Insurance Fraud Weekly ePort: Week Ending October 26

Insurance Fraud Weekly ePort
Week Ending October 26, 2007
www.InsuranceFraud.org 

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LEGISLATION & REGULATION

* The NAIC is looking for a coordinator to staff the group’s anti-fraud task force and oversee the NAIC’s anti-fraud activities. The person also would be a liaison to state anti-fraud efforts and fraud-fighting organizations such as the coalition and NICB. For more information and to apply, visit the NAIC’s website by clicking here. 

* The California Department of Managed Care is working with the state’s insurance department to draft stricter regulations on how and when health insurers can rescind policies because of misrepresentations in the applications. A health insurer must establish a willful misrepresentation before rescinding a policy. The effort is prompted by consumer complaints over perceived policy rescissions based on innocent errors by insureds and ambiguous questions on the policy applications. The draft regs are expected to be completed by mid-November. Public hearings then will be held. The regs must be adopted one year after they’re submitted to the Office of Administrative Law.

PUBLIC OUTREACH

* “For insurers, getting tough with suspect claims can land them in court, facing billion-dollar lawsuits. If they pay claims too quickly and generously, they can incur the wrath of editorial writers and even face regulatory fines. So goes the balancing act insurers must perform in dealing with suspect claims,” coalition Executive Director Dennis Jay writes in the organization’s FraudBlog. “…The fact is, insurers pay thousands of fraudulent claims every year…They should pay honest claims promptly and fairly, detect dishonest ones accurately and have the wisdom to distinguish the difference.”

CRIMINAL CONVICTIONS

* More than 4,500 real estate agents and appraisers around the U.S. paid $7 million for fake malpractice policies during an 11-year fraud spree by a Toledo, Ohio businessman. Mark Haukedahl sold errors & omissions policies through fake real estate trade associations he had set up. They were called the American Real Estate Association and the Noble Group. Haukedahl even used his high school-age son as the straw owner of his operation. Haukedahl received 11 years in federal prison Monday.

* Booted from Blue Cross Blue Shield for earlier convictions for phony billings, Zack Brown recruited more than 140 fake patients who were reimbursed directly for phantom injections, physical therapy and other treatments. The bills were sent through a crooked medical biller who was working with the Detroit doctor. Brown split the insurance money with the so-called patients. Brown received more than 16 years in federal prison Tuesday and must repay $1.1 million. His medical biller received three years.

* The number of people in Ohio who thought they had heart problems spiked during Dr. Mohammed Aiti’s nearly decade-long reign of fraud. The cardiologist kept telling healthy patients their tickers might be in trouble. He and his cronies then ordered nearly $2 million in insurer-paid heart tests his patients didn’t need. Aiti used leverage to compel his doctors to order the worthless tests: His Akron firm, Premier Medical Group, sponsored them for their visas. Tests were scheduled as often as insurers would pay for them. Aiti pleaded guilty Wednesday, and faces up to five years in federal prison when sentenced. He also was booted from federal health-insurance programs.

CRIMINAL CHARGES

* In an FBI sting, a New Jersey politician took a bribe from a fake broker to obtain taxpayer-funded contracts for schools and municipalities, the feds charge. Former Democratic state assemblyman and current Orange Mayor Mims Hackett Jr. was the latest to plead guilty in the unfolding courtroom drama. Hackett accepted $5,000 from a fake broker the FBI had set up, and agreed to receive another $25,000 once the city of Pleasantville authorized the firm to provide insurance brokerage services, the feds allege. Hackett pleaded not guilty this week. Eleven public officials were arrested in September. Former Democratic Assemblyman Alfred E. Steele pleaded guilty last Friday.

* A construction firm in the New York City area paid some of its employees off the books to illegally reduce its workers comp premiums by more than $790,000, prosecutors charged Monday. Complete Construction Consortium (CCC) took $9 million in payroll offline over six years by hiding 25-30 workers in four shell firms, officials say. The salary checks allegedly were labeled “materials” on CCC’s general ledger and tax returns. CCC also used commercial check-cashing firms in New York City to pay some employees in cash. Former owner Frank Terry faces a variety of charges.

* Former state corrections officer Dennis Gillan stole more than $100,000 in workers comp premiums by lying he was hurt so badly from a job-related injury that he couldn’t walk more than a block, New York prosecutors charged this week. The Monroe man allegedly was caught hiking and deer hunting even though he was receiving comp money.

* Scott Baldwin said he injured a tooth while eating soup he’d bought at a local supermarket, and made an insurance claim against the soup’s manufacturer. The Hampton, N.H. man told Wausau Insurance the dental bill was $1,927, and that he’d never had problems with the tooth before. But the bill covered tooth treatment he’d received on another date, officials allege. Baldwin had damaged the tooth another time, and said he was too busy to get it fixed. He received six months, suspended. The state insurance department’s fraud unit led the investigation.

* Philadelphia didn’t show much Brotherly Love for suspected scammer Lewis Strand. The Delaware man allegedly drove his 2003 BMW into town, set it on fire with gasoline to collect $47,000 in insurance money to pay off the car, then had a leisurely drink before falsely reporting someone had stolen it, Pennsylvania’s AG said Wednesday. The car was a total loss.

* Maria Aquilar hired Gustavo Adolpho Ortegon, who said he was a dentist, to help fix a painful tooth in the back of her mouth. But he isn’t a dentist and has no license, Greenacres, Fla. officials say. Ortegon allegedly showed up at Aquilar’s house with suitcases loaded with dental tools and demanded $400 of a $1,200 fee upfront. He told Aquilar to lie on her living room couch and gave her some numbing medicine in prep for root-canal surgery. Ortegon then allegedly said he wanted to yank two back teeth, and Aquilar refused. Ortegon then gave her two packs of penicillin and left, saying he’d return to finish the job, officials say. Aquilar finally went to a real dentist, who said Ortegon had left the infected tooth open and exposed. She called police, who arrested Ortegon when he returned to complete the surgery. Ortegon allegedly told police he was there to work on a car.

ADMINISTRATIVE & CIVIL ACTIONS

* An agent was booted from selling insurance in Montana after bilking two elderly women, one of whom has Alzheimer’s disease. Martin Bower went to that woman’s home several times, and convinced her to liquidate her securities to buy an insurance product from him. The Troy man also tried to gain illicit control over stock certificates of a woman in an assisted-living apartment so he could sell her a fixed annuity. The state banned Bower for five years and fined him $80,000.

ETC.

* California’s insurance department has sent fraud investigators to assistance centers in San Diego County to deal with expected scams from the wildfires. “It’s like clockwork. Every time there’s a natural disaster, scam artists show up trying to victimize victims. And they pretend to be contractors or claims adjusters,” Commissioner Steve Poizner told the San Francisco Chronicle this week. At least $1 billion in insurance claims are expected, Poizner says. The state also has lifted a ban on out-of-state adjusters to help fire victims begin sorting out losses. The state however, does prohibit adjusters from soliciting homeowners for business for seven calendar days after a disaster. This will give victims time to size up their losses before signing a contract. Another potential fraud problem: As many as one-quarter of the burned homes are under-insured, Poizner says. Though most homeowners will make honest and accurate claims, some inevitably will try to make up for lack of proper insurance by trying to slip padded claims through insurers, the coalition’s Executive Director Dennis Jay warns. 

* Why was someone watching Marvin Martin’s home and following him? Fed up, the Syracuse-area man pulled a loaded .45-caliber handgun and approached the parked car in which Christian Bradley was sitting outside a fire station. Turns out Bradley is an insurance investigator who was tailing Martin in a fraud probe. Both men called 911, but only Martin ended up in police custody. He faces a number of charges. No word on what suspected fraud Bradley was looking for.

* The FBI raided a Tampa, Fla. insurer Wednesday that has made suspiciously large amounts of money running government health plans for the poor and elderly. WellCare is the largest Medicaid provider in Florida, with more than 350,000 members. The insurer also offers Medicare Advantage plans to seniors in seven states. Nobody is quite sure what the FBI was looking for when it started carting boxes away. But the insurers caught heat from the U.S. Senate and House last spring for overly aggressive Medicare marketing practices. Medicare cited WellCare again in August for violating Medicare sales practices.

QUOTE OF THE WEEK

“We’re not talking about a short-term operation. Year after year. Dollar after dollar. For what? For a lavish lifestyle you led.”

—Federal judge Jack Zouhary said in convicting Toledo, Ohio businessman Mark Haukedahl to nine years this week for selling fake malpractice coverage to real estate agents around the U.S.

OTHER HEADLINES THIS WEEK

* N.J. sheriff sentenced for stealing health benefits
* 16 Medicaid care providers arrested in New York
* NYC business accused of getting auto coverage upstate
* Mich. doc sentenced to 16 years for 19K phony claims

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

MEETINGS & CONFERENCES

* 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)

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

For more info, visit online events.