Insurance Fraud Weekly ePort: Week of April 11

Apr 11, 2008

 

Insurance Fraud Weekly ePort
Week Ending April 11, 2008
www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • Illinois would set strict licensing rules for public insurance adjusters if the legislature approves HB 5489. The bill sets both the requirements to become a public adjuster, and criteria for the insurance department to discipline adjusters. The department would have authority to revoke the licenses of adjusters who violate the state’s license requirements or are convicted of a crime.
  • The Florida legislature is debating requiring that a contract between professional employer organizations (PEOs) and their client businesses specify who provides workers comp coverage. One benefit of HB 239 is that it creates an evidentiary trail if a PEO fraudulently fails to provide coverage. PEOs provide a variety of services for businesses, including comp coverage. Crooked or fake PEOs, however, have bilked businesses by providing bogus coverage while pocketing the premiums.

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

PUBLIC OUTREACH

  • The sequel to Saints Row, a popular video game that encourages young gamers to throw themselves in front of cars to fleece insurers with injury claims, will be released in August. Saints Row 2 features gang warfare with liberal doses of insurance fraud. “In the first game, your character needed to go through various activities like committing insurance fraud, racing, hijacking shipments and so on. Completing these boosts respect, unlocking more and more missions for you to complete,” says one review . “Well, that’s the way it was in the original and…the mechanics are pretty much the same in (Saints Row 2).”

CRIMINAL CONVICTIONS

  • The mastermind of a ring that torched dozens of houses in Indiana for insurance money received four years in federal prison. Kenneth Allen’s gang bought up to 50 low-priced homes in the Muncie area, then burned them down to collect insurance payouts. Gang members loaded up the homes with old furniture and other personal items to inflate the claims. Often the members collected nearly double their original purchase price. An insurance adjuster allegedly helped grease the scheme, which netted millions of dollars. About 30 suspects have been indicted.
  • Travis Powell told Progressive Insurance that his truck slid into an air-conditioning unit, causing more than $2,000 in damage to the unit about five days after he bought an auto policy. But the Kensington, N.H. man actually had damaged the air conditioner before buying the policy. Progressive didn’t pay out, but the court did: Powell received six months, suspended, plus a $2,000 fine and must write a letter of apology to Progressive. He was convicted Tuesday.
  • Insurance agent Calvin Mitchell McKeel issued bogus commercial and personal policies to clients in order to steal their premiums. The Troutman, N.C. man provided clients with fake policy numbers and billed the clients for higher premiums when their contracts were renewed annually. Some homeowners learned about the scam when they tried to make claims but found they had no coverage. The insurers named on the fake policies still paid about $2 million in total claims to make the victims whole. McKeel received 37 months in federal prison.
  • William Hoeg hurt his back while working as a window and siding installer, and began collecting workers comp money. The Brockton, Mass. man reported no major improvement a year later, and told his insurer that he hadn’t earned any outside income during this time. But he was caught re-siding a garage three times, and another doctor’s exam required by the insurer revealed Hoeg was perfectly capable of working. All in all, Hoeg collected more than $30,000 in comp benefits until pleading guilty. He received five years of probation. The Massachusetts fraud bureau investigated the case.
  • Houston-area dentist Vu Tuan Tran charged Medicaid $24,000 for work he never performed. He merely inspected children’s mouths, advised parents about brushing teeth and bottle-feeding. But he billed Medicaid for more expensive services such as sedation, fluoride treatments and sealants. Tran received two years deferred.
  • A stripper-turned-soccer mom murdered her doctor husband, mistakenly thinking she was the beneficiary of the Olympia, Wash. man’s $1 million life policy. Mechele Linehan lured husband Kent Leppink to a rural trail outside Anchorage, Alaska. There, her lover John Carlin III shot Leppink three times with a .44-Magnum handgun. She had written Leppink a note saying she was staying in a rural cabin. The cabin didn’t exist. Linehan was inspired by a 1994 movie “The Last Seduction,” prosecutors say. She received 99 years Wednesday, and will be eligible for parole in 33 years.
  • High winds likely caused the collapse of her wooden barn, Gina Driscoll told Liberty Mutual when she made a claim of about $27,500 for replacement value of the structure in Middleborough, Mass. But a witness saw her live-in boyfriend Dennis Bell knock down the barn with a snowplow attached to his pickup truck. A structural engineer for Liberty Mutual confirmed high winds didn’t cause the collapse. Bell received two years suspended yesterday, and Driscoll previously received two years of probation. The Massachusetts fraud bureau investigated the scheme.
  • The wall came tumbling down for Gordon Thompson. The UK man jumped on his girlfriend’s leg and broke it so he could make a £100,000 insurance claim by lying that his garden wall had collapsed and fallen on her. Thompson and Elizabeth Hingtson also wanted to sue a local government for negligence. The scheme fell apart when police searched Thompson’s home in a drug raid and found the plot recorded on his cell phone. He’s seen jumping on Hingston’s leg, and a loud snap is clearly heard. Police also found a partially filled-out insurance claim form. Thompson received three years yesterday. No word on Hingtson’s fate.

CRIMINAL CHARGES

  • A local youth made good has turned out bad, Massachusetts prosecutors charged Wednesday. Attorney Socrates Delacruz allegedly helped lead a staged-accident ring in the Lawrence area. Growing up without a father, Delacruz was named 1991 National Youth of the Year by the Boys and Girls Clubs of America. He met President George H. W. Bush in the Oval Office, but will meet corrections officers in a jail cell if prosecutors have their way. The Methuen man was one of seven alleged ring members indicted this week. Two runners recruited people to act as injured passengers in phantom crashes, prosecutors allege. But the cars actually were banged up in advance by ring members, officials say. The so-called passengers were sent to local chiros for bogus treatment. Attorneys such as Delacruz then helped make allegedly bogus treatment claims against insurers. The latest indictments are part of an ongoing crackdown against staged-accident rings in several cities around the state.
  • The owners of a Radio Shack outlet faked a break-in and lied that $15,000 in merchandise was stolen from their Matthews, Va. store, prosecutors charge. Digital video recorders, radios, cameras, TVs and DVD recorders all were taken, Mark Haris and James Bragg told officials. Investigators grew suspicious when they couldn’t find any signs of a break-in.
  • Who really made the claim? Someone named John M. Schlauer told New Jersey Cure Insurance that he’d hit a pedestrian with his car in Philadelphia. The insurer was set to defend him in the ensuing lawsuit, but discovered that Schlauer actually is a Louisiana resident named Jeremy Sager, New Jersey’s office of insurance fraud prosecutor alleges. No word on how Sager allegedly stole Schlauer’s identity.
  • Insurance fraud is only the beginning of Becky Jo Tatum’s legal problems. The Bexley, Ohio woman told her insurer that a burglar stole $6,000 of items from her home, including a Hewlett Packard laptop. But the police report didn’t match with the insurance claim, officials say. The laptop allegedly wasn’t stolen after all. When officials searched it, they allegedly discovered images of two 16-year-old girls and a teenage boy simulating sex. Tatum was indicted on a variety of charges Wednesday, including insurance fraud.
  • Robert Shecter allegedly found a dramatic way to steal insurance money: He blew up his house, Pennsylvania prosecutors charged this week. His flaming Bucks County home already was collapsing when fire fighters arrived. The walls and windows were blown outward. Investigators ruled out a natural gas accident, since the neighborhood didn’t have gas lines. An arson dog didn’t find suspicious accelerants in the rubble, thus deepening the mystery. But in the ruins investigators found a 100-pound propane cylinder that may have caused the fiery explosion. Shecter also was heavily in debt, officials say.
  • Former independent agent Jack McDonough bilked 10 client businesses out of nearly $137,000 and kept selling policies after his license was yanked, the Pennsylvania AG’s office charged Wednesday. The Etters man took premium payments and arranged for premium financing but never sent the money to the insurers, officials allege. McDonough stole $40,780 in premiums from a builder, prosecutors say. A fuel oil company’s policy was cancelled for failure to pay nearly $35,000 in premiums. An auto salvage business, towing company and car dealer were among the other clients whose coverage was cancelled for nonpayment.
  • Lorraine Gay told New York Central Mutual that someone stole a $3,500 fur coat from her car in the Albany, N.Y. area. But the insurer grew suspicious because Gay had made a series of claims over the past year. The insurer refused to pay up, and investigators allegedly found the coat in her home. The former project manager for the state comptroller’s office allegedly made a written confession. She faces up to seven years if convicted.

CIVIL & ADMINISTRATIVE ACTIONS

  • A chain of dental clinics did root canals and placed worthless stainless steel crowns on seven healthy children’s teeth to bilk North Carolina Medicaid. One four-year-old had 16 stainless steel crowns put on his teeth after going to a clinic for routine tooth cleaning. Another child had three teeth yanked and 10 steel crowns added. Yet another child had 17 crowns. Medicaid Dental Center agreed to pay more than $10 million to settle federal whistleblower charges Tuesday.

ETC.

  • South Carolina’s fraud bureau received 712 case referrals that resulted in 94 criminal convictions and 72 civil remedies last year. Those decisions resulted in approximately $550,000 in fines, restitution and civil penalties, the state AG says. Half of the cases involved suspected auto schemes, followed by 14 percent involving workers comp complaints.

QUOTE OF THE WEEK

“They made $2.8 million by murder — murder to collect life insurance benefits of two men who had nothing.”

— Los Angeles Deputy District Attorney Truc Do, commenting on two women on trial this week on charges of murdering homeless men for life-insurance payouts.

OTHER HEADLINES THIS WEEK

  • Fraud charges dropped against two California chiros
  • Video of ‘black widow’ suspects released in California
  • Insurer exec accused of looting three companies in Fla.
  • ‘Bama insurer exec says indictment politically inspired
  • Texas insurance agent accused of bribing local officials

Details at www.InsuranceFraud.org/

MEETINGS & CONFERENCES

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