Insurance Fraud Weekly ePort: Week Ending June 6

Jun 6, 2008

 

Insurance Fraud Weekly ePort
Week Ending June 6, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The Louisiana governor signed HB 333 into law, making it a crime to make, sell or distribute bogus auto-insurance cards. The legislature also is on the verge of passing HB 1147, which would extend the state police’s fraud unit through 2012. The unit is scheduled to sunset at the end of June.
  • New Mexico has a new law clarifying actions health insurers can take when consumers make misstatements on applications. Insurers can rescind policies or deny claims only when the misstatements are willful or fraudulent. The measure sets other parameters for dealing with application misstatements that aren’t fraudulent or willful. The law takes effect July 1.
  • A court has upheld the District of Columbia’s law restricting attorneys from directly soliciting automobile accident victims within 21 days of the accident. The restriction doesn’t violate the separation of powers provision allowing the judiciary a role in regulating attorneys, the federal Superior Court ruled. The restriction was part of a coalition-supported fraud law enacted in 2006. (Bergman v. District of Columbia, Docket No. 06 CA 7992)

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

PUBLIC OUTREACH

  • Insurance fraud is financing America’s epidemic of diversion of addictive prescription drugs such as OxyContin, and this crime wave could be looting private insurers out of up nearly $25 billion a year, the coalition’s Dennis Jay writes in a major article in this week’s BNA’s Health Care Fraud Report, a widely read publication for senior policymakers and other health-care leaders. “Bogus insurance claims are the door keys to a large volume of the diverted prescription drugs in America,” Jay writes. “Insurance fraud thus helps energize and enable a persistent drug trend that wrecks lives and stubbornly resists the best efforts of fraud fighters throughout the U.S.”

CRIMINAL CONVICTIONS

  • Real estate agents and appraisers landed bad deals. Darrell Crosgrove was a key cog in a scheme that promised them affordable malpractice coverage if they’d join the Toledo, Ohio-based nonprofit American Real Estate Association and Noble Group. But the coverage was fake. A few “members” had some legal fees paid, but most didn’t. More than 4,500 people shelled out $7 million in premiums and membership dues in the national scheme. Crosgrove, legal counsel to the so-called association, was convicted this week and faces up to 15 years in federal prison when sentenced. The mastermind, Mark Haukedahl, received 103 months in federal prison last July.
  • A Maryland transit police officer and a bus driver tried to avoid paying car loans by hiring someone to burn their vehicles so they could make bogus insurance claims. Former officer Ronald Lurz and bus driver Lucretia Westbrook hired James Walthall – also a former transit police officer – to do the deed because they were having problems making their vehicle payments. Walthall did away with Lurz’s Audi Quatro TT and Wesbrook’s 2003 Chevy Tahoe. Lurz received a year in federal prison this week, and Westbrook two years of probation.
  • Ronald Berlinsky told police that someone stole his 2000 Ford Expedition. He claimed he’d parked it in front of his Westlake, Calif. home and found it gone the next morning. He made a theft claim with Liberty Mutual. Except for one small problem: Officials found the SUV in Mexico several days before he’d reported it stolen. Berlinsky received five years of probation Wednesday – mostly because of his age (58) and lack of criminal record.
  • Albany, N.Y. agent Tiawanna Thomas Moore kept selling coverage after losing her license for taking client premiums but failing to place the promised coverage, the feds charge. The insurance department yanked her license in late 2007, but she allegedly pocketed $70,000 in premiums from at least 15 people afterward. Police suspect there are more victims.
  • Contrite, repentant and way lucky, Rev. Acen Phillips won’t do time despite conning his parishioners in a scheme that stole $575,000 in life insurance money from AIG. The Denver-area pastor allegedly forged parishioner signatures to life policies to funnel money to church groups he controlled, but received only eight years of probation yesterday. Sometimes he showed up at funerals to contact grieving family members about filing claims. Phillips asked one mother to sign her son’s name to a beneficiary form just two days after the funeral, prosecutors say. He also submitted numbers instead of names of people supposedly under a group life policy he administered. He pleaded guilty to fraud involving possibly the only legitimate life policy: The Rev. Kenneth Davis died in an Oklahoma auto accident. But Phillips didn’t tell his widow the payout was $120,000 rather than $50,000 and kept some of the difference. Phillips faced up to 81 years, but prosecutors accepted a plea because a jury might not be sympathetic to a large insurer, few people actually lost money, and proving a complex criminal case would be hard.
  • Eye doc Joseph Mermelstein should’ve seen it coming. The New York City man received five years this week for performing useless eye surgeries and inflating claims to bilk Medicare and Medicaid out more than $1 million. Mermelstein once ordered a medical technician to exaggerate a patient’s droopy-eye condition in a medical drawing so he could inflate his insurance billing. The technician complied but refused to sign his name to the sketch. Mermelstein signed the artist’s signature himself.

CRIMINAL CHARGES

  • The state will seek a retrial after a jury deadlocked Wednesday in the insurance fraud case of David Wilcox, whose dump truck lost its brakes and fatally piled into cars parked at a stoplight in Avon, Conn. Four people died and 19 were hurt. His liability policy had lapsed, so Wilcox and his wife tried to buy coverage and have it illegally backdated to take effect before the crash. Wilcox also faces manslaughter charges. His wife has pleaded no-contest to fraud charges.
  • A Chicago cop and tow truck driver named Meatball Athans tried to bilk State Farm with fake vehicle theft claims, the feds charged yesterday. Officer Joseph Grillo allegedly asked Meatball to make another cop’s Volkswagen Passat disappear. It was hidden in one of Meatball’s vehicle storage lots and chopped up by a crony, the feds say. The owner then received more than $4,000 in insurance money. Meatball then reported his own tow truck was stolen from his storage lot. But FBI agents allegedly found the truck and three other supposedly stolen vehicles at the home of the crony who’d carved up the Passat. The crony let law enforcement wire him for a talk with Meatball. The crony told him cops had picked up the “stolen” vehicles. Meatball’s response: “Oh my God.” No word on potential sentences if they’re convicted.
  • A former detective torched his house for $183,000 in insurance money but disguised the blaze as revenge by a biker gang, Florida officials charged this week. Robert Alan Michael Hendrix said he returned home to find gang graffiti spray-painted in his garage. The Lake Wales man was working for the Lake Wales street crime unit. He said he sent his wife and three kids to stay with relatives that night, and the fire started around midnight in the garage area. But Hendrix quickly aroused suspicion. He videoed the charred rubble with his cell phone. The video showed a plastic gas can on a shelf, but the can had been moved to the garage floor when investigators arrived. He also called his supervisor at the department and a police dispatcher, but didn’t call 911. One local organization named Hendrix 2005 Officer of the Year.

CIVIL & ADMINISTRATIVE ACTIONS

  • An upstate New York insurance broker fooled dozens of seniors into spending thousands on overlapping home health policies they didn’t need, the state AG charged in a lawsuit this week. Thomas Piccirillo collected $117,000 in commissions by selling nearly identical policies for two insurers without the knowledge of either, officials allege. He scared seniors with the fear of being sent to nursing homes unless they bought both policies, prosecutors say. Ithaca senior Helen Kulp allegedly gave Piccirillo $40,000 for overlapping policies she didn’t need or use. The state wants him to repay the alleged victims, and require him to post a $500,000 bond when he sells policies. No mention of license revocation or suspension.

ETC.

  • Property/casualty and health insurers both combat fraud by medical providers, but each side of the insurance industry has its own tactics, techniques and strategies — and rarely interact with each other. That’s about to change with a novel education program scheduled later this month. Investigators will learn the other side’s tricks of the trade, June 17 and 18 in Baltimore. There’ll also be a session on the legal aspects of sharing intelligence across industries. “Building Bridges to Combat Medical Fraud” is a joint effort of the National Health Care Anti-fraud Association, the National Insurance Crime Bureau and the coalition. There’s still time to register for the program. Coalition members receive a discount on the registration fee.
  • A perfect storm of sleazy contractors, foul weather and unwary consumers has the Ohio insurance department hunting for home-repair schemes. Dishonest contractors are especially aggressive after hailstorms and tornados – nasty storms where homeowners need insurance money fast, the department says. Alleged scams range from inflating claims to meet homeowner deductibles, to intentionally damaging homes to trigger fraudulent claims. One homeowner allegedly granted a roofer power of attorney to broker an insurance claim. The roofer then pocketed the insurance money without doing the work, investigators say. The insurance department is working to educate the public and contractors.
  • Some 154 people died in Maine from drug overdoses last year, and nearly nine of 10 involved pharmaceuticals. Many of those claims involved insurer-paid prescriptions. Even so, the state’s Prescription Monitoring Program is being “grossly underutilized,” the state AG charged this week. Maine docs and other medical providers also write more prescriptions per capita for narcotic painkillers than most states. This is mostly because of Maine’s aging population and large number of laborers in the workplace. Methadone and OxyContin are the two leading killers.
  • The feds are casting a wide net over Medicare fraud artists in Southern California. Using real-time analysis to uncover unusual billing patterns, the feds have uncovered $13 million in bogus Medicare claims just since March 1. A recent sweep snagged several suspects for bogus claims for unneeded wheelchairs, orthotics and other durable medical goods for people who didn’t need them. Medicare paid out $1.5 million in illicit claims to David Gabrielyan and Marina Nazarova, owners of U.S. Medtrade Co. over 13 months. Even medical equipment firms got into the act. Usik Kirakosian and Petros Odachyan snagged $1.2 million in Medicare cash for medical supplies for patients who’d never laid eyes on the goods. Eleven people have been indicted. A similar sweep in Florida found $420 million paid out in fraudulent claims in Miami alone last year.
  • Arizona and other states say some health insurers may be dumping policyholders with costly medical bills. Regulators are receiving growing numbers of complaints, and consumers are filling lawsuits protesting the actions. Insurers say they rarely cancel policies, but do so occasionally to fight fraud. Two Arizona women are suing Health Net for dropping them after they were diagnosed with cancer. An arbitrator awarded another woman more than $9 million after Health Net cut her loose while she received chemo for breast cancer. The insurer now says it’ll have impartial third parties review future cases before canceling.
  • Texas law enforcement is trying out onsite software at traffic stops help combat auto fraud. Using a pilot program tabbed Texas Sure, police officers on traffic stops can tell in seconds if a vehicle is covered by liability insurance. Officers simply pop a Texas license plate number into a software database. Seconds later they know the vehicle’s insurance status. Texas Sure is being tested in Austin, and Houston police are expected to follow suit this summer.

QUOTE OF THE WEEK

“Every dollar lost to fraud or abuse is one less dollar available to help the most needy citizens of our state.”

— N.J. Insurance Fraud Prosecutor Greta Gooden Brown commenting on the effect that insurance fraud has on providing Medicaid for needy citizens.

OTHER HEADLINES THIS WEEK

  • N.Y. judge bars summary judgment in auto fraud case
  • Indiana doc charged with drug diversion and fraud
  • Former agent in Georgia accused of stealing premiums
  • Two providers in Massachusetts charged in billing scam
  • Walgreens to pay feds $35M to settle drug switching

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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