Insurance Fraud Weekly ePort: Week Ending Mar. 7

Mar 7, 2008

 

Insurance Fraud Weekly ePort
Week Ending March 7, 2008
www.InsuranceFraud.org 
 
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LEGISLATION & REGULATION

  • Utah has passed a bill expanding its law requiring insurers to report suspected insurance fraud to the state’s insurance fraud unit or law enforcement. Current law only refers to title insurance; HB 93 requires reporting of schemes involving all forms of insurance. The measure also expands insurer immunity from lawsuits for sharing info about suspected schemes. The governor is expected to sign the bill into law. 
  • The Iowa legislature also is looking to expand the state’s mandatory-reporting law. Current law requires insurers only to report suspected bogus claims to the fraud bureau. Under HB 737, insurers also would report schemes involving insurance applications.
  • The Rhode Island House is debating a bill (HB 7994) allowing the state to deny or revoke the license of a body shop that gives customers rebates or discounts to offset their auto-policy deductibles.

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

 

PUBLIC OUTREACH

  • “Most body shops are honest, but some will charge an insurance company thousands of dollars for a new airbag, but not install it and keep the insurance money,” warns a radio consumer alert the coalition has recorded and distributed. It went to hundreds of radio stations throughout the U.S. Consumers should check the airbag light on their dashboard. If the airbag is working properly, the light will flash on for a few seconds and then blink off, the coalition’s alert says. A similar print alert went to newspapers.

CRIMINAL CONVICTIONS

  • The co-owner of a trucking firm tried to illegally reinstate lapsed liability coverage for a truck that crashed and killed four people, Connecticut prosecutors charge. A dump truck owned by David Wilcox and his firm American Crushing and Recycling lost its brakes while going down Avon Mountain in 2005. It smashed into vehicles parked at a stoplight at the bottom during morning rush hour. Three motorists plus the truck driver died, and 11 people were injured in the 20-vehicle pileup. David and his wife Donna called their insurance agent within 20 minutes after learning of the crash. They tried to buy coverage for the truck but didn’t tell the agent about the crash. Jury selection for David’s trial began this week. He faces insurance-fraud and manslaughter charges. Donna pled guilty to insurance-related charges last week, and will be sentenced April 30.
  • One of the largest insurance swindles in Ohio history took 11 years to investigate and prosecute. But a judge took just seconds to slap chiro Paul Neumann with more than three years in federal prison Monday. He and his brother Timothy installed doctors as straw owners of their MedBack clinics in Toledo and other Ohio cities, then tossed tens of thousands of fake treatment bills at more than 200 insurers. Timothy received nearly three years last month.

CRIMINAL CHARGES

  • A suspected staged-accident ring’s 20-year crime spree crashed to a halt with the bust of 40 people in a pre-dawn roundup around Los Angeles yesterday, police say. The suspected ring—which includes a grandfather, sons, daughters and grandchildren—allegedly hauled in several million dollars in bogus injury and collision-repair claims over more than two decades. It was one of California’s largest staged-accident operations, officials allege. One claim alone fleeced State Farm for nearly $137,000, officials say. Grandfather and suspected ringleader Curtis H. Connor picked up cheap, battered old cars at auctions, then bought coverage for each car from several insurers using aliases or stolen identities. Family members and buddies posed as fake passengers who lied they were hurt in rear-end collisions that actually never happened, police say. The ring gave insurers photos of cars that were damaged before Connor even had bought them. The “injured” victims went to his daughter—a chiro—for worthless treatment. Lawyers allegedly in cahoots with Connor then submitted the claims. Inflated repair claims were submitted through Connor’s South Los Angeles body shop, MB Automotive, police say.
  • Three generations of a Massachusetts family tried to sneak a fake car crash past insurers, prosecutors charge. Maria Espaillat allegedly used her son and 81-year-old mother as fake passengers who made bogus injury claims for a setup crash. A friend named “Rogue” banged up a 1991 Volkswagen Passat to make it seem like it had crashed in Lawrence. But none of two drivers and five so-called passengers were injured and nor was there even a crash, prosecutors allege. The suspected gang members allegedly were simply stuffed into the cars and told to act injured. But Hanover Insurance denied the claims. The Passat was stationary when struck, Hanover’s investigators decided. And the Lincoln Mark VIII supposedly involved in the claimed crash actually was struck by a solid orange object instead of the Passat. There also were no police reports nor did tow trucks respond. Operator reports filed by the drivers didn’t mention clear injuries either, the Massachusetts fraud bureau notes.
  • The seeming robbery appeared so invasive—someone stole William Wade Anderson III’s wallet, cell phone and 2007 Ford pickup truck while he was unloading trash. At least that’s what the Raleigh, N.C. man told his insurer. But the apparent heist was a hoax for insurance money, prosecutors charged this week. Police spotted Anderson’s pickup two days after the claimed robbery. The driver, Michael Lashawn Richardson, fled into his home but quickly surrendered. He and Anderson had worked together to arrange the bogus theft claim, officials allege.
  • Someone stole literally tons of business equipment from contractor John Dilts, the Bossier City, La. man told his insurer. A sticky-fingered thief walked off with his Caterpillar Trackhoe, utility trailer, Ditchwitch Rod Pusher used for pipe installation, 2005 and 2006 Chevy 3/4-ton pickups, and a variety of tools, Dilts told his insurer. But the so-called theft actually was an insurance ruse, prosecutors say. Dilts allegedly asked an employee to hide the equipment from creditors who wanted to repossess it. Officials recovered at least $14,431 worth of machinery on a friend’s property, prosecutors say.
  • The no-parking zone became a bad-claim zone for David Berry. The Millville, N.J. man told his insurer a thief drove off with his 2003 Dodge Ram 1500 pickup in Atlantic City. But in fact, he knew police actually had hauled the truck from a no-parking zone to a towing lot, prosecutors charged this week. High Point Insurance denied his theft claim, and the state Office of Insurance Fraud Prosecutor is handling the case.
  • Stop digging when you’re stuck in a deep hole, wise people advise. But insurance agent Darrius Wright wasn’t listening, prosecutors say. The Cincinnati-area man wrote too many policies that insurers rejected. He couldn’t repay the clients their premiums, and his reputation among local agents soon was in tatters, prosecutors say. Unable to get an agency job, Wright allegedly stole another agent’s identity and kept selling policies, officials allege. The insurance department yanked Wright’s license. Undeterred, Wright then stole two other agents’ identities and kept signing up clients, prosecutors allege. Wright allegedly overcharged clients and pocketed their premiums. His suspected scheme collapsed when insurers asked the real agents to repay the money. Wright faces up to 32 years if convicted.
  • Where’s Vern Potter? Police wanted Potter for allegedly making a fake injury claim with Allstate, but nobody could find the Concord, N.H. man. At least until a police lieutenant glanced at the New Hampshire Union Leader. A front-page photo showed Vern shoveling snow off the roof of a local school. The photo caption read, “Up on the roof; shoveling reaches new levels.” Police learned Potter would return to the school the day they saw the photo. They stopped by and arrested him without incident. 
  • Tragic, Ari Squire’s death was. His scorched body was found crushed beneath a burned-out pickup truck in his Lake Barrington, Ill. home garage. Apparently the jack had given way and the truck caught fire while he was working on the vehicle. But Squire actually killed Justin Newman then dressed him in Squire’s clothing to stage his own death for $5 million in life insurance, officials said this week. Squire even dyed Newman’s hair, gave him blue contact lenses, and placed his wallet with ID on the body before burning the young man’s corpse. But a DNA tests quickly confirmed the body wasn’t Squire’s. But his fake death turned real when Squire shot himself in the head as police showed up to question him.

CIVIL & ADMINISTRATIVE ACTIONS

  • Allstate has sued a Texas chiro company, lawyers, telemarketers and others for recruiting crash victims to make at least $10 million in fake injury claims. The suspects hired a telemarketing firm to phone victims in Texas, Ohio, Indiana and Alabama. The callers often claimed they represented Allstate and offered free medical exams, Allstate says in a federal RICO suit filed yesterday. The victims were told they had substantial injuries and needed immediate medical care. They allegedly received standardized and useless treatment, then were handed over to a personal-injury law firm for processing of bogus claims. Law-firm employees often came directly to the clinics to sign up patients, Allstate says. Michael Kent Plambeck, who owns Chiropractic Strategies Group in Arlington, Tex., is among the 66 defendants. 
  • A small graphic design firm was awarded more than $3 million for an insurer’s failure to provide coverage for wrecked office equipment and normal operating expenses. The Sherman Oaks, Calif. firm Amerigraphics was flooded by a ruptured water heater. The scanner and printer were ruined, and Mercury Casualty took possession of the equipment. The design firm went out of business when the insurer didn’t pay the claims or replace the equipment for more than 650 days. A claims executive from the company reportedly admitted during the trial that its guidelines for adjusters urged them to “use time as your ally.” A Los Angeles jury awarded Amerigraphics $170,000 in compensatory damages and $3 million in punitive damages for bad faith.
  • A crash victim’s wife says a life insurer fraudulently failed to pay a mortgage claim after her husband died. Minnesota Life issued a policy to Dawn Kay-Woods and Brian Woods to cover their mortgage for nearly $62,000. But the insurer denied her claim after the deadly crash, saying the policy excludes payment when the death is caused directly by a felony. Woods had cocaine in his system when he died. He also was DUI and driving with a suspended driver license for a previous DIU, the insurer says. Kay-Woods insists the insurer violated its contract.

ETC.

  • Wednesday, June 25 will mark “Insurance Fraud Awareness Day” in New York this year. The celebration will allow citizens of the Empire State to learn what fraud is, how severe it is and who pays for it. Building up to that date, the New York Alliance Against Insurance Fraud will air new anti-fraud radio spots and TV commercials beginning in May. The new ads continue the theme of previous spots, that getting caught committing fraud can have a devastating effect on family relationships. The NYAAIF also appointed OneBeacon SIU Supervisor Lou Pagnotta to its board this week.
  • North Dakota’s workers comp regulatory agency should better train its claim handlers but there was no evidence of “blatant” or wrongful claim denials, a report by outside consultants has found. The consultants reviewed 475 claims representing $6.2 million in benefits. The agency also should spend more time investigating wrongdoing by medical providers and employers, whose schemes can be much more expensive than suspicious injury claims by workers, the report recommends.
  • Corruption among Los Angeles-area medical equipment firms is so widespread that nearly 1,000 firms fraudulently billed Medicare $21 million in just one year, says a federal report. Offices that should’ve displayed piles of wheelchairs, crutches and other equipment actually listed offices in vacant buildings or addresses of other businesses. One firm even listed an art gallery as its address. Investigators have uncovered $300 million in potentially bogus bills over two years.

QUOTE OF THE WEEK

“At one time he was a legitimate agent, but once he got in over his head it snowballed. He resorted to rummaging in garbage cans and stealing identities.”

— Prosecutor Andy Berghausen on former Cincinnati-area agent Darrius Wright, who allegedly stole the identities of fellow agents to keep practicing after losing his license.

 

OTHER HEADLINES THIS WEEK

  • Florida chiropractor charged with insurance fraud
  • Conn. podiatrist charged with drug diversion and fraud
  • New York man charged with faking theft of motorcycle
  • Federal jury convicts Virginia dentist of racketeering
  • Florida man accused of faking cancer in policy scheme

Details at www.insurancefraud.org/news.lasso

 

MEETINGS & CONFERENCES

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