Insurance Fraud Weekly ePort: Week Ending May 2

May 2, 2008

 

Insurance Fraud Weekly ePort
Week Ending May 2, 2008
http://www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The Louisiana House overwhelmingly approved a bill making it a crime to forge or produce bogus auto-insurance cards. HB 333 now goes to the Senate. The legislature stays open through June, so there will be plenty of time for action on the bill.
  • Two governors have signed anti-fraud bills into law. In Iowa, House File 2555 requires insurers to report schemes involving insurance applications. In Minnesota, Senate File 2765 works to close down recruiting of crash victims for fake injury claims. The new law restricts medical providers from contacting crash victims face to face, via email or by telephone unless the crash victim voluntarily initiates the contact. Providers only could use ads such as billboards or mail flyers, and the ads must be clearly labeled as such.
  • The Vermont House and Senate are ironing out the differences in a major workers comp reform package. SB 345 passed both chambers with slightly different provisions. The bill includes a provision — not under debate — requiring workers comp insurers to file an anti-fraud plan with the state department of labor. The plan covers bogus claims by workers, and employer premium scams such as misclassifying workers and lying that their business performs lower-risk work than it really does.

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

PUBLIC OUTREACH

  • Virginia’s annual Insurance Fraud Awareness Week will take place May 4-10 throughout the state. The awareness program is spearheaded by the Virginia State Police, whose ongoing Stamp Out Fraud program has gained considerable visibility for the agency’s anti-fraud efforts in recent years. The governor’s proclamation will be presented next Wednesday at an award luncheon in Richmond, where fraud fighters will receive awards for outstanding achievements. The luncheon is sponsored by the Virginia chapter of IASIU.
  • Ohio’s insurance department is working to protect seniors from insurance crooks during national Older Americans Month, which takes place this month. Medicare scams, Stranger/Investor Originated Life Insurance (STOLI) and unsuitable annuities are being targeted. Seniors are being cautioned to avoid STOLIS altogether, and are urged to review all insurance products with a trusted financial advisor or family member before buying.
  • Shady discount health plans are in the crosshairs of California regulators who are working to alert consumers during national Cover the Uninsured Week. Discount plans promise reduced rates for medical treatment that members have to pay from their own pockets. Many discount plans are legit, but shady outfits are targeting low-income immigrants and others who can’t afford full health coverage. Many discount plans pretend to be insurance, charge hidden fees and inflate the number of medical providers in their purported networks. “In the past month, we have seen a substantial increase in the number of complaints regarding discount plans, so it would appear that some fraudulent companies may once again be marketing heavily in California,” writes Cindy Ehnes, head of the state’s department of managed health care in yesterday’s Capitol Weekly.

CRIMINAL CONVICTIONS

  • Chutzpa, thy name is Chitpaseuth. Jovi Chitpaseuth and his girlfriend Michelle Neak couldn’t keep their stories straight when reporting an auto accident. The crash was a hit-and-run job and no passengers were in his car, Chitpaseuth told Lowell, Mass. police. But then they told his insurer that she was in the vehicle during the accident. Their story changed yet again when Chitpaseuth later told his insurer an unknown red car hit his car from behind. But Lowell police had a video of the scene from an unrelated investigation. It showed Chitpaseuth pulling up to the intersection, with “numerous passengers” getting out and striking a second vehicle with baseball bats. The second car then rammed Chitpaseuth’s vehicle while speeding away. The video showed no sign of Neak inside the car or nearby. Chitpaseuth received five years of probation, and must have no gang affiliations. Neak received two years of probation. The Massachusetts fraud bureau played a lead role in this investigation and numerous other staged-accident probes around the state.
  • Pharmacist Lisa St. Peter ran an Internet fraud operation that fleeced Medicaid out of millions by delivering addictive prescription drugs to virtually all comers. The Carnegie, Pa. woman billed Medicaid for phantom drug orders through a pharmacy she and several cronies operated. St. Peter and a website operator also supplied the addictive painkiller hydrocodone to online buyers, officials allege. Doctors recruited by the website wrote the prescriptions, often based only on answers to a brief Internet questionnaire. Her pharmacy dolled out 3.7 million pills. St. Peter received 20 months in federal prison.

CRIMINAL CHARGES

  • Witnesses have proven very inconvenient for Robert Andrew Nelson. The Cathedral City, Calif. man told his insurer that someone stole his 2005 Ford Expedition from his driveway in the middle of the night, wrecked it and drove it on three wheels back to his driveway. Nelson said he went to bed early that night after hosting a party, and heard neither the theft nor the banged-up vehicle limping back to his home. He received $26,000 from his insurer. But Nelson actually had struck a vehicle himself early that morning, and a witness named him the driver, California’s insurance department charges. Another witness allegedly saw Nelson walking near the SUV and into his home after the crash. A third witness says there were no extra vehicles at his home despite the supposed party.
  • Two New Jersey educators may need ethics lessons after allegedly torching a leased car to avoid extra-mileage fees. Terrence Wilkins, a principal and former Red Bank, N.J. ‘educator of the year,’ paid school guidance counselor Kenyatta O’Bryant $600 to burn up his 2004 Acura TL for insurance money, prosecutors say. The car was found in flames in a Newark high school parking lot. Wilkins reported it stolen the next day and filed a claim. Wilkins would’ve owed $9,000 for exceeding the mileage limit when his lease expired in a few months. Wilkins and O’Bryant each faces up to 10 years if convicted. More than 400 auto arsons occur each year in Essex County, compared to an average of 25 in most other counties in New Jersey, says the Office of Insurance Fraud Prosecutor.
  • Denise Albanese’s calendar and clock are way off — and criminally so, New York prosecutors charge. The Staten Island, N.Y. woman said she last saw her Mercury Mountaineer in front of her home around 10 p.m. on January 20. Albanese made a theft claim with Geico. But fire fighters found the burning vehicle at a roadside in Connecticut. That was nearly 100 miles away and 23 hours earlier than when she claimed she saw her Mountaineer at home, officials charge.
  • A suspected owner giveup turned into a weapons charge. Jabeza Ganesh and his girlfriend Carmela Destefano got into a crash on the Staten Island (N.Y.) freeway. The pair allegedly dumped the Mazda 6 at a campground, breaking the windows before they left, prosecutors say. She then told her insurer the car had been stolen, listing a theft date before the crash. Her story didn’t sit well with investigators, and Destefano confessed to the suspected plot, officials say. When Ganesh came to the police station for questioning about the incident, he was slapped with a warrant for illegal possession of guns. Police had found a gun stash at his home during an earlier search.
  • Four men launched a watery insurance con to supplement a mortgage scam, New York officials charged Tuesday. Lenders allegedly lost millions when the suspected gang fraudulently brought houses and then defaulted. But the foursome also made bogus and inflated insurance claims for water damage at several of those homes in the Westchester County area, officials say. Working with a firm specializing in emergency water cleanup, the gang broke water pipes to seemingly legitimize the water damage, prosecutors say. Dominick Devito, Robert Didonato, John Liscio and Louis Cordasco Jr. are charged.
  • A well-read employer and errant bullet took down an Anderson, Ind. man suspected of soaking Blue Cross/Blue Shield for about $123,000 by claiming his girlfriend was his wife. Bernard R. Fogle worked for Culligan Water and lied that Teresa Cole was his wife to get her health coverage under Culligan’s group health plan. She rang up about $123,000 over several years. But the alleged caper collapsed when Fogle accidentally shot her in the foot while working on his muzzle-loader rifle. The shooting incident showed up in the local newspaper, which identified Cole as Fogle’s girlfriend. The folks at Culligan Water became suspicious after reading the story, and fired Fogle after he admitted to falsifying health-insurance and employment paperwork. Fogle faces up to eight years if convicted.
  • Michael Stinson posed as a physical therapist and treated injured workers for six years without a license, prosecutors say. He fleeced the Ohio Bureau of Workers’ Compensation for more than $2 million, prosecutors say. An exercise physiologist, Stinson opened his Loveland-area business Reconditioning and Exercise Physiology Specialists in 2001. He used provider numbers from a physical therapist and a doctor to bill workers comp insurers, federal prosecutors say. Stinson is expected to plead guilty to mail fraud and tax evasion, officials say. He faces up to 20 years in prison.

CIVIL & ADMINISTRATIVE ACTIONS

  • A team of lawyers suing State Farm for allegedly defrauding the feds after Hurricane Katrina illegally infiltrated the insurer’s database to try to build its case, the insurer charges. State Farm is asking a federal judge in Mississippi to disqualify a law firm for misconduct. The original suit involves two sisters who worked for a State Farm contractor that assessed hurricane damage. But State Farm claims the sisters illegally used a laptop to access State Farm databases during meetings with one of their lawyers.

ETC.

  • “Michigan’s unaffordable insurance rates are driving people out of Detroit and other large cities. They are practically forcing thousands of motorists to commit fraud to secure coverage or go, illegally, without it,” yesterday’s Detroit Free Press says in an editorial urging changes in Michigan’s no-fault system. “Easing this problem will require changes to Michigan’s no-fault insurance law to allow drivers the option to lower rates by buying less medical coverage, as they can in other states. It’s not a perfect solution…(But the) costs of continuing the current system now outweigh the benefits.”
  • The head of the Martin Luther King Jr. Commission may have been involved in staged accidents several years ago, the Arkansas insurance department said this week. DuShun Scarborough hasn’t been charged yet, but he allegedly was a passenger in vehicles used in suspected staged accidents between 1996 and 2000. Scarborough received about $15,000 in insurance money for five claims involving medical treatment and collision damage. The claims were based on “misrepresentations” he made about his claim, the cause of the collision and the extent of his injuries, the department says. In one incident, he was a passenger in a rental car that deliberately rammed another vehicle, the department alleges. Two Little Rock cousins, Mark Anthony and Rick Watson, are accused of running a staged-accident ring for almost 12 years.

QUOTE OF THE WEEK

“We sometimes throw prison time around like it’s nothing. But years mean something.”

—Pittsburgh defense attorney William Manifesto commenting on a pharmacist who received 57 months in a drug fraud case.

OTHER HEADLINES THIS WEEK

  • Two W.Va. men sentenced for role in staged accidents
  • New Zealand man fakes death for insurance money
  • UK woman caught on camera working while receiving benefits
  • Philly man accused of blowing up home for insurance $
  • Mo. man bilks seniors out of health coverage

Details at www.InsuranceFraud.org/

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