Insurance Fraud Weekly ePort: Week Ending June 27

Jun 30, 2008

 

Insurance Fraud Weekly ePort
Week Ending June 27, 2008
http://www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • Louisiana has passed its fourth fraud bill in a 2008 session that ended this week. HB 413 requires anyone reporting an auto theft to sign an affidavit with law enforcement. The affidavits intend to deter people from committing auto giveups by lying that someone stole their vehicle in order to scam an insurance payout.
  • Less than a year after Maryland enacted a law restricting outsider access to police auto accident reports, the state repealed the measure. A new law replaces it. The measure appears to allow access to the reports, but makes it a crime to use the reports for soliciting accident victims for attorneys and lawsuits. What’s missing — stopping the accident reports from being used to file fraudulent insurance claims.
  • The New York legislature agreed on two bills before shutting down this week for 2008. AB 10371/SB 7368 extends from January to March the date for insurers to file required annual fraud report with the insurance department. Another measure, AB 11468/SB 8449, targets home health-care fraud by creating a central registry of care aides that includes background info and proof of proper training. The legislation stems from the AG’s investigation into fraud and corruption in home health care.

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

 

PUBLIC OUTREACH

  • Guess where this dire warning comes from: “We now have clear evidence, of the criminal kind, that we’re entering a marked economic slowdown from the rising tide of fraud, especially through the insurance market. Tales of arson abound. The struggling business owner, for instance, who finds a crucial contract has been cancelled can no longer resist applying a match to his office or warehouse. Or that stock which just can’t be shifted — why not stage an elaborate break-in to at least try to claim the insurance to raise much-needed cash? Fraud need not be that elaborate. Hide a car and claim it’s been stolen, exaggerate a claim for a burglary, burnish the facts and claim a car break-in caused phantom possessions to vanish.” It’s from across the pond, in the London-based Daily Telegraph.

CRIMINAL CONVICTIONS

  • Prison food was so bad that William Craig Miller admitted he torched his house for insurance money just so he’d be moved from Arizona county jails to enjoy the haute cuisine of state prison. Miller received 3 1/2 years and, presumably, a tastier menu. But leathery meatloaf is the least of Miller’s problems. He also shot five people — including two children — in a mass murder intended to silence two witnesses who could’ve testified in his insurance-fraud trial, prosecutors allege. Miller awaits trial for the suspected murders, and has swallowed county prison food for two years. Meanwhile, Allstate demands that Miller return the $443,312 it paid out for his burned Scottsdale house.
  • A crime ring used stolen identities of possibly thousands of Pennsylvania residents to sell fraudulent license plates and vehicle registrations, Philadelphia officials charge. The bogus documentation can help illegal immigrants fraudulently buy auto coverage. Out-of-state drivers also could buy cheaper auto coverage in Pennsylvania than in their home states such as New York, officials say. Andrew Shapiro, who owns Bassett’s Auto Tags, was busted along with three others.
  • How low can a convicted fraud artist sink to avoid jail? Tell the sentencing judge that your wife has terminal cancer — even though she isn’t that sick. Federal Judge Sol Blatt Jr. had delayed sentencing of Joseph Crowley, of Bluffton, S.C. so the disgraced head of Health Care Economics Group could care for his ailing wife. Crowley had illegally shifted money intended to pay claims into an account that covered expenses of his company, which managed health claims for employers. Imagine Blatt’s surprise when he found that Anne had a job and had described her condition as “not terminal.” Crowley was ordered to immediately begin serving his sentence of four years and two months.

CRIMINAL CHARGES

  • Funeral home owner Manny Diaz tried to scam the auto insurer of a driver who struck and killed an 11-year-old boy near Lawrence, Mass., prosecutors charged this week. Dario Rodriguez was killed while crossing Route 114 last October, and his mother Viviana Resto had him buried in a pauper’s grave because she couldn’t afford a traditional funeral. Then Diaz allegedly billed Safety Insurance nearly $12,000, forging Resto’s signature to a statement of funeral goods and services she hadn’t agreed to pay. The bill included a headstone that wasn’t installed, officials allege.
  • An arson probe turned into a murder investigation. The owner of a Chicago-area home had the place burned down to land an insurance payday. The blaze was suspicious from the start because someone had moved a variety of the unnamed owner’s possessions into storage just days before the fire broke out, officials say. But three days after the blaze, an insurance investigator found the body of Thomas Kunz inside. He’d been promised a car to torch place, police said yesterday. Kunz also had asked a friend Christina Stone to take him to the property and pick him up after starting the fire, officials say. She allegedly left her job around 4 am, records show. But the suspected plot went wrong when Kunz ignited gasoline and ether that exploded, killing him. Stone was connected to Kunz through phone and text message records. More on this story as it unfolds.
  • Already charged with helping a school principal torch his car for insurance money, guidance counselor Kenyatta O’Bryant now is in hot water for allegedly having his own BMW 525i set on fire to bilk his insurer. The North Plainfield, N.J. man owed nearly $35,500 on the Beamer when police found it partially sunk in a pond, with the rear end on fire. O’Bryant also allegedly helped Terrence Wilkins, head of the Red Bank Middle School, burn up his leased Acura to avoid $9,000 in mileage fees. In a separate case, another New Jersey educator incurred similar fraud charges last month. Amanda Wright-Stafford, principal of the Lincoln Avenue Elementary School in Orange, allegedly had her 2000 Honda Passport burned up for an insurance payout.
  • What’s the going rate to stage an auto accident? It’s $500 and some marijuana if you’re Ashley Crew, Nevada prosecutors allege. The Reno woman was hired by Mohammed “Capone” Alshehry to ram a rented U-Haul into his 1999 Mercedes so Alshehry could make bogus injury claims, officials charge. Alshehry even allegedly planted his mother inside the car to increase the injury claims, fixing the steering wheel to minimize real injuries she might suffer. Crew told police she rented the truck to help a friend move, but the truck was empty when police arrived on the crash scene. The Mercedes’ insurer paid out $23,000 in claims. Reno police received a tip from the teen mother of Alshehry’s child, who said she was onsite when the $500 and marijuana allegedly changed hands.
  • An NYPD officer, school safety official and security director of a hospital were among dozens of people busted in a chop-shop sting in Queens. Some 61 people brought their vehicles to the apparent chop shop and filed fake theft claims with their insurers, prosecutors say. But the outfit was an NYPD sting.
  • A preacher may be giving the Good Book a bad name. Charles Shifflet, pastor of Calvary Baptist Church in Culpeper, Va. claimed he hurt his back unloading a pony at a church carnival. He then allegedly inflated his weekly income by $300 to receive more disability insurance benefits. Shifflet also earned extra income despite claiming he was disabled, prosecutors say. When Shifflet saw his church salary slashed by $250, he allegedly took the same amount of money from the church budget as his “housing allowance.” He allegedly didn’t report that income on his tax returns, thus adding tax evasion to his insurance fraud charges. Shifflet faces up to 310 years and a $50,000 fine if convicted. Calvary Baptist boasted the largest congregation in the U.S. during his tenure.
  • What seemed like a dreamy honeymoon turned into a death-dealing tragedy. Gabe Watson allegedly cut off his wife Tina’s air supply during a seeming scuba accident off Australia’s Great Barrier Reef so he could collect a life-insurance payout, prosecutors charge. The Alabama couple was diving a historic wreck in 45 feet of water just 10 days after their wedding. Tina panicked and drowned after getting caught in an underwater current, claimed Gabe, a certified rescue diver. But he actually was bear-hugging Tina underwater just before she drowned, a witness says. Gabe also asked Tina to maximize her life policy and make him the beneficiary just days before the wedding, her father says. He also asked about her life policy after her death, the insurer says. He was charged in Australia and is expected to fight extradition.

CIVIL & ADMINISTRATIVE ACTIONS

  • Molly Daniels wants out of jail. Now. The Texas woman and her hubby Clayton dug up the body of an elderly woman named Charlotte Davis, and stuffed her corpse in their car, wearing Clayton’s clothes. They torched the car and tried to convince their insurer that Clayton had died in that blaze. Actually it was a plot to collect $110,000 in life-insurance money. They nearly pulled it off. Charlotte’s body was burned beyond recognition, and Molly identified Clayton’s charred shoes. She even held a memorial service for him. But DNA samples outed the scheme. Molly received 30 years in 2005 and was dishonored into the coalition’s Insurance Fraud Hall of Shame. Despite it all, she’s already being considered for parole. The Williamson County DA will have none of that, however. John Bradley wrote a letter this week protesting Molly’s parole push. We’ll keep ePort readers updated.
  • Mercury Insurance Group has agreed to pay $250,000 to settle alleged claims-handling violations, the California insurance department says. The practices included unreasonable delays in affirming or denying coverage, and in paying claims, the department says. Mercury also agreed to pay $50,000 for the department’s legal fees and enforcement costs. The insurer also must reduce valid complaints 15 percent by the end of 2008 or face another $200,000 in fines.

ETC.

  • A new initiative to combat medical fraud by pooling the resources of property-casualty and health insurers was announced in Washington, D.C. this week. The Consortium to Combat Medical Fraud is a joint project of the coalition, the National Health Care Anti-fraud Association and National Insurance Crime Bureau. Projects underway include cross-matching data on suspected fraud cases, cross-training investigators, getting insurers comfortable with sharing information across industries, and conducting research. Check out FraudBlog for more details.
  • Massachusetts has launched a task force to nail employers who exploit workers in the state’s burgeoning underground economy. Workers comp insurers in Massachusetts lose $100 million a year in unpaid premiums to businesses that illegally pay workers cash under the table or falsely label employees as independent contractors, says a Harvard study. As many as one of seven construction workers is hired off the books or illegally classified as independent workers, the 2004 study says. Some 13 percent of employers under-report wages and unemployment taxes to Massachusetts, the state’s labor department says. The task force is holding meetings around the state to promote the crackdown. Some advocates for immigrants fear the crackdown will hurt workers who take those jobs, but officials insist they’re only chasing dishonest employers.
  • California has just finished a sweep of 60 motels in 10 counties to root out inns that failed to buy state-required workers comp coverage. Twenty were cited and several others are being investigated more closely. The state labor commission led the sweep, which has generated more than $52,000 in fines.
  • San Bernardino County, Calif. has snagged a $2-million state grant to help root out shady contractors and other businesses that cheat the workers comp system. Insurers also are on the hit list. The county already is prosecuting five cases involving alleged multi-million-dollar premium evasion by businesses. One case is a $30-million whopper, and several involve construction firms. “Some roofers ask for cash payment up front, and since they don’t have insurance the roofers injure themselves and sue the customer’s homeowner’s insurance,” San Bernardino County Deputy DA Gary Fagan told the Victorville Daily Press this week. The county also wants to go after workers comp insurers that, officials say, delay claims and tack on hidden fees.
  • July 15 is the deadline for receiving the best rates for IASIU’s annual fraud seminar and expo, which will be held Sept. 7-10 in Atlanta. Online registration is available, and mailed registration forms must be postmarked by July 15 to qualify for the reduced rate. IASIU also is accepting nominations for its annual awards — Investigator of the Year, Outstanding Service, Public Service and Analyst of the Year.
  • More than 40 million people age 65 and older or disabled have Medicare cards listing their Social Security numbers. That leaves cardholders vulnerable to identity theft, and advocates urge Medicare to stop using Social Security numbers. Tough luck, the job is too big to fix, Medicare says. The changes would cost at least $500 million and take three years to finish. Private insurers have abandoned Social Security numbers on their cards, and Medicare should so the same, Social Security officials say.

QUOTE OF THE WEEK

“A lot of people still believe that workers compensation fraud is the number-one job killer in California, so we need to control it.”

— Jiles Smith, a California workers comp fraud assessment commissioner, commenting on construction firms that cheat comp insurers out of millions of dollars.

 

OTHER HEADLINES THIS WEEK

  • Convicted exec accused of bribery to reduce sentence
  • Calif. body shop owner accused of $1.2M repair fraud
  • Mass. lawyer accused of stealing insurance proceed
  • Michigan woman admits $230K theft of health benefits
  • Miss. woman ordered to prison for Medicaid fraud

Details at www.InsuranceFraud.org/

 

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