Insurance Fraud Weekly ePort: Week Ending March 21

Mar 21, 2008

 

Insurance Fraud Weekly ePort
Week Ending March 21, 2008
www.InsuranceFraud.org

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LEGISLATION & REGULATION

  • The Florida legislature is looking at a bill (SB 2082) raising criminal penalties for agents who target seniors for schemes involving churning life policies and annuities. Fines would be $30,000 for each willful scam (currently $20,000), up to a maximum aggregate of $150,000 (currently $100,000). Churning also would rise to a third-degree felony, and to a second-degree felony with stiffer sentences for agents who habitually bilk seniors. Churning involves an agent earning a large commission by conning victims into giving up whole life policies with built-up value to buy new coverage they don’t need.
  • Kansas (SB 491) and Mississippi (SB 2713) appear to be on the verge of enacting prescription-monitoring programs that would set up tracking systems of prescribed medicines. Monitoring program help detect pharmacies, providers and consumers who may be using legitimate prescriptions to divert highly addictive drugs for illegal purposes.
  • The West Virginia legislature closed for the year without acting on a bill giving vehicle owners more control of the info in their vehicle event data recorders (also called black boxes). Fraud fighters and others would’ve needed owner permission or a court order to access the data under SB 75. The bill never gained any momentum or a large support base during the brief legislative session.

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

 

PUBLIC OUTREACH

  • “(Workers comp) seems to be one area where there seems to be a little more fraudulent activity,” the coalition’s Dennis Jay told the State Journal about West Virginia’s fraud environment. “But that could be because when (West Virginia) formed the fraud unit they inherited a lot of the workers compensation investigations.” The state fraud bureau was created in 2004, and three or four years of data usually are needed to clarify fraud trends, Jay said. The coalition’s study of state fraud bureaus will be released later this spring, and thus will reveal more about possible trends in West Virginia. “This year will be a telling year,” Jay said.

CRIMINAL CONVICTIONS

  • A suspected home arson led investigators to a truck arson. Charles Gutaukas smashed his pickup, torched it in a state forest, then told Progressive Insurance that someone had stolen it. The insurer paid the Middletown, Conn. man nearly $35,800. But his downfall came when Middletown police investigated an unrelated suspicious fire at the home of his landlord. A witness in that case fingered Gutaukas for the truck arson. Gutaukas received three years of probation.

CRIMINAL CHARGES

  • David Iknaian bought a used car at auction, hoping to sell it for a profit. But the car didn’t sell for several months. Frustrated, the Waltham, Mass. man allegedly towed it out of Watertown and abandoned it by a road. The next day, Iknaian told police that someone had stolen the car while he shopped at a nearby store. He made an insurance claim for more than $7,000 and signed a notarized affidavit. But the Massachusetts fraud bureau looked closer, and alleges Iknaian set up the incident to seem like a theft for car parts. He was charged yesterday.
  • Sheriff’s deputy Audrey Rodrigues said she hurt her back on the job. The Orange County, N.Y. officer went on disability and received full pay while performing occasional light work at the office. Eventually her back hurt so much she couldn’t even sit at a desk, Rodrigues claimed. She also had no outside employment during this time, she told officials. But Rodrigues actually worked as a supervisor for a business that rehabs and sells homes all the while, prosecutors charged this week.
  • The owner of the largest asbestos-training firm in Massachusetts illegally saved millions in workers comp premiums and taxes by paying employees under the table, the feds charged Tuesday. Albania Deleon runs Environmental Training. She allegedly directed many of her graduates to work for her temp firm, Methuen Staffing, which specializes in asbestos removal. But Deleon allegedly paid most employees secretly, without reporting them to her workers comp insurer or the state for tax purposes. Deleon allegedly hired the workers using fake Social Security numbers, kept them on a secret payroll, and paid the workers with checks that they cashed at a friendly liquor store that didn’t look closely at their IDs. The Massachusetts fraud bureau was part of a multi-agency team that busted the suspected scheme.
  • The trial finally began this week for two elderly California women who allegedly ran down two indigent men with a car in a suspected plot to collect nearly $5.7 million in life insurance. Olga Rutterschmidt, 75, and Helen Golay, 77, befriended the street men, drugged them and drove over them to make the suspected murders appear to be hit-and-run accidents, the feds alleged in the highly publicized Los Angeles trial this week. The women found the men in a homeless shelter, set them up in apartments, and supported them for two years. Along the way, Rutterschmidt and Golay secretly took out several life policies on the men, the feds say. The women allegedly signed some policies themselves with a rubber stamp of one victim’s signature.
  • Personal-injury lawyer Patrick Joseph Dooley ran off with at least $253,166 in insurance checks that injured auto-accident victims had hired him to obtain in settlements from insurers, Florida prosecutors charged Wednesday. The insurers made the checks payable both to Dooley’s law firm and the clients. Dooley had clients endorse the checks or forged their signatures, then deposited the money into a trust account, officials allege. He allegedly underpaid the clients, wrote worthless checks or avoided payment altogether. The father of Miami Heat NBA forward Udonis Haslem was one victim, officials say. Dooley allegedly said he’d pay $47,000 medical bill after a crash. But unpaid invoices kept coming and Dooley’s personal checks to Haslem then bounced. Dooley soon disappeared and recently was picked up in Las Vegas.

CIVIL & ADMINISTRATIVE ACTIONS

  • Trying to protect his state pension, a jailed Louisiana politician wants to use money from one failed insurer to help repay the millions he stole from another insurer that he bankrupted. Former Louisiana Senate president Michael O’Keefe is serving 19 1/2 years for helping skim $7.5 million from Physicians National Risk Retention Group. That scam left hundreds of docs around the U.S. without malpractice coverage in the early 1990s. O’Keefe and two cronies controlled the insurer and looted it into bankruptcy. But he doesn’t want his state pension used to repay the money, he says. Instead he wants to pay up with the remnants of Lloyds Assurance of Louisiana, another insurer they also controlled and looted. The state liquidated Lloyds in 1994. O’Keefe was convicted in 1996.
  • The nation’s largest insurer will pay $9.1 million to Pennsylvania for conspiring with brokers to submit fake bids to create the illusion of competitive bidding for excess casualty accounts. AIG also agreed to be more transparent in paying commissions to agents and brokers, the Pennsylvania insurance department said Monday. AIG’s fine was the largest the department ever has imposed. The department also is probing the insurer’s reporting of workers comp premiums to the state.

ETC.

  • Doctors in South Carolina are adopting tamper-resistant prescription pads to help combat fraud-fueled illegal diversion of addictive prescription drugs such as painkillers. The pads provided by the state medical association will have several security features to make it harder for swindlers to forge or alter prescriptions. The pads will have heat-sensitive inks, micro-printing, unique background patterns, artificial watermarks, chemical-sensitive coatings, warning bands and consecutive numbers. Insurance fraud is a leading financier of drug diversion, warns the coalition’s recent report, Prescription for Peril.
  • Efforts by Medicare and Medicaid to shuttle more beneficiaries into private managed-care programs have spawned a rash of sophisticated new fraud schemes, the Wall Street Journal reports. Crooked managed-care firms shortchange patient care and payments to doctors while collecting preset fees from the government, the Journal says. It also cited CVS pharmacy, which was accused of fraudulently raising Medicaid billings by giving patients expensive brand-name antacid drugs instead of less-expensive generic versions. CVS agreed this week to pay the feds $37 million. New-era scams thus are expanding beyond traditional upcoding by docs, and billing for phantom treatments or medical equipment. Compounding the problems, some states have reduced their healthcare fraud investigators, and most states also rely on HMOs to self-regulate.
  • More than seven of 10 Nigerian drivers have bought fake auto coverage from the government’s own salespeople. Some drivers are duped and others want to avoid paying for real coverage the government requires, officials say. Most Nigerians and even many government officials can’t tell a real auto policy from a fake one. There’s also little education to help consumers know the difference. Many people also don’t realize a fake policy provides no protection after a costly crash, officials say. “It is a well known fact that motor insurance has not been taken seriously,” a senior police official says in promising a crackdown.

QUOTE OF THE WEEK

“It’s straight from a movie plot. It’s `Arsenic and Old Lace.”

—Laurie Levenson, Loyola University law professor, on two elderly California women charged with murdering two indigent men on whom they’d secretly taken out millions in life policies.

 

OTHER HEADLINES THIS WEEK

  • Probation for N.Y. man who defrauded workers comp
  • Michigan man convicted of fraud in wife’s murder
  • Former police chief in Fla. pleads guilty to fraud
  • Feds seek to seize assets of rogue agent in Iowa
  • New York woman accused of torching wrecked car

Details at www.InsuranceFraud.org

 

MEETINGS & CONFERENCES

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Should you have any questions or comments, please do not hesitate to contact this office.

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