Insurance Fraud Weekly ePort: Week Ending July 18

Jul 18, 2008

Insurance Fraud Weekly ePort
Week Ending July 18, 2008



  • The Massachusetts Senate approved a bill requiring the state’s registry of motor vehicles to permit auto insurers computer access to driver’s license info. SB 2120 would allow insurers investigating suspected auto frauds to be able to see the online info. The state would charge insurers for access. Insurer investigators say having quick access to this data will aid detection of auto fraud scams.
  • The New Hampshire governor signed SB 500 into law, which creates a task force to study misclassification of employees by businesses. Lying about worker classification is a major element of workers comp premium fraud. The 15-member task force will include two insurer representatives appointed by the governor. The bill also increases the penalty for employers who fail to obtain workers comp insurance.

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



  • What does insurance fraud look like? A new feature on tries to answer that question with a photo gallery of people recently convicted of insurance scams. The images, along with a little information on what each did and how they’re paying for their crime, will help put a face on fraud and demonstrate that people of all stripes commit fraud — and get caught doing it. See FraudBlog for more details.


  • Aisa Perera tried to rob Medicare of more than $11 million using a fake Miami clinic to provide phantom HIV services to patients. Perera helped run the Saint Jude Rehab Center, which claimed to provide HIV infusion services. She and several cronies billed Medicare $11.3 million in bogus infusion claims, paying HIV patients $100 to $150 each in kickbacks to use their names. The con artists hired a medical billing firm to process the bogus bills. Perera received 30 months in federal prison this week. Saint Jude was part of a massive Medicare swindle. Medical biller Rita Campos-Ramirez charged Medicare approximately $170 million for fake HIV infusion claimed by 75 HIV clinics. She received 12 years in federal prison.
  • Darin Still’s dead aunt lived on through her disability checks. The Rahway, N.J. man kept cashing and depositing her checks for months after she died. Still never notified Unum Provident that she’d died, and fraudulently cashed 30 checks worth $24,630 made payable to her. He’ll be sentenced in September. The state Office of Insurance Fraud Prosecutor led the probe.
  • Former New Mexico deputy insurance superintendent Joe Ruiz received four years in prison Tuesday for soliciting insurers to donate charity money in exchange for reducing regulatory fines. Ruiz told insurers to fork over money to the health foundation Con Alma or the Southwestern Arts Institute. Con Alma was founded by Eric Serna, the state insurance superintendent at the time. The institute bought bilingual children’s books — mostly written by Ruiz. He worked for the insurance department from 2002 to 2005.
  • Life without parole. That’s the fate of two elderly California women who befriended then killed two homeless men after secretly taking out life policies naming the women as beneficiaries. Helen Golay, 77, and Olga Rutterschmidt, 75, desperately – and fruitlessly — blamed each other during their trials. Paul Vados was found dead in a Hollywood alley after being run down by a vehicle. The women pocketed $600,000 in life insurance money. They raked in more money when Kenneth McDavid’s mangled body also was discovered in an alley, apparently run over as well. His DNA later was found on the underside of a station wagon, which someone using Golay’s auto club membership had towed the night of his death. A secretly recorded conversation also caught Rutterschmidt berating Golay for taking out 23 life policies that raised red flags when the men died. 
  • A Miami woman and two daughters stole $14 million from Medicare in bogus claims. Maria Hernandez, Marta Jiminez and Maivi Rodriguez billed for unneeded medicine, medical equipment and pricey home-care services. The trio paid kickbacks to 60 Medicare patients to run phony claims through their firm, Action Best Medical Supplies. The patients gave their Medicare cards to the women, who worked with local pharmacies to turn in bogus medical claims. In one scam, the women falsely diagnosed the patients and prescribed aerosol medication. Some of the aerosol was brewed by a cohort who was trained as an auto mechanic. The women face between 30 and 51 months in prison when sentenced.
  • A Washington, D.C. pain doc received three years for scamming federal health agencies out of $1.75 million. Martin McLaren, owner of Pain Management Center, billed Medicare and Medicaid for care and services he never delivered over five years. McLaren didn’t even need the money, prosecutors pointed out. His clinic earned millions of dollars before he began sending out bogus bills. “He is here because of flat-out greed,” assistant U.S. Attorney Thomas Zeno said at McLaren’s sentencing. McLaren will pay the feds $5 million in addition to his three-year jail term.


  • Investigators smelled a rat. Literally. Debbie Miller planted a dead rat in her meal at a restaurant and tried to extort $500,000 in insurance money by threatening to go public, Wisconsin prosecutors charge. Miller allegedly leveled the threat against The Seasons restaurant, an upscale eatery in Grand Chute. The restaurant says it lost business once rumors began circulating around town, but the owner was forced to keep quiet while police investigated. But the rodent couldn’t have been cooked in Miller’s meal, Secura Insurance said after doing a lab analysis of the rat. She faces up to 3 1/2 years in prison if convicted.
  • Two New Jersey agents are accused of stealing around $500,000 in premiums and related money from unsuspecting commercial clients. William Wolnski and Thomas Hurd issued fraudulent insurance ID cards to taxi and limo clients, and stole unearned premiums that should’ve been returned to the clients when they cancelled policies, prosecutors charge. They and other agents were supposed to place commercial coverage with an insurer American Transport. But the outfit wasn’t licensed in New Jersey, and the agents also used fraudulent premium financing to steal more money, prosecutors say.
  • A suspected scheme to provide illegal immigrants auto coverage earned a Delaware junkyard owner a date in criminal court. William Hrazanek charged illegal immigrants $1,800 a year to insure and register their cars. About 40 cars were registered under a rider on his Rabbit City Junk umbrella policy, costing him just $30 per vehicle. But the worm turned when police noted an unusually high rate of traffic stops involving illegal immigrants, and found the cars were registered to Hrazanek’s business. The suspected scheme may have cost $522,823 in lost premiums, his insurer says.
  • Two New York State employees tried to bilk their comp insurers, state prosecutors charged this week. Family services employee Dean Dale said he was injured on the job and collected nearly $9,000 in comp money, but the Attica man allegedly was caught working at the Batavia Downs Racetrack several times. His name also was on the track’s employee log. Attica corrections officer Darren Krawczyk also said he was hurt on the job, and received more than $13,500 in comp money. But he was working at the Western New York Equine Clinic, prosecutors allege.
  • A woman’s tendency to outlive five husbands and a son has North Carolina authorities investigating whether she killed them for life-insurance money. Betty Neumar sits in a North Carolina jail for allegedly hiring a hit man to murder her fourth husband, Harold Gentry. Four ex-husbands and one son died under mysterious circumstances, which authorities are now investigating. Neumar grabbed $20,000 in life-insurance money after Gentry was shot to death in his home. She collected on a $100,000 life policy after her son also died from a gunshot the year before. Neumar was set to collect on an insurance policy taken out by her fifth husband John Neumar, who died earlier this year of possible poisoning, authorities say.
  • Eleven people connected to a Brooklyn, N.Y. medical clinic were charged yesterday with participating in a massive no-fault insurance scam. According to the FBI, the Avenue K Clinic acted as a medical mill, recruiting patients with non-existent injuries to bilk auto insurers. Among those charged was clinic owner Samuel Vilshanetski and several runners, who were paid up to $2,000 per patient. During the last two years, the clinic filled more than $3.6 million in claims with insurers.


  • An insurer can rescind a policy even when material misstatements in the application weren’t willful, a New York appellate court has ruled. Precision Auto Accessories tried to recover from Utica First Insurance after its business was wrecked by fire. Utica denied the claim and rescinded the policy, saying Precision had made material misstatements about its claims history in the application. Precision sued, arguing the misstatements weren’t willful. But an insurer doesn’t need to prove they were willful, the court ruled. Nor did Utica waive its right to rescind because it knew of Precision’s misrepresentations before the fire. That knowledge alone doesn’t create a waiver where Precision failed to establish it had paid premiums to Utica after the insurer allegedly knew about the misstatements [Precision Auto Accessories Inc. v. Utica First Ins. Co., No. 05129 (N.Y. App. Div. June 6, 2008)].


  • The Los Angeles city attorney is suing Blue Shield of California for $1 billion, alleging more than 850 policy rescissions were illegal. The city accused the insurer of using complex and confusing applications that make it easy to rescind the policies later instead of paying valid claims. But close scrutiny helps weed out fraud, the insurer responds. Blue Shield also has paid out nearly $4 billion in claims to 400,000 policyholders, and two regulators reviewed its applications, the insurer adds.


  • More signs of the times: Arsons of vehicles and buildings have reached a 20-year high in Bibb County, Ga., possibly because people are unloading gas-gobbling vehicles, local officials say. Many are high-end SUVs with low gas mileage. In fact so many vehicles are going up in flames that Geico is training its investigators to better probe damage caused by fires and explosions. Insurers also are concerned about the rising number of home fires throughout the Peachtree State, the Georgia Insurance Information Service says. Insurers are watching closely for economy-driven home arsons, according to news reports.
  • Russian and Albanian groups “are more like criminal enterprises than organized crime,” FBI agent Dennis Bolles, who heads the squad investigating them, told CNN this week. “Whether it is insurance fraud, bank fraud, identity theft, Medicaid fraud, securities fraud, mortgage fraud [or] multimillion dollar scams, the Russians are very sophisticated,” Bolles says. “They are very educated people. Some are former KGB. Some are former government officials — master’s degrees, PhDs, and now they find themselves in the U.S. and they are using those brains to commit scams.”
  • From our “Sounds Familiar?” file: The credit crunch could spur a fraud crunch in the UK, officials warn. “If unemployment rises as suggested by movements in the market over the past week, it is very likely that we will see fraudulent insurance claims rise significantly,” Nikki Grieve, head of intelligence, research and development at insurance consultant Innovation Group, told the UK’s Post Magazine. “These claims are multifaceted and complex, but are likely to be the result of difficult personal circumstances, such as job losses or the rising cost of mortgages, food and fuel. By the end of the summer, we will know conclusively what the real impact of the credit crunch is on fraudulent behavior, but initial indicators do not look good.”


“They will die in prison. I think that’s a just sentence.”

— A relative of one of the victims of Helen Golay and Olga Rutterschmidt, who were sentenced this week for purchasing life insurance on elderly men and having them killed [see Criminal Convictions above].



  • Three in New Jersey charged with staging carjacking
  • Ohio woman found guilty to setting home on fire
  • Concrete firm in N.Y. guilty of $211K workcomp fraud
  • Kentucky woman indicted for filing false auto claim
  • Florida couple charged with ‘doctor shopping’ for drugs

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