Insurance Fraud Weekly ePort: Week Ending May 25

Insurance Fraud Weekly ePort May 25, 2007 http://www.InsuranceFraud.org

 

 

 

LEGISLATION & REGULATION

* The New York Senate once again passed a bill making it a crime to be a runner for staged accident rings, and to hire runners. But SB 637 likely will be DOA in the Assembly, which has quashed anti-runner bills for years. The Assembly leadership wants to add supposedly pro-consumer measures that lower auto premiums and create a state consumer advocate. The Senate stoutly resists those add-ons, so the bill likely will gather dust in the Assembly until the full legislature shuts down for the year later this summer.

* The North Carolina House passed HB 729, which tackles cheaters who illegally reduce their auto premiums by lying about where they garage their vehicles. The bill would make it a specific crime to provide false information on insurance applications that could lead to lower premiums. It also would require auto-insurance applicants to show proof of residence before receiving coverage. North Carolina has a problem with drivers from other states exploiting North Carolina’s low auto premiums.

* In the waning hours of the Texas legislature, two doomed fraud bills received last rites while two others were racing to the governor for his signature. Bills that would’ve restricted access to accident reports (HB 2828) and allowed prosecutors to choose friendlier venues to prosecute fraud cases (SB 1715) were breathing their last. But Austin did pass HB 1519, which would set misdemeanor charges for a medical provider who solicits accident victims for treatment within 31 days of the accident. A green light also went to SB 1627, which would let prosecutors use the state’s workers comp fraud law or any other Texas law to prosecute comp crimes. The legislature is in its final hours, and won’t reopen until 2009.

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

PUBLIC OUTREACH

* Helping bust one of Virginia’s most-notorious fraud families has earned federal agent Jennifer Clarke a Fraud Fighter Award from the Virginia State Police recently. The case against the Scott family of Ewing began in 2003 with prescription fraud in Lee County and arson in Kentucky. Under Clarke’s leadership, investigators also exposed a family heavily involved in insurance fraud and other criminal activities, from arson to identity theft, false auto and injury claims, burglaries, narcotics distribution and more. Her team tackled a massive amount of information, including more than 20 years of records. Clarke presented a federal grand jury evidence of nearly 100 federal violations in 2004. As a result, 14 family members received sentences ranging from 10 months to 178 months, and were ordered to repay more than $300,000. Clarke is one of nine Virginia fraud fighters recently honored by the State Police.

* Howard and Claudette Clark submitted insurance photos of a mud-spattered vehicle they said was wrecked by Hurricane Katrina. But a closer look shows they’d allegedly painted the mud on with a sponge, and the red clay wasn’t even indigenous to Gretna, La. The 2006 annual report of the Louisiana State Police insurance fraud and auto theft unit is a poignant portrait of Katrinia’s aftermath. It reveals a tireless but stressed agency dealing with sleazy Hurricane claims and helping restore order to the damaged region, while working to keep their own operation working smoothly in a virtual battle zone. “This struggle ultimately brought forth a maturity and greater understanding of the importance of our role in disaster recovery efforts,” Lt. Allen Carpenter, head of the unit, writes in the report. A copy of the 60-page report can be downloaded at http://www.lsp.org/pdf/ifuAnnualReport06.pdf.

CRIMINAL CONVICTIONS

* Keith Dion told his insurer that someone stole his prized $55,000 red BMW convertible and joy-rode it into a neighborhood swimming pool. But unlike the soaked car, Dion’s story doesn’t hold water. He dunked his dream car into the pool himself, say police in Chelmsford, Mass. Dion was reading a newspaper in the car while it idled in a cul-de-sac near his home, but forgot to put the Beamer on park. When the car started to move, Dion panicked and pushed the accelerator instead of the brake. The BMW blasted through a chain-link fence, sailed over a hill of bark mulch and plunked into the pool. Dion somehow got out of the car, climbed from the pool and made his soggy way back to his condo. Towing firms needed an hour to yank the car from the pool. Aside from a paying for a wrecked car, cracked pool, ruined landscape and destroyed fence, Dion also faces insurance fraud charges. He could land up to five years in jail if convicted.

* A Santa Clarita, Calif. man and his wife each received 22 years Tuesday for helping stage crashes on freeways for insurance money. Law office administrator Ramon Zanoletti paid recruiters to hire drivers to maneuver innocent motorists into crashes and make false injury claims. He then referred his “injured” cronies to a Los Angeles chiro clinic where his wife Magdalena worked. She told the claimants to sign up for treatments they never received. Some crashes were staged on freeways and surface streets. Innocent drivers of commercial vehicles, SUVs, luxury cars and cars driven by seniors were targeted. They were likely to have substantial auto coverage, the ring members reasoned.

* Accused staged-accident mastermind Joseph Houghtaling tried to kill himself by drinking antifreeze just before a jury acquitted him of the most serious charges (see May 18 ePort). The upstate New York man was despondent that he could face decades in jail, and wanted to kill himself so his family members could move on with their lives. He drank the liquid in a second-floor bathroom of the Albany courtroom less than an hour before the jury’s decision last week. But Houghtaling was acquitted of the most-serious charges—enterprise corruption—and received a lesser conviction that could land him up to four years. Houghtaling took sick in the courthouse holding cell afterward. He was rushed to the hospital and now appears to be recovering. Houghtaling, his wife Renee and other family members were accused of staging more than 20 car wrecks to bilk auto insurers out of hundreds of thousands of dollars.

* A Pittsburgh-area businessman bilked an insurer by submitting inflated bids and invoices for repair work on tools and machinery supposedly damaged by flooding caused by Hurricane Ivan in 2004. Michael Smarto and a crony maneuvered the claims. The insurer paid $2 million, and Smarto received a $300,000 kickback from the firm hired to refurbish the tools and machinery at Smarto’s business. Smarto pleaded guilty yesterday, and will be sentenced August 21.

* Four family members siphoned tens of millions in premiums from a Miami insurer they controlled, bankrupting the insurer and leaving thousands of policyholders exposed. The Fraynds, who ran Aries Insurance Company, diverted premiums through their managing general agent Onyx Underwriters. The Fraynds also owned Onyx, which collected client premiums for Aries. But instead of depositing the premiums into an insurer trust within 15 days, as required, they sent the money to other companies the Fraynds owned. The Fraynds also falsified financial statements and depleted Aries reserves to where the insurer was declared insolvent in 2002. Aries president Paul Fraynd received three years Monday. Marcos and Saul received three years of probation, and Fannie will serve one year of probation.

* Two South Florida women illegally obtained police accident reports and peddled them to a chiro, who used the reports to solicit clients. Tina Vallorani D’Esposito and Kathi Rodriguez got the reports by pretending they were reporters. Florida generally limits outsider access to the reports, but reporters are given immediate access. The pair was convicted this week. D’Esposito faces up to 40 years in prison when sentenced, and Rodriguez could receive up to 25 years. Charles Mermelstein, who allegedly created the fake newspaper, has been arrested. The investigation was conducted jointly by Florida’s insurance fraud division and the state department of law enforcement.

* Bill Ledee was a wealthy big-shot contributor to politicians in Cobb County, Ga., but his shaky empire soon fell apart. The Georgia man raked in millions by selling fake malpractice coverage to doctors and other medical providers around the U.S. He collected their premiums under the guise of Professional Liability Insurance Co. but never provided coverage. Thus the providers were unprotected, and anyone with a malpractice claim was unprotected as well. Ledee kept the scam going by paying many claims himself. He received five years in federal prison and must forfeit $10 million in cash and real estate.

* Weeping and apologizing didn’t stave off a jail term. Former agent Robert S. Klein cried as he apologized in court for stealing nearly $167,000 from an 82-year-old client who thought he’d bought her life coverage. But the McMurray, Pa. man deposited her checks, ranging from $2,000 to $9,000, into his personal accounts and never bought her coverage. She discovered the thefts only when the insurer told her that her policy was cancelled. Klein also allegedly stole $13,506 from another client and $17,950 from a third client. Unmoved by Klein’s tears, the court handed him 11 1/2 to 23 months for the $167,000 theft Tuesday.

CRIMINAL CHARGES

* Kelli Lyn Cole told State Farm someone stole her wedding and engagement rings but actually traded them at a jewelry store, Pennsylvania prosecutors said this week. The Pittsburgh-area woman said a diamond engagement ring, gold wedding band and diamond hoop earrings worth $6,000 were taken from her repossessed 2006 Chevrolet Envoy after it was hauled to an impoundment lot. Cole told her insurance agent her husband had bought a new ring at a local jewelry store after the claimed theft. But when the agent contacted the jewelry store, employees said Cole had traded in rings matching the description of the stolen ones. Police tried to contact Cole several times, but she never responded.

* Vincent Guisto said he was hurt while working for a moving company, and started receiving workers comp money. But the Waterbury, Conn. man then started working for another moving firm, officials charge. Guisto allegedly was caught driving a tractor trailer, and carrying furniture and boxes onto trucks while claiming under oath that he wasn’t working.

* A pharmacist altered old prescriptions to fraudulently obtain about $30,000 in insurer-paid narcotic prescription drugs from the pharmacy where he worked, Pennsylvania prosecutors charged this week. John Kriak got his hands on oxycondone, methadone, amphetamines and other drugs from a Rite Aid in Johnstown. He simply changed the names on prescriptions that had been filled, prosecutors allege. A woman allegedly let him use her health policy to get the drugs. They split the narcotics, and Kriak covered the copay, officials say.

* In a scene fit for the Texas Chainsaw Massacre, a Thai man chopped off his thumb to collect on 30 disability policies worth the equivalent of $478,000, Thai police say. Pichet Porntantipong claimed he accidentally sliced off the digit while cooking, and that it was badly burned when it fell onto his stove. But severing the thumb actually took more than one cut, a skeptical forensics expert says… Then there’s the unnamed South Korean man who allegedly cut his feet by having a train run over them so he could collect the equivalent of more than $3 million in insurance money. The man claimed he fell off a train in Vietnam and was run over. But insurers question his story: Victims usually are pulled under the train in accidents like those. China and Southeast Asia are favorite places for insurance fraud because it’s easy to fake accident records in those countries, news reports say.

* Jon Stentiford won the Strongest Man title in Cornwall, England, despite collecting disability money after claiming he was too injured to work. Stentiford lifted a Mini Metro car off the ground for more than a minute, dragged a bus, held a 50-pound weight at arm’s length, and ran around carrying heavy glass bottles over his head. He competed as John Nicholls, and also worked as a laborer and nightclub bouncer. Stentiford will be sentenced later.

CIVIL SUITS

* Fireman’s Fund is suing actor Robert De Niro for $1.8 million, claiming he misled the insurer about his cancer biopsy just before beginning filming the movie Hide and Seek in 2003. Fireman’s Fund provided coverage for the movie. De Niro had a biopsy three days before he signed a health certificate, but failed to disclose the procedure, Fireman’s contends. The movie then was delayed four months while De Niro sought treatment for prostate cancer. Knowing of the biopsy would’ve been critical to the insurer’s decision about whether to cover the movie, Fireman’s says.

* Infinity Insurance is suing several Mesa, Ariz.-area towing firms and body shops, claiming they towed vehicles without the owners’ permission, charged inflated fees, and took the vehicles to chosen body shops even when the owners had requested other body shops. The body shops charged a $250 administrative fee and other excessive fees for rehooking, storing, cleaning vehicles and removing them from the collision yard, Infinity says. The towing firms allegedly overcharged for hourly towing rates, and charged unreasonable fees for loading and second tows, the insurer says.

QUOTE OF THE WEEK

“These people should realize that not only will benefits be denied, but they can be charged with a crime.”

— N.J. Insurance Fraud Prosecutor Greta Gooden Brown, commenting on the indictment of Andrew Dorrothy and Lynn Mickley who allegedly pretended to be married in order to qualify for health coverage.

OTHER HEADLINES THIS WEEK

* NY doctor admits bilking auto insurers out of $2 million
* Minnesota doctor, chiro under investigation for fraud
* Woman in Tennessee arrested for stealing health benefits
* Florida clinic shut down; found to have defrauded $2 million
* Tennessee clinic co-owner convicted of filing false claims

Details at www.InsuranceFraud.org/

MEETINGS & CONFERENCES

* June 13-15, 2007 — Fraud Education Conference
Orlando, FL (Florida Insurance Fraud Education Committee)

* June 19-22, 2007 — Health Care Fraud Schemes
Scottsdale, AZ (National Healthcare Anti-Fraud Association)

* June 21, 2007 — Board and Membership Meeting
Washington, DC (Coalition Against Insurance Fraud)

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

* 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.