience store parking lot as a backdrop, three stooges staged a carjacking and filed an insurance claim on the “theft.” But police were on to the scam and now the three co-conspirators are on the fast track to jail. In early 2006, Dennis Carabello and his girlfriend, Kristin Smith, both of Vineland, N.J., reported that they were the victims of a carjacking in a Wawa store parking lot. Carabello submitted an auto theft claim to State Farm Insurance, saying his 2005 Toyota Scion, valued at $18,810, had been stolen. Police grew wary when Carabello claimed that gal pal Smith was in the car at the time of the carjacking but couldn’t prove it. Further evidence revealed that a third co-conspirator, Craig Likanchuk, drove the Toyota away before police arrived on the scene. The three face conspiracy and insurance fraud charges.
  • Fraudsters phone home. When a U-Haul truck rear-ended a Cadillac filled with passengers in Monroe, La. earlier  this year, police didn’t suspect a scam at first. At the scene, police were led to believe the occupants of the two vehicles didn’t know each other. But an astute claims adjuster from Republic Western Insurance noticed that the owner of the Cadillac, Jacob Middleton, who was a passenger in the car, had the same telephone number as the driver of the truck, Shelia Braggs. The case was referred to the fraud unit in the state police and this week Middleton, Braggs and four others were charged with insurance fraud.
  • A Florida insurance agent praised for her claim handling during Hurricane Ivan was charged with ripping off her clients this week. Ashley Hunnicutt Barkocy, 37, of Hunnicutt Insurance in Ft. Walton Beach, was charged with failing to place coverage for condominium associations in the state. Federal prosecutors say Barkocy spent the money on herself and her insurance agency and left the condo groups without coverage from 2002 to 2006. She faces 20 years in prison for each of the 23 counts of wire fraud filed against her. In 2005, the building housing her agency was hit by a tornado, and as the storm approached, Barkocy backed up her client files to the Internet, rented a trailer to work out of and was back in business the day after the storm to help her clients file claims.

CIVIL & ADMINISTRATIVE ACTIONS

  • A national glass repair shop found a nifty way to increase profits — just lie about where the repair takes place. Glass repairers can add a surcharge for auto glass replacement in rural areas, so why not just set up a few shell entities in outlying areas and claim that’s where the repairs occurred? That’s exactly what Legacy Auto Glass of Spokane, Wash. did, unlawfully raking in $600,000 in extra profit from 2001 to 2004. Farmers Insurance caught on to the scam, and alerted the FBI and National Insurance Crime Bureau. The result: Last Friday Legacy pleaded guilty to the scam, was fined $500,000 and ordered to pay back insurers the money they stole.

ETC.

  • Plaintiff attorneys are declining to take legitimate claim cases for fear of being prosecuted for insurance fraud, says a law journal article published last week. The article implies that insurer funding of fraud prosecutors presents a conflict of interest and stacks the deck against plaintiff attorneys. The author, an associate law professor at Syracuse University, recommends that lawyers accused of fraud be dealt with primarily by state attorney disciplinary systems — and not by prosecutors working in tandem with insurers. The 66-page article, titled An Unholy Alliance: Perceptions of Influence in Insurance Fraud Prosecutions and the Need for Real Safeguards, is published in the current issue ofJournal of Criminal Law and Criminology. You can read the article online in the members-only section of InsuranceFraud.org.
  • California’s high-tech entrepreneur-turned insurance commissioner is attempting to put his stamp on the anti-fraud landscape with a new “fusion center” and other cutting-edge ideas. Commissioner Steve Poizner was interviewed for an article in the current issue of Fraud Focus that describes 18 new ways to enhance fraud fighting in California. The newsletter also includes a detailed article on the new Consortium to Combat Medical Fraud and how this cross-industry strategic alliance  plans to ramp up pressure on crooked medical providers. The newsletter is in the mail, but you can download a copy online now.

QUOTE OF THE WEEK

“This was your basic 101 auto fraud back then — an accident that never happened, except on paper. A lot of those cases made it through without anyone getting caught. But this one didn’t because the insurance companies were onto it early and denied all of the claims.”

— Lawrence, Mass. police Chief John Romero, commenting on the strange staged auto case involving two men both named Jose Villa [see Criminal Charges above].

 

OTHER HEADLINES THIS WEEK

  • Miami official received $20K from accused fraudsters
  • Russian charged with $1M Medicare fraud in Oregon
  • Two in Kentucky charged with faking theft of big rig
  • Insurer employee admits stealing $1M from company
  • Missouri hospital to pay $60M to settle fed investigation

Details at www.InsuranceFraud.org/

 

MEETINGS & CONFERENCES

For more info, visit online events.

 

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.

 

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