Insurance Fraud Weekly ePort: Week Ending Sept. 14

Insurance Fraud Weekly ePort
Week ending September 14, 2007 
www.insurancefraud.org

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LEGISLATION & REGULATION

* The Utah AG is asking the legislature for money to hire a special prosecutor and tax-fraud investigator to hunt down companies that duck taxes and workers comp premiums by lying that employees are contractors. The problem is especially widespread in the construction industry, where high risk of injury can mean high comp premiums. Illegally designating a worker as a contractor lets a firm lower its premiums, since payroll size and the number of employees are key factors in calculating comp premiums. “(The Attorney General) is so confident of success that he claims the prosecutor and investigator, if hired, would ‘pay for themselves.’ It sounds like a bargain. The Legislature should honor his request,” the Salt Lake Tribune said in a recent editorial.

* Georgia and Ohio have created new regulations to protect Army recruits from life-insurance scams. Agents sold overpriced and unneeded coverage to thousands of young service personnel, often luring them with pizza parties on bases. Soldiers believed they were investing in financial products and would have money waiting when they returned home from overseas duty. But that rarely happened. The new regs prohibit insurers that market “savings funds” to lower-paid soldiers from using deceptive interest-crediting methods and automatic premium-payment provisions. The payment provisions divert accumulated funds to pay for the coverage in case of default. The new regs come in response to a federal law that gives states authority to oversee insurance sales on military bases.

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

PUBLIC OUTREACH

* The Poughkeepsie (N.Y.) Journal said this about AG Andrew Cuomo’s targeting of widespread Medicaid fraud: “The state can’t afford the waste and corruption that has plagued the Medicaid system for too long. New Yorkers pay dearly, in the form of higher taxes, for the abuse. The state spends almost twice as much per person on Medicaid—more than $2,100—than the state next in line, Massachusetts. The national average is about $950…Unquestionably, a strong Medicaid program is critical to reimbursing hospitals, nursing homes and other health-care facilities for the fine work they generally do treating the poor and elderly. But abuses have been pervasive. Last year, the state comptroller’s office found, in some cases, New York was actually paying for the medical services of people who had been dead for years.”

CRIMINAL CONVICTIONS

* Andrew Hinkle has a choice: Money or jail time. The former Stockbridge, Mich. police officer crashed his truck in an accident. But he had a fellow officer create a fake accident report that said the truck hit a deer so Hinkle’s insurer would cover the repairs. Hinkle was convicted, and the court gave him a choice Wednesday: Pay the court $4,202 by December 31, or spend 89 days in jail if he misses the deadline. 

* If it happened there, could it happen here? Three British lads downloaded death certificates from the Internet and wrote phony lawyer letters to fake the deaths of two women for more than £125,000 in life-insurance money. James Gargett, John Gilbert and Chris Smith, all from Glascow, have confessed. Gargett, who was a parttime broker with Scottish Life Assurance, processed the claims. The trio allegedly said a client named Jacqueline Gilbert had died. Scottish Life paid out £30,503 into Gilbert’s bank account. Then Elizabeth Taplin supposedly died; she was good for £95,332. The scheme collapsed when Gilbert’s husband contacted the insurer to say she was quite alive.

CRIMINAL CHARGES

* Who’s the real policyholder? Investigators want to know. Misty Megill made 10 applications to register or renew vehicle registrations over three years but lied that the vehicles were insured as required by the state, New Jersey prosecutors charged Monday. The Farmingdale woman also allegedly lied to Geico that her vehicle was insured by New Jersey Manufacturers Insurance, when her policy actually had been cancelled several months prior for nonpayment. When applying for auto coverage, Megill also allegedly used a fake name for her boyfriend, who lived with her, to hide the fact that he had a suspended license and wasn’t authorized to drive. She also answered “no” when asked if any resident in her home had a suspended or revoked license, prosecutors say. 

* A new Cadillac could prove more expensive than suspended Sgt. Theodore Randolph Dorsey thought. The Knoxville, Md. man torched his girlfriend’s 2005 Chevy Blazer, hoping to use the insurance money to buy a 2003 Cadillac Escalade SUV, prosecutors charge. A key witness has recanted Dorsey’s alibi, however. Dale Williams first said the men visited bars and strip clubs in Harrisburg, Pa. the night the Chevy caught fire. But Williams later said Dorsey asked him to lie, officials say. Dorsey also had suspicious burns on his hand, and he and his girlfriend bought the Escalade just five days later. Dorsey says he burned himself lighting a grill the day after the car was stolen—possibly by a criminal with a grudge.

* An Indianapolis roofer lied that he was using subcontractors, allowing him to bilk insurers by charging an extra 20 percent for overhead and profit, Indiana prosecutors charge. Investigators have confiscated invoices with yellow Post-It notes allegedly saying “do not show to the insurance company and do not share with the homeowner.” Edwin Holmes allegedly had two copies of paperwork. One copy is what his employees filled out, and a second invoice shows an inflated estimate, prosecutors allege. Nationwide and American Family allegedly were defrauded out of tens of thousands of dollars. Holmes faces up to eight years in prison if convicted.

* A mold cleanup firm faked test reports for $286,000 of work done on homes and businesses on the Florida barrier islands, officials said this week. Patrick Bock also allegedly told clients that his firm Registry Services had submitted mold samples to a testing company when he hadn’t, so insurers would pay for needless repair work, prosecutors say. Bock faces up to 30 years in prison if convicted of defrauding more than 20 people. Among the charges, he faked reports done at St. Edwards School, where his wife worked. She isn’t charged.

* Michael Kennedy and Bryan McGraw may need armed guards to protect themselves from their own employees. The Philadelphia police sergeants ran an armed-guard security firm on the side, but didn’t carry state-required workers comp coverage or compensate workers when they were injured, the feds charged yesterday. Pro Guard carried comp coverage for about a year, but the policy was cancelled, the feds allege. Employee Darrell Bey was injured at work and discovered Pro Guard had no coverage. A court earlier had ordered Kennedy and McGraw to pay him $345 a week plus medical expenses, but the pair allegedly didn’t comply. Same with another employee. McGraw later showed a bogus comp policy to investigators in an effort to avoid charges, the feds say. Kennedy and McGraw now are suspended from the force. Combined, they face more then 1,800 counts covering a variety of charges, including insurance fraud.

* A big mouth has landed Reina Harth in hot water. The Scranton, Pa. woman said she was injured when the lid fell off a vase she’d picked up while shopping in a store. Harth said the lid hit her in the face and nose. She filed a claim with the store and its insurers. But it was all an insurance shakedown by her and her husband, prosecutors charged Wednesday. Harth’s suspected plan unraveled when she started blabbing to people that she was going to get an insurance windfall for an accident that didn’t happen, officials say. One of those witnesses called investigators. Harth faces up to 15 years if convicted.

* The husband of an allergist stole at least $800,000 in health-insurance money by issuing inflated bills that were so confusing that patients usually paid up instead of questioning them, the feds charged in Illinois this week. Patients who contested the charges allegedly were referred to collection agencies. Rickey Weir handled the books for his allergist wife Dr. Janet Despot, in Springfield. Despot allegedly kept authorizing the suspected over-billings even after being alerted by Medicare and patients. Despot says the billings were simply a mistake caused by complex billing rules. Weir faces up to 20 years in federal prison if convicted. Despot, who reportedly has agreed to plead guilty, faces up to six months.

CIVIL & ADMINISTRATIVE ACTIONS

* Get it right, the court told prosecutors. The Illinois AG’s office needs more specifics in its civil suit against more than 20 Chicago-area MRI centers that allegedly paid doctors illegal kickbacks for patient referrals. The doctors allegedly paid the centers a reduced rate for often-needless MRI imaging, but charged patients’ health insurers a higher rate and kept the difference. A sham-leasing agreement made it appear the MRIs were done inhouse at the doctors’ offices instead of farmed out to clinics, prosecutors say. But the suit was too vague on details and must be refiled, the court says. The defendants say the order shows the charges are groundless.

ETC.

* State Farm’s Ed Welch was named Investigator of the Year by the International Association of Investigation Units (IASIU). He was honored at IASIU’s 22nd Annual Seminar & Expo in Las Vegas. More than 1,000 delegates from 11 nations attended. Welch led an investigation of a prominent South Florida neurologist who was bleeding State Farm with dirty PIP claims. Welch and his team found the neurosurgeon had systematically upcoded and unbundled medical services, performed fake epidural steroid injections, had physician assistants give epidural injections without supervision, routinely allowed unlicensed staffers to perform patient exams while posing as doctors, and billed for phantom followup visits with patients. Some patients couldn’t even describe epidural needles, or described the injection as a “small shot in the back.” State Farm extracted a hefty civil settlement: The surgeon waived more than $3.3 million in billings.

* In other IASIU news, Fred Burkhardt, NICB special agent for the Florida Medical Fraud Task Force, received the Outstanding Service Award. He is the main catalyst in the continued success of the task force…Henry Thomas Clark received the Public Service Award for his lead role in unraveling a $217-million workers comp scheme by a professional employee organization called Miralink. Clark is a detective for the Florida Department of Financial Services. Miralink provided fake workers comp coverage to clients, leaving one victim homeless and five families without death benefits after fatal accidents…Dave Rioux of Erie Insurance was elected to a two-year term as president of IASIU, and retiring IASIU director Glenn Wolf of Liberty Mutual was presented with a presidential citation for his nine years of service. For additional insight into the IASIU conference, visit Insurance FraudBlog.

QUOTE OF THE WEEK

“I’ll make your car disappear for a price.”

-Police Detective Carl Zogby, commenting on two men arrested in Hialeah, Fla. for agreeing to steal a car for $500 each because the owners couldn’t afford their monthly payments.

OTHER HEADLINES THIS WEEK

* Fraud an issue in Washington bad-faith ballot initiative
* Fraud, drug charges filed against Mass. woman
* State investigators raid office of Ohio psychiatrist
* W.V. agent sentenced to year of home confinement
* Fraud fugitive brought from Costa Rica to Alabama

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

MEETINGS & CONFERENCES

* September 17, 2007 — Building, Managing and Measuring Your SIU
Hartford, CT (Association of Certified Fraud Examiners)

* September 18, 2007 — Fraud and Abuse: Quality of Care Issues
Las Vegas, NV (National Health Care Antifraud Association)

* September 19, 2007 — Medicare Part D: Where to Go From Here
Las Vegas, NV (National Health Care Anti-Fraud Association)

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

For more info, visit online events.