Insurance Fraud Weekly ePort: Week Ending Feb. 29

Feb 29, 2008


Insurance Fraud Weekly ePort
Week Ending February 29, 2008


  • The Maryland House unanimously passed a bill (HB 404) requiring fraud warnings on claim and application forms. A provision requiring a fraud warning on benefit checks was removed on the recommendation of the state’s insurance department.
  • The coalition was reappointed as a consumer representative of the NAIC’s consumer liaison committee. The committee meets at each quarterly NAIC meeting to discuss consumer insurance issues with state regulators.
  • “And so the question arises, why are private citizens able to simply walk into a police department and purchase information that describes an accident that may include personal private information of the victims?” the coalition’s Howard Goldblatt asks about staged-accident rings obtaining accident reports to recruit crash victims to make phony injury claims, in a National Underwriter story about staged accidents.
  • The numbers tell all: Consumer tolerance for insurance fraud has increased over the last 10 years, the coalition’s Howard Goldblatt said told state legislators attending this week’s meeting of the National Conference of Insurance Legislators. Goldblatt reviewed the coalition’s recently completed consumer-attitude study, The Four Faces of Insurance Fraud. The research updated a consumer study the coalition commissioned in 1997.

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


  • Today’s Lawrence (Mass.) Eagle-Tribune said this about the success of a multi-agency task force in rolling back widespread staged-accident rings in the city: “Drivers have finally begun to see a benefit from the falling number of fraudulent claims. The average premium in Lawrence dropped $400 in 2007…Lawrence police are committed to keeping the task force working. They’ll need the continued cooperation of state insurance officials, prosecutors and the insurance industry. They should get it.”
  • “Officials say no claim is ever denied solely on the basis of voice-stress analysis, but it does help to direct investigators to claims that merit more scrutiny. It’s also said to help speed claims payments to truthful claimants,” the coalition’s Dennis Jay reported in his latest FraudBlog entry on the controversial technology that UK insurers often use to identify suspect claims. “So, is America ready for this technology? In an age when cameras catch red-light violators and the FBI can monitor phone calls and e-mail at will, perhaps Americans would accept this technology—if it helps to keep premiums in check. I’d like to see the results of more thorough testing first.”
  • The deadline is getting close. The coalition is seeking nominations for its new Prosecutor of the Year award. The deadline for nominations is March 14. The award will honor a federal, state or local prosecutor for achievements in 2007. The fraud fighter can be nominated for a courtroom success or for broader leadership. This is the only national award for prosecutors by an anti-fraud organization. The award will be presented in Washington, D.C. in June. Contact Jim Quiggle at 202-393-7331 or


  • Pain doc Linda Sue Cheek billed Medicare and Medicaid up to $10,000 for phantom services, and for services she claimed she performed but were done by nurse practitioners. The New River Valley, Va. woman’s office also held unreimbursable group sessions with patients but billed the sessions as office visits. Cheek faces up to 10 years when sentenced in May.


  • The head of a suspected staged-accident ring was arrested after months on the run. Khai Van Nhin finally was nabbed last week after most of his San Jose, Calif. ring was rounded up in June, prosecutors said yesterday. Ring members typically rammed each other’s cars while changing lanes on freeways, forcing one of the vehicles into guard rails, officials say. The suspected 25-member ring reported at least 22 fake accidents to a variety of insurers over four years. Ring members repeatedly used the same two cars. Most claims involved inflated collision damage but some involved fake injuries, officials allege. Nhin was arrested when police stopped him because his car didn’t have a license plate. He faces 24 years in prison if convicted.
  • Vito Manzella had no PIP coverage but made more than $68,000 in bogus claims by lying that he lived with a family member whose policy covered him, New Jersey officials charged Wednesday. In New Jersey, PIP covers people living in a home whose residents are licensed and insured drivers. But Manzella allegedly lived with a Camden County family member who didn’t have coverage. He was hurt in an accident and allegedly told New Jersey Indemnity that he lived elsewhere in the state with another family member who did have PIP coverage.
  • Insurance fraud is one of the charges plaguing U.S. Rep. Rick Renzi. The Arizona Republican allegedly siphoned more than $400,000 from his insurance agency over two years to help finance his congressional campaign. In non-fraud charges, Renzi also allegedly offered to sponsor legislation to help a company seeking to swap land with the feds if the company bought property owned by an associate. Renzi sat on the committee that approved such deals.
  • Roofing contractor Michael Amzie Holley avoided paying more than $700,000 in comp premiums by purchasing a minimum policy and failing to report most employees of his Santa Ana-area firm to his comp insurer, California prosecutors charged this week. Holley allegedly paid workers in cash under the table, hired unlicensed employees and leased employees from other companies. One of Holley’s employees filed a comp claim after being hurt when he fell from a roof. Holley denied him coverage, allegedly lying that the man didn’t work for him. Officials have been striking back at widespread premium scams around the state in recent months. In Riverside County, for example, a program is called CON Air. Helicopters swoop down on work sites, and officials jump out and ask for proof of insurance.
  • Carl Barcus posed as an agent and conned a 90-year-old man into buying 11 life-insurance policies even though Barcus had lost his license several years ago, Georgia prosecutors charged this week. Atlanta Financial Group had fired Barcus in 2004. But the elderly man paid Barcus $5,850, believing Barcus would buy the policies for the senior’s family members, Georgia insurance commissioner John Oxendine alleges. Barcus faces up to 10 years if convicted.
  • Two docs lured low-income pregnant women to a fake health clinic in order to bill California’s state-run health program more than $2 million for worthless tests, prosecutors charged Wednesday. Drs. Peter Shrier and Anna Gravich allegedly hired recruiters to persuade pregnant women walking by the clinic to stop in for treatments. The recruiters offered the women about $30 each. Recruiters were paid $100 for each pregnant woman they brought in, prosecutors allege. The women were told to use fake names and given needless tests. Some women received pregnancy tests though they were obviously pregnant. Others received needless ultrasounds and blood tests, officials say. The women also were told they’d receive more money if they returned for more tests using yet more fake names, prosecutors charge.
  • Too vague. That’s what Louisiana cardiologist Dr. Mehmood Patel says about a federal healthcare law defining how to determine if procedures are medically unnecessary. Patel did worthless procedures on 76 heart patients in a scheme that billed insurers more than $2 million, prosecutors charge. He allegedly did angiograms, angioplasties and stents on healthy patients. Patel wants the criminal charges dropped. Two hospitals where Patel worked have paid a combined $5.7 million to settle federal whistleblower suits.
  • Two sisters swapped identities so an uninsured sister could receive $30,000 in surgery at a Philadelphia hospital, the Pennsylvania’s AG Tom Corbett alleged this week. Tirhas Mekonnen let sister Woinshet Mekonnen use her medical ID card, believing Woinshet would get better medical care in the U.S. than her native Ethiopia, prosecutors say. Woinshet was treated by several doctors and home healthcare workers. The sisters each face up to 28 years in prison if convicted. Extradition proceedings also are being pursued.


  • A Southern California woman whose coverage was cancelled while she was being treated for breast cancer was awarded more than $9 million by an arbitrator. Patsy Bates had undergone surgery to remove a tumor and received two chemo treatments, but doctors dropped her when Health Net suddenly cancelled her policy. Bates faced $129,000 in unpaid bills. Health Net must pay her bills plus $8.4 million in punitive damages and $750,000 for emotional distress, the court ruled. The insurer says it’s also freezing policy cancellations and creating a third-party panel to review future cases. Health Net also is being sued in Los Angeles (see the Feb. 22 ePort).


  • Forget trying to torch your foreclosed home for insurance money, Trenton, N.J. mayor Doug Palmer warns city residents. “They would be in more trouble than having their house foreclosed on. They would go to jail,” Palmer recently told the Trentonian newspaper. “This arson issue may be unlawful, but it highlights just how desperate people are because of this mortgage meltdown. But people need to realize that insurance companies are not just going to sit by and allow this to happen.” The coalition is alerting the nation about a possible new trend of arsons by homeowners facing foreclosure during the subprime crisis. Palmer appears to agree.
  • Nevada Governor Jim Gibbons has created a task force to study the state’s problem with car theft and fraud. The task force, which includes public officials and insurer representatives, will identify the impact of theft and fraud on consumers, and recommend solutions. The NICB’s Judy Fitzgerald will chair the task force.


“Anytime, in this kind of crisis situation, with our own personal finances, it can put people in a desperate situation and desperate people sometimes do desperate things.”

—Bob Blume, State Farm fraud investigator, telling CBS (Denver) about the possible spread of arsons by desperate homeowners seeking insurance money to bail themselves out of foreclosure.


  • Employee admits stealing from Mich. insurance agency
  • W.Va. woman accused of “doctor shopping” for drugs
  • Maryland pain doc accused of filing false claims
  • Penn. couple accused of filing false homeowner claim
  • Calif. man accused of falsely reporting stolen Jeep

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