Insurance Fraud Weekly ePort
Written and compiled by the Coalition Against Insurance Fraud.
LEGISLATION & REGULATION
* Provisions to crack down on health care fraud were approved by a major committee of the U.S. Senate yesterday. The Health, Education, Labor & Pensions Committee gave the green light to include anti-fraud initiatives in the massive health reform bill moving through Congress. The provisions would create a permanent structure in the federal government to coordinate anti-fraud activities within the government and with states and private insurers, and would boost information sharing among all fraud fighters. The committee action was supported by NICB, the coalition and other fraud-fighting groups. Read more about Senate proceedings at FraudBlog.
* An ill-advised proposal that downgrades most insurance crimes from felonies to misdemeanors would embolden fraud rings and threaten public safety, four national anti-fraud groups warned California Gov. Arnold Schwarzenegger yesterday. The proposal is a move to reduce many crimes to misdemeanors in an effort to cut state spending. “Taking the power out of the hands of the public prosecutor to charge someone with a felony crime will have a serious impact on public safety,” the coalition, NICB, NHCAA and IASIU said in a joint letter sent to Schwarzenegger yesterday. Fraud rings also would be emboldened to step up their activities without the deterrent of tough penalties, the groups warned.
* After years of trying, Hawaii has expanded the fraud bureau’s jurisdiction to all lines except workers comp. Gov. Linda Lingle signed HB 262 into law this week. The unit previously had tackled only auto schemes. Similar bills had failed amid debate over including workers comp fraud. This year’s effort took workers comp off the table, allowing the bill to move through the system. The coalition strongly supported the measure, telling legislators that “insurance fraud in the islands is not solely committed against automobile insurance, and the state’s effort should not be restricted to a single line of insurance.”
* The Texas governor signed a bill setting penalties for attorneys and health providers who contact auto accident victims by telephone or in-person within 31-days of the accident. The new law will help stop fraud operations from soliciting accident victims for shady injury treatment or illicit legal advice. HB 148 was a key goal of the Texas Committee on Insurance Fraud, of which the coalition is a member. The new law takes effect on September 1.
* The Pennsylvania House is debating five fraud bills. Four Republican-backed measures would: Allow asset forfeiture of people convicted of insurance fraud (HB 1740)…Make staging an auto accident an act of insurance fraud, revoke driver licenses used to commit insurance fraud, and restrict outsider access to police accident reports for 60 days (HB 1734)…Give the forfeited funds to the Pennsylvania Insurance Fraud Prevention Authority and require health facilities to display a poster offering a reward for reporting fraud (HB 1737)…Require insurers to file anti-fraud plans with the insurance department (HB 1739). Democratic-sponsored HB 1750 makes application and insurer scams acts of insurance fraud. Application fraud also would rise to a felony.
* Connecticut will have a new law restricting attorneys and health providers from using so-called runners to recruit clients or patients for insurance claims. HB 6642 also sets criminal penalties for acting as a runner. Anti-runner laws usually target insurance staged-accident rings that bilk auto insurers with fake injury claims from setup or phantom crashes. The new law is broader: It targets runners for any insurance scheme, such as health cons. Some advertising or other marketing would be exempt under the law, which takes effect Oct. 1.
PUBLIC OUTREACH
* Nominations are being accepted for the coalition’s coveted Prosecutor of the Year Award. The award honors prosecutors for excellence in courtroom takedowns of swindlers, or for overall leadership. The only national honor of its kind, the award shines a light on best practices, persistence and innovation. Last year’s winner was Los Angeles prosecutor Al MacKenzie, who routinely convicts insurance schemers via tax fraud. Deadline for nominations is September 1. For more info, contact Jim Quiggle, 202-393-7331 or jamesq@InsuranceFraud.org.
* “People are normally honest, but people are literally being driven to desperation by the recession,” the coalition’s Jim Quiggle told the Dallas Morning News in a story about vehicle giveups. “People's finances are being squeezed so badly that many are willing to try to risk a criminal record by committing insurance fraud as their personal stimulus bailout package.”
* Don't be fooled just because your agent is licensed, and be sure your health insurer is licensed as well, the coalition told the Los Angeles Times in a story about health coverage. "The agent is simply an intermediary who sells the product. The fact that the agent is licensed doesn't mean that the product is real or valid. Agents can be duped into selling fake coverage because they didn't do their own due diligence, or they could have signed on with a wink and a nod because they want the commission…” the coalition said. “If you can't get timely medical care, your life could be on the line. And you don't want to end up having to be bankrupted by paying major medical bills on your own, when you thought they were covered by insurance."
CRIMINAL CONVICTIONS
* An agent stole about $400,000 by forging workers comp insurance certificates for 22 Chicago-area businesses then pocketing the premiums, the Illinois insurance department said this week. Many of Ruben Collier Jr’s clients paid him cash after he promised they’d receive a discount for cash premiums. He renewed their bogus policies when the invented policy periods were near or past the lapse deadline, thus collecting more premiums. Clients often stopped by Collier’s agency with cash payments, and he gave them forged insurance certificates whenever they needed proof of insurance for a project. All told, Collier forged hundreds of insurance certificates but received only 30 months of probation this week. The insurance department teamed with other agencies to bust Collier’s scheme.
* Michelle Cote bought a policy covering a diamond ring for $6,500. The Manchester, N.H. woman told State Farm she’d lost the ring, and made claim. But the jewelry store where she said she bought the rock had no record of the purchase. Cote withdrew her claim, but it was too late. The New Hampshire insurance department investigated and helped land a conviction. She received six months suspended and must write a letter of apology to her agent, State Farm and the local jewelry store.
* A physician’s assistant often doubled-billed insurers to steal nearly $376,000 but got a reduced sentence for being an otherwise all-around good guy. Christopher John Caggiano owned Cannon Family Medicine in Kannapolis, N.C. He charged insurers for two allergy tests when only one was given, or charged for double the medicines he actually administered. Caggiano also billed insurers for tests he never administered, and consistently failed to document patients’ medical histories or exams enough to justify the tests for which he billed insurers. He also fired one employee who grew too suspicious of his billing practices. A joint investigation by the feds and North Carolina insurance department took down Caggiano. He received 20 months in federal prison. He stood to receive more time, but the court considered his community involvement, military service, and modest lifestyle despite the stolen money.
CRIMINAL CHARGES
* Some 53 docs, clinic owners and others were busted for allegedly bilking Medicare out of more than $50 million. Federal busts were made in Detroit and Miami on Wednesday. Some suspects were paid kickbacks for use of their Medicare numbers, which were used to submit false claims for therapy and other services. Most suspects were from the Detroit area. Continued pressure on Miami fraud operations drove them to Detroit, the feds believe. The busts stem from heat being applied by a Medicare strike force that discovered the latest suspected cons with sophisticated analysis of Medicare data. The feds discovered suspicious billing patterns that led to the suspects.
* Agent Rickey Lynn Warren stole $2,125 in liability and comp premiums from a construction firm, the Arkansas insurance department charges. The Hensley man sold a general liability and comp policy to Red Construction Co. He handed over a “Certificate of Liability Insurance” from Commerce and Industry Insurance with a 12-digit policy number. The workers comp certificate had an eight-digit number. The client called the insurer to question incorrectly stated term dates. He allegedly learned that the policy numbers didn’t correspond to those used by Commerce and Industry, and that the insurer hadn’t received premium payments from Warren.
* Two agents stole millions in premiums by selling Valley Baptist Hospital inflated surplus lines and fake hurricane coverage, the feds charged in Houston this week. Brent A. Carter and Michael N. Swetnam Jr. altered documents to inflate the premiums on a surplus policy issued by Zurich, thus doubling their commissions to $2 million, the feds allege. Swetnam and Carter also provided the hospital with coverage documents from fake insurers with the forged signature of a British Virgin Islands insurance manager, according to the federal indictment. The next year, they told the hospital they could obtain the hurricane coverage “cheaper” and provided documents from yet another fake insurer with a forged signature, the feds say. Carter and Swetnam allegedly stole $4 million in premiums on the hurricane transactions. Each faces up to 25 years if convicted. The bust was a joint effort of the feds and Texas Insurance Department.
COURT DECISIONS
* An insured driver gets a new trial in a dispute over whether she lied on an auto application to lower her premiums, the New Jersey Superior Court, Appellate Division, has ruled. Elizabeth Torres-Ruiz signed an app indicating no one else lived in her household and that no one who normally drove her car had ever had their license suspended or revoked. Later she was involved in a crash and sought PIP benefits from Rutgers Casualty Insurance. But Torrez-Ruiz actually was married, her husband’s driver license also had been suspended and he had other driving infractions, Rutgers charged in denying the claim for alleged fraud. The trial wound through the courts, but the appellate court couldn’t decide because the issue revolved around Torrez-Ruiz’s credibility. So the court sent the case back down the ladder for yet another trial.
CIVIL & ADMINSTRATIVE ACTIONS
* Former appellate judge Michael Joyce will keep his $82,000 annual pension despite being convicted of faking back and neck injuries to collect $440,000 in insurance money from what he claimed was an auto accident. Last year’s conviction and 46-month sentence weren’t related to his public employment. But prosecutors are trying to nab Joyce’s house, arguing he used some of his ill-gotten insurance money to pay for it.
ETC.
* The irate New York Daily News said this about a speech to NYU students by movie man Todd Phillips, who directed the hit comedy The Hangover: “The way-cool guy told of how, as a film student, he scored equipment by fraudulently reporting that his gear was stolen and having the insurance company pay for it. NYU is currently suffering coverage difficulties because of hefty equipment losses. (Have some students absorbed Phillips' lesson already?) So his advice regarding success through theft didn't get rave reviews. It could also produce a felony rap for anyone who takes as a role model a guy who revealed himself to be a cheap chiseler.”
* Are fraudsters hearing loud footsteps of fraud investigators in South Carolina? Fraud convictions bumped up 44 percent last year over 2007, the AG and South Carolina News Service report. This includes 135 convictions, a jump from 94 in 2007. Last year was the most convictions since the AG’s insurance fraud division was created in 1994. Complaints also rose to 815 last year, from 712 in 2007.
QUOTE OF THE WEEK
“You don't see nearly as many cases prosecuted as there probably should be. There's difficulty prosecuting these cases because the person committing the scam controls the crime scene. You're only limited by the extent of someone's imagination and greed."
—Dallas criminal defense attorney Barry Sorrels on widespread vehicle giveups for insurance money in the Dallas area.
OTHER HEADLINES THIS WEEK
* Husband-wife docs accused of operating pill mill in Tex.
* Medical billing firm owner in N.J. admits no-fault scam
* N.J. pastor accused of aiding parishioner Medicaid scam
* N.C. couple charged with setting their home on fire
* Citing fraud concerns, Conn. guv vetoes rescission bill
MEETINGS & CONFERENCES
* September 10-11 — 2009 IAIFA Annual Conference
Geneva, Switzerland (IAIFA)
* September 20-23 — IASIU's 25th Annual Seminar & Expo
Palm Desert, CA (IASIU)
* September 29-October 2 — Fundamentals for the Health Care Fraud Investigator
Baltimore, MD (NHCAA)
* November 17-20 — NHCAA 2009 Annual Training Conference
Orlando, FL (NHCAA)
For more info, visit online events.
Get fraud news everyday free. Details at http://www.insurancefraud.org/fnd_subscribe.lasso.
Please report any transmission problems in receiving this newsletter to: ePort@InsuranceFraud.org.
© 2009, The Coalition Against Insurance Fraud, Inc. Not to be reproduced or re-transmitted without written permission. Published each Friday except for Thanksgiving week and the week between Christmas and New Years. To sign up to receive this electronic newsletter, visit http://www.insurancefraud.org/eport_intro.htm..
