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.

Sober home: Will we demand reform?

The largest Medicare-Medicaid takedown in history recently underscored the vast scope of America’s addiction epidemic — and the role insurance fraud plays as the deadly financier.

More than 400 people were charged with bilking health insurers out of $1.3 billion in bogus bills for addictive opioids across 20 states.

Corrupt sober homes are the newest discovery in the opioid crisis. Sober home owners routinely spoon drugs to addicts so they’ll keep relapsing. The homes, rehab facilities and drug-testing labs get more shots at inflated insurance billings.

Thankfully, the corruption is now wide out in the open. Investigative news stories have appeared in droves over the last few months.

We have to ask how so much fraud could’ve spread before anyone discovered the vastness of the crimes. Why did the safety net break down so badly, and how do we repair it?

The respected SunSentinel has done some of the best investigative reporting of sober-home fraud in South Florida. It believes:

“Shared responsibility also lies with insurance companies, who through incompetence or negligence seemingly have no problem pumping blood money into fraudulent schemes that feed a largely failed relapse industry by paying billions in insurance claims as if these were established medical procedures, which they are not, and which have, in fact, provided little in the way of sustained recovery for suffering addicts and desperate families,” the SunSentinel says in an oped.

Of course responsibility extends to lax policymaking, perhaps sleepy law enforcement and other corners of the safety net.

Once the drama of betrayed addicts and sleazy treatment dies down, will the story go away as just another news cycle? Or will we stay focused and keep up the pressure for workable solutions? Some of the hardest work lies ahead.

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

“Internet of Things” reveals new sources for detecting fraud

A court in Ohio this week gave the OK for prosecutors to use data from a fraud suspect’s pacemaker as evidence in his upcoming arson trial.

This is an interesting case, likely a first of its kind. Investigators obtained a subpoena to compel Ross Compton to sit so they could download the data from the device that keeps his heart beating. The data allegedly conflicts with Compton’s statements to investigators on how he escaped a fire in his home. He’s accused of burning down his home for insurance money.

Coalition members at the recent midyear meeting were briefed on this case by the prosecutor who brought the charges. He correctly predicted the court would allow the data to be used at trial.

This case is a reminder that fraud evidence increasingly will come from highly unusual sources as the “Internet of Things” picks up steam.

During another presentation at the June meeting, attendees heard about a case in Arkansas where investigators obtained audio recordings from an Amazon “Echo” device. Amazon fought the search warrant to turn over the evidence, but a court again sided with law enforcement.

These two cases  remind us that fraud investigators should creatively think beyond the typical sources to detect and investigate insurance crimes.

At the same time, fraud fighters need to follow legal and ethical lines to protect privacy and public trust. Consumer and privacy groups are rightfully concerned about how “Big Data” is used by government and business.

As expectations of privacy continue to fall, the landscape will be filled with court challenges and even attempts to legislate restrictions. Balance between proper use of data and privacy will be key.

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

Forward thinking: 3 things SIU leaders should consider

Special Investigation Units (SIUs) are key components of any healthy insurance company because of their ability to recognize and fight fraud. However, these units often operate today more or less on their own, separate from the general claims function within insurance enterprises.

Like much of the insurance industry, SIUs are finding ways to adapt to the technology-driven changes that are rapidly transforming the entire anti-fraud field. These units may not be first adopters of new technologies, and therefore may be at risk of losing their edge in the fight against fraud.

To meet these challenges, today’s SIU executives must come to terms with the insurance industry’s changing environment. So many opportunities might open up if claims leaders resolve to find solutions not only to adapt to the present, but to thrive in the future. To do so, it is helpful to break from departmental silos and create a fully integrated claims process with data science, updated analytics and a balanced workforce.

Keys: Data science, analytics

Technology and analytics continue to advance, and are key components to claims investigations. It is important that SIU leaders stay in front of this technology and drive it forward, rather than just try to keep up with current technology.

One suggestion to consider is developing in-house data science teams. They can provide custom support to claims, as opposed to purchasing off-the-shelf products to which other carriers have equal access.

SIUs have historically used rules-based anti-fraud models, or models that required manual combining and reviewing of data. Data scientists now can build predictive anti-fraud models combining claims, fraud and behavioral analytics. This approach can help better identify potentially fraudulent claims and criminal rings that target insurance organizations.

Having these analytics and data teams in-house could help drive SIUs to be more-effective and efficient.

Plan for a balanced workforce

Nearly 30 to 40 percent of the insurance industry workforce will be eligible for retirement in the next five years. To attract much-needed new talent, claims leaders should consider embracing diversity of thought by hiring individuals who “break the mold” of a stereotypical SIU employee.

Instead of only searching for candidates with law-enforcement backgrounds, leaders and hiring managers should think about targeting individuals with backgrounds in leadership, banking, data, security, customer service — and even military experience. A team with a diverse skillset is a team that is often well-equipped for a competitive market.

Become a millennial magnet

I would argue that most of the general public doesn’t know what SIUs do, or even what they are. Because SIUs often are lumped in with claims departments, job seekers may overlook opportunities in the field. SIU leaders should promote the unique qualities of our work — especially with the growing cohort of millennials looking for meaningful and rewarding work.

This would mean finding ways to position SIUs as attractive places to work for young adults, because that’s where our future talent lies. Leaders can do this by creating workplaces that allow for professional growth and educational opportunities. They should also work to develop strong management teams that stay focused on their people first.

When an industry undergoes major changes at a rapid pace, the next steps often are unclear. But like a puzzle, the picture becomes clear when you fit the right pieces in place. As claims leaders, we must challenge ourselves to seek the right tools that will enable SIUs to meet the fraud threats of the future. It’s up to us to make our workplaces more efficient and better equipped.

By staying ahead of technology, implementing data strategies and hiring the strong talent, we can ensure that claims and SIUs are well-positioned to handle the uncertainties of the future.

About the author: Keith Daly is Executive Vice President and Chief Claims Officer of Farmers Insurance.

Fraud of the Month: Flashy lawyer’s $550-million disability con disabled

Where’s Eric Conn?

The feds want to know. So do the Kentucky disability lawyer’s clients — hundreds, many stuck without disability money they desperately need to survive.

Conn engineered the largest federal disability ripoff in U.S. history — nearly $600 million in pilfered taxpayer money, plus a judge bribed to grease disability claims for Conn’s clients.

After pleading guilty, Conn slipped out of his ankle monitoring bracelet and disappeared while awaiting sentencing. He’s still on the run, facing up 12 years or more in federal prison.

Face plastered on billboards
Conn was something of a celebrity in Eastern Kentucky. He built one of the nation’s largest disability practices through quirky, outlandish and pushy self-promotion.

He styled himself as “Mr. Social Security,” plastering his face on billboards around the state. In a TV ad, Conn cruises around town in a Rolls-Royce, pulls up in front of a Lincoln Memorial replica, and banters with a young woman in a trench coat.

Then there’s his 3D commercial. A tiny computer-generated image of Conn frolics on the TV screen. There’s even a music video. The late bluegrass star Ralph Stanley and Amber Ettinger beg Obama to appoint Conn to the Social Security Advisory Board.

Weirdness worked. Thousands of people flocked to his office complex of five connected trailers — with a 19-foot replica of the Lincoln Memorial out front. They hired Conn to have them declared disabled and quickly get a lifetime of Social Security disability money. Some clients were in true pain. Some may have been healthy and just wanted free money for life.

Regardless, Conn made it easy. He bribed a local judge, psychologist and doctors to rubber-stamp claims for clients. Many weren’t even examined, and medical records often were dummied up so the claims would move quickly. Social Security was on the hook for nearly $600 million over the life of the ongoing claims.

Burned records in bonfire
Conn lived in a swanky mansion and relished frequent luxury travel from the legal fees he took in. Two principled federal workers finally reported him, thus starting his downfall.

Conn burned records in a two-day bonfire behind his offices as federal investigators closed in. He pleaded guilty and could spend 12 years or more in federal prison. He also must shell out more than $83 million in fines, penalties and other costs.

A lot of heartache ensued in Eastern Kentucky. Hundreds of clients lost their disability benefits after Conn was convicted. Social Security also is demanding that many clients repay up to $100,000 for disability money going back 10 years.

At least seven clients killed themselves, news reports say.

Slipped out of ankle bracelet
Conn may have bolted the U.S. after slipping out of his ankle monitoring bracelet, news reports say. The FBI is hunting him.

Meanwhile, hundreds of former clients are trying to have their canceled disability benefits restarted. “I’ve got to get these people money quick,” said their new attorney Ned Pillersdorf. “I’ve got 800 people going without, and it’s a real humanitarian crisis.”

VIDEO: Arson dog Facebook live chat

Research & social media associate sits down with DCFD’s arson dog handler and State Farm to talk about the role arson dogs play in solving cases

Write legislators now, shut down storm chasers

At least 20 states have enacted stricter laws protecting consumers and insurers from shady roofing contractors in recent years. Dishonest storm chasers prey on consumers whose homes were damaged by rain, wind, hail, fire and other natural disasters.

More states require more transparency from roofing contractors, and have empowered homeowners to back away from contracts they were duped into signing.

New York is in the crosshairs of enacting roofer reforms before Albany shuts down soon. It’s urgent we act right away.

New Yorkers should write your legislators now — urging your home-district legislators to support much-needed reform bills. It’s our last chance this year.

Assembly and Senate measures would: limit repair deposits to 50 percent of the contract … forbid roofers to act as illegal public adjusters … forbid contractors to dangle rebates to lure consumers for repair jobs … and let homeowners cancel contracts for unneeded repairs.

Albany needs to hear from New Yorkers now. Everyone in New York can send letters. We’re building a groundswell of support that tells legislators these bills deserve “Yes” votes.

An alliance of committed insurers, consumers and other groups is seeking to put crooked roofers out of business.

If you’re a New Yorker, send a letter today. Ask your New York colleagues to send a letter as well — just forward them the link to the letter-writing engine.

Together, we can pull the roof off roofer cons!

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Pedestrians grievously hurt drivers speed away, lie about collisions

Pedestrians grievously hurt, drivers speed away, lie about collisions

Dazed and fumbling after drinking at a party all night, Maxwell Materazzi-Hatala made a dumb choice to drive home.

The Scranton, Pa.-area man rammed into a trash collector and crushed the city worker’s legs. Materazzi-Hatala then lied to his insurer about the collision. It was a desperate bid to fool his insurer into paying for repairing his Toyota’s crumpled front end, and throw police off the track.

Hit-and-run drivers sometimes use insurance scams to camouflage their mistakes and avoid responsibility for the grievous injuries they cause innocent people trapped in the onrushing car’s path. The contrived insurance claims often quickly break down under methodical scrutiny by fraud investigators.

Materazzi-Hatala bore down on trash collector Steven Pierson around 6 a.m. The truck’s driver saw the onrushing headlights. He warned Pierson and another worker at rear of the truck. Too late. Materazzi-Hatala never braked. He crashed into Pierson, crushing his legs against the truck.

Materazzi-Hatala bolted the scene without stopping, leaving Pierson writhing on the street in agony.

Damaged parked trailer

Desperate for a way out, he deliberately rammed the Toyota into a parked transport trailer. Materazzi-Hatala then made a false damage claim with his insurer, lying he had a regretful run-in with the trailer. He hoped to convince his insurer to pay for the repairs, and explain away the damage.

Police found parts of a headlamp that seemed merely tossed on the ground — including plastic pieces with blood on them.

Nor did the Camry’s heavy front-end damage track with Materazzi-Hatala’s version of the crash. He was handed 18 months in prison plus seven years of probation in May 2017 — for insurance fraud, causing serious bodily injury, and other crimes.

Pierson needed more than 200 stitches, a skin graft plus rods and plates. He lost 1¾ inches in height on his right leg, and requires lifts in his shoe — yet he’s finally walking again. Pierson hopes he’ll return to work.

“It is very fortunate for you that Mr. Pierson survived,” Judge Margaret Bisignani Moyle said at Materazzi-Hatala’s sentencing. “If he did not, you would be standing in a very different place.”

Driver hits pedestrian

Other hit-and-run drivers have used insurance scams to hide their roadway mistakes.

High-school student Devaughn Moore was crossing a street in Amherst, N.Y. when Kevin Ford hit him and sped away. He left Moore lying in the street with a serious head injury. Ford then set his car afire in a field, and called his insurer to falsely report that someone stole the vehicle.

The shell of a broken, gray side-view mirror was left at the hit-and-run scene. Investigators determined it came from a 2006 Chevy Impala.

A police license-plate check of cars fitting that description revealed Ford’s car was reported stolen the night of the hit-and-run. Investigators found the burned car at an insurance impound lot. Ford received up to three years in prison. Moore was hospitalized for four weeks before learning to walk again.

Rams truck carrying women

Thomas Douglass was a police officer for the City of Newburgh, N.Y. His truck hit a car carrying five women.

Douglass roared off. He left the women alone to die, for all he knew. In fact four were injured. One woman was trapped in the wreckage with a broken vertebrae, permanently injured.

Douglass told his insurer that he hit a deer. He received up to three years in prison.

These misguided drivers may hit-and-run, but they can’t run far.