Insurance Fraud Weekly ePort: Week Ending July 27, 2007

Insurance Fraud Weekly ePort
Week ending July 27, 2007 
www.insurancefraud.org 
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LEGISLATION & REGULATION

* People who apply for auto coverage in North Carolina must prove they’re residents under a bill the legislature passed Wednesday. H279 targets out-of-state drivers who register their vehicles in North Carolina to fraudulently obtain lower-priced auto coverage. Policy applicants must show documents such as a lease or driver license to prove they live in-state at least six months a year. Scofflaws would face misdemeanor charges and a fine of up to $1,000. The insurance department also could pursue agents who knowingly insure dishonest insurance buyers. One small agency in Duplin issued 250 policies to New Jersey residents who lied that they lived in North Carolina, according to news reports. The reform was sent to the governor for signature.

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

PUBLIC OUTREACH

* Seniors were a special focus of efforts to arm consumers against scams during Fraud Awareness Week sponsored by the D.C. Department of Insurance, Securities and Banking. A series of education efforts were held this week. The program culminated in a town hall meeting for seniors yesterday. Officials from various District of Columbia agencies discussed insurance and investment schemes, plus identity theft, sweepstakes fraud, ponzi schemes, auto/home repair fraud and multilevel marketing. Information also was sent each day to different population groups in the District, including working families and immigrants. Mayor Adrian Fenty issued a proclamation, and the fraud bureau’s hotline was promoted extensively.

CRIMINAL CONVICTIONS

* A Rusk County, Tex. deputy sheriff made a bogus claim for hail damage to his 1981 Ford pickup after a storm hit the area. Michael Wayne Davis said about $6,000 in damage was done to his truck, but a forensic exam confirmed the damage likely was done by a human with a metal object. Davis received two years deferred after pleading no contest Wednesday. He also lost his job.

* Ritch’s Body Shop tried to get rich off of insurers. The Incline Village, Nev. firm charged auto insurers for new parts but simply fixed old parts, didn’t repair some damage, and submitted fake invoices so the shop appeared to have purchased new parts. Farmers Insurance and the state AG teamed up in the investigation. A sting vehicle was run through the shop. The vehicle was documented before going in, then again after being supposedly repaired. That provided the key evidence for trial. Owner Ritch Johnson received one year suspended, and must repay $16,000.

* A New Orleans man and woman staged car crashes for seven years to get quick settlements with insurers. Elton Calloway and Rosalyn Bradley set up the crashes, then pressured their victims into fast payments from State Farm, Geico, Allstate and Progressive. Many of the accidents happened on private property and weren’t reported to the police. Calloway and Bradley landed at least $51,000 in bogus claims, and received suspended sentences after pleading guilty Tuesday. The Louisiana State Police played a leading role in the successful investigation.

* Four Tampa residents were arrested for their roles in staged accidents, Florida’s Department of Financial Services said Wednesday. Car passengers were paid $600 each to make fraudulent claims for treatment of fake crash injuries. At least one clinic, the Bellamar Medical Center, paid suspects $2,000 or more to stage the crashes. Arrested were Bellamar owners Isidoro Martinez and Yusimy Martinez. Also busted were Lemuel Filipe and Yunaisy Silverio, who face insurance-fraud and patient-brokering charges. Florida drivers must carry at least $10,000 in PIP coverage.

* Eye doc Douglas Greer bilked health plans out of more than $1 million in part by performing worthless operations on patients. The Washington, D.C. surgeon did 30 laser operations on one patient who didn’t have glaucoma. And 108 of 136 cataract operations he performed required “scleral grafts” to heal a burn on the white part of the eye. But these grafts are needed only once out of every 1,000 cataract operations, the feds said. Greer faces up to 51 months in federal prison when sentenced. 

* Alabama insurance agent Peter Thosteson used two professional employer organizations to provide client businesses with worthless workers comp coverage. Thosteson was head of TMG Staffing Services and Allarre Partners, which provided comp coverage through two fake insurers—Regency Insurance of the West Indies and Transpacific International. The insurers paid no claims and had no reserves. Client firms paid Thosteson more than  $4.8 million in comp premiums, which he rewired to personal accounts throughout the U.S. Thosteson pleaded guilty Wednesday, and faces up to five years in prison when sentenced. Thomas King received 14 years in May for using Regency as a front to steal client workers comp premiums through his Jacksonville, Fla.-based PEO, Miralink.

CRIMINAL CHARGES

* Michael Macomber will have to explain why firefighters found 25 five-gallon gasoline cans in the rubble of his burned-out Houston-area home. The real estate agent quickly withdrew his $1.2-million insurance claim when officials confronted him with the evidence. Macomber paid a crony $10,000 to torch the 7,000-square-foot home while he was out of town, prosecutors charged this week. Six others also are charged.

* A suspected insurance-fraud scheme turned into a vicious crime involving five shooting deaths, Arizona prosecutors charge. Five people were shot in a Mesa home, including two who could’ve implicated William Miller for allegedly torching his home for insurance money. Miller admitted gunning down one witness, Steven Duffy, but insists an accomplice shot the other four, including three youths. Miller says he will plead guilty to Duffy’s murder on August 15, and faces a possible death penalty. “The death penalty doesn’t bother me. First of all, I’m conservative politically. I believe in the death penalty. I believe in God, and I’ll let him be my judge,” he told the Arizona Republic this week.

* The feds have dropped charges against General Re Corp. after first hailing the case as one of the largest insurance-fraud prosecutions in Virginia history. General Re was accused of taking part in a suspected accounting scheme tied to Richmond, Va.-based insurer Reciprocal of America, which is now in receivership. Reciprocal allegedly tried to hide large losses from regulators. When the insurer finally collapsed, more than 80,000 lawyers, doctors and hospitals in 30 states lost their malpractice coverage. State insurance commissioners in Virginia and Tennessee still are suing executives of Reciprocal and General Re for damages.

* Gary Tomassoni was polite and in control of his emotions while telling investigators that an intruder had broken into his Minneapolis-area home and shot his wife Helen twice in the head, prosecutors said this week. There was no evidence of a break-in, but investigators did find a lockbox with blood on it. The box contained a semi-automatic pistol, torn blue gloves and a $500,000 term life policy for Helen. Tomassoni also had lost up to $50,000 gambling in the last year, and had borrowed large amounts of money from family and friends. Investigators also found blood around the home, including on clothes in the washing machine.

CIVIL  & ADMINISTRATIVE ACTIONS

* A chiro and two of his assistants bilked Encompass Insurance Company with fake claims from staged crashes in Massachusetts, the insurer says in a federal RICO suit this week. Patients went to Kramer Chiropractic in Fall River and other towns. They claimed soft-tissue injuries, even though the crashes were so minor that the cars were barely damaged, says Encompass, an Allstate company. The alleged victims received virtually identical diagnoses and treatments, billing Encompass thousands of dollars. The charges were inflated, and treatments were both unneeded and followed no clear medical treatment strategy, Encompass says. Patients also made minimal claims for lost wages despite routinely receiving disability ratings from the chiros, Encompass charges. Defending themselves are Eugene Kramer, Melissa Phan and Wendy Mendoza.

* Twelve insurers will help out 71 clients whose auto premiums were stolen by a now-defunct Indiana agency. The insurers will pay $58,000 total after Daneile Frydrych, owner of the All-Star Agency in South Bend, allegedly took the premiums without buying coverage. The insurers are compensating the clients but weren’t involved in the scam. Still, one victim will have an especially hard time recovering. Raymond Mallard discovered that his firm Heavenly Limousine had no insurance when the state suspended his operating permit for lack of coverage. He lost his sole source of income for about four months. His current insurer also is charging him $2,000-$3,000 more in premiums, he says, because it considers him a higher risk of letting his coverage lapse. Frydrych lost her license in February and must pay $365,000 in fines and restitution. No word on whether criminal charges are coming.

* A consulting firm hired to help Medicaid recoup funds for services that Washington, D.C.’s foster-care agency provided to children ended up bilking Medicaid instead. Maximus agreed to pay $30.5 million for charging Medicaid for consulting services it never performed. The company helped the agency submit claims to Medicaid for foster-care services to help kids with medical, social and educational needs. Maximus created elaborate invoices for beneficiaries, as if foster-care services had been provided, then was paid for helping recoup fees from Medicaid.

ISSUE SPOTLIGHT

* Should law enforcement be more forthcoming in sharing information with insurers about SIU cases they’re investigating and prosecuting? Many SIUs get frustrated when they hand over cases to fraud bureaus and prosecutors, and are kept in the dark about how the cases are proceeding. Some prosecutors say, however, that it’s in the best interest of the case for them not to get too cozy with insurers. Learn more about why and share your opinions at Insurance FraudBlog

QUOTE OF THE WEEK

“These hard-working, mainly blue-collar folks were taken advantage of in ways that are completely unacceptable.”

– Indiana Insurance Commissioner Jim Atterholt said of insurance agent Daneile Frydych’s stealing client premiums.

OTHER HEADLINES THIS WEEK

* Medical office manager faces 30 years for $200 fraud
* Farmers wins lawsuit against Hollywood body shop
* W.V. woman sentenced to prison for home arson
* Employment service owners convicted in Oklahoma
* Indiana man admits to fraud in transporting patients

Details at http://www.insurancefraud.org/news.lasso

MEETINGS & CONFERENCES

* July 23-24, 2007 — Advanced Fraud Investigation Seminar San Diego, CA (National Association of Insurance Commissioners)

* July 24-25, 2007 — Legal Issues in Health Care Fraud Chicago, IL (National Health Care Anti-Fraud Association)

* July 26-27, 2007 — Best Provider Defenses in Health Care Fraud Cases and How to Combat Them Chicago, IL (National Health Care Anti-Fraud Association)

* September 9-12, 2007 — Annual Seminar & Expo on Insurance Fraud Las Vegas, NV (International Association of Special Investigation Units)

* September 10-11, 2007 — 2007 Annual Meeting Lisbon, Portugal (International Association of Insurance Fraud Agencies)

For more info, visit online events.