Association health plans open door to premium theft

Last time the Trump Administration forayed into health insurance, it created an ill-advised executive order allowing sales across state lines. The administration went further this week by announcing an order to allow association health plans (AHPs).

Both ideas likely will do little to expand coverage or lower premiums, most experts say. The proposals also could open the door to the worst type of insurance fraud.

Trump’s latest order would allow creation of health plans that bypass state regulation and important safeguards on solvency standards. We’ve gone down this road before, and the scenery isn’t pretty.

Trusting consumers bought thousands of such lower-priced policies15 years ago. People wanted to save money or get coverage that wasn’t available from standard health plans. Many plans were legitimately offered through trade and professional associations.

Thousands of consumers didn’t get health claims paid, though, when some plans went belly up. Other plans were outright frauds. They often paid small claims to pacify policyholders in the beginning. then refused to pay larger claims. The con artists collected millions of premium dollars and fled. Consumers by the thousands were defrauded. Many were left in financial ruin, stuck with large medical bills they had to pay from their own pockets. One couple had a child with brain cancer, only to discover they’d bought into a fake health plan.

That’s one reason the Coalition adopted a position opposing AHPs back in 2003.

If association health plans catch on this time around, state regulators and others will have their hands full helping consumers steer clear of the inevitable fraudulent ones.

In the meantime, some con artists who got caught in the last round of bogus health schemes are just getting out of prison. They may revert to selling more fake health plans. So the administration’s timing couldn’t be worse. AHPs are one health reform consumers can do without.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Dying Medicare scammer handed 75 years

Debates over fairness of jailing offenders typically traverse highly emotional concerns such as over-packing prisons with African-American men and nonviolent drug users.

How about terminally ill mothers of kids?

A federal judge’s recent decision turned a $13-million Medicare crook into a sympathetic figure.

Marie Neba deserves prison. But 75 years worth?

The Houston woman looted Medicare of $13 million. Neba co-owned a home healthcare firm. She recruited healthy seniors — lying they were frail, homebound and needed her firm’s expensive care.

Neba blew our taxpayer money on a pasha’s lifestyle. She was caught and rightfully convicted. Neba should’ve been quietly shuttled to federal prison for at least several years. Yet another cheater swept up by an protracted federal smackdown of Medicare criminals.

Instead, Judge Melinda Harmon inexplicably handed Neba 75 years.

The next-largest Medicare sentence is 50 years, for Lawrence Duran’s $205-million looting of mental-health services in the Miami area. Dr. Farid Fata got 45 years. He inflicted massive doses of painful and disfiguring chemo on healthy patients in the Detroit area.

Neba’s also dying. She has breast cancer that has spread to her lungs and bones. And she’s the mother of twin seven-year-olds.

Harmon struggled to justify 75 years. “I am not a heartless person. I think I am not. I hope I am not …” she told Neba at sentencing. “It’s just the way the system works, the way the law works.”

Justice should be fair, and tough when needed. It’s when sentencing appears robotic and punitive for its own sake that we erode the fairness and public trust that distinguish America from banana republics.

Neba is appealing. It’ll be vigorous debate about judicial discretion and strict adherence to sentencing guidelines. Her appeal deserves a very close look.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud

Celeb skin doc bills nose jobs as insured medical repairs

Patients found Dr. David Morrow’s offer an easy sell — he’d pretty them up with free or discounted cosmetic surgery.

Insurers would pay most of the tab, the celebrity skin doc told patients at his clinic in Rancho Mirage, Calif. Except health insurance generally doesn’t pay for plastic surgery. Beautifying the body is more an elective personal pleasure than than true medical need.

So Morrow blithely invented medical diagnoses he knew insurers would pay — falsely billing $50 million for trumped-up surgeries. He billed nose jobs as fixing deviated septums. Tummy tucks magically became hernia repairs or abdominal reconstructions. Breast lifts were surgeries for “tuberous breast deformities.”

Morrow forged test results, medical notes and surgical records to back up his fantasy world. He even covered up the text of records for a patient’s “abdominoplasty” (tummy tuck) — hand-writing “umbilical & ventral hernias” on top of the original wording.

Insurance made doc wealthy

Compliant patients herded to Morrow. He fashioned himself as a high-profile, high-end skin doctor. “One of the top cosmetic surgeons in the world for skin and facial rejuvenation,” Morrow lauded himself on the now-shuttered website for his defunct Morrow Institute.

Pinterest postings are also an online temple to status, wealth and opulent living off of stolen insurance wealth. Morrow had his own line of beauty cosmetics, and claimed the world’s first laser face lift. The couple founded a Jewish day school, and donated handsomely to the symphony and other cultural causes.

Morrow also pressured some patients to get surgeries they didn’t want in exchange for “free” cosmetic upgrades. Patients believed Morrow played by the rules, giving them honest surgery and lodging honest insurance billings.

Far from it. On top of camouflaging cosmetic operations, Morrow also stole patient names, medical information and signatures to secretly charge insurers for surgeries he never bothered performing.

Tried to steal $50 million

The insurance spigot opened wide. Morrow charged patients’ insurers more than $50 million all told.

Morrow billed up to $150,750 for a single surgery. He ransacked insurers for as much as $700,000 if he did several procedures on a patient. The hefty payouts cascaded into his bank account — $24 million worth before he was caught. Morrow and his wife Linda owned a $9.5-million mansion and fleet of cars.

Morrow also botched some surgeries, disfiguring patients and inflicting ongoing discomfort.

Some insurers refused to pay up. So if the patient was a public employee, Morrow demanded the government agency pay him directly. He went after the California Highway Patrol, Desert Sands Unified School District, Palm Springs Unified School District and City of Palm Springs.

Handed 20 years, bolted for freedom

Investigators and prosecutors did their job well. The evidence of insurance scheming and tax evasion was so strong that Morrow pleaded guilty to federal charges. So did Linda, who was executive director of his operation.

They faced dozens of years in jail. Morrow was scheduled for sentencing first. Everyone showed up at the court for a hearing except the Morrows. They’d carefully plotted an elaborate escape.

The couple secretly sold their mansion and car fleet, wired millions of dollars to secret bank accounts, then disappeared. They’re still on the run, and the feds are hunting. Any potential for leniency evaporated. The court handed Morrow 20 years in federal prison in absentia. Linda awaits sentencing.

In Morrow’s high-rolling world of cosmetic scalpel work, the celebrity skin doctor proved that insurance fraud and bodily beauty both are only skin deep.

Coalition partnering for stronger government affairs

We all know today’s business mantra is to do more with less … the “less” meaning fewer personnel, less funding and stretching of resources. While accepting this “new reality,” many of us are quick to criticize these changes from what we were accustomed to for many years.

Without debating the pros and cons of the financial and human resources limits facing today’s fraud fighters, many positive things are occurring as well under new business models. These often require more-creative thinking and working cooperatively to achieve results.

While it is far too early to tell if this will be a major and continuing trend, one positive thing the Coalition is monitoring is the increase in our member (and organizations looking to strengthen their partnership with the Coalition. Jointly, we’re working to expand our impact on legislative initiatives and government-affairs efforts.

We regularly meet with our fraud-fighting partners, and non-traditional partners when necessary, to help move an anti-fraud agenda forward.

Partnerships are an important tool as we fight insurance fraud. For instance, we partner in several states including Kentucky, Virginia and New Mexico as members of statewide insurance advisory boards. We partnered with NICB to push for funding of dedicated fraud prosecutors in Virginia. We also partner with non-traditional groups like the carpenters union on workers compensation premium-avoidance schemes, and with Honda America to help thwart counterfeit airbags.

Working in partnership helps bring the anti-fraud message forward more forcefully. The message is good both for consumers and insurers. The Coalition is ready and able to partner and achieve shared legislative goals to help protect America’s consumers from both being victims of, and paying for, insurance fraud.

The more we work cooperatively as a multi-faceted team in approaching government affairs the more impactful, and successful, our efforts will become.

The Coalition remains a unique voice uniting America’s consumers, insurers and government agencies to let our message and concerns be known from the halls of Congress through 50 state legislatures. And now we’ve expanded those efforts with a program of amicus briefs in key U.S. federal and state courts.

We are here to serve all our members — and the American public — and welcome partnering with you to fight fraud.

About the author: Matthew J. Smith serves as general counsel and associate director of government affairs for the Coalition Against Insurance Fraud.

11 years ago there was a troubling disturbance in the anti-fraud force

As the Coalition prepares to celebrate 25 years of combating insurance fraud, let’s glance back and explore milestones, key successes and discuss the great progress the fraud-fighting community has enjoyed.

But such wasn’t the case 11 years ago this month when plans were being drawn up to fold the three major anti-fraud organizations into one. A proposal to combine the Coalition, NICB and International Association of SIUs had been pursued aggressively for more than a year. The plan created controversy and deep distrust among the organizations.

The idea for a single organization to focus on fraud in the property/casualty arena arose from the consulting firm of McKinsey & Company, which sold the proposal to members of the Chief Claim Officers Roundtable.

On the surface, it seemed having one organization would improve efficiencies and create a united front against fraud. But digging deeper, which McKinsey failed to do, would’ve found three organizations with different missions and divergent constituencies. It was a half-baked idea that likely would have ended in disaster.

The dance of dealing with efforts to combine organizations lasted a full year. Our vital work on combating fraud slowed to a snail’s pace. Momentum was lost, and no one knew if the Coalition or IASIU would survive. There were hard feelings all around. The Coalition lost about $100,000 in dues revenue from insurers who wanted no part of consolidation. At least one insurer subsequently quit because it favored the proposal.

Fortunately, IASIU members came to the rescue in September 2006 and voted to stay independent. The merger then was abandoned.

While it wasn’t the finest hour for the fraud-fighting community, there was a silver lining. The merger discussions helped the three organizations know each other much better. All three soon signed a memorandum of understanding to work together against fraud crimes.

Since then, the three groups have been active partners working jointly on a variety of projects that have greatly benefited our common cause in curbing fraud. All three also have flourished in achieving great success — and we expect that will continue for the foreseeable future.

On an ironic side note, the lead consultant in this boondoggle from McKinsey & Company — the guy who came up with the merger idea — was convicted earlier this year of a $500,000-plus fraud scheme. He’ll be sentenced next month in federal court — while our three anti-fraud organizations continue thriving.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Kind man burned alive in home insurance arson

David O’Dell was a gentle man, mentally slowed by a head injury, yet good-natured and trusting. He lived alone in an aging wooden house. He had no idea the home would become his coffin. O’Dell was burned alive for insurance money by someone he considered his best friend.

O’Dell worked for Joseph Meyers in upstate Wayland, N.Y. Meyers and his wife Iryn wanted to buy a double-wide trailer to upgrade their living quarters, and Joseph planned to buy two tow-truck businesses.

O’Dell and insurance money were their gateways to the good life. The couple abused his trusting nature. They maneuvered to buy the aging house from him for half its value. Cunningly, they let O’Dell keep living there as he had since childhood.

The couple insured the house and Iryn’s possessions for about $125,000, and secretly bought a $40,000 life-insurance policy on O’Dell. The insurance setup was in place. Joseph and Iryn used a blow torch to burn down the old tinder-box home, leaving O’Dell inside to roast alive.

Victim burned alive

He died a horrific death. Flames quickly engulfed the brittle wooden home early that chilly February morning in 2016. O’Dell had no chance. He was quickly incinerated down to 97 pounds of charred debris and seared bones. Medical examiners had to compare his singed backbone with an old X-ray to identify him.

Joseph and Iryn tried to make O’Dell take the fall. He’d lost touch with reality and wanted to kill himself, they told investigators. O’Dell left his clothes on the heater after hearing “voices” telling him to burn down the house. Increasingly unhinged, he also stole $40 from a tool box at Meyers’ business shortly before the fire. At least that’s the sham story the couple fed investigators. The fairy tale quickly fell flat.

In fact O’Dell was careful about using fire around the house he so enjoyed, grieving relatives countered. He knew the home was a fire hazard and made sure flammables were handled well.

“When he was using the wood burners, he was always very careful. He could smell the smoke, and he would get up and take care of it, so he was extremely wary of any kind of smoke in that house,” older brother Phil O’Dell said.

Burn patterns found on furnace

Experts also discovered “ignitable liquid patterns” on a wood-burning furnace in the basement, meaning someone intentionally set the fire. And surprise, a propane torch was found at Joseph’s business.

Joseph also forgot to turn off his cell phone. A phone mapping analyst tracked him and Iryn back and forth between their place and O’Dell’s house three times just hours before the fire. Surveillance video from Joseph’s business, which was based at his home, matched the phone findings.

O’Dell’s siblings loyally sat in the courtroom, looking for justice for their youngest brother. More relatives joined in, such was their caring for O’Dell.

Instead of that snazzy new double-wide, Joseph and Iryn will spend 23 years to life in cramped jail cells. They were convicted of arson, insurance fraud, murder and other offenses.

“It tears your heart right out,” said older brother Phillip O’Dell. “Your baby brother. (That) somebody whose is supposedly good friends would do something like that to him, to that extreme. Why they would do it at all, I don’t know. It just rips your heart out.”

Credibility of anti-fraud efforts placed at risk

Whatever your opinion of illegal immigration, you have to feel uneasy about a report last week that insurers in Florida are denying benefits to severely injured workers based on a legal technicality.

An investigation by ProPublica aired on NPR says one and maybe more insurers routinely deny claims by injured immigrant workers because they used fake Social Security numbers when seeking care. Thus, they’re committing workers-compensation fraud.

Identity theft is a serious problem, and the state fraud bureau rightfully is investigating.

But in the process, legitimately injured workers are being denied healthcare.

That’s not only wrong — no matter what their immigration status may be — but it also paints insurers as uncaring, greedy corporations that allow human suffering to make a buck. It places the credibility of combating real fraud at risk.

And if that’s not bad enough, the report suggests some employers intentionally hire undocumented workers. The employers know that if injured, the workers can be denied care, thus saving the employer on workers-comp costs.

In the absence of a functional federal government working to reform immigration laws, legislators in the Sunshine State need to correct this loophole so workers hurt on the job get the care they need.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Costs of air-ambulance transport flying high

Billing practices of air-ambulance services is a “hot topic” among many insurance groups. The question involves the large and often unexpected charges airborne transports can impose on insurers and consumers.

Patients may need air transport when they’re physically and mentally unable to give consent, or to understand the cost impact or options.

No one questions the value of emergency air transport in times of great medical need. Yet issues abound about how the services are billed and paid for.

An air ambulance may sit unused for hours or even days, but expenses are constantly being incurred. Often four crews of pilots and medical professionals work six-hour shifts daily to be “on call.” Maintenance expenses continue even without flights.

Medicare and Medicaid are the largest payers for these services, and have fixed billing schedules on a state-by-state basis. Yet no state appears to cover the full cost for medical air services. Next come private insurers — including healthy and property-casualty insurers. Collecting from uninsured patients is sporadic at best.

Herein lies the issue, which some say is “tantamount” to insurance fraud via excessive billing.

Using what’s called “rate-based billing,” many air ambulance services “roll” insurance bills into the overall operating expenses. Insurers thus arguably pay a disproportionate share of expenses. The billing includes staff and operational expenses far beyond the time spent transporting the insured patient.

Equally concerning, patients are personally billed for the portion of air transport that their insurance doesn’t cover. That can impose thousands of dollars of surprise costs. Consumers are losing their homes from court judgments for air ambulance services the patients never requested or agreed to pay, one Western legislator recently said of incidents in her state.

Compounding matters is whether state insurance regulators have authority over air-transport companies; the federal Airline Deregulation Act covers these services. States lack jurisdiction, a federal court also recently ruled. This situation directly impacts consumers and health insurers. It also affects property-casualty carriers that pay for the services — while denying the state-regulated industry a direct say in oversight.

Large air-transport bills may fall short of traditional insurance fraud. Yet many observers are calling for legislation or for revising federal aviation law to permit more state regulation of air-service providers.

Air ambulances involve large insurance billings, and charges beyond actual services rendered. The Coalition will actively monitor developments for fraud implications, and keep members informed. Consumers and insurers equally should be aware of this important issue. The large bills directly impact on the cost of insurance, medical services, and premiums that consumers pay.

About the author: Matthew Smith is associate director of government affairs for the Coalition Against Insurance Fraud.

Leaders in $375-million scam lie that seniors infirm, homebound

Wilbert James Veasey Jr. and nurse Charity Eleda mounted a form of home invasion. They’re the latest criminals who’ll serve prison time for one of the largest Medicare cons in history.

Veasey and Eleda were prime-time players in an elephantine $375-million plot that cranked out thousands of false claims for phony care of supposedly infirm and homebound seniors. The pair shines a cold light on how a Dallas-area doctor named Jacques Roy masterminded the home-healthcare ripoff.

Medicare gives seniors a leg up if they’re stuck in their homes, too unhealthy to get around. Uncle Sam pays for specialists to come to their homes and help with their day-to-day medical needs.

Phony home-health claims have robbed Medicare for years. What’s new was Roy’s dark genius for amping up patient recruiting and fake claims to unheard-of levels of industrial efficiency. One more reason Medicare thievery of all kinds could be America’s single largest form of insurance fraud.

Claimed 11,000 seniors in his care

Roy specialized in certifying people for home healthcare benefits, taking this con to new heights. He created a fantasy world, falsely certifying 11,000 seniors as eligible for home healthcare. He convinced Medicare that somehow these seniors were all under his close medical care and supervision.

Veasey and Eleda ran home-health agencies in the Dallas area. They helped Roy convince Medicare that often-homeless street people were eligible for home-health visits. Or that perfectly healthy, mobile seniors were bedridden and needed homecare.

Roy bribed 500 home-health agencies like Veasey’s and Eleda’s to pump him with patients. The gang paid many beneficiaries cash, food stamps and groceries to hand over their Medicare identifiers. The seniors’ personal information such as SSN was rocket fuel for his con.

Roy falsely certified the seniors for homecare. He received a slice of fake claims the home agencies billed, and soaked Medicare for his own home visits as the supervising doctor. Roy even set up a boiler room where employees worked all day robo-signing his name on Medicare claims.

Veasey knocked on doors, convincing healthy seniors to hand over their Medicare and other personal information for Roy. Veasey was a large and reliable source of patients, feeding Roy their names and personal information for false billing.

Eleda pulled in homeless seniors off the streets, for example. She often bribed cohorts $50 per beneficiary they found and sent to her vehicle parked outside a Dallas homeless shelter’s gates. She promised the homeless people free McDonald’s meals for their medical information.

Forged patient care plans

Eleda also invented medical records to make it seem the seniors qualified for home healthcare. And she forged patient care plans, and helped dummy up daily logs supposedly documenting hundreds of worthless or phantom patient-care visits.

This frenetic activity let Roy and the collaborating home-health agencies pour bills into Medicare under the happy illusion of homebound seniors getting care they needed, under the watchful eye of a physician.

Roy was bound to attract attention. On paper, he ran the largest home-health operation in the U.S. — dozens of times more than any specialist practitioner.

Medicare got wind and started investigating. Investigators found healthy seniors mowing their lawns and working on cars in their driveways. Veasey was handed 14 years in federal prison, and Eleda four years. Roy will face up to life in federal prison when sentenced.

The welcome mat for Roy’s uncaring homecare plot was yanked, replaced with a lock and key that will keep the conspirators, well, homebound in jail for years to come.

Hill hearing reignites question: What’s federal anti-fraud role?

Franklin Roosevelt signed the McCarran-Ferguson Act in 1945. This groundbreaking law has led to the regulation of insurance — including insurance fraud — to the states rather through federal oversight.

The federal government does play a role, such as overseeing federal health-insurance programs like Medicare. Nonetheless, the states remain more in charge of insurance regulation than almost any other sector of American business.

The result is 50 separate states with differing laws, codes and regulations governing selling, underwriting, claims within their borders — and also insurance fraud. Mostly the states have risen to the occasion, with 48 of 50 states enacting anti-fraud laws.

Yet the actions of Congress do impact the battle against this crime. From major national disasters (FEMA) through healthcare legislation (the ACA and what lies beyond) by virtue of federal oversight and funding, many laws impact the world of insurance. While many organizations are involved with insurance and fraud-specific matters, no national organization “bridges” state insurance oversight and federal legislation or administrative actions.

To the positive, Congress does appear to appreciate the importance of knowing about, and fighting against, insurance fraud. The Coalition testified before a key U.S. Senate subcommittee this week. We shared insights into how insurance fraud hurts all Americans, and urged needed steps for turning the corner on this crime. Especially important, we urged more public and private sharing of medical data to better ferret out hidden crimes affecting both sectors.

In the process, the “age-old” debate of federal vs. state regulation of insurance resurfaced during the hearing.

While there is little doubt state regulation will remain in place, the question must be addressed: What role can and should the federal government play in fighting insurance fraud?

Going forward, Congress and the White House should keep in mind three mantras. First, stay keenly aware of the high cost insurance fraud imposes on consumers and the American economy. Second, make sure any federal legislation meets the “do no harm” test of not unduly burdening or hindering state anti-fraud efforts. And third, be vigilant in identifying where federal involvement will help combat fraud at all levels.

About the author: Matthew Smith is associate director of government affairs for the Coalition Against Insurance Fraud.