Insurance Fraud Weekly ePort: Week of June 8, 2007

Insurance Fraud Weekly ePort
Week ending June 8, 2007

http://www.InsuranceFraud.org  
 
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LEGISLATION & REGULATION

* California’s system for funding fraud investigations hasn’t changed much in 34 years, which means one of every four investigator jobs at the insurance department remains unfilled. But AB 1401 would quadruple the fees insurers pay to fund fraud investigations. The annual fee would increase from $1,300 to $1,500. This would pump an extra $4.9 million into the fraud bureau, and fill its full quotient of 325 investigators. Insurance fraud is so widespread in San Joaquin County (which includes Sacramento) that the state would need 174 new investigators just to handle the cases it received last year, officials say.

* The California Assembly passed a bill allowing prosecutors to seize assets of fraud suspects being prosecuted for tax fraud. Some prosecutors are quickly nailing fraud schemers for tax fraud instead of using the more-cumbersome insurance fraud laws. AB 1199 was recommended to the legislature by the Los Angeles County DA’s office, which is pioneering the concept. The bill closes a loophole in current law, which didn’t allow asset seizure in insurance-fraud cases.

* Several fraud bills died when Nevada’s legislature shut down for the year this week. An insurance department-backed measure requiring insurers to submit annual anti-fraud plans was removed from one bill (AB 161) before it passed. Two other bills that stalled would’ve expanded immunity for reporting suspected fraud cases (AB 523) and increased the annual assessment on insurers to fund the state’s anti-fraud efforts (SB 24).

* The Connecticut legislature has passed a bill giving vehicle owners control over the info in their vehicle event data recorders (or “black boxes.”). Under SB 974, fraud fighters  would need a court order or the owner’s permission to obtain the data. The bill passed on the last day of the 2007 session.

Note: Texts of anti-fraud bills are available on the coalition’s website here http://www.insurancefraud.org/bills_intro.html.

PUBLIC OUTREACH

* Travelers Investigative Services is co-sponsoring open houses in three New York claim centers to support the statewide fraud awareness day spearheaded by the New York Alliance Against Insurance Fraud on June 27. A variety of fraud-fighting groups will set up booths and answer questions at claim centers in Albany and Melville, and Buffalo on June 28. The coalition will be on hand at the Buffalo event. The open houses will be aimed mainly at informing insurer claim staffers, agents, brokers and other industry personnel, and may be expanded to include the public next year. Questions? Contact Craig Moruzzi at 631-577-7337 or Gary Smith at 518-862-5851. 

CRIMINAL CONVICTIONS

* A former top-producing agent for American Family Insurance received four years in prison this week for collecting $265,000 in commissions on at least 350 fake policies. Nancy Paquette insisted organized crime figures had taken out the policies and then mysteriously vanished. The Waukesha-area, Wisc. woman stuck to her story even during interviews for a sentencing memorandum. Paquette’s intransigence so angered the judge that he slapped her with the hefty jail time, plus supervision and probation for 16 years after her prison term ends. She bought many of the policies with $200,000 of her own money to collect $265,000 in commissions, and stole commissions from unsuspecting clients as well.

* Thomas Croome will serve no time despite helping facilitate an elaborate staged accident. The Williamsville, N.Y. man rented a truck, and a crony crashed it into a car owned by another crash-ring member. Four passengers then made fake injury claims after receiving worthless treatment from a clinic that was part of the scheme. Croome received only five years of federal probation, however, but must repay nearly $47,000. He was the 15th person sentenced for the scheme, and another seven await sentencing.

* A former claim adjuster and Baltimore cop stole about $150,000 in bogus workers comp checks from the city’s workers comp program. Natalie Mack issued more than $153,000 in fake checks to former cop Andre Stover. Stover hurt his leg while in training. He started receiving $860 in comp money biweekly from CompManagement, the city’s comp administrator. Stover and Mack, who handled his comp claims, became friendly during the claim process. They decided to open more case files in his name to illegally pad his comp money. Stover would meet Mack on a Baltimore street corner outside her office. He’d take the insurance checks, cash them at a nearby check-cashing store, then split the money with Mack. The Maryland fraud bureau investigated, and the AG landed the conviction this week. Mack faces up to 15 years in prison when sentenced in early August. Stover pleaded guilty in January and received six months of home detention.

* A Canadian conman fooled U.S. and Canadian insurance agents into buying more than $8.5 million worth of bogus commercial liability policies. Ian Stuart said he represented Lloyd’s of London, Great American Insurance and other insurers. He convinced the agents to buy coverage for restaurants and bars in California and Arizona, and for publicly traded companies. Stuart pleaded guilty this week.

* Insurance adjuster Jacinto Antonio Barrientos stole more than $45,000 from Unitrin Insurance, where he worked. The San Fernando Valley, Calif. man added crony Lisa Ann Hiersekorn’s name to claims and split the checks with her when Unitrin paid the claims. The checks were as large as $8,363. Barrientos received checks on 16 of 19 attempts until Unitrin got wise and stopped the payouts. Barrientos pleaded guilty this week and received a year in county jail. He also must repay the stolen money.

* Andrea Renquist stole two blank prescription forms from the doctor for whom she worked, forged prescriptions for narcotics and presented them to a CVS pharmacy to fill. The pharmacy filled the prescriptions, which were paid for by insurers. The Clarksburg, W.Va. woman received one to four years in jail, suspended.

CRIMINAL CHARGES

* Jason Potter and Tracy Hoffman said someone broke into their Warren, Conn. basement apartment and stole $150,000 in jewelry. Police found broken windows and damaged walls, but say the damage wasn’t consistent with a break-in. There were no signs of forced entry, officials said yesterday. The couple caved in when questioned, and turned over a bag of the supposedly stolen jewelry. The necklaces, watches and trinkets also may not be as valuable as Potter and Hoffman claimed, officials say.

* Two people crashed the tractor portion of a tractor-trailer rig to fleece an insurer, Louisiana prosecutors charged this week. Christopher Bonier and Liza Telsee allegedly disconnected a flatbed trailer from the tractor, then maneuvered the tractor off the road into a nearby tree. The pair claimed the trailer was defective and disconnected from the tractor while it was traveling at 55 mph. But the evidence at the scene was inconsistent with their story, according to the insurance fraud unit of the Louisiana State Police, which investigated the case.

* Insurance agent Kristin Lakvold Childers lied about her criminal past when renewing her Louisiana license, prosecutors charged yesterday. The Shreveport woman never said she was convicted of writing about 70 bogus insurance applications and forging names on the applications. Childers also failed to mention she’s charged with forging $114,104 in checks from a Shreveport construction firm. The insurance department ordered her agency shut down and fined her $10,000. She also was jailed and is being held without bond.

* Joel Zellmer drowned his three-year-old stepdaughter Ashley in their swimming pool one cold winter night to collect $200,000 in insurance money, Washington State officials charged Wednesday. The toddler was found unconscious in the pool. The Seattle-area man said Ashley must’ve opened a sliding glass door, eaten cake Zellmer had left at the pool deck, then gone down steps to wash the cake off her hands in the pool. But the pool was uncovered and unlit, and Ashley was known to be afraid of the dark, officials say. Zellmer also was strangely unemotional about her death, and had bought the policy just three months prior, soon after he’d married Stacey Ferguson. Earlier, Zellmer bought a $25,000 uninsured motorist policy while married to another woman. Just weeks later, he took his then four-month-old step son Mitchel to the hospital. Zellmer said a hit-and-run driver had rear-ended the car. Hospital tests were negative, but Zellmer ordered new X-rays three days later. Mitchel had one, and possibly two broken legs, the new tests revealed. Zellmer tried to collect on the policy, but withdrew the claim after his then-wife said there was no car crash, officials say.

* Donna Moonda had her boyfriend Damian Bradford gun down her urologist husband to collect $676,000 in life-insurance money and other inheritance, the feds charge in Ohio. Gulam was shot when he and Donna pulled off the Ohio Turnpike south of Cleveland. The Pittsburgh-area woman allegedly gave Bradford a map of the Moondas’ driving route the day Gulam died. She later text-messaged Bradford that they had left around 4:30 pm. She was driving their Jaguar, but complained of nausea and pulled off the Ohio Turnpike so Gulam could drive. Bradford was waiting, the feds say. He ordered Gulam back into the car, demanded his wallet and shot him in the face, prosecutors allege. Bradford already has pleaded guilty, and says Donna hired him to do the deed.

* Stanley Cannella was just another New York City employee, but convinced an insurer that he performed nine brain surgeries on himself, his wife and two sons, the feds charge. Charles Pritchett, who worked at a medical billing firm, is the suspected kingpin. He had access to insurance claim forms for two patients who had undergone real brain surgery. He allegedly created fake claim forms for Cannella and Dorothy Smith, and sent the forms to an insurer called GHI, along with post-op reports. GHI paid out $300,000 for 20 phantom brain surgeries. Cannella pocketed $142,238, and Smith raked in $131,397 for sham surgeries for herself, her husband and daughter, prosecutor allege. Pritchett faces up to 90 years if convicted, and the others face 30 years each.

* This tooth claim had no bite. Scott Baldwin told Wausau Insurance he racked up $1,927 to fix an injured tooth. The Hampton, N.H. man submitted a patient treatment plan, supposedly from his dentist. But his dentist actually had generated that plan on a different date, and for a different injury, prosecutors charged this week.

ETC.

* Alaska disciplined wayward docs most severely among states while Mississippi was the most-lenient, a consumer watchdog group said Wednesday. Alaska lodged 7.30 serious disciplinary actions per 1,000 docs from 2004 through 2006, while Mississippi came in with just 1.41 serious actions. The national average is 3.18. Fraud-soaked Florida ranks 35th. Public Citizen analyzed data compiled by the Federation of State Medical Boards for license revocations, surrenders, suspensions and probations/restrictions. “There is considerable evidence that most boards are under-disciplining physicians,” the report said. “For example, in a report on doctors’ discipline for criminal activity that we published in the last year, 67 percent of insurance fraud convictions and 36 percent of convictions related to controlled substances were associated with only nonsevere discipline by the board.” Overall, serious disciplinary actions dropped 10.4 percent in the last year, the group says. Visit www.citizen.org  http://www.citizen.org/ .

QUOTE OF THE WEEK

“Nancy lost her way somewhere along the way. The explanation has to be mental health and emotional issues.”

— Attorney for convicted agent Nancy Paquette after his client was sentenced to four years in prison for faking 350 policies in order to collect $265,000 in commissions [See Criminal Convictions above].

OTHER HEADLINES THIS WEEK

* Tulsa doctor pleads guilty to drug and fraud charges
* S.C. lawmakers reach deal on workcomp fraud bill
* New York City cop pleads guilty to torching his truck
* Doctor in New York charged with drug diversion
* Construction firm ordered to pay $113K for comp fraud

Details at www.InsuranceFraud.org/ http://www.insurancefraud.org/news_set.html

MEETINGS & CONFERENCES

* June 13-15, 2007 — Fraud Education Conference Orlando, FL (Florida Insurance Fraud Education Committee)

* June 19-22, 2007 — Health Care Fraud Schemes Scottsdale, AZ (National Healthcare Anti-Fraud Association)

* June 21, 2007 — Board and Membership Meeting Washington, DC (Coalition Against Insurance Fraud)

* July 23-24, 2007 — Advanced Fraud Investigation Seminar San Diego, CA (National Association of Insurance Commissioners)

* 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)

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