Insurance Fraud Weekly ePort: Week Ending Dec. 7, 2007

Insurance Fraud Weekly ePort
Week Ending December 7, 2007
www.InsuranceFraud.org 

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LEGISLATION & REGULATION

* The board of directors of the Coalition Against Insurance Fraud now includes the top elected leaders of associations for both regulators and insurance legislators. That’s a first. It happened last week when Kansas insurance commissioner Sandy Praeger was installed as president of the National Association of Insurance Commissioners. Rhode Island representative Brian Kennedy, who also serves on the coalition board, is president of the National Conference of Insurance Legislators.

* A move to allow fraud investigators access to digital driver-license information in Massachusetts appears DOA due to budget constraints. SB 2120 would allow fraud investigators to obtain driver’s license photo information for fraud probes. But the bill doesn’t contain a funding mechanism, and the state bureau of motor vehicle registry says it has no money to implement the bill even if it does pass.

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

PUBLIC OUTREACH

* Recent TV commercials by Toyota are an open invitation to insurance fraud by showing owners wrecking their Toyotas so they can upgrade to a newer model, the coalition warns. “Something strange happens to people this time of year,” the announcer says in the commercials. A family pushes a boulder off a cliff onto a 4Runner in one ad. A man shoves his SUV off a parking garage onto the street below in another commercial. The unspoken implication—insurance money will pay for the new Toyota. At bottom, the commercials encourage owner giveups—a common and costly insurance crime. At least five commercials are airing in heavily watched timeslots such as NFL football games. “The spots trivialize insurance fraud as a fun game for the whole family. Toyota probably didn’t intend to encourage a crime, but that’s the practical impact of this ill-conceived TV campaign. Millions of Americans are being taught that insurance fraud is an easy and acceptable way to move up in the world,” says Dennis Jay, the coalition’s Executive Director. The coalition is writing a strongly worded letter to Toyota, and is working to arrange a meeting with the company’s senior executives. ePort readers can complain by writing to Mr. Shige Hayakawa, President, Toyota North America, Toyota Motor Corporation, 25 Atlantic Avenue Erlanger, KY 41018-3188 or emailing www.customerservice@toyota.com.

CRIMINAL CONVICTIONS

* This time Jill Morrill will wear the handcuffs. The South Glens Falls, N.Y. broker stole nearly $9,600 in auto premiums from 36 families. Her downfall began when victims began complaining to her employer Pro-Vu Best Insurance Company that their auto policies were cancelled even though they’d paid premiums. Some victims had their vehicle registrations and driver licenses suspended for failure to have coverage. Several even were handcuffed and arrested for driving without auto insurance. Others had their vehicles towed and received civil sanctions from the DMV for driving without coverage. Morrill could receive up to four years in prison when sentenced in March.

* Three al-Qaeda terrorists tried to fake the death of one for life-insurance money to bankroll their deadly jihad. Life insurance policies were taken out on Yasser Abu Shaweesh in Germany. He planned he’d pretend to die in a car crash in Egypt, then die for real in a suicide car bombing in Iraq. Ismail Abu Shaweesh, Yasser’s brother would collect the insurance money, which the survivors would use for terrorist activities. But that scheme fizzled when Yasser and cohort Ibrahim Mohamed Khalil were arrested in early 2005. Khalil, a resident of Mainz, trained at an al-Qaeda camp in Afghanistan and fought U.S. forces there. He also was a part of al-Qaeda’s command structure and had contact with top leaders, including bin Laden. The three received prison terms in Germany this week ranging from three to seven years.

* A Louisiana man staged a three-vehicle crash that bilked three insurers out of $105,000 and disabled an elderly motorist. The rigged crash also endangered the lives of several others, including a pregnant woman, her year-old infant and several children. Kenneth Wayne Guillory of Ville Platte packed his Ford Taurus with as many as two other adults and five children, then intentionally slammed on his brakes in front of a commercial van driven by an elderly man. The senior’s injuries were so severe that he never returned to work. Guillory faces up to 15 years in prison when sentenced. The Louisiana State Police and AG teamed to land the conviction.

* As a local detective, Herbert A. Cantrell relied on his snitch to help put away drug dealers. But this time the Decherd, Tenn. man was too trusting, and now he’s the one headed to jail. Cantrell hired the informant to torch his house for an insurance payout to cover mounting medical bills. Cantrell hatched the plot just four days after buying the policy—and inflating the home’s square footage and value. But the informant flubbed the job twice. Cantrell then torched the house himself by plugging in an appliance with a frayed cord and leaving home. But the informant informed on Cantrell. He spilled the whole plot to the feds, for whom he also worked as a snitch. Cantrell received four years in federal prison Monday.

* Construction firm owner Steven V. Raleigh underreported his payroll and mischaracterized his Hyannis, Mass. business to avoid paying $100,000 in workers comp premiums to his insurer Associated Industries of Massachusetts and the State Workers Compensation Ratings Board. The S.V. Raleigh Corp. also didn’t pay state-required comp coverage for employees between July 1998 and May 2000. Raleigh will be sentenced in February.

CRIMINAL CHARGES

* Suspected coercion and friendly persuasion only landed accused cheaters in hotter water. Eddie and Doree Lanier torched their house for insurance money, destroying several nearby buildings and causing about $400,000 in damage, Georgia officials charge. But Eddie allegedly broke into a witness’s home and tried to convince him not to testify in his arson trial. Eddie apparently didn’t take the hint, however. After being arrested for that break-in, he allegedly tried to persuade yet another witness to keep quiet… In a separate case, Ketul Arvind Akhani, who manages a Travel Lodge that sustained fire damage in Beaumont, Tex., allegedly tried to bribe a Nationwide Insurance rep $20,000 to increase the damage estimate from $16,000 to $125,751.

* Anthony Trabal didn’t give up easily. The Springfield, Mass. police officer was hurt in an off-duty car crash, and stayed out of work until his vacation and sick leave expired. Trabal took off another six months without pay, and allegedly faked police-department disability certificates to collect back wages from the City of Springfield for that six-month period. After being denied, he then made a lost-salary claim against Liberty Mutual, which insured the other driver in his crash. Trabal sent Liberty the disability certificates but included no medical records, prosecutors say. Liberty concluded the certificates were fake. The Massachusetts fraud bureau investigated, and Trabal was charged this week.

* A New Jersey corrections officer may find herself on the other side of the bars. Crystal Williams McCrary presented a phony State Farm insurance card when registering her car. An alert DMV staffer who’d received fraud training noticed the card allegedly was bogus and confiscated it. McCrary also managed to register another vehicle using forged documents indicating State Farm coverage earlier this year, officials say. Fake insurance cards are sold on the streets for $50 to more than $200 each, officials say. McCrary faces up to 18 months in prison if convicted.

* Paula Garst ran a bogus insurance company that sold worthless health coverage to unsuspecting small businesses, Texas prosecutors charge. The Amarillo woman marketed to prospects under company names Direct Marketing Services, Healthcare Solutions and Advanced Marketing Group. She also hired staffing firms to handle her firm’s administrative work, thus creating the illusion of legitimacy, officials contend. After convincing people to buy her supposed coverage at discount prices, Garth allegedly sent the completed applications to the staffing agencies for processing. She faces up to 250 years in prison if convicted.

* The UK is atwitter about John Darwin, who was missing 5 1/2 years and presumed drowned at sea while canoeing. The former teacher suddenly walked into a London police station on Saturday, claiming he didn’t remember where he’d been. His wife Anne, meanwhile, collected life-insurance payouts after he was declared dead in 2003, and she moved to Panama City, Panama. But investigators are suspicious. The water was glassy smooth the day Darwin disappeared, and a date-stamped photo purporting to show the couple smiling side by side at their apartment in Panama City has surfaced. When Anne was shown the photo, she allegedly confessed that John is the man in the image, and that the disappearance was staged.

COURT DECISIONS

* The U.S. Supreme Court has let stand a Virginia law regulating viaticals and life settlements as insurance. The life-settlement firm Life Partners sued to have a Virginia law regulating viatical and life settlements declared unconstitutional interference with interstate commerce and thus not regulated by the state’s insurance laws. Virginia argued that viaticals alter the parties to a life insurance policy and thus are subject to state insurance regulation. A lower court and the federal 4th Circuit Court of Appeals agreed. The Supreme Court refused to hear the case, thus letting the rulings stand. The upshot: The decision appears to allow states to determine whether to regulate viaticals as securities or insurance (Life Partners Inc. v. Morrison, 07-261).

CIVIL & ADMINISTRATIVE ACTIONS

* Florida regulators have ordered bogus health plans to close their doors in the state. The National Trade Business Alliance, National Alliance Association and several affiliates have peddled fake health, dental, accident, vision, hearing and chiro coverage to nearly 800 Florida consumers. The so-called plans failed to pay more than $100,000 in claims and stonewalled premium refunds, regulators say. This prompted consumer complaints that led to the crackdown by Florida’s Department of Financial Services this week. Insurance agencies peddled the plans through blast faxes, and collected premiums through automatic bank withdrawals.

ETC.

* Representatives of more than 50 organizations will travel to Washington, D.C. next week for the annual member meeting of the Coalition Against Insurance Fraud. Topping the agenda will be a briefing on new research on public tolerance of insurance fraud. Also on tap will be a preview of the coalition’s 2008 workplan, election of new officers and a report from the board chair of the National Insurance Crime Bureau on that organization’s proposed restructuring.

* A skeleton and 110 cars were discovered in a rural canal west of Boca Raton, Fla. on Tuesday. The 45-mile-long Hillsboro Canal is a well-known spot for stolen vehicles, and vehicles the owners have dumped for insurance money. Divers aren’t sure if the bones found in a mid-1980s Mercedes are human. Crocodiles are known to store animals they’ve caught in sunken vehicles for eating later. The macabre discovery left one officer actually wanting an insurance scam. “I’m just hoping that it is not a human being in there. I’m hoping that it is just maybe an insurance job where someone dumped a car…and what we have is a set of animal remains,” Michael Bianchi, with the Palm Beach Sheriff’s office, told WBPF TV.

* California’s chiro board has “often consistently failed to protect the public from chiropractors’ misdeeds,” over the last 10 years, including insurance schemes and misdiagnoses, the Sacramento Bee alleged in an investigation published Monday. Instead of seeking out wrongdoers, the board often waited for complaints, the newspaper contends. Even when the chiro board did learn about skullduggery, it often failed to act. The board doesn’t consider criminal fraud to be malpractice, and thus doesn’t require convictions to be reported to. Chiro David Neff settled out of court in 2000 after 21st Century Insurance accused him over-billing, billing for treatments not done, and submitting fraudulent medical reports. His license remains active despite widespread news coverage of the case, the newspaper says.

* Last week’s ePort incorrectly reported Barb Parker’s employer in a story about her winning a major award from the National Society of Professional Investigators. Barb works for the Agency Market SIU of Liberty Mutual.

QUOTE OF THE WEEK

“It is unfathomable that a doctor would treat patients as if they were bodies on a medical conveyor belt for a quick buck.’’

—Tony Rackauckas, Orange County District Attorney commenting on the recent conviction of surgeon William Hampton in the massive “rent-a-patient” scam.

OTHER HEADLINES THIS WEEK

* Florida therapist charged with false bills to Medicaid
* Sting in California nets four unlicensed contractors
* Medical center CEO in Texas admits fraudulent billings
* Jury convicts former Michigan mayor of auto fraud
* Utah pharmacist gets year in prison for false claims

Details at http://www.insurancefraud.org/news.lasso

MEETINGS & CONFERENCES

* December 11, 2007 — Annual Membership & Board Meeting
Washington, DC (Hyatt Crystal City)
* April 1-2, 2008 — Insurance Fraud Training Seminar
Orlando, FL (NAIC)
* May 7-8, 2008 — VA Chapter IASIU Annual Meeting
Richmond, VA (Holiday Inn)

For more info, visit online events.