Insurance Fraud Weekly ePort: Week Ending May 30

Jun 1, 2008

Insurance Fraud Weekly ePort
Week Ending May 30, 2008


  • The Louisiana legislature passed a bill targeting the marketing of phony auto-insurance cards. House Bill 333 makes it a crime to make, sell or distribute fraudulent cards. The governor is expected to sign the bill shortly.
  • The New Hampshire legislature passed a bill targeting workers comp premium scams by businesses. SB 500 raises the penalty from a misdemeanor to a felony for businesses that purposely fail to obtain state-required comp coverage. The bill also creates a state task force to study misclassification of employees, a large source of comp premium scams. The bill should soon go to the governor for his expected signature.
  • The New York legislature is on the verge of changing the date by which insurers must file annual fraud reports with the state fraud bureau. The Assembly passed AB 10371, which would change the reporting date from January 15 to March 15 each year. The Senate should take up its version (SB 7368) before the expected end of the session later in June.

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


  • The feds are touting recent successes in combating insurance fraud (see ETC. below), but the bigger picture appears less-rosy, the coalition’s Dennis Jay says in his latest FraudBlog posting. “A peak inside the FBI’s website reveals why the agency doesn’t wish to highlight year-to-year trends. Health care fraud cases are flat, at best, and insurance fraud cases have declined in each of the last four years,” Jay writes. “…The federal government plays an important role in investigating and prosecuting fraud, and in helping to send a strong message that aggressively fighting fraud is important for government agencies, insurers and society in general. Weakening those efforts hurts us all.”
  • IASIU is seeking nominees for its annual fraud-fighting awards, among the most-prestigious in the business. IASIU will honor top performers with the Investigator of the Year, Public Service, Outstanding Service and Analyst of the Year awards. Deadline for nominations is July 18. Visit IASIU’s website for more information.
  • Watch out for suspicious cars that may be setting you up for a staged crash now that summer vacation driving season is underway, California’s insurance department is alerting residents. Warning signals: The other car is an old clunker packed with passengers; the other driver has a relatively new policy; and the other car stops suddenly even though traffic is moving smoothly. The warning is more than rhetoric, the department says. Nearly three of five case referrals involved auto-related schemes in 2006-2007.
  • From our “We Feel Your Pain” file: A columnist for the Ugandan newspaper The Monitor received a reader’s call advising that people were selling their car radios in a local marketplace and then making bogus theft claims. “This particular caller was shocked to an almost comatose level when I told him…that insurers might actually be extremely smart when it comes to such matters and that what he was describing was actually attempted fraud which could end up in you enjoying prison food for a considerable period of time,” the columnist writes.


  • A Lexington, S.C. man won’t receive any academy awards for allegedly staging a traffic accident that netted him $9,000 in phony insurance claims. David Roberts told police a vehicle rammed his car early one morning. Roberts said he was injured and that his car was a total loss. But Roberts had asked crony Barry Hughes to intentionally crash into his vehicle while Roberts exited stage left to a safe spot nearby. Roberts also helped fake his injuries by scratching his face with glass from the shattered windows. He received two years in the pen and must pay State Farm $8,602.
  • Three businessmen who cheated millions of employees out of workers comp coverage received 55 years total yesterday in a $75-million insurance schme, one of Florida’s biggest insurance cons ever. Donald Edward Touchet, Richard Standbridge and Robert Jennings helped con tens of thousands of small businesses into buying fake workers comp coverage. The trio created sham firms that performed administrative functions for a crooked employee leasing company called Miralink, which provided the fake coverage. Millions of workers thus had no coverage. One man lost both legs in a work accident but could afford only one prosthetic leg. A trucker suffered brain damage from a job injury but had no salary or hospital benefits; he lost his home and marriage. Touchet received 22 years in federal prison; Standbridge received 18 years and Jennings 15 years. The trio also must repay $75 million.
  • If nothing else, the crooks were consistent. Samantha Demetro and two cronies staged nine crashes in Passaic, N.J. to bilk insurers with fraudulent claims for injuries and collision damage. They collected $63,000 in insurance money. All nine crashes happened on the same Rte. 21 exit ramp in Passaic, and all involved a 1995 Crown Victoria or 1983 Porsche 928. Demetro pleaded guilty this week, and faces up to five years in state prison when sentenced in June.
  • Ronald Hartner said he was injured on the job and couldn’t work anymore. The Tallahassee-area, Fla. man collected more than $91,000 in workers comp money. So why was he videotaped lugging boxes into a moving van during this time? No explanation, or at least not a good one. Hartner received a whopping 10 years on Wednesday, and must repay the stolen money.
  • Douglas Poole made a legitimate comp claim because of a job injury in 1992 at a construction site in the Boston area. But Poole began working again, taking $34,715 in workers comp money while operating a snowplow for the town of Spencer and doing roofing jobs on private homes with his own company. Poole kept signing insurance forms saying he wasn’t working or receiving any added income while collecting comp money. He received 2 1/2 years for fraud, and five years probation for larceny. He also must repay Liberty Mutual. The Massachusetts fraud bureau assisted in the investigation, and the state AG’s office won the conviction.


  • The agent charged with killing an investigator may have stolen money from his agency and clients, North Carolina officials said yesterday. Michael Arthur Howell allegedly murdered state insurance examiner Sallie Jordan Rohrbach, who was investigating his agency. At least 250 clients of the Dillworth Insurance Agency in Charlotte have complained about problems with their coverage. Another five written complaints involved policies that allegedly were cancelled for nonpayment, or never issued even though the clients say they paid premiums to Howell. GMAC Insurance had told Rohrbach it was concerned premium payments weren’t being forwarded promptly, and the money sent was different than the money clients had paid. Rohrbach disappeared May 14 and her body was found last week in a rural area.
  • The street theft was upsetting to Shabnam Barekzai, assuming the heist actually happened. Barekzai said an African American man in his 20s stole her wedding ring at knifepoint as she left a Macy’s department store in Antioch, Calif. She made a $46,000 insurance claim just hours later. Barekzai described him intimately — 5-10, medium build with a thin moustache, wearing a black baseball hat with red embroidery. But the store’s security camera showed no robbery took place, prosecutors say. Nobody was standing where she said he stood, officials allege. Barekzai’s insurance policy also was about to be cancelled due to poor credit history. Police haven’t found the ring, but a search of Barekzai’s home and vehicle allegedly uncovered evidence she sold the jewelry.
  • Her life and finances falling apart, Mia Gayshonne Dix torched her home for an insurance payout, Florida prosecutors charge. The Tampa woman had lost her job, her car was repossessed and she faced foreclosure. The December fire started in the kitchen and caused $17,000 in damage. Dix was moving out and had the only keys to the $101,378 home, officials say.
  • Three corrections officers will join their former inmates if New York prosecutors have their way. Scott Tadt said he was hurt in an “incident” with an inmate at a correctional facility in Brocton. He received nearly $17,000 comp money but allegedly was caught working for his Fredonia-based concrete company…Jennifer Dubel said she was hurt in an incident with an inmate as a nurse at a facility in Alden. But she collected nearly $13,700 in comp money while allegedly working as a health-care specialist on weekend duty as a military reservist…Joseph Fiederowicz said he was hurt at Attica, but allegedly worked as a bartender and cook at a tavern in Buffalo while receiving more than $12,500 in comp money.
  • Wal-Mart may have experienced a “blue light special” of fraud after a suspected disability scam netted $9,000 in fraudulent payments. Tomica Cooper of Willingboro, Pa. allegedly filed two bogus short-term disability claims with the retail giant. Cooper aroused suspicion after making a claim and then returning to work only a month later while still collecting benefits, the state AG reports. Cooper later impersonated a doctor’s employee in a phone call to her insurer while trying to make a long-term disability claim. Cooper faces up to 10 years in prison plus weighty fines and restitution if convicted.


  • No error here, the Texas Court of Appeals says. Gary Quintansky fraudulently lowered his workers comp premiums by arranging a fake sale of his crane company to an employee to hide his true ownership, and by lying about the size of the company’s payroll. He thus avoided Texas Mutual’s experience-rating system. A trial court ordered Quintansky to repay Texas Mutual more than $5 million in stolen premiums plus $2.5 million in exemplary damages. He also hit a brick wall in the appeals court. It found that the jury finding was legally and factually sufficient, and that the large award was fair [Quintinsky v. Tex. Mut. Ins. Co., No. 03-07-00299 (Tex. App. Apr. 30, 2008)].


  • California’s insurance department will strike a blow against fraud by pursuing five new actions recommended by a task force in which the coalition took part. The initiatives released in a lengthy report this week include: Create a fusion center so law enforcement can better share info and identify emerging trends and crime patterns…Better train SIUs to recognize, document and report suspected schemes…Honor insurers for outstanding anti-fraud efforts…Increase efforts to educate the public about the costs of fraud…Better recruit and retain investigators, including giving pay upgrades. The coalition served on the task force’s advisory committee.
  • The rocky economy and rising gas prices continue prompting drivers to torch unwanted vehicles. The latest locale is New Hampshire, where officials see a statewide spike in vehicle arsons, especially gas-inhaling SUVs. “In a recession, we see an increase in arson because people are overextended or living beyond their means,” Portsmouth Fire Chief Christopher LeClaire told the Portsmouth Herald News this week. “When times are good, huge car payments don’t seem to be an issue, but when people get laid off, lose their job or can’t make ends meet, they can’t afford to keep these vehicles.” Most vehicle arsons are happening inland in New Hampshire, but fire officials in coastal regions are watching closely. “We look at things that may not look right,” LeClaire said. “If it was sitting in the driveway and hasn’t been running then all the sudden sets on fire, is a little different than if the driver was going down I-95, smells smoke, and then it’s on fire.”
  • Global security giant G4S has acquired longtime coalition member MJM Investigations to gain a toehold in the insurance-fraud investigation market. MJM has expanded rapidly in recent years. Mike Malone started the firm in 1989 with a $30,000 loan from his mother, and MJM now has 374 employees and an estimated $45 million in 2007 sales. The UK-based G4S handles, among other things, risk management consulting and on-site security. It logged $8.8 billion in revenue in 2007 and has about 500,000 employees. The acquisition of the Raleigh, N.C.-based MJM adds insurance fraud detection to the portfolio of G4S.
  • Garland, Tex. could be out $1 million from a suspected insurance fraud scheme — and one of its insurance claim staffers could be to blame. Patsy Leathers handled insurance claims in the city’s risk-management unit for 20 years. She and several cronies forged hundreds of insurance claims and pocketed the money, a city counselor familiar with the case reports. Her forgeries were so good that nobody suspected fraud, city council member Doug Athas writes in his blog. Leathers was nabbed along with sidekicks Jerry Don Diviney and Duane Milford Stanley, who aren’t on the Garland payroll. The city’s insurance carrier assures residents the loss will be covered, Athas says. The investigation is continuing.
  • Should health schemers worry about the feds breathing down their necks? The feds think so. In FY 2007, the feds opened 878 criminal health-fraud investigations targeting 1,548 suspects, and 560 defendants were convicted that year. The feds also won or negotiated $1.8 billion in judgments and settlements. Nearly $800 million of that money from 2007 and previous years made its way back to Medicare. A copy of the FBI’s latest statistical report is available on the coalition’s website.


“For every crooked durable medical equipment company we bust, there is another one to replace it before the ink on the indictment is dry.”

— U.S. Attorney General Michael Mukasey, commenting on the role that the Justice Department has on fighting healthcare fraud.


  • Connecticut pharmacy owner guilty of billing fraud
  • Missouri workcomp fraud unit receives state honors
  • W.V doc on trial for defrauding workers comp and feds
  • Doc in Virginia sentenced to probation for billing scam
  • Conn. doc gets probation for $421,000 billing fraud

Details at


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