Insurance Fraud Weekly ePort: Week Ending May 9

May 9, 2008

 

Insurance Fraud Weekly ePort
Week Ending May 9, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The Louisiana legislature is looking at several fraud bills…Forging documents: HB 241 and HB 333 would make it a felony and specific insurance fraud to forge insurance documents such as auto-insurance, health-insurance or workers comp cards…Tackling owner giveups: The statehouse also is going after owner giveups. HB 413 would require people to file an affidavit when reporting their vehicle stolen. An affidavit creates an evidentiary trail if people dump their vehicles for insurance money. Signing a legal document also may make some people think twice about making bogus vehicle-theft claims with their insurers. The House has passed the bill. The Senate now debates the measure, which is similar to a 2007 Arizona law…Extending fraud bureau: The House is debating extending the insurance fraud unit within the state police until 2012 (HB 1147). The unit is scheduled to sunset at the end of 2008.
  • The Florida legislature passed a bill raising criminal penalties for agents who target seniors for schemes involving churning life policies and annuities. Fines under SB 2082 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.

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

PUBLIC OUTREACH

  • What do massive workers comp premium scams and Allstate’s lawsuit against a phone-happy chiro have in common? They’re the feature stories in the Spring issue of Fraud Focus, the coalition’s quarterly publication of fraud trends and news. Crooked construction firms are avoiding paying millions in workers comp premiums through ruses such as hiding workers in shell companies, says the feature story Digging Up the Underground Economy. Ill-paid and vulnerable immigrants are unknowingly going without comp coverage thanks to these ruses…Meanwhile, Allstate is suing a chiro who allegedly set new standards for recruiting crash victims for bogus treatment by launching a corporate-quality telemarketing operation, says the feature story Full-Throttle Phoning.
  • “When General Motors was offering zero-percent financing a few years back, people with relatively low incomes were walking out of the showroom with cars they had no business buying. Easy financing begets unwise buying decisions,” the coalition’s Jim Quiggle said in a story about how the troubled economy and rising gas prices are spurring people to unload expensive vehicles for insurance money. “The illicit goal is a quick insurance payout that will pay off the entire debt.”
  • Warning note to consumers: Lying about relevant info on insurance applications is insurance fraud in Kentucky, the state insurance department is cautioning residents. Many consumers think that little lies to reduce premiums or obtain coverage are minor matters. But they actually can land people fraud convictions and fines, says acting chief John Burkholder. Tracy Cardwell obtained health coverage from Anthem Blue Cross after lying that he had no significant health problems. But Cardwell actually had pre-existing problems, and the Blues rescinded his coverage. He now must pay more than $14,000 in medical bills from his own pocket, the department says.

CRIMINAL CONVICTIONS

  • So how could wheelchair-bound Samuel Aaron Brabson compete in triathlons? Because he wasn’t wheelchair bound. The Richmond, Va.-area man faked a severe injury trying to cash in on a $1.3-million accident policy. Brabson’s spinal cord apparently was injured in a car crash. He claimed he reinjured his spine in another crash that barely even dented a license plate. Then Brabson went after money from the accident policy, claiming he was virtually crippled. But people saw him competing in triathlons, climbing mountains and walking around amusement parks with girlfriends. All the while, Brabson told caregivers he was feeling lousy. He even claimed he was Brabson’s twin when a woman saw him standing in a grocery store checkout line. Surveillance video also caught him mowing his lawn and doing other activities. Brabson was convicted this week, and could receive up to 15 years when sentenced in August.
  • Former cop Matthew Shade lost his job with the Falls, Pa. police department but received just five years of probation for forging his estranged wife’s name on a $5,000 insurance check to steal the money from her (see March 14 ePort). Shade was involved in a messy divorce with Lisa. The check was issued after storm damage to Shade’s home. The one-time police officer, whose job included arresting people for forgery, signed his and Lisa’s names to the check. After his arrest, Shade had lobbied on his MySpace page for character witnesses to testify in court. The case was “nonsense,” he posted on the page. “It stretches credulity to say that he didn’t understand that what he was doing was wrong,” prosecutor Anthony Cappuccio said in court. “This is a person who, as a law enforcement officer in the community…should have held himself to a higher standard.”
  • A Kentucky claims supervisor tried to help himself to more than $17,000 in insurance money by forging claims. Kelly Lee Mora filed claims in the names of others and used the money for personal expenses. The Lexington man worked for the independent adjusting firm Tower Hill Claims Management. He used a $3,062 insurance check for closing costs for his new home. Another $5,782 went to his mortgage company. But Mora’s downfall came when an $8,855 check was questioned because it wasn’t made out to the claimant. Mora sent the check to the actual insured to cover his own tracks. But that wasn’t good enough; the Kentucky insurance department revoked his license. Mora also received three years in jail, but is serving only 60 days.
  • Joseph Richard Kosack lost his chiro license in early 2005 but kept practicing until Arizona’s fraud bureau caught up with him. The Phoenix man inflated numerous claims, often billing for treatments he never provided. Kosack treated many patients along the way, including a mother and her 11-year-old daughter who were hurt in an auto accident. Lacking a license, Kosack fraudulently billed insurers using his partner’s name and chiro license. He billed an insurer for treating one patient after merely telling the patient to walk around the parking lot for 20 minutes. Kosack was scheduled to receive 30 days in jail plus three years probation today. The state chiro board previously revoked his partner’s chiro license as well.
  • Ellen Frangules obtained insurer-paid painkillers and stimulants from pharmacies by using more than 100 bogus prescriptions in the names of her ex-husband, children and her former attorney. The Marlborough, Mass. woman’s ruse surfaced when her insurer noticed all the prescriptions but saw no related office visits from the supposed patients. The signature on the prescriptions also didn’t match her doctor’s. She received 2 1/2 years Tuesday, but will serve only 30 days.
  • An eye doc’s shortsighted ruse landed him a fraud conviction this week. Frank Davis charged patients $21 for a “visual fields test” procedure. The Dayton, Ohio man told patients their insurance wouldn’t cover this test but that it was important they have it. So patients forked over their co-payments and the $21. Davis only showed the co-payments on the insurance submissions then billed the insurers and pocketed the money. He also billed insurers for a bogus mucous membrane test that required a special allergen — which the office didn’t have — to be inserted into the eye membrane. Davis was convicted this week and faces up to 12 months when sentenced in June.

CRIMINAL CHARGES

  • Two evil twins or one brazen swindler? The latter, Massachusetts prosecutors charge. Ernies Baez claimed he was hurt while driving a 1997 Dodge Stratus that was rear-ended when a 2001 Dodge Caravan ran a stop sign in Lawrence. It was a suspected staged accident, and Baez received bogus injury treatment in his own name as the Stratus driver. Someone named Jairo Reyes said he was an injured passenger in the Caravan, and also received worthless treatment. Incredibly, Reyes was Baez using an alias to scam insurers on both sides of the suspected setup crash, prosecutors say. “…we’ve never had an individual appear in the same accident in both cars under two different names. This just takes the cake,” Lawrence police chief John Romero told the Lawrence Eagle-Tribune this week.
  • Last week ePort covered the high school principal charged with torching his leased 2004 Acura TL for insurance money to save $9,000 in excess mileage fees. Terence Wilkins, principal at Red Bank Middle School in New Jersey, got his day in court and pled not guilty for arranging to have the car stolen and set ablaze in Essex County. A former New Jersey ‘educator of the year,’ Wilkins allegedly paid $600 to school guidance Kenyatta O’Bryant to execute the scam, prosecutors contend. Wilkins reported the car stolen a day after the incident and tried to file an insurance claim, which was denied. O’Bryant faces the same charges and could get up to 10 years in the slammer.
  • Where’s Joshua Curtis Coker? Fraud fighters want to know. A family hired the Raleigh, N.C.-area man to work on a room addition to their home, and asked for proof of liability coverage. But Coker had no coverage. He allegedly scanned in a friend’s policy, forged his own info onto the form, and presented it as his own. Coker’s suspected scheme fell apart when he disappeared halfway through the $90,000 remodeling job. The family called the North Carolina insurance department for help in locating his insurer. Nobody’s quite sure where Coker is, but the insurance department welcomes any tips.
  • Allegedly lying about her marital status cost a clerk with the Florida state attorney’s office her job, but that could be the least of the Auburndale woman’s troubles. Kristie Derrick allegedly listed ex-husband Ken as her spouse on her employee health policy so he could receive free medical treatment. After being admitted to Winter Haven Hospital for chest pains, Ken listed Kristie as his wife on the admissions form. United Healthcare shelled out $6,935 for his treatment. The alleged scheme blew up when her employer followed up on the claim and confronted Kristie over her marital status. She denied she was divorced but later admitted they were no longer married. Derrick claimed the “married” listing on her personnel records was a mere oversight. She was fired the next day and faces fraud charges.

CIVIL & ADMINISTRATIVE ACTIONS

  • A Tulsa ‘black widow’ is waiting to hear if the Oklahoma governor will free her from a tangled web of murder and insurance fraud. Norma Jane Lumpkin took out a $210,000 life insurance policy on husband Gilbert back in 1981. He was found dead in the trunk of her car just one day later, beaten to death with a baseball bat. A local cop stopped her for speeding. When the deputy asked Lumpkin to open the trunk, she said, “I guess I’ve been had.” Lumpkin’s 18-year-old neighbor and love interest Mark Lewis said she coerced him into helping her kill her husband. Now 26 years into her life sentence for murder and trying to collect on the policy, Lumpkin says she was the victim of battered spouse syndrome. Last month, the Oklahoma pardon and parole board recommended she be released with time served. Now Oklahoma governor Brad Henry will decide Lumpkin’s fate. By state law, Henry has no time limit to decide.
  • In this week’s edition of “where there’s smoke there’s fire,” the volunteer fire department in Jefferson Parish, La. allegedly inflated the number of firefighters who respond to alarms. The department fudged the numbers to lower the property insurance premiums in areas it services, prosecutors said this week. The suspected ruse was discovered when a routine audit by the Property Insurance Association of Louisiana found that the electronic incident reports listed more firefighters responding to alarms than the reports written at the scenes. Parish attorneys want fire fighter or supervisors involved in the suspected scam fired. The fire department hadn’t issued any heated denials as of Tuesday.

QUOTE OF THE WEEK

“He made a bad decision. He is guilty of thoughtlessness and bad judgment.”

— Pa. lawyer Douglas Maloney commenting on Pennsylvania ex-cop who forged his wife’s name on an insurance check to hide the money from her.

OTHER HEADLINES THIS WEEK

  • Economy adding to burden of fraud fighters
  • Murdered man’s family sues over suspected insurance scheme
  • Ind. man arrested in a multi-million dollar arson plot
  • Ohio cop allegedly linked to foreclosure scam
  • Biz partner wants NZ death faker named

Details at www.InsuranceFraud.org/

MEETINGS & CONFERENCES

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