Insurance Fraud Weekly ePort: Week Ending Nov. 16

 

Insurance Fraud Weekly ePort

Week Ending November 16, 2007

www.InsuranceFraud.org

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LEGISLATION & REGULATION

* Combating auto-insurance schemes will be a prominent anti-fraud theme in a number of state legislatures next year, the coalition’s government affairs chief Howard Goldblatt told lawmakers at the annual meeting of the National Conference of State Legislators in Las Vegas this week. “We expect several states, including Florida, Michigan and Connecticut, will consider targeting automobile insurance fraud,” Goldblatt said. “We also hope New York moves forward to pass stronger automobile fraud laws.” Strong measures likely will be introduced to stem rampant PIP fraud in Florida as well. Michigan also is considering creating an authority to investigate and prosecute automobile schemes, and Connecticut is looking to limit access to automobile accident reports.

* Mississippi insurance commissioner George Dale soon leaves office after being defeated in the Democratic primary. Dale gained national attention for being instrumental in busting Martin Frankel, who raked in more than $200 million by siphoning the assets of ailing insurance companies he secretly controlled. Frankel fooled several departments of insurance before he moved to Mississippi and encountered Commissioner Dale. Several hundred industry employees lost their jobs when the depleted insurers went belly-up. Frankel received 200 months in federal prison in December 2004.

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

PUBLIC OUTREACH

* Not my fault. It’s his, hers, or anyone else’s. Blaming others for insurance scams is a common tactic when a swindler is cornered. San Francisco resident Katherine Paiz blamed her husband Luis Gonzales for involving her in a scheme to torch their 2006 Honda Accord for insurance money. He then fingered her for the whole plot before admitting he actually burned the car. Their sordid blame game is outlined in the coalition’s newest online Fraud of the Month. Some crooks go to extremes, like the Florida gay man who burned down his mobile home, spray-painted “Die Fag” on his front doorstep and blamed his insurance arson on unnamed bigots.

CRIMINAL CONVICTIONS

* Michael Paul Schook will serve eight years after blabbing too much about torching his Suffield, Conn. home for insurance money. Schook, who has dozens of other felony convictions, left a fat-filled pan on a hot stove. He then bolted with his wife and daughters. Schook next called a disabled neighbor to check on the house, saying he might’ve left something on the stove. Oddly, Schook barely knew the neighbor, who lived several streets away. The neighbor found the place ablaze, and firefighters couldn’t save it. Schook collected $82,000 in insurance money. But the evidence quickly piled up because Schook’s mouth was too big. He’d asked an ex-con buddy living with the family how to burn down a house. He even told his kids: A student at a local middle school told a guidance counselor about the planned fire after one of Schook’s kids started talking about it at school. Schook’s home also was in foreclosure, his car was being repossessed and he owed thousands in credit-card bills. He also refused to cooperate with the insurer’s investigation.

* Joseph Adjmi’s nearly 45-year run from the law is finally over. The Florida man jumped bail and fled to Europe after receiving 10 years in 1963 for an insurance scam involving the torching of his family’s Miami-area store, which sold paintings and vases. Adjmi spent most of his time in Europe, but turned up in Cuba two years ago. But he was booted from Cuba for carrying a fake Israeli passport and sent back to the U.S. The 71-year-old Adjmi received a year and a day in federal prison for jumping bail, in addition to his earlier 10-year sentence.

* Medicare fraud was a family business of four South Floridians. Carlos, Aristides and Robert Berenguer and Carlos’ stepson Ivan Aguera used their medical equipment stores to recruit Medicare patients to make false claims for compounded aerosol medicines. They also conspired with the owners of Miami pharmacies to refer patients illegally. The four family members each received 57 months in prison and were ordered to pay $1.4 million.

* Lending a helping hand only helped Edward Gregory get murdered. The Portland, Ore.-area man helped Angela Soon He Kim and her husband Norman Schlunt buy a house, pay bills and run a business. Gregory, who lived with them, even made the couple the beneficiaries of his $150,000 life policy. That was his big mistake. Kim and Schlunt ground up 25 sleeping pills and mixed them into his chili. When Gregory dozed off, Kim and Schlunt put him to bed and smothered him with a bag over his head. Kim received 17 years Tuesday, and is cooperating with prosecutors in Schlunt’s upcoming trial.

CRIMINAL CHARGES

* An insurance adjuster and three convicted drug dealers led a gang that torched more than 50 houses to make millions in inflated insurance claims in the Muncie area, Indiana prosecutors charged yesterday. Kenneth Allen and adjuster Douglas Haynes allegedly bought low-cost homes, loaded them with old furniture to inflate the claims, then set the buildings on fire. They collected up to $160,000 on each home they’d bought for up to $90,000 apiece. Haynes helped Allen and other cronies inflate the claims, officials allege. Up to 20 others are suspected of taking part, and more arrests are expected, officials say.

* Keith Lewis bilked insurers out of $29,000 by making 17 bogus vandalism claims for vehicles he had registered in his name and the name of someone whose driver license he stole, Pennsylvania prosecutors charged Tuesday. The Philadelphia-area man allegedly made another 45 dirty vandalism claims worth more than $120,000 that were denied. Lewis used a Toyota Camry and three SUVs. He paid premiums with checks drawn on nearly empty bank accounts, making dozens of claims for minor damage before insurers realized the checks were no good, officials say. Lewis sometimes made claims for vehicles with pre-existing damage. Lewis allegedly told the insurers he was a police officer, accountant, bounty hunter, bank manager, salesman and entertainment-industry employee. To speed up one claim, he even posed as a soldier facing immediate deployment overseas, prosecutors charge. Progressive Insurance busted the suspected scheme, news reports say. Lewis allegedly bought four Progressive policies and quickly filed damage claims, saying the vehicles were vandalized or struck in the streets. But the insurer figured out the suspected ruse and reported him to the DA.

* Two former California agents illegally diverted insurance payouts. Cynthea Ann Eckhart stole more than $700,000 by issuing bogus auto-insurance ID cards and certificates of homeowner insurance. The Salinas woman, received 12 months in county jail and was ordered to repay $225,000. Former Allstate agent Linda Carol Rehrig issued nearly $9,000 in claim checks by altering claim records and checks. The Woodland Hills woman received a week in Los Angeles County jail.

* What a pal. Jack Easterly claimed he couldn’t work after a traffic accident, and collected $1,250 in lost-wage payouts from his auto policy. But investigators allegedly videotaped the Niagara Falls, N.Y. man working at various construction sites—including one site where he allegedly worked with Kenneth Zortman. It was Zortman who allegedly submitted a bogus wage-verification report to Progressive Insurance. Each could receive up to four years in jail if convicted.

* Michael Mason lied that he wasn’t receiving Social Security disability benefits when applying for benefits from Unum, New Jersey prosecutors charged Wednesday. The former Freehold, N.J. man had altered a Notice of Disapproved Claim from the Social Security Administration and submitted it to Unum to collect increased benefits, prosecutors say. Mason illegally collected $92,222 from Unum while receiving Social Security money before the insurer discovered the suspected scheme. Mason faces a variety of charges that could earn him more than 10 years in prison.

* Even the dead couldn’t rest peacefully. Raymond Carter died while collecting workers comp checks for a job-related injury. Apparently his comp insurer sent the Charleston, W. Va. man a check after he died. But his live-in girlfriend Linda Jett allegedly gave the check to her daughter Dotson, who cashed it. Both women face fraud charges.

ADMINISTRATIVE & CIVIL ACTIONS

* A Missouri man who said Allstate Indemnity defamed him in a letter denying his claim due to suspected fraud has won a $1-million jury award in St. Louis Circuit Court. John Johnson made a claim after fire wrecked his house. Allstate denied the claim, citing “intentional misrepresentation.” He later tried to buy coverage for property he inherited, and disclosed Allstate’s denial letter to agents as required by law. He said no carrier would insure his property because of the letter, so he sued. The jury found that Allstate’s statements about Johnson’s alleged misrepresentation were inaccurate. He was awarded $900,000 in actual damages and $100,000 in punitive damages. Allstate says it will appeal.

* California regulators fined Health Net Inc. $1 million yesterday for lying to investigators about paying employees bonuses for the number of policies they canceled when the insureds got sick. Health Net and other health insurers are being investigated for allegedly sifting through applications to find mistakes or omissions that would justify canceling policies. State law forbids linking compensation to claim decisions. Health Net officials twice denied tie-in deals, but documents showed one of the insurer’s analysts received more than $21,000 in bonuses partly for meeting or exceeding the company’s rescission goals. Health Net says it saved $35.5 million in “unnecessary” care for rescinding more than 1,000 policies between 2000 and 2006, according to news reports. The insurer says it rescinded policies for material misstatements in applications. Consumers say the questions often are vague and misleading.

ETC.

* State fraud bureaus posted a record number of convictions in 2006—nearly 5,000—and opened more cases than ever, according to preliminary results of the coalition’s latest study of state fraud bureaus. Case referrals from insurers dropped significantly, and budgets and staffing for most fraud bureaus either plateaued or declined in 2006, coalition Executive Director Dennis Jay also reported at the annual fraud director conference in Jacksonville, Fla. yesterday. The continuing rise of organized rings, ability to recruit and retain quality investigators, and the shrinking of some insurer SIUs are among the concerns expressed by fraud-bureau directors in the study. The full study is scheduled to be published in December.

* Lake Quinsigamond is a popular recreation spot next to Worcester, Mass. It’s also a popular dumping ground for stolen vehicles, and vehicles the owners unload for insurance money. The locale is tailor-made for schemers: A paved ramp extends about 100 feet from a street in Worcester. This makes it easy for anyone to send an unwanted vehicle into the dark waters, which take a sharp decline of about 75 feet at the end of the ramp. Divers also find other crime debris such as loaded guns. They even found a stolen ATM machine.

* A fraud conviction is only the beginning of Dr. Robert Stokes’ problems. The Grand Rapids, Mich. dermatologist was nailed last April for overbilling insurers at least $500,000 for falsely claiming patients developed post-operation infections. Stokes will be sentenced in December, but now employees claim he exposed potentially thousands of patients to risk of hepatitis and HIV by reusing sutures, syringes, needles and other medical tools on patients. He routinely carried a syringe in his pocket while going to exam rooms without obtaining another syringe, they allege. Employees also say he would reuse leftover sutures that already had threaded through other patients. Prosecutors are deciding what charges, if any, they’ll bring.

* Smile and say cheese. Increasingly, patients should be prepared to pose for cameras the next time they visit the doctor. The camera is the latest weapon in efforts to thwart medical identity theft, the fastest-growing type of identity theft. Two practices in Raleigh, N.C., Family Medical Associates and Gynecology and Laproscopic Surgeons, keep patient photos on file to ensure the patients are who they say they are. Blue Cross Blue Shield of North Carolina also urges physicians to request patients’ insurance cards and driver licenses each time they come into the office, not just on the first visit.

QUOTE OF THE WEEK

“They have a sense of entitlement or what would be referred to in psychiatry as narcissism. They think somehow they are owed what other people have to work for.”

—Jeffrey Schaler, a psychologist and professor in the Department of Justice, Law and Society at American University in Washington, commenting on fraudulent claims made by Katrina victims.

OTHER HEADLINES THIS WEEK

* Md. deputy to be sentenced today for torching SUV

* S.C. health transport company accused of billing fraud

* Health insurer fined $1 million for denying coverage

* New Jersey woman charged with disability fraud

* California couple charged with disability fraud

Details at http://www.insurancefraud.org/news.lasso

MEETINGS & CONFERENCES

* December 4, 2007 — Annual Training Conference Anaheim, CA (National Health Care Anti-Fraud Association)

* December 11, 2007 — Annual Membership & Board Meeting Washington, DC (Hyatt Crystal City)

* May 7-8, 2008 — VA Chapter IASIU Annual Meeting Richmond, VA (Holiday Inn)