Publications

Following the November 14th informational session hosted by the Coalition, CDI requested feedback from interested parties on the proposed legislative changes that were detailed during the session. The affected California statutes include: 1872.4, 1874.2, and 1877.3, and the proposed changes are designed to address language inconsistencies to make the Suspected Fraud Referral (SFC) process more effective. Coalition members can view the recorded session and provide feedback on these proposed changes on or before the December 8th due date by emailing brent@insurancefraud.org with the word "CDI" in the subject line. Feedback will be aggregated by the Coalition and delivered to CDI. Sources of this feedback will be kept confidential. CDI seeks to include the change as part of the Department’s 2024 omnibus bill that the Assembly Insurance Committee carries if the final language is non-controversial. Otherwise, the changes would be included in a standalone bill. This timeline would make any changes effective January 1, 2025, unless the bill is passed as an urgent measure, which would take effect with the Governor’s signature.

The Coalition co-signed a letter to the Texas Supreme Court, urging them to block a challenge to existing law that protects consumers by preventing roofing contractors from acting as public adjusters. Texas law currently prevents roofing contractors from acting as public adjusters for their customers' damage claims. Stonewater Roofing Ltd. challenged this restriction in court, arguing that it violated their free speech rights. The trial court initially dismissed the case, but on appeal, the appellate panel allowed Stonewater's challenge to proceed. The Texas Department of Insurance (TDI) seeks to overturn this decision in the Texas Supreme Court. The American Property Casualty Insurers Association (APCIA), National Association of Mutual Insurance Companies (NAMIC), and the Insurance Council of Texas (ICT) have filed a joint amicus brief, expressing concern that if Stonewater's challenge succeeds, it could lead to an insurance crisis in Texas. In a show of support, the Texas Association of Public Insurance Adjusters (TAPIA) also filed an amicus brief on this matter. The TAPIA amicus brief pointed out that Texas’s regulation of the business of and licensing of public insurance adjusters is based on the policy of protecting the public. Texas' public adjuster laws are not unique, and other states have withstood similar challenges. TAPIA urged the Texas Supreme Court to reverse the appeals court decision. Oral arguments have been heard, and the case awaits a final ruling. In the interim, there was a unique opportunity to submit a "letter amicus" on the matter. The National Association of Public Insurance Adjusters (NAPIA), a Coalition member, approached the Coalition about the possibility of submitting a joint letter to provide clarity around questions that arose during oral arguments. The Coalition agreed, and a joint Coalition-NAPIA letter was drafted and delivered to the Texas Supreme Court. In that letter, the Coalition and NAPIA adopted the amicus briefs submitted by the TAPIA and the APCIA, NAMIC, and ICT while clarifying that the existing statutes protect consumers by requiring the licensure and regulatory oversight of public adjusters in Texas and prohibiting the conflicts of interest when roofers and contractors attempt to act as public adjusters on homeowner property claims. The Texas Supreme Court ruling is pending.

The California Supreme Court denied the defendant's petition for review in People ex rel. Allstate Ins. Co. v. Discovery Radiology Physicians P.C. et al. and the Coalition-supported appellate decision will stand. In its amicus curiae brief, the Coalition argued the trial court erred in ruling the corporate practice of medicine and “structural fraud,” more generally, were not viable theories of liability under the California Insurance Frauds Prevention Act (“IFPA”) as a matter of law and asked the Court of Appeal to reverse the trial court’s holding. The California Court of Appeal issued its decision, overruling the trial court and reinstating the case. In doing so, the Court found, among other things, a violation of the corporate practice of medicine doctrine had been adequately alleged and that this violation is a viable theory under the IFPA, even though statutes prohibiting the corporate practice of medicine are not expressly incorporated into the text of the IFPA or California Penal Code. Thus, the Court adopted the overall position advanced by the Coalition, based on the rich history of the IFPA and a wealth of case law. The defendant providers subsequently filed a petition asking the California Supreme Court to accept a review of the appellate court’s decision. Last week, the California Supreme Court denied the defendant's petition for review, and the Coalition-supported appellate decision will stand. For additional information or questions regarding this matter, please contact Ross Silverman of Katten Muchin Rosenman LLP. This is yet another great example of the value that the Coalition's Amicus Program brings to its members and the fight against insurance fraud.

The State of Colorado seeks consumer representatives for the FAIR Plan Association Board of Directors. The Fair Access to Insurance Requirements (FAIR) Plan program provides property insurance coverage when traditional options are unavailable.  Colorado HB 1288, establishing the FAIR Plan, was passed by the legislature and signed into law by the Governor on May 12, 2023. The Board will be made up of representatives from insurance companies, consumer advocates, and industry professionals. This would be an excellent opportunity for Coalition members to help protect consumers and bring a more vital anti-fraud perspective to the FAIR Plan Association Board of Directors. The deadline to apply is December 1st. For inquiries, interested members are encouraged to contact Debra Judy or Keilani Fleming. Participation in this capacity is recognized as pivotal in contributing to fairness and security within the insurance sector across the state of Colorado.

Kansas Insurance Department Commissioner Vicki Schmidt spoke to Kansas residents to share more about the issue of insurance fraud this season. Schmidt said one type of fraud they see is what she calls “bump and buy.” It’s when a person who does not have insurance gets in a wreck, then quickly purchases coverage and tries to submit a claim. She said a person needs to be covered at the time of the wreck. Buying afterward is fraud. Schmidt also commented on Medicare open enrollment. People are receiving a lot of solicitations right now, so Schmidt said to be aware of what you may be agreeing to and be wary of offers over the phone. You can watch her interview and learn more about insurance fraud here. 

Auto insurance fraud investigation: perspectives from experts in accident reconstruction. As interest rates and financial pressures on families continue to mount, more and more drivers may be unable to pay their repair bill for damage they caused or for mechanical issues on their vehicles. A common response is auto insurance fraud. After all, it’s only the big insurance company that will take a hit, right? Auto insurance fraud is an industry-wide problem, with estimates suggesting that up to 15% of all auto premiums paid are used directly to cover undetected fraudulent claims. It is in the insurer’s and public’s best interest to investigate any claims that don’t add up or seem suspicious. The investigating expert needs to have a keen eye for the details that could make or break your claim. Of course, every circumstance and every claim are different. Get in touch with the right experts to discuss how they can assist in uncovering the truth about the nature of the damage to your insured’s vehicle and help prevent insurance fraud from growing.

The Oklahoma Insurance Department warns against fake holiday shipping insurance scams. The Oklahoma Insurance Department (OID) has released information warning consumers of unlicensed insurance providers offering “package protection” that includes stolen-item protection this holiday season. According to OID, these providers facilitate the unauthorized sale of insurance, which can cost consumers money while not providing protection for stolen items. “When shopping online for the holidays, pay close attention to your shipping protection options and who is offering the coverage,” Insurance Commissioner Glen Mulready said. “Legitimate shipping insurance providers will be licensed companies or producers.” Unauthorized insurance sales are illegal and happen outside the control of regulatory agencies. If these providers become insolvent or are unable to pay for consumer claims, the Oklahoma Insurance Department may not be able to intervene.

Reform group queries how seriously insurers are taking fraudulent claims. A pressure group seeking insurance reform in Ireland has questioned how serious insurers are about detecting and reporting fraudulent claims. The Alliance for Insurance Reform said just 98 recorded crime incidents of insurance fraud were reported to the Gardaí last year. It said this is despite the fact that insurers regularly claim that one in five of all insurance claims are fraudulent or exaggerated. It comes as Insurance Ireland holds a fraud conference in Dublin. The reporting of less than 100 fraudulent and exaggerated claims compares with around 18,500 overall claims received by the Personal Injuries Assessment Board in 2022, where all claims have to be lodged initially. Board member of the Alliance for Insurance Reform and owner of the Vienna Woods Hotel in Cork, Michael Magner, claimed insurers will not be discussing the number of false and exaggerated claims reported to the Gardaí at their fraud conference. Fraud affects everyone in the world, and we here at the Coalition hope to increase awareness to everyone. 

Therapist living in Middletown charged in scheme to defraud Medicaid. Darlene Shuff-Porter, of Middletown, Connecticut, was charged Tuesday with health insurance fraud and first-degree larceny. The allegations against her: Shuff-Porter as a licensed behavioral health clinician and the owner of Dailey Professional Counseling Services. Between December 2018 and April 2020, Shuff-Porter billed Medicaid for psychotherapy services that were never rendered by submitting false claims to the Connecticut Medicaid Health Insurance Program. Dailey Professional Counseling Services, LLC was not meeting with clients as reported. However, she was submitting claims to the state Department of Social Services for payment. In addition, she was utilizing unlicensed employees to meet with clients and then billing as if qualified services were provided. Following her arrest, Shuff-Porter was released on $50K.

Philadelphia pharmacy pleads guilty to more than $500K in fraudulent insurance claims. Philadelphia-based Aramingo Pharmacy and its owner, Ahmed Bachir, pleaded guilty to Medicaid fraud after an investigation uncovered hundreds of thousands of dollars in fraudulent claims to health insurance providers, including Medicaid. Bachir and the pharmacy billed Medicaid and other providers for prescription medications that were never provided to patients. From June 2019 to June 2021, Aramingo billed providers $573K for medications that were not provided to customers. The pharmacy used other tactics to maximize its profits, including billing for brand-name medications but dispensing the generic form, requesting physicians to prescribe specific unnecessary and expensive medications, and asking physicians to change medications to more expensive replacements. Aramingo also refilled expensive medications and billed insurance companies for those refills without the knowledge of the patient and without ever dispensing these refills, keeping the full payment. Ahmed Bachir will be required to pay $573K in restitution to the health insurance providers and $300K to the Commonwealth of Pennsylvania Department of Human Services-Bureau of Program Integrity.

Two Dallas physicians charged in $12M fraud scheme. Drs. Desi and Deno Barroga were indicted for allegedly receiving $12M from fraudulent claims and illegally distributing hydrocodone to patients from the Dallas pain management clinic where they operated. The allegations they face: Between 2016 and 2022, the doctors would require patients to visit once a month, where they would allegedly stay for only fifteen minutes, often leaving with a prescription for a Schedule II narcotic. While at the clinic, the Barrogas would bill insurance for injections of anti-inflammatory steroids without administering the medicine. The doctors would put a needle against the patient’s skin without piercing the skin to mimic an injection. Other patients received small amounts of steroids. The clinic created fake health records to reflect the fraudulent billing, often copying and pasting the record from patient to patient with little to no variation. The Barrogas submitted the false records to Blue Cross Blue Shield (Coalition member), Cigna, and United Healthcare to justify the alleged fraud. The defendant billed insurance companies for $50M, of which they were paid $12M for the fraudulent work.

New York doctor convicted in major Medicaid fraud and kickback operation. A jury found Dr. Payam Toobian and his company, America’s Imaging Center, Inc., guilty of multiple felony charges related to a fraudulent kickback scheme and medical misconduct on Wednesday this week. Dr. Toobian, from Kings Point, New York, was convicted of Grand Larceny in the Third Degree, Health Care Fraud in the Third Degree, Falsifying Business Records in the First Degree, and violating Social Services Law statutes prohibiting kickbacks. From January 2006 to August 2017, Dr. Toobian operated a kickback scheme where he paid two physicians in gift cards and cash in exchange for patient referrals. From January 2014 to August 2017, Toobian directed his employees to add extra, unordered radiological procedures to increase Medicaid payments. These included MRIs of the brain, cervical spine, and lumbar spine, all requiring unnecessary and invasive injections without the consent or knowledge of the referring physicians.

Former St. Louis alderman Brandon Bosley charged with filing a false police report in relation to an insurance claim. Bosley was charged with one misdemeanor count for making a false report to police and lying on insurance claims. The allegations against him: Bosley asserted that a woman struck him in December but later dropped the charges. He said a woman tried to carjack him. Bosley live-streamed the aftermath of what he described as an attempted carjacking last December. The video began with him speaking into the camera, and he said a woman demanded his keys and acted like she was going to pull a pistol on him. He also said he heard shots fired from a nearby car. Bosley accused the woman of trying to rob him, while the woman told police that Bosley hit her with his car. Bosley had called 911 three times that night and told police he was robbed at 1522 Hogan Street. But investigators found he wasn’t on Hogan Street at the time and instead spent “an extended length of time” about a half-mile from that address. Investigators say Bosley’s story didn’t hold up. Bosley is facing federal charges of insurance fraud for falsely inflating the cost of repairs to his car. He pleaded not guilty in that case. 

Canadian woman charged in $100K dental insurance fraud case. Alena Vladimiro Smadych has been charged with one count of fraud over $5K. Investigators say Smadych has been a practicing dentist for 25 years, starting in Russia, her home country. She has been operating in Calgary since 2013. The practice insurance provider reported to police in June they received several discrepancies in claims regarding fillings and root canal treatments, all submitted by the same dentist at All About Family Dental. Police collected enough evidence to support a criminal charge based on discrepancies and false billings affecting 53 patients between June 2015 and June 2021, totaling $97K in fraudulent claims. On Monday, Smadych turned herself in at a Calgary Police Service district office and was arrested.

Oklahoma man sentenced to 54 months for $7M COVID-19 testing fraud. A Tulsa man who submitted fraudulent insurance claims for COVID-19 testing, resulting in a more than $7M loss to insurers, was sentenced this Wednesday to 54 months in federal prison. William Paul Gray was charged via criminal information in March and pleaded guilty to Conspiracy to Commit Health Care Fraud. Mr. Gray admitted that he and his co-conspirators accessed private patient information – including names, dates of birth, and insurance subscriber numbers – by accessing confidential electronic medical records to obtain large amounts of patient information at once. They then used the patient information to submit claims to insurance providers – including Blue Cross Blue Shield (Coalition member), Cigna, United Healthcare, Aetna, Humana, and Molina Health Care – for COVID-19 testing that was never performed. The patients had not requested COVID-19 testing, nor were they aware their information was being used to submit claims. Mr. Gray admitted that the labs at which the co-conspirators claimed the testing occurred, including TC Diagnostics, ME Diagnostics, and PHR Diagnostics, were, in fact, shell entities that never operated as labs. Collectively, these three entities submitted approximately $30M in claims and were paid more than $7M in reimbursements for fake testing. In addition, Mr. Gray was also ordered to pay over $7M in restitution. 

Congratulations to the Coalition Against Insurance Fraud on its 30th Anniversary. The Coalition was a major part of my two-decade second career after ending a thirty-year career as an Army Special Forces and Intelligence Officer. Luckily, through a family friend, I was hired by AIG and its Claim Services Company, along with two others with SIU experience, to set up a new Special Investigations Unit. My knowledge of insurance and insurance fraud was zero. I began my anti-fraud education in 1993 by attending Coalition meetings at the old Washington Hilton. Throughout the next twenty years, I was involved with the Coalition in some way, shape, or form. The Coalition brought me to a level of understanding and commitment I might never have had. I progressed up the leadership chain through my newfound experience with the SIU and the Coalition. I became the vice president of the national AIG SIU, regional manager in Travelers Insurance, product leader of Fireman's Fund, and associate commissioner of the District of Columbia, Insurance, Securities And Banking Fraud Bureau. I succeeded with the Coalition's assistance with anti-fraud program knowledge, anti-fraud materials, and most importantly, the contacts, many of whom are my lifelong friends. I learned in the Army Special Forces that good people with expertise and exceptional drive to be the best – ensure success. In my time, the leadership team of Dennis Jay, Howard Goldblatt, Jim Quiggle, and Kendra Smith were the best. Dennis Jay was always inspirational and innovative and was the perfect person to develop the Coalition into the high-performance organization it is today. I should mention that I owe Dennis my job at the DC Government Fraud Bureau, which led me into exciting challenges. The Coalition and NICB basically underwrote my DC fraud conferences, provided anti-fraud material, and also the help from Dennis Jay and Howard Goldblatt provided me with models and guidance on rewriting DC Insurance laws, obtaining limited law enforcement status and truthfully bringing DC out of ignoring insurance fraud. Howard Goldblatt has assisted me in many ways, most notably during my time as NAIC AFTF chair. Jim Quiggle was always there to help with PR issues and Kendra, who makes everything work behind the scenes, makes the Coalition to this day exceptional. She is the best. I tried to give back to Coalition by first being just a Coalition member and convincing company leadership of Coalition ROI to ensure continuing membership. Through Dennis Jay's help I became a Coalition board member, progressed to Secretary and then onto being Coalition Co Chair with my friend and antifraud hero Frank Sztuk. I’ve always thought my colleagues on the board at that time notably Ken Jones, John Sargent, Steve Rutzeback and several others led by Dennis Jay accomplished monumental initiatives in the antifraud industry. To cap off how I feel about Coalition, after leaving the band of brothers type comradeship of Army Special Forces, I thought I would never feel a part of an organization like that again. However, I did get the feeling again with involvement with the Coalition. Some would say, and they might be right, that I was in it for the free meals, good Coalition happy hours, boat trips on Lake Tahoe, shenanigans at Cabo Wabo and many other places, never to be spoken of, fun times, deleted photos and most important solid friendships. I must add, I did repay Dennis in a small way by getting him a US Congressional ticket to the first Obama Inauguration which was something special from me, a Republican. Looking back, I recognize it was the people leading the Coalition and the membership that made the organization the truly exceptional entity that it has become. I am absolutely positive that the incoming Coalition leader Michelle Brugh Rafeld will carry on the strong leadership of Dennis Jay and Matthew Smith. Michelle is the absolute professional, proven leader, charismatic person and enjoyable to work with. The Coalition will continue to grow and lead others in fighting insurance fraud.

Stephen M. Perry

Retired Associate Commissioner, D.C., Insurance, Securities And Banking Fraud Bureau

As an army veteran and lifelong resident of Massachusetts, I entered Law Enforcement in 1970, where I spent 28 years of service in various roles. In addition to patrol, I was a detective, detective sergeant, and the interim chief. Early in my career I initiated the first safety officers' position and became a member of the Massachusetts Safety Officers League. During that time, I worked closely with the school department and conducted programs for grades K through 12. These programs gave students the opportunity to have direct contact with the police in a very positive setting. For the high school aged kids, I brought in judges from various court levels and mock trials were held. Students also had the opportunity to tour the court system including grand jury proceedings. This culminated with a tour of a prison facility so that they were able to experience the entire criminal justice system. In addition to the school focus, I also started a neighborhood watch program which educated people and increased awareness so they could more easily spot suspicious situations and report it to the police. In 1998, I accepted an investigator position with the SIU at Amica Insurance. During my early years with Amica, I was exposed to various staged accident rings and struggled to gather cooperation from various carriers in the region. It was quite clear there were opportunities to improve results and detection if the carriers worked closer within the industry. These needs, as mentioned about drove me, along with others to create the New England Chapter of the International Association of Special Investigations Units. I was also the first elected president of the chapter, and on the BOD for 12 years. In 2006, I was nominated and elected to the International Association of Special Investigations Units board of directors, serving for 16 years. With me being on the BOD in both New England and International it gave me a lot of access to people all over the world, and helped tremendously with the large scale of fraud investigations I and many others were involved with. I currently have no immediate retirement plans, but I am looking into some possibilities to keep busy. When the weather breaks in the spring, I plan on doing a lot of bike riding. There are a number of old rail trails in the surrounding area that have been converted for biking and walking. 

Lou LaRose, Retired Senior SIU Investigator, Amica

Next week, during the Coalition’s Annual Meeting, we will be celebrating their 30th Anniversary! The International Association of Special Investigation Units (IASIU) is proud to call the Coalition Against Insurance Fraud one of our closest strategic business partners in the fight against insurance fraud. Founded in 1993, the Coalition unites over 300 member organizations in the relentless fight against insurance fraud. The Coalition has demonstrated throughout its 30-year history what IASIU believes strongly in – partnership and collaboration. The Coalition's impact on the fraud-fighting community has been tremendous. No other organization brings together consumers, insurers, governmental agencies, legislators, prosecutors, and other committed partners to make a positive impact in the fight against insurance fraud. A powerful testament to the enormity of the issue, the Coalition emphasizes, "Insurance fraud is the crime we all pay for, costing consumers more than $308.6B each year." I encourage all that read the Coalition’s weekly newsletter to continue your efforts to stay informed and educated. Seek opportunities to learn and grow your knowledge while being an active part of the fraud-fighting community. I look forward to seeing many of you at the Coalition’s Annual Meeting next week in Washington, DC. For those of you interested in learning more about how to become part of the fraud-fighting community through IASIU, reach out to us at iasiu.org. To quote Helen Keller, “Alone we can do so little, together we can do so much.”