Insurance Fraud Weekly ePort–Week Ending Sept. 7, 2007

Insurance Fraud Weekly ePort
Week Ending September 7, 2007
www.InsuranceFraud.org

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LEGISLATION & REGULATION

* The California legislature yesterday unanimously voted to add urgently needed state fraud investigators by quadrupling the annual fees insurers pay to fund the state’s anti-fraud efforts. AB 1401 hikes the annual assessment to $5,000, up from the $1,300 level that had stood for 34 years. One of four investigator positions in the insurance department remains open. The $4.9 million infusion will help the insurance department reach its full complement of 325 investigators, and expand. The coalition is urging California fraud fighters to send letters of support to Gov. Schwarzenegger as soon as possible. Send email via the department’s website at http://gov.ca.gov/interact, or via regular mail to Office of the Governor, State Capitol, Sacramento, CA 95834.

* Another bill on its way to Schwarzenegger is SB 869, which would help the state identify businesses that avoid paying their full share of workers compensation insurance. The bill would set up reporting systems to allow the labor department to maintain a database of scofflaw firms. On the verge of expected passage is AB 1199, which would allow prosecutors to freeze assets of fraud suspects while pursuing criminal cases. It could pass as early as today.

* After dangling for months, no-fault insurance in Florida finally appears finished. State leaders have decided not to hold a special legislative session, thus making it likely the fraud-wracked auto insurance system will sunset as scheduled on Oct. 1. The expected Sept. 18 special session to cut the state budget would’ve been the last chance this year for lawmakers to consider retaining no-fault. Interest groups have fiercely debated whether to retain the system. Some major insurers wanted to quash no-fault, arguing it was too fraud-ridden and stuffed with high medical costs. Hospitals, agents and others wanted to keep no-fault. They may try to reopen the debate later this fall or during next spring’s regular legislative session, according to news reports.

* California insurers must file their annual SIU compliance reports by September 14. For more info visit the website of the department of insurance.

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

CRIMINAL CONVICTIONS

* Naveed Khan torched a friend’s grocery store for insurance money, helping the owner make the fire look like a hate crime against Muslims. The Everett, Wash. store was failing, and owner Mizra Akram wanted out. The pair spray-painted anti-Arab slogans on the walls and spread gasoline around the building. Khan returned early the next morning to set the blaze. Khan received three years in federal prison Thursday. Akram received four years and three months last February.

* After more than 40 years on the run, Joseph Adjmi finally is going to jail. His family insured fake paintings and vases from Asia and the Middle East, then collected hundreds of thousands of dollars in claims after a suspicious fire at their New York City store in 1958. Now nearly 70, Adjmi was convicted in 1963, receiving a 10-year federal sentence. But Adjmi bolted from the U.S., hiding out in Europe for decades. He turned up in Cuba a couple of years ago. But the Cubans accused Adjmi of passport fraud and shipped him back to the U.S.

* Baez Martinez worked as a ride operator at a San Diego Christmas tree company. She claimed she hurt her back lifting kids onto rides at the firm. But California’s state-run workers comp fund began investigating. Video footage showed Martinez walking long distances, and running vigorously up and down stairs after telling her doctor she could barely perform these activities. Martinez received two years in state prison, and must repay nearly $10,500 to the workers comp fund.

* For Patricia Williams, insider access to her insurer’s database means insider access to a jail cell for stealing $971,000 in commissions intended for agents. The Grandview, Kans. woman was a commissions administrator for Transamerica Occidental Life. Her job involved tracking down unaccounted-for agents to whom the insurer owed commissions. Using her access to Transamerica’s database, Williams transferred the money to various bank accounts, and disguised the transactions as legitimate commission payments. She received 30 months in federal prison this week.

* The owner of a Florida durable medical equipment firm and assisted-living facility bilked Medicare by paying illegal kickbacks to physicians to obtain phony prescriptions, and took bribes from a pharmacy to refer the fake prescriptions to it. She also paid kickbacks to patients to accept worthless Medicare-billed treatments. Marianela Smith referred patients to Lily’s Pharmacy in exchange for half of what Medicare paid the pharmacy for certain drugs. Smith referred at least 48 patients and their Medicare billing information to Lily’s Pharmacy. Lily’s fraudulently billed Medicare more than $271,000, and gave Smith more than $81,000 in kickbacks. Smith paid one patient $150 per month to use his Medicare card and obtain phony prescriptions in his name that were ultimately provided to the pharmacy. She also provided phony prescriptions for medicines purchased from local physicians. She was convicted in Miami, and faces up to 30 years in federal prison when sentenced in November.

CRIMINAL CHARGES

* Twelve gamblers rolled the fraud dice and lost, Pennsylvania prosecutors charged Tuesday. A car rammed into a bus taking people from Philadelphia to a gambling outing in Atlantic City, N.J. in 2004. Neither vehicle received much damage, but Lancer Insurance received claims for all 21 passengers plus eight other people who weren’t even on the bus. The insurer paid more than $26,000 in injury claims, and several people also sued. But claims by 12 people were bogus, officials say. The owner of the car that hit the bus also was a cousin of a bus passenger who sought more than $4,000 in medical treatment, prosecutors allege.

* The owner of a secondhand sporting-goods store torched his business for insurance money and concealed the crime by burning down an entire the strip mall, the feds charge in Pennsylvania. Thomas Smith hired a crony to torch the Pittsburgh-area mall, and with it his firm Play It Again Sports. The blaze wrecked the mall, caused $2 million in damage and displaced three other businesses. Smith faces up to 40 years in federal prison if convicted, including a mandatory five-year minimum.

* It’s what Archie Smiley didn’t tell doctors that got him into trouble. The Philadelphia, Miss. man said he injured his back while carrying a grinder up a flight of stairs while working for a construction firm. The 600- to 800-pound grinder pinned Smiley against a wall when he and another worker lost control of it, he claimed. When receiving treatment, he told doctors he had no prior back injuries. But Smiley actually had hurt his back 10 years beforehand, was declared permanently disabled and received $350,000 in insurance money, officials allege. He was busted; no word on potential sentence if convicted.

* Chuck Arellano impersonated a doctor while working at a clinic for several years, illegally receiving more than $200,000 in insurance billings between 1998 and 2004. The Huntland, Tenn.-area man graduated from med school in Grenada but never passed a second board exam or completed his internship or residency. Arellano started working as a manager at the clinic for his father, who was a doctor. Arellano began seeing patients as his father aged. He received nine months in prison Tuesday.

ETC.

* Can MRI’s detect lies? They can, according to a San Diego company that’s marketing a new system involving brain scans. The company’s website claims its No Lie MRI system is the first and only direct measure of truth verification and lie detection in human history. The system was recently used in an insurance fraud case in South Carolina, but we’re still skeptical. For more information, go to Insurance FraudBlog.

* Nearly 1,000 fraud fighters will descend on Las Vegas this weekend for the largest insurance fraud conference of the year. The 22nd Annual Seminar and Expo of the International Association of Special Investigation Units (IASIU) will feature educational opportunities and a chance for the investigators to trade ideas on how they’re succeeding in combating fraud. Delegates also will bid farewell to longtime IASIU president Dan Fitzgerald, who recently retired from Hartford Insurance. Highlights from the conference will be included in next week’s issue.

* The Arkansas AG is so concerned about agents selling bogus Medicare Advantage policies to seniors that he’s launching a $100,000 TV campaign to warn elderly residents. Insurers are allowed to sell private health plans called Medicare Advantage and drug plans called Medicare Part D. But numerous residents have complained that agents used deceptive and high-pressure sales tactics to hawk the coverage. Agents are illegally knocking on doors, confusing people living alone about plan details. Some agents even wear nurse’s uniforms during sales pitches. People later learn that the coverage isn’t suitable for their needs, and they’ve signed away their government Medicare and Medicaid coverage.

* Nearly nine of 10 Americans want lawmakers to reduce identity theft by limiting the use and availability of Social Security numbers by businesses and government agencies, according to a public-opinion poll by Consumer Reports magazine released yesterday. Nearly nine of 10 also say a business or agency has asked them to provide their Social Security numbers. Many requests came from businesses that had no clear need for the numbers, the poll says.

QUOTE OF THE WEEK

“Doctors are supposed to be healers, not enablers for drug addicts.”

-Attorney General Bill McCollum of Panama City commenting on a physician sentenced on drug and fraud charges involving improper dispensing of controlled substances.

OTHER HEADLINES THIS WEEK

* Driver in California charged with inflating auto injuries
* Two from Tennessee clinic guilty of health care fraud
* Florida construction worker charged with comp fraud
* N.J. cop gets probation for trying to fake car theft
* Health insurer to pay states $13M to settle civil claims

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

MEETINGS & CONFERENCES

* September 9-12, 2007 — Annual Seminar & Expo on Insurance Fraud
Las Vegas, NV (International Association of Special Investigation Units)

* September 10-11, 2007 — 2007 Annual Meeting
Lisbon, Portugal (International Association of Insurance Fraud Agencies)

* 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)

For more info, visit online events.