Insurance Fraud Weekly ePort–Week Ending Nov. 30, 2007

Nov 30, 2007

Insurance Fraud Weekly ePort
Week Ending November 30, 2007  


* The NAIC’s anti-fraud task force is updating its manual on unauthorized entities such as bogus insurers. The swindlers have evolved since the manual was written in the late 1990s. The updated manual will help insurers and regulators better understand and combat the newest scams. Send comments to Tim Mullen at by the end of December.

* The NAIC also will address stranger-owned life insurance policies (STOLIs) at its winter meeting in Houston this weekend. The issue is whether to restrict the sale of life policies within five years of their origination. Consumers buy the life policies then quickly sell them for a profit. But, for example, agents don’t always advise clients that selling could incur a large tax liability and make it difficult to obtain life coverage in the future. The nation’s insurance legislators also view STOLIs as a problem. The National Conference of Insurance Legislators recently approved a model law. Among other things, it would require agents to tell clients that selling could limit their ability to buy life coverage later on. Ohio’s insurance department also just issued an alert warning consumers about potential problems with STOLIs.

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


* “More states are waking up to the fact that they do have a problem and it’s costing them potentially serious money,” the coalition’s Jim Quiggle said in a lengthy New York Newsday investigation of widespread of auto-premium evasion in the state. Policyholders pay lower auto premiums by lying to their insurer that they live in a locale with lower premiums than their real residence. “Insurance companies or agents need to see more verifiable information on where applicants live and will garage their vehicles,” the coalition’s legislative chief Howard Goldblatt also said in the article. And finally, “It’s a continuing problem. All you can do is peck away at it,” said Roy Miller, coalition board member and head of the Pennsylvania Insurance Fraud Prevention Authority, which is aggressively fighting premium evasion.


* Mapquest directions led police to a Rochester, N.Y. man who lied that someone stole his 2002 Mercury Mountaineer. Craig Wilson received $10,812 from his insurer, but police recovered his 2002 Mercury Mountaineer in the parking lot of a Jacksonville, Fla. apartment complex two months after he reported it stolen. Mapquest directions from Wilson’s home to the apartment complex printed nine days before the reported theft were found inside the vehicle. Police also found paperwork describing airline flights from Jacksonville to Rochester. The New York frauds bureau helped lead the investigation, which led to five years of probation Monday.

* Ruben Cervantes of Norfolk, Va. claimed his motorcycle was stolen from the interstate on-ramp where he had left it after a crash. But Cervantes’ story didn’t add up for Virginia State Police Trooper J. L. Peters, so the trooper did a little digging. He found no debris or other evidence of a wreck at the so-called crash site. But Peters did discover an insurance policy for the bike; Cervantes had bought the policy the day of the alleged theft. Cervantes received six months on each of several charges, with six months suspended. His policy was rescinded and premium refunded. The Virginia State Police insurance fraud unit was instrumental in Cervantes’ arrest and conviction.

* That’s right, blame it on Hoboken. Frank Petrelli said someone stole his 1998 Audi while it was parked in Hoboken, N.J. He received $13,101 from New Jersey Manufacturer’s Insurance. But the Passaic County man finally admitted he gave the car to someone else to make it appear stolen. The Audi was found abandoned about a week later in East Orange. Petrelli pleaded guilty and will be sentenced in December. The state’s Office of Insurance Fraud Prosecutor investigated 71 suspected owner giveups last year.

* Several temp agencies paid employees more than $39 million in cash under the table to avoid workers comp premiums and payroll taxes. Charles Wallace was an accountant who helped run Massachusetts temp agencies Daily A. King Labor, Pro Temp. Company, PTC and Precission (sic) Temp Corp. Wallace received five years in federal prison in a case investigated by the Massachusetts fraud bureau.

* Apparently, Gordon Thomson isn’t a leg man. The 32-year-old unemployed chef tried to win a £100,000 insurance payout from the city council of Plymouth, England by claiming a wall fell on girlfriend Elizabeth Hingston and broke her leg. In fact, Elizabeth placed her leg over a concrete block and Thomson—described as “a big guy”—jumped on it with both feet. Incredibly, the couple even recorded the scheme on his cell phone. “You could hear a cracking sound,” said a friend who saw a 20-second video of the assault. That video led to Thomson’s arrest. Hingston, who has since split from Thomson, isn’t charged.


* Two New Jersey cops lowered their auto premiums by lying that their medical-transport vans were personal vehicles, prosecutors charge. Camden officers Darryl Miller and Fred Jefferson saved more than $9,000 a year on each of eight vans, thus bilking insurers out of more than $150,000 total, prosecutors allege. The suspected scheme began unraveling when one van was involved in a fatal crash. The van wasn’t properly covered and the victim’s family was denied compensation. A county social service agency also hired MJ Transportation to take patients to appointments, but discovered the vans were registered with the state as personal vehicles, prosecutors allege.

* A Brooklyn dentist shined up the teeth of more than 40 New York Port Authority cops so he could use their names to make bogus insurance claims, officials charge. Dr. Barry Cohan allegedly whitened and capped their teeth, and gave them flat-screen TVs and cash kickbacks. Cohan then billed MetLife, which administers the Port Authority’s dental plan, for fake work such as expensive orthodontic braces.

* Two lawyers allegedly used the Boston office of an unsuspecting chiro to run an insurance scam. Unbeknownst to the chiro, Bruce Namenson and partner Gerald Schena altered treatment notes and invented patients to inflate bills and collect tens of thousands of dollars in insurance money, prosecutors say. Namenson also allegedly forged signatures to make it seem Advanced Chiropractic treated the patients more times than it actually did. Former employee Janet Dejesus also lied to a grand jury that she was treated, though the clinic billed One Beacon for phantom treatments in her name, prosecutors say. Schena, meanwhile, is believed to be in Las Vegas. The Massachusetts fraud bureau played a lead role in the investigation.

* A Lexington, Ky. doctor illegally billed Medicaid for abortions he claimed were fetal ultrasounds, prosecutors charge. Medicaid pays for abortions only under limited circumstances. But Dr. Hamid Hussain Sheikh allegedly wrote prescriptions for drug cocktails normally given after abortions. He faces up to 20 years if convicted.

* Jackie Youhanian didn’t last 10 days as an employee of Macomb County, Mich. But her firing didn’t end her benefits: She allegedly used her former employer’s Blue Cross Blue Shield card for eight years after leaving, racking up $230,000 for treatment of ovarian cancer, multiple sclerosis and spinal problems, prosecutors say. Three other ex-county workers also collected $4,900 after being fired. Youhanian faces up to four years in prison and a $50,000 fine if convicted.


* MetLife Auto & Home is suing a Boston physical-therapy clinic for allegedly making millions in bogus claims for crash injuries. The clinics never provided the claimed treatments in many cases, and gave unneeded or excessive treatments in other cases, MetLife says. The clinics coerced payments by threatening to sue. MetLife is in a commanding legal position: The court already has made a $1.3-million pre-judgement award, signalling the insurer is likely to win. MetLife could win more than $5 million if it prevails on all counts. 


* Battle fatigue is setting in with New York fraud fighters after years of warfare with organized gangs involved in auto no-fault fraud, says deputy superintendent Steve Nachman. Government and insurer investigators need to re-engerize their efforts to build on the gains they’ve made in recent years, Nachman said in a keynote speech at yesterday’s annual meeting of the New York Alliance Against Insurance Fraud (NYAAIF). The insurance department is gearing up by bringing in a new leadership team [see next item] and by continuing auto fraud as a number-one priority of the state’s fraud bureau, Nachtman says. Other priorities will be workers comp fraud and commercial auto rate evasion. Also coalition board member John Sargent of MetLife was re-elected vice chair of NYAAIF.

* Frank Orlando has been named the new director of the New York fraud bureau, and Angelo M. Carbone has been named deputy director. Prior, Orlando was deputy chief of the auto insurance fraud unit in the AG’s office. He was a supervising investigator beforehand, and also served 20 years in the NYPD. Carbone has been an investigator with the fraud bureau since 2005. Prior, he spent 20 years with the NYPD. He headed up a key departmental unit that targeted staged-accident rings, no-fault claims, identity theft and other major crimes. 

* Can anyone guess what Zdruzenje Proti Zavarovalniskim Prevaram means? Give up? It’s Slovenian for Coalition Against Insurance Fraud. Insurance officials in the Balkan region are using the coalition as a model for anti-fraud watchdogs they’re setting up in nations such as Yugoslavia, Bosnia and Serbia. The groups will use the coalition’s unique governance model that includes insurers, consumer leaders and government agencies. They’ll work to educate the public about fraud, and are translating the coalition’s brochures into Balkan languages.

* Outstanding investigative work has earned Chubb Insurance investigator Barb Parker a major award from the National Society of Professional Insurance Investigators. Parker was instrumental in many high-profile investigations in Ohio. The F. Lee Brininger Award is given annually to honor an investigator’s skill, education and development, and integrity during fraud investigations.

* From our “And You Think YOU Have Problems” file: One of the biggest personal security breaches in UK history occurred when nearly half of the nation’s population was exposed to potential identity theft after two discs containing more than 25 million names and personal information disappeared last week. Insurance info was part of the data. Swindlers can use the data to make bogus medical claims against the victims’ health insurance policies. Nobody is quite sure what happened to the government-owned discs. They disappeared while being shipped to a government agency for an audit of benefits fraud.


“A wonderful catalyst that brings insurers together to help focus on fighting fraud.”

— Bernie Bourdeau, president of the New York Insurance Association, in describing a state regulation that requires insurers to sponsor anti-fraud advertising. Boudeau admitted that insurers vigorously fought the regulation when it was proposed several year ago. His remarks came during the annual meeting of the New York Alliance Against Insurance Fraud, which was created to help insurers comply with the regulation. NYAAIF honored Boudeau for his years of service to the organization. He is retiring at the end of the year.


* $26M wheelchair-for-scooter scam alleged in Ohio
* Feds indict prominent Katrina plaintiff attorney
* NY builder charged with comp fraud and premium theft
* Kansas City man admits to stealing $850K from elderly
* Five chiro patients in Pittsburgh indicted for kickbacks

Details here.


* December 4, 2007 — Annual Training Conference Anaheim, CA (National Health Care Anti-Fraud Association)

* December 11, 2007 — Annual Membership & Board Meeting Washington, DC (Hyatt Crystal City)

* May 7-8, 2008 — VA Chapter IASIU Annual Meeting Richmond, VA (Holiday Inn)/

For more info, visit online events.