Insurance Fraud Weekly ePort: Week Ending Feb. 8

Feb 8, 2008


Insurance Fraud Weekly ePort
Week Ending February 8, 2008



  • The Maryland legislature is considering a bill requiring insurers to print warnings on claim and application forms, and insurance checks. HB 404 would both warn potential fraudsters, and create an evidentiary trail to help prosecutors prove intent and bring stronger charges.
  • The Utah House unanimously passed a bill expanding both the state’s fraud immunity law and mandatory reporting of suspected frauds. HB 93 would give insurers greater immunity to share anti-fraud information with one another and with NICB. The expanded reporting provisions seek to encourage insurers to report more cases to Utah’s fraud bureau. Similar legislation failed in 2007.
  • Vermont legislators are seeking to strengthen the state’s workers comp fraud-fighting capabilities. HB 756 would create a unit in the labor department to investigate suspicious comp claims. The bill also would raise penalties for comp frauds that steal less than $10,000: Convicted schemers could be fined up to $50,000 (now it’s $10,000) and three years in jail (now it’s two years). Swindlers who steal less than $900 could be fined up to $10,000 and receive up to two years in jail.
  • The Mississippi legislature is debating requiring property-casualty insurers to pay a claim within 90 days of filing. HB 754 appears to have no exclusion giving insurers more time to investigate suspicious claims. Most states give insurers more time to investigate possible schemes. The bill intends to force insurers to pay property claims quickly in a state that’s still recovering from Hurricane Katrina.

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



  • “Any time the economy turns south, and after these adjustable rate mortgages are reset, people get desperate,” the coalition’s Jim Quiggle says in a BestWire story about a possible spike in arsons by homeowners hoping insurance money will bail them out of foreclosures stemming from the subprime mortgage crisis. Though national data have yet to be compiled, a number of suspicious fires have wrecked homes facing foreclosure in recent months, Quiggle says. Fraud investigators are watching closely to see if the trend accelerates.
  • “It’s hard to say right now whether it’s a tsunami revival of these frauds or a handful of isolated warning flares, but clearly these scams don’t die easily,” the coalition says in an article in about fake health plans. The scams were widespread several years ago, preying on small-business owners anxious to find affordable coverage. Regulators shut down most of the fake plans, but there are early signs of a revival, the article says.


  • The first lawyer convicted under New Jersey’s anti-runner law will head to prison in March. Irwin Seligsohn received three years for running afoul of the state’s nine-year-old law making it a crime to use runners—or recruiters—for staged-accident rings. The West Orange man filed bogus injury claims for fake patients, knowing they weren’t hurt in car crashes. Seligsohn also disguised payments to runners as tax-deductible investigative expenses. The case began when Allstate and Prudential unearthed the staged accidents and alerted the state’s Office of Insurance Fraud Prosecutor. In an ensuing sting, Seligsohn paid an undercover agent $450 for runner services, entered into a retainer agreement with agents posing as fake crash victims, and executed a release for a fake crash. Some 50 people have been charged, with 27 pleading guilty.
  • Willie Quintana took his dump truck to a chop shop to “make it disappear,” then told his insurer the truck was stolen. But the Golden Gate, Fla. man received only probation this week despite being nailed by surveillance video. Law enforcement spied on a local body shop owned by Quintana’s crony Orlando Blanco. He was caught using a blowtorch to remove the bed from Quintana’s truck and place it on a red dump truck. A search of Blanco’s home also turned up five truck parts with ID numbers removed. Quintana denied he’d taken his truck in for repairs until confronted with the video, which showed him and Blanco together. Quintana then admitted that his truck engine had needed $9,000 in repairs, and that he’d agreed to pay Blanco $5,000 to cut up the vehicle so he could make an insurance claim.
  • In an elaborate kickback scheme, a claims adjuster, three Houston-area clinic operators and a personal-injury lawyer from Ghana stole more than $1.7 million from The Hartford. Staff adjuster Sandra Johnson issued Hartford checks to several clinics that didn’t exist or had provided no services. She received kickbacks from operators Theresa Williams, Dianne Winzer and Deandra S. Wade. A fourth schemer, attorney Eric Amoako, also received insurance payouts even though his clinic was defunct. Each faces up to 20 years in prison and large fines when sentenced this spring.
  • Talk about family values. With their eyes on an insurance payout, May Xiong and her son Pao torched TMX May’s Supermarket in Green Bay, Wisc. May doused the store with isopropyl alcohol and gasoline, and stacked wooden pallets along the wall. Pao returned late that night to light the blaze. May later filed a $794,833 claim after the store was ruled a total loss and demolished. The store was failing, and was being investigated for food-stamp fraud. Mother and son each faces up to 20 years in federal prison and $250,000 in fines when sentenced. The son’s friend, Xee Vue, faces up to 10 years for giving a false alibi. All will be sentenced in April.
  • Christopher A. Falco used a dead man’s Social Security data, driver license number and other information to illegally buy auto coverage for two vehicles, Massachusetts prosecutors say. Falco’s driver license had been suspended six times in four years because of traffic violations. The Quincy man’s license also was suspended at the time he sought coverage. Posing as his ex-girlfriend’s deceased father would’ve saved Falco nearly $2,000 in insurance in part through a 25-percent senior-citizen discount. Falco is the son of Quincy’s former police chief.
  • Nine Miami-area swindlers ran fake medical firms that billed Medicare nearly $57.6 million for worthless medical goods and services. Luis Soto billed more than $47 million through bogus medical-supply firms that charged for wheelchairs, oxygen concentrators, nebulizers and other durable goods he didn’t provide to seniors. He received 87 months in federal prison this week. Noel Rodriguez ran a fake medical-supply firm called OxyCare that billed Medicare $1.2 million for needless oxygen concentrators, hospital beds and pressure-reducing mattresses. He received 51 months. Jose Prieto and Armando Jorge Herrera made more than $900,000 in bogus claims for useless HIV treatments. Others were convicted as well. Prieto received 41 months, and Herrera 36 months.
  • A UK surgeon and his nurse wife used her mother’s cancerous tissue to back a false breast-cancer claim that bilked two insurers of more than EUR730,000. But DNA tests trumped the scheme by Emad Massoud and his wife, Gehan. After pretending to operate on his wife, the Dublin, Ireland surgeon gave Mater Hospital tissue he claimed he’d removed from her breast. In fact, a friend had brought the tissue to Ireland from Egypt, where Gehan’s mother had undergone breast cancer surgery. DNA tests proved the tissue had come from her mother. The Massouds await sentencing in March.
  • Daniel Winn and his insurer don’t see eye to eye. The retired deputy in Spartanburg, S.C. sought a $50,000 payout from Stonebridge Life Insurance by lying that his eye was struck by branches hauled by a passing truck. But Winn didn’t even seek medical care until a routine doctor appointment six weeks later. At that time, his eye doctor said diabetes had caused the damage. But Winn used White-Out to hide the diabetes reference in the doc’s report, and altered the form to say he was a victim of a hit-and-run. Winn received three years probation.


  • A 185-year-old landmark home outside Rome, Ga., was torched for more than $1 million in insurance money, authorities say. Ware House owner Wayne Franklin Christian, who has collected $15,000 in living expenses since the August blaze, allegedly hired someone to set the historic home afire and interfered with firefighters’ efforts to save it. Christian also reported his 2001 Mercedes stolen after having someone torch it for insurance money, police say. He collected $20,000 for that claim.
  • Last Saturday wasn’t a good day for Brandon Koff. The San Francisco-area man told police that his 1999 Lexus had been stolen, with $2,000 of his boss’ money inside. Eight minutes later the car was found—on fire. The money also was found—in Koff’s home, police say. Koff was booked into the Solano County Jail.
  • A worker at a Bangor, Me. doctor’s office forged more than 100 prescriptions for narcotic painkillers for relatives, then billed the drugs to the state’s insurance program for low-income people, prosecutors charged Monday. Christina Hesseltine allegedly created prescriptions for OxyContin, Percocet and other narcotics to help her daughter Ashlee and the daughter’s boyfriend obtain the drugs. MaineCare allegedly footed the bill.
  • A clinical psychologist claimed she was injured and couldn’t work for the rest of 2004. Dr. Alice Berkowitz filed $117,000 in longterm disability claims with Liberty Mutual and UnumProvident, but still kept seeing as many as 40 patients, California prosecutors charged yesterday. The Beverly Hills woman allegedly received more than $140,000 in patient billings during this time. The state insurance department and the insurers teamed to investigate. Berkowitz faces up to five years in state prison if convicted.


A Missouri appeals court upheld a lower-court award of punitive damages for wrongful claim denial and malicious prosecution by an insurer that had contended the policyholder had torched her car for insurance money. State Farm denied Jennie Hampton’s claim after she said someone stole and later burned her car. A lower court awarded Hampton and her boyfriend more than $4 million each. The insurer’s witnesses weren’t credible, the court said. The court also believed Hampton’s contention that she’d driven the car the night before the claimed theft. State Farm had argued the car had had a total engine breakdown and was towed to the site where it was burned [Hampton v. State Farm Mut. Auto. Ins. Co., No. 66791 (Mo. Ct. App. Jan. 8, 2008)].


The Mormons have it in for him, says a Utah man convicted of hiring two construction workers to kill his wife for life-insurance money. Paul Allen contends he’s the victim of religious discrimination by Utah’s justice system. He has received unfair treatment because Utah courts are ruled by a “theocracy” comprised of members of the Mormon church, he says. Allen was convicted of killing wife Jill in 2000 for a $250,000 insurance payment. He lost his first appeal, and his second appeal will come before the state’s high court next week.


  • The vast deserts around Barstow, Calif. are convenient graveyards for vehicles the owners have discarded for insurance money, officials say. Deputies routinely find cars from around the state and nearby Nevada; 20 of the 80 vehicles recovered last year came from beyond Barstow. Some were vandalized, some were burned and some were just left in the hot sands. The Barstow sheriff’s department runs license plates of any vehicle abandoned in the desert, or on a roadside or interstate ramp. Helicopters also scan for vehicles in especially remote parts of the desert.
  • A state audit says Georgia’s fraud bureau investigates few cases and often allows the four-year statute of limitations to expire without acting against suspected schemers. The bureau referred 17 fraud cases for potential prosecution in fiscal 2006. Of 203 cases “resolved” in 2006, about 68 percent were closed because the statute of limitations ran out, the audit says. Slim resources are a big problem, the audit concedes. The fraud unit has six investigators while New Jersey, with a slightly smaller population, has 270 employees in its fraud unit. South Carolina has 12 investigators but less than half of Georgia’s population. Few insurers report suspected scams to the fraud unit despite a state reporting requirement, Georgia’s insurance department adds. Auditors used the coalition’s annual statistical study of fraud bureaus as a basis for their report.


“We tend to suspect the burned ones. We tend to suspect insurance fraud or that the thief is trying to hide is his tracks.”

— Barstow, Calif. police Sgt. Manny Mendoza on the large number of vehicles found suspiciously abandoned in the surrounding desert.


  • Fraud fugitive found shoplifting at Indiana Wal-Mart
  • North Carolina halts sales by bogus health insurer
  • Doc in California accused of $117K disability fraud




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