Publications

Current Texas law prohibits roofing contractors in the state from acting as public adjusters on their customers' damage claims. This issue began when Stonewater Roofing Ltd. filed a lawsuit claiming this law infringed on their rights to free speech and due process. The trial court initially dismissed the lawsuit without explanation, but Stonewater appealed, and the appellate panel ruled that the trial court made an error by not providing a written explanation, allowing Stonewater's challenge to move forward. TDI is now seeking to overturn this ruling with the Texas Supreme Court. The American Property Casualty Insurers Association, National Association of Mutual Insurance Companies, and the Texas Insurance Council have filed a joint amicus brief, expressing concern that if Stonewater's challenge succeeds, it could lead to an insurance crisis in Texas. The law was created to protect the public from unregulated contractors. Oral arguments have already been presented to the Texas Supreme Court, and a ruling is pending. Attorney Steven Badger of Zelle LLP in Dallas, who submitted the amicus brief, said in a recent interview, "Should Stonewater's position be accepted, the Texas requirement that only licensed public insurance adjusters can assist building owners in negotiating their insurance claims would be entirely eliminated, meaning that anyone – even the contractor performing the repair work – could act as a public insurance adjuster" Badger went on to state that if this happens, "Katy bar the door, every assorted crook and fraudster across the country will come to Texas to handle insurance claims, which is a very scary thought." 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 asked the Texas Supreme Court to reverse the decision of the court of appeals and affirm the trial court's decision granting TDI's motion to dismiss. Stay tuned as this important case awaits a Texas Supreme Court ruling. 

President Biden signed a sweeping Executive Order regulating artificial intelligence (AI). The executive order on AI regulation addresses the critical issue of AI-generated deepfakes and their potential threats. The order sets new standards for security, privacy, and safety in AI development, requiring companies like Microsoft, Amazon, and Google to subject their AI models to safety tests before public release. The White House has also called on lawmakers to pass data privacy legislation, though Biden doesn't yet have a position on how Congress should approach the comprehensive regulation of AI. Additionally, the order promotes the development of watermarking standards for AI-generated content, such as audio and deepfake images, that can be very misleading and deceptive. US lawmakers are holding briefings and meetings with tech industry leaders to better understand AI technology and its potential risks. This indicates that AI regulation and legislation are ongoing priorities at both the executive and legislative levels to address the challenges posed by deepfakes and other AI-related threats. The Coalition is also tracking this issue at both the federal and state levels. Stay tuned to this emerging issue, as it will likely make the Coalition's list of 2024 legislative priorities. 

South Carolina has seen a spike in insurance fraud reporting, but a lack of resources has kept many from being investigated. A recent study in South Carolina reveals that insurance fraud is on the rise in the state. State legislators have formed an Ad Hoc Committee to Study Insurance Fraud in the House and are now seeking solutions to combat this issue. In 2022, the South Carolina Department of Insurance's Insurance Fraud Division annual report showed a record 3,100 fraud complaints, and there have already been 3,000 in the current year, with several months still to go. Only about half are investigated. "The reason for that drop in cases being investigated is solely due to resources, not due to the quality of the potential cases," Director of the Insurance Fraud Division Joshua Underwood said. Auto insurance fraud is the most prevalent insurance fraud scheme in South Carolina, constituting 50% of cases, primarily in counties like Richland, Sumter, and Lexington. In South Carolina, the Department of Insurance first vets complaints, which insurance carriers typically report. Then, the department sends some of them along to South Carolina Law Enforcement Division (SLED) agents to investigate. SLED currently has only five agents to investigate insurance fraud claims, which pales in comparison to neighboring North Carolina and Georgia, which each have 50. "We certainly could be working more cases now if we had more agents to work them," SLED Chief Mark Keel said. To address this, lawmakers are considering options such as hiring more SLED agents and increasing public awareness. 

The Healthcare Fraud Prevention Partnership (HFPP) released its biennial report to Congress. The HFPP is a public-private partnership of members from the Federal Government, state agencies, law enforcement, private health insurance plans, and healthcare anti-fraud associations and is overseen by the Centers for Medicare & Medicaid Services (CMS). The goal of the partnership is to identify and reduce fraud, waste, and abuse across the healthcare sector through collaboration, data and information sharing, and cross-payer research studies. As required, HFPP has released its "Calendar Years 2021 – 2022 Healthcare Fraud Prevention Partnership Biennial Report to Congress". The report showcased that HFPP's primary service is fraud analytics, providing partners with research results, reports, and fraud alerts. In 2021-2022, they conducted 30 studies, shared 158 alerts, and organized 194 events. Results include $11.4M in hard dollar savings for Federal Partners and $19.9M in soft dollar savings for non-Federal Partners. This report is the first to be required from the HFPP and will be delivered biennially hereafter. 

FRISS has recently collaborated with Microsoft to enhance its AI fraud model explanations using Microsoft Azure OpenAI Service. As a Microsoft Global Partner, FRISS is working to take explainable AI to new heights. FRISS solutions will be available in the Microsoft Commercial Marketplace – as a transactable offer in both storefronts: Azure Marketplace and Microsoft Appsource. FRISS is developing a "smart" explanation of its AI models' predictions, aligning with its responsible AI approach. Azure OpenAI Service enables FRISS to present potential fraud cases into more engaging and understandable stories, using the art of storytelling as the essence of the explanation. With this approach, understanding and conveying potential fraud incidents to insurance professionals and fraud investigators becomes remarkably seamless. "We are pleased to support the digital transformation of business processes in the insurance industry, especially in this new era of AI," says Matthew Kerner, Corporate Vice President, Microsoft Cloud for Industry. "FRISS brings differentiated new experiences to insurance customers with the power of Microsoft Azure OpenAI Service. With a deep understanding of the insurance domain, FRISS has the know-how to apply Azure OpenAI Service responsibly to core business processes of insurers and other regulated firms."
 

In a week of technological advancements in the insurance sector, Instnt introduced biometric digital ID supporting SSI for the insurance sector. New York-based Instnt, which provides technology for preventing insurance fraud, is launching a decentralized digital identity for consumers to ease the onboarding of legitimate customers. The new Multipass is based on verifiable credentials and provides one-click or QR code onboarding without either passwords or multi-factor authentication, according to the announcement. Instnt also says Multipass avoids vendor lock-in and supports self-sovereign identity while protecting against fraud loss liability of up to $100M. The credential provides strong assurance with KYC binding and continuous authentication, the company says. Azim Esmail of ATB Ventures told Biometric Update in a recent interview that digital ID can help the insurance sector address fraud losses, which totaled over $300B in 2022.

Will we need to monitor AI in the insurance industry? As we look at technological changes, artificial intelligence jumps out as the trend that continues to create the most buzz in the insurance industry. Already, AI has been employed across the industry at many levels, such as underwriting, claims processing, customer service, chatbots, and much more. Overall, AI has the potential to modernize and make more accurate and efficient aspects of the insurance industry. At the same time, there are concerns about oversight and regulation — to ensure that its use does not create discrimination issues, for example. As rules and regulations evolve, including at the state level, we will see how the oversight of AI develops. Overseeing AI, however, has a number of wrinkles. There are, for example, "AI hallucinations," when AI programs make up information out of whole cloth based on no real data or information. As we see more uses of AI to create images and video, there is more opportunity to move away from reality and create compelling content that misrepresents the facts.

Tips for detecting and reporting Medicare fraud. Medicare fraud costs Americans an estimated $60B per year. It also affects Medicare beneficiaries in terms of time, stress, and health. About 60 people, mostly senior citizens, were able to be a part of a trending event across the country, a Scam Jam, a fraud awareness event, and heard about how to detect and prevent healthcare-related scams from Armeta Coley, a senior Medicare Patrol coordinator with Upper Coastal Plain Council of Government. "The Medicare Fraud Prevention Program is a program that teaches beneficiaries how to detect healthcare fraud and abuse and how to report it if you suspect your Medicare has been charged with something you didn't receive," Coley told those in attendance. Coley said a good place to start in detecting Medicare fraud is keeping a healthcare journal of services provided, dates and times those services were provided, and the business name of the provider. Coley said other facts that beneficiaries should keep track of include benefit days used, claims approved or denied, non-covered charges, the amount Medicare paid, the maximum they may be billed, and notes for what is claimed. In addition, medical supply shipments should be tracked to determine if what was ordered was delivered and if what was shipped to a beneficiary's account was actually ordered by a known healthcare provider.

Leoncia Hutchinson, of Metuchen, New Jersey, was indicted on one count of insurance fraud and 15 other counts, including theft and forgery. The allegations against her: Between October 2018 and April 2019, Hutchinson allegedly committed insurance fraud by submitting, or causing to be submitted, false, fictitious, or misleading statements to Coalition member CNA in an attempt to create the false impression that services were provided to her by an independent caregiver, who was dead at the time. Hutchinson is alleged to have submitted to CNA forged timesheets bearing the deceased caregiver's name in order to receive long-term care payments from CNA for his services. CNA made payments to Hutchinson, and she then wrote checks to the deceased caregiver, deposited the funds into an account, then moved the funds back into an account in her name, knowing the transactions were designed to conceal or disguise the nature, location, source, ownership, or control of the money.

Lead defendant in a 15-defendant healthcare fraud conspiracy sentenced to federal prison. Arisleidys Fernandez Delmas, of Miami, Florida, was sentenced for her participation in a healthcare fraud conspiracy that billed Coalition member Blue Cross Blue Shield for more than $36M for physical therapy services that patients never received. From August 2018 to February 2023, co-conspirators in the scheme paid kickbacks to beneficiaries of health insurance plans managed by BCBS. The co-conspirators offered these kickbacks to employees of JetBlue Airways, AT&T Inc., and TJX Companies Inc. to induce the beneficiaries to serve as patients at 30 South Florida physical therapy clinics. The co-conspirators who owned the clinics then submitted fraudulent health insurance claims to BCBS for healthcare benefits that were medically unnecessary and not even provided. Delmas was sentenced to 104 months in federal prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $8.6M, along with multiple other conspirators.

Jefferson County chiropractor sentenced to four years in prison, ordered to repay $16M. Vivian Carbone-Hobbs of Fenton, Missouri, was convicted of conspiracy to defraud the Social Security Administration, 10 counts of healthcare fraud, and two counts of theft of money from the United States. Carbone-Hobbs and her husband, Thomas G. Hobbs, are co-owners of Power-Med Inc., a chiropractic clinic in Arnold, Missouri. The couple, some of their employees, and others conspired with each other and others to fraudulently obtain disability payments for patients. In exchange for upfront fees of thousands of dollars, Carbone-Hobbs, Hobbs, and others would coach patients on how to pretend to be unable to work and unable to lift objects, sit, stand, and walk. Patients had to pay hundreds of dollars for annual appointments to keep qualifying for disability payments. Carbone-Hobbs was also billing insurance companies for services that were not provided. She now faces four years in prison and was ordered to repay $16.4M lost to disability fraud.

Attorney pleads no contest in the insurance fraud scheme. Philip William Ganong accepted a plea deal from Orange County Superior Court this week. He pleaded no contest to 10 felony counts of fraudulent claims for a health benefit. Multiple attorneys were charged in 2017 in connection with the scheme allegedly led by Ganong and his wife and co-defendant Pamela Mae Ganong, 67, who owned sober living homes in Orange County, Bakersfield, Los Angeles, and San Diego. Pamela Mae Ganong is awaiting trial, but her case has been assigned to a court that handles defendants who are facing questions about whether they are mentally healthy enough to assist in their defense and is thus delayed. The Ganongs formed a medical testing lab in December 2011, and sober living home residents were recruited to join the scheme to overbill insurance companies for urine tests, which involved listing them as employees and signing them up fraudulently for health insurance. Ganong was sentenced Monday to two years in jail for his part in the $12.5M scheme. 

Ex-Navy nurse sentenced for role in $2M military insurance fraud. Kelene Meyer pleaded guilty to conspiring with her then-husband, former chief petty officer Christopher Toups, to bilk the Traumatic Servicemembers Group Life Insurance Program out of around $2M. The defendants submitted fraudulent claims on behalf of Navy sailors for fake or exaggerated injuries or disabilities. For her part, Meyer falsified medical records to bolster the servicemembers' injury claims, which said she personally received around $150K for her participation. Toups, who got about $400K through the scheme, was sentenced a few weeks ago to 30 months in prison. Meyer was sentenced on Friday in San Diego federal court. In total, around 10 defendants were charged, many of whom were stationed locally as part of the Explosive Ordnance Disposal Expeditionary Support Unit One in Coronado. 

Farmington Hills psychotherapy clinic owner sentenced for healthcare fraud conspiracy charges. Mohamed Kazkaz has been sentenced after having pleaded guilty to health care fraud and money laundering charges. Kazkaz admitted he owned and controlled Centre HRW, a purported psychotherapy agency in Farmington Hills, Michigan for the purpose of submitting false and fraudulent claims to Medicare, seeking reimbursement for psychotherapy services that were not provided or were otherwise not eligible for reimbursement and whose Medicare identification numbers were procured through kickbacks and bribes. Kazkaz admitted he submitted or caused the submission of approximately $11M dollars in fraudulent claims to Medicare, and Medicare paid approximately $5.3M dollars to Kazkaz as a result of the fraudulent submissions. He has been sentenced to 7 years and 6 months. 

Framingham construction company to pay nearly $1M for subcontractor's failure to pay prevailing wages to employees. BPI Construction Management, Inc. has been issued a judgment for its subcontractor’s failure to pay prevailing wages to employees working on two public construction projects. Despite paying employees less than half of what was owed to them on two public construction projects in Westport and Middleborough, BPI and its subcontractor submitted 32 fraudulent payroll forms to certify compliance with the Massachusetts Prevailing Wage Law. The Court held that BPI violated the law by using the records to get paid in reckless disregard of their falsity, rejecting BPI’s defense that it was blameless in blindly relying on Superior’s fraudulent payroll forms. “Companies that receive public funds for projects must ensure that all workers receive the pay and benefits they are entitled to,” said Attorney General Andrea Joy Campbell. “I am grateful for the team’s continued efforts to safeguard the Commonwealth’s public resources while protecting our workers from exploitation.” As part of the judgment, the company will pay $926K to the Commonwealth for violating the Massachusetts False Claims Act in connection with prevailing wage theft. 

Southern Idaho man sentenced for insurance fraud after claiming to have hit a deer. Travis Darrell Gentry of McCammon, Idaho, was sentenced in Bannock County for one count of felony insurance fraud. In July 2022, Gentry made a fraudulent claim to Progressive Northwestern Insurance Company for damage to his Ford F150. Gentry said a deer struck his truck, however, 360-degree showroom photos from the online auto-auction where he bought the truck showed the pre existing damage identical to the damage he was reporting. When asked by Progressive about pre existing damage, Gentry said there was none during recorded phone calls. When asked by Progressive if he filed a police report, Gentry said he did so through the Bannock County Sheriff’s Office. The offices and other area police agencies had no record of the collision. Progressive denied coverage, and no money was paid. On August 15, 2022, Progressive referred the matter to the Idaho Department of Insurance for further investigation, which led to Mr. Gentry’s prosecution. Gentry was sentenced to three years in prison (one year fixed), which was suspended. He was placed on three years of supervised felony probation and ordered 40 hours of community service, a healthy thinking class, a $500 fine, and restitution of $204 to DOI.
 

I have been in the insurance industry since 1988 and SIU since 1994. At the time I joined SIU, I was the first female, non-law enforcement employee ever hired into SIU at my company. I can't lie; attending my first FIFEC Conference that first year was a bit intimidating for a very passionate 28-year-old! As I looked around the room, I was one of 5 females at this conference. Growing up a Cuban immigrant in the middle of Long Island, I was used to being in the minority – but this was daunting. I questioned whether I had made the right choice in my career. As years passed, I noticed that leadership positions for females in SIU, although easier to attain than in the 90's, were not widespread. Because of this, I made it my mission to see diversity, equity, and inclusion in our field, even before the acronym DEI was born! Fast forward to the Coalition Midyear Member meeting in 2022 in Orlando. It was the largest-ever Midyear meeting! Topics presented were outstanding, starting with NC Insurance Commissioner Mike Causey discussing the "backstory" of the Lindberg fraud & bribery prosecution! And then it happened: Executive Director Matthew Smith discussed the next steps on the Coalition's path to increasing diversity, equity, and inclusion in the anti-fraud community! I remember sitting there, taking it all in and fighting back tears. For me, this was the culmination of something I had championed my entire career, and in that moment, having an organization like the Coalition make it such an important part of their doctrine, I knew I had made the 'right choice' back in 1994.

Mariela M. Pennock

National Director SIU & Fraud Compliance

It was founded two years ago with the goal of supporting the insurance industry in addressing the persistent issue of insurance fraud. Insurance carriers and special investigative units often grapple with misrepresentation related to unreported medical treatment, concealed pre-existing conditions, and claim anomalies, which can lead to inflated costs, jeopardizing the integrity of claims information. In response to these challenges, CDI Canvassing has taken proactive measures to collaborate with carriers as they combat insurance fraud. The landscape of insurance claims is fraught with challenges that frequently result in inflated claims, resulting in an overall strain on the insurance industry. In response to these challenges, CDI Canvassing has undertaken a mission to support carriers and special investigative units in combating insurance fraud through effective medical canvassing. Their claims tool leverages strategic reporting processes and industry-leading technology to provide clients with actionable data. This invaluable data empowers insurance professionals to make informed decisions when developing their claims strategy. The core of CDI Canvassing approach is predictable, reliable, repeatable, and scalable. These attributes ensure a consistent production of intuitive, actionable data that empowers insurance professionals to address fraud and inefficiencies within their claims processes. CDI Canvassing is committed to continuous innovation within the insurance industry, setting a high standard for data quality. CDI Canvassing plays a crucial role in helping the insurance industry gather and utilize critical information, ultimately allowing SIU and claims leadership to combat insurance fraud in this dynamic and ever-changing environment. The Coalition appreciates the efforts CDI Canvassing puts forth in combating insurance fraud, and we welcome them into our very devoted group of nearly 300 Members who are making a difference every day.

IASIU members, it's time to renew your membership for 2024! The International Association of Special Investigation Units provides you the education, awareness, and networking you need to effectively fight insurance fraud. Renewing your membership means staying connected to a global network of dedicated fraud fighters. Access resources, tools, and stay updated on the latest industry insights to enhance your skills and knowledge. By renewing or joining,  you are part of a community of SIU professionals, sharing and learning together. The connections you make enable you to stay informed of evolving industry trends, fraud detection techniques, and legal updates. Your renewal also supports IASIU's efforts to provide the essential resources and support to professionals involved in fraud prevention. It's an investment in you with significant benefits to your professional growth and to the industry as a whole. To renew your membership for 2024 and explore the benefits of being part of IASIU, visit https://www.iasiu.org/page/membership. Join IASIU for another year and be a driving force in the fight against insurance fraud. Your involvement matters, and it's an investment worth making.