Insurance Fraud Weekly ePort-Week Ending Oct. 12

Insurance Fraud Weekly ePort
Week Ending October 12, 2007
www.insurancefraud.org
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LEGISLATION & REGULATION

* Florida Gov. Charlie Crist yesterday signed a law extending the no-fault automobile law that had expired at the end of September. The new law adds teeth to Florida’s anti-fraud effort, and takes effect in January. It restricts the types of medical clinics that can make PIP claims, and caps medical provider fees to limit open-ended billing by providers. The AG also gains authority to sanction insurers that wrongfully deny claims. The legislature passed the law in a special session this week.

* In a related move, anti-fraud measures are included in the 2008 state budget the legislature is expected to adopt today. The budget would fund 16 new fraud investigators, plus fraud prosecutors for the Miami-Dade, Orlando and Tampa areas. The prosecutors would focus on staged-accident rings, which have imposed large fraud losses on auto insurers in those locales. The new anti-fraud resources underscore the legislature’s recognition of how serious Florida’s fraud problem is. Anti-fraud resources will rise while the budget decreases spending in many other important areas.

* California Gov. Arnold Schwarzenegger signed a law allowing law enforcement to seize the assets of suspected insurance swindlers being prosecuted for tax fraud. Some prosecutors are successfully using tax fraud instead of traditional insurance-fraud prosecutions. The new law will help prevent fraudsters from hiding their assets in case they’re slapped expensive restitution orders if convicted. The Los Angeles County DA’s office led the effort for passage.

* The coalition held a meeting with several state fraud bureaus and insurers to discuss a strategy for moving an anti-fraud agenda in 2008. Among the states discussed were California, Connecticut, Florida, Michigan, New Jersey, New York and Utah. The coalition will work with insurers, consumers and other anti-fraud groups to draft an action plan for 2008.

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

PUBLIC OUTREACH

* “Most people think that insurance fraud is a victimless crime. (They think), ‘so we’re getting $29,000 from the insurance company. The company can afford it, that’s no big deal…’ So, everybody is the victim. We all pay higher rates because of those false claims,” the Waynesville, N.C. Mountaineer wrote in an editorial Monday after Buddy Eugene Ewart was busted for allegedly staging a crash and filing a bogus $29,000 claim.

CRIMINAL CONVICTIONS

* Joseph Arcidiancono lied that he lost up to $3,000 in wages after being injured in an auto accident. The Seabrook, N.H. man faxed Peerless Insurance an employment-verification form, supposedly from his employer. Arcidiancono admitted faxing the form but denied forging it. He received six months in prison anyway, the insurance department and AG said Monday.  

* A state employee used her office to forge insurance cards and temporary car tags to help give people new identities, Michigan prosecutors charge. Janice Bess worked in the Secretary of State’s office, and was busted after allegedly selling fake documents to an undercover investigator. She allegedly stole the identities of people in the department’s computer system. The suspected scheme was uncovered when a sharp-eyed Wayne County Sheriff’s deputy spotted a fake temporary tag taped to the back window of a car.

* A former police captain gave up a 24-year career over a golf bag and pistol. Former Muskogee, Okla. officer Jim Wooten told his insurer a burglar stole the items from his home. But police found the bag and pistol still in his home. Wooten received one year (suspended), but says he’ll appeal.

* James Vavra said he was hurt while installing windows and doors for his firm Clear View II Inc. and couldn’t work anymore. The Bryant, Tex. man collected more than $3,900 in workers comp money from Texas Mutual. But Vavra returned to work anyway, illegally collecting both comp money and his salary. He received two years, deferred.

* Agent David Burbine forged a client’s name to a life-policy amendment that eliminated a disability rider. The Rye, N.H. man’s crime surfaced when an injured client tried to collect on the disability portion of the policy, and the insurer said that provision didn’t exist. Burbine pleaded guilty this week. The New Hampshire insurance department and state AG combined to land the conviction. Burbine won’t face jail time, however, but his license was suspended for a year.

* Addicted to prescription painkillers, Janet Leas used her insider position at a health clinic to steal narcotics by charging them to insurers. The Lower Pottsgrove, Pa. woman was a medical assistant at Women’s Healthcare. She stole prescription forms, signed them with a doctor’s rubber stamp and bought the prescriptions at a pharmacy under the name of Sharon Robbins. Leas pleaded guilty this week, and will be sentenced later. Robbins still faces charges as an accomplice for helping Leas score the drugs.

CRIMINAL CHARGES

* Houston police busted four body shops Wednesday, alleging they grossly inflated repair costs or charged for repairs they never made. The police launched a sting, using nearly 50 bait cars that were intentionally damaged to catch the body shops in the act. Police banged up the decoys with barbells and cattle guards, then documented the damage and estimated what repairs should cost. The shops allegedly charged insurers $150,000-$200,000 in inflated costs. One shop billed for eight hours of work on a car that wasn’t damaged at all, officials say. Police confiscated a Bentley, Lamborghini and Ferrari as evidence. The arrested shop owners all were working together, police say. More busts may be coming.

* Two members of a suspected auto-premium evasion ring registered more than 150 vehicles in their names, all at just three addresses around North Carolina, prosecutors charged this week. Andrea Martinez Hernandez and Octavio Telles Segura may be helping out-of-state drivers illegally slash their auto premiums by helping them register in North Carolina, which has relatively low rates, officials say. The pair also may be involved with identity fraud. The insurance department is cracking down on auto-premium evaders, who’ve fraudulently registered their vehicles in the state in growing numbers. The legislature also passed a law this year making rate evasion a specific crime.

* A Kentucky consumer’s complaint busted Michael Leroy Fleckinger’s suspected sale of fake auto coverage to dozens of drivers. The unnamed woman thought she’d bought coverage from Fleckinger, who told her he was an insurance agent. She tried to transfer her vehicle title at the Boone County Clerk’s office, but was told her insurance card was invalid. The Kentucky insurance department investigated. Fleckinger isn’t a licensed agent and his firm Amtrek Two Insurance Co. isn’t authorized in the state, prosecutors say. The Fort Mitchell man allegedly sold fake coverage to 43 persons. He took in more than $9,000 in premiums, and allegedly issued his clients fake insurance cards. Fleckinger faces up to 20 years if convicted.

* The part-owner of a Travelodge in Beaumont, Tex. tried to bribe a Nationwide adjuster $20,000 in exchange for a $125,000 claim check on an $18,000 loss from Hurricane Humberto, prosecutors charged yesterday. An undercover officer met with the unnamed man and allegedly received the $20,000 in cash. He was arrested on the spot.

ADMINISTRATIVE & CIVIL ACTIONS

* Allstate is innocent of charges that it stonewalled a Kentucky woman’s pain-and-suffering claim in a vehicle accident, a jury found Wednesday. The insurer could’ve faced a firestorm of lawsuits if Hager had won. Hager claimed she was permanently injured, but Allstate says she only had a muscle strain, and ran two businesses while claiming she couldn’t work. Much of the trial centered around documents the consulting firm McKinsey & Co. created to help Allstate streamline its claim-processing. Hager said the documents showed a plan to stonewall claims. The plan actually helped root out fraud and expedite honest claims, Allstate countered. Hager also cherry-picked quotes from the documents, and took them out of context, Allstate said. The jury reached a unanimous verdict in just 35 minutes. Hager says she’ll appeal.

* The head of a Bedford Hills, N.Y. body shop is suing Progressive Insurance for $40 million, contending the insurer is forcing shops to lower their fees and repair quality. Greg Coccaro, head of North State Custom, says Progressive is steering customers from his body shop to outfits in Progressive’s own repair network. They charge less but do lower-quality work, Coccaro says. Progressive responds in a prepared statement: “It is our practice to fully explain to customers that they are free to choose any body shop they wish to repair their vehicles. We also explain that if they so choose, they can use our network of shops…A shop in our network will give priority to their repair and together, with us, will guarantee the work for as long as the customer owns or leases the vehicle.”

* A jury awarded a secretary at a New Jersey chemical company $392,000 in a counter-suit against Rutgers Casualty. The insurer had sued her for fraud when her brother-in-law made a bogus auto-injury claim against her auto policy without her knowledge. Alice Kennedy’s brother-in-law filed a claim for $15,000 in medical bills after a vehicle accident even though he wasn’t listed on Kennedy’s policy. He told the insurer he was covered. Rutgers Casualty denied the claim and sued Kennedy for insurance fraud. Kennedy counter-sued.

ETC.

* State Farm is suing suspected PIP schemers throughout Florida, alleging they’re inflating or manufacturing medical bills for so-called crash injuries. The insurer is going after about 37 doctors, chiros, clinics and hospitals around the state. Among the targets is Florida Hospital, the state’s largest hospital system. State Farm says the system’s 17 facilities have inflated charges up to 1,000 percent. The insurer also has sent letters to at least 20 more targets. The letter accuses them of fraud, and demands they stop treating auto-accident patients and billing the insurer. State Farm says it’s turning to the civil courts because criminal prosecutions are too hard to bring. The attorney for one targeted clinic says State Farms is “trying to carve up the market” and get rid of doctors the insurer doesn’t like, according to news reports.

QUOTE OF THE WEEK

“Stop, Call and Confirm’ before purchasing insurance coverage.”

—Julie Mix McPeak, KOI Executive Director in Fort Mitchell, K.Y., commenting on a man being charged with issuing fake insurance cards and accepting premiums from 43 individuals for fake auto insurance.

OTHER HEADLINES THIS WEEK

* Casino dealer in Conn. charged with work comp fraud
* 21 months in prison for Pa. agent’s $288K theft
* Four sentenced for operating bogus California clinic
* Two in N.H. charged with auto insurance fraud

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

MEETINGS & CONFERENCES

* October 25, 2007 — 3rd Annual California Insurance Fraud Symposium Torrance, CA (The National Underwriter Company)

* November 8, 2007 — Worker’s Compensation Claimant Fraud Seminar Randolph, MA (Lombardo’s)

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

For more info, visit online events http://www.insurancefraud.org/events.lasso.