Home arsons are fiery family affairs in West Virginia

The Lesters were a well-known family in parts of Southern West Virginia. Especially, patriarch Windel Lester sat on the board of a local bank. He also owned a hardware store and sold mobile homes.

Windel thought big, as community pillars should. Except he slid off the railroad tracks of respectability, deciding that burning homes for insurance money would be his next business venture. The whole clan joined in, burning down three homes and trying to walk away with more than $556,000 of insurance money.

Windel had it all figured out: Buy vacant, decrepit homes for next to nothing. Install straw owners to hide their own manipulating. Then pack the homes with useless, junky old furniture they bought at flea markets or yard sales. Then they over-insured the homes, and burned them down to make bloated claims for expensive possessions they never owned.

Burn homes with candle oil

Windel’s hardware store sold unscented — and combustable — candle oil. That was the fire starter; he figured it would be untraceable. The store played another role: Windel forged receipts for home possessions to support the series of inflated claims. He also laundered insurance money through the bank he helped run.

So the Lesters got to work. One of the two Lester sons, James Edward “Punkin” Lester helped a crony buy a house for just $38,000, with Windel fronting the money. They bought a $196,000 policy on the dwelling, and $147,000 for the junky possessions. Then they soaked cardboard boxes with the candle oil in the kitchen and a bedroom and started the fire.

The house had no chance, and lit up like a roman candle. The straw owner told the insurer the fire was a kitchen-related incident, and received nearly $300,000 of insurance money to be divided up.

Claimed was at county fair

Punkin installed James Keith Browning as the straw owner of another house that soon became blackened ashes. Browning claimed he was at the county fair while the slow-building fire gained steam. Browning collected $100,000 of insurance money and the conspirators divided up the loot.

Another doomed house was bought for $100,000. It netted a tidy $280,000 of insurance money after the structure burned down.

Windel’s still prominent in these parts, though as a convicted felon. The Lester clan and fake owners were convicted or pled guilty to volumes of federal charges. Everyone faces up to dozens of years in federal prison when sentenced.

Even with unscented candle oil, the whiff of fraud was too strong for investigators to ignore.

Sprinklers splash doomed pizzeria insurance arson

Owner muffs blaze ineptly planned to look like a grease fire

If Mustafa Zabana cooked pizza with the skill he used to fry his pizza shop, he should be selling furniture or shoes instead.

The Iraqi national owned Bruno’s Pizza in a strip mall in Enfield, Conn. Zabana was ambitious. He wanted to build a bigger and better pizza emporium. Insurance money was his meal ticket, literally.

So Zabana decided to torch the place and use the insurance money to build a fancier eatery. Except Zabana had little idea how to burn anything more than a pizza crust.

A grease fire accidentally broke out in an oven at Bruno’s one evening. Zabana doused it with a fire extinguisher. Two workers left the building, and one stayed behind. Zabana seized the moment and told the employee he wanted to start another grease fire. That would make it seem like the first fire had re-ignited. He figured he’d steal a tidy pile of insurance cash for his pizzeria rebuild.

Bought lighter fluid

The employee tried to convince Zabana this was a bad idea. Zabana wouldn’t listen, and told his worker to buy some lighter fluid at a nearby convenience store. The guy reluctantly agreed, and bought the lighter fluid using Zabana’s credit card.

Zabana then went to the rear of the store. He wanted to ignite several fires around the place. He first lit up a pile of restaurant menus he’d placed on the floor near the pizza oven. Why burned menus would look like a grease fire was pretty muddled thinking, though Zabana gamely plowed ahead.

He lit the first blaze, and smoke quickly spewed around the room. Gasping for air, Zabana had no chance to light more fires. He and the worker dashed outside while they still could. Zabana locked the door behind them, and told his employee to report to work the next morning as if nothing had happened.

Meanwhile, the arson fire tried its best to spark up. In addition to screwing up the grease fire, Zabana overlooked a second flaw in his arson plan: He started the fire right beneath the pizzeria’s interior fire sprinklers. The water drowned the flames — and Zabana’s insurance plot.

“Luck” prevents deaths

Even so, the smoke badly damaged a neighboring Edible Arrangements store, and ruined its inventory. Fire fighters were grateful they didn’t have to duel a full-on arson blaze in the pizzeria’s small space. Only pure “luck” kept Zabana’s insurance fire from killing anyone, federal prosecutor Natasha M. Freismuth said.

That was Zabana’s last dose of good luck. He received only an initial $5,000 check from his insurer before investigators discovered the insurance plot. Zabana then was handed 18 months in federal prison, and could be deported back to war-torn Iraq.

“Thankfully, this sprinkler functioned properly and saved the building from almost certain ruin,” Freismuth agreed.

Corrupt public adjuster damages homes with hammers, hoses, burning lard to balloon insurance claims

Give corrupt public adjuster Jorge Fausto Espinosa credit for one thing — maybe he wasn’t honest, though he was certainly prolific with wrecking homes.

The South Florida man recruited dozens of homeowners to burn or flood their places for about $14 million of inflated insurance claims in one of the most legendary plots by an adjuster in a state known for brazen insurance scams. Espinosa may go down as arguably the Dangerous Don of shady adjusters in Florida annals.

Espinosa was an independent (or “public”) adjuster. He made his living by earning a percent of insurance payouts he helped line up for client homeowners via his firm Nationwide Adjusters. The bigger the damage, the fatter his insurance take — around 30 percent of the payout.

So Espinosa inflated claims like a hot-air balloon, typically manufacturing damage. An insurance insider, knew how insurers and policies worked — and how to game the insurance system like Picasso colored canvasses.

He paid a squadron of marketers to recruit homeowners. Fires were set and pipes clogged. Great care was taken to make it look like an accident — and Espinosa then pushed the insurers hard for large claims payouts.

Free kitchens lured homeowners
Homeowners gladly signed onboard, egged by the lure of free kitchen or home remodeling, all paid for by their unsuspecting insurers.

The ring decided in advance whether faking fire or water damage would earn a bigger claim. The arsons resembled electrical, kitchen and vehicle fires in homes or garages. The water damage was rigged to look like faulty water lines or clogged sewer lines. In one case, Espinosa and a crony clogged a drain by stuffing small children’s dolls into it. The claim sought more than $200,000 in kitchen-flood damages.

In another case Espinosa placed bed sheets, stuffed animals and clothing under a Christmas tree and ignited the pile with a propane torch. “Wow! Look at my masterpiece!” Espinoza told a cohort while watching the fire spread. The fire earned a payout of more than $317,000.

Another home absorbed fire damage thusly: Espinosa went to a grocery store, bought a frying pan, lard and croquettes. He put half the lard in a frying pan and then used a paper towel to spread lard on the kitchen cabinets. He told the homeowner to wait a few days, cook croquettes and leave the stove on. But a temperature switch on the oven prevented the fire. Espinosa then returned, bought a new stove, installed it and told the homeowner the same thing.

This time it worked. The insurer paid nearly $400,000.

Rigged power strips, loosened pipes
In yet other cases, an electrician rigged power strips to look like they shorted and started fires.

A homeowner in South Miami-Dade had Esponosa’s people loosen a pipe under the sink of the bathroom in master bedroom, then let the water run. And to speed up the damage, the men also used a garden hose.

Then there was the yellow-hammer dodge. Espinosa and a trusted employee arrived at Angela Frye’s home, where a small kitchen fire had occurred the day before. She’d collect much more if just one tile also was damaged, they said. So Espinosa smashed the floor with a frying pan, then with a yellow hammer. He hid the dodge behind a cover story about a dropped plate. The actual damages amounted to about $9,000, though Espinosa enlarged the claim into a $70,000 insurance haul.

Espinosa hid his plot by spreading the damage claims among numerous insurers. That way, no single insurer would easily see a pattern worth investigating. At least 14 insurers were bilked by more than 50 inflated claims.

The plots grew so brazen that the state CFO, Fire Marshall and other agencies launched two fullscale probes called Operation Flames and Flood l and ll. Insurers also provided plenty of evidence and investigative firepower.

The years-long probes finally cracked open Espinosa’s ring. Yet even while languishing in prison after his arrest, he plotted with a fellow inmate to hire a hitman and rub out the prosecutor. The courtroom wizard was Laura Uriarte, who earned the Coalition’s Prosecutor of the Year Award in part for taking down Espinosa and his ring.

The kill plot fizzled. Still, Espinosa was beached for 20 years in state prison for numerous major charges, including racketeering and insurance fraud. In the end, Operation Flames and Floods flamed out Espinosa’s legendary fraud plot.

Deeply in debt, UK husband tries to kill wife for life insurance, run away with mistress

What fearful emotions raced through parachutist Victoria Cilliers as she tumbled 4,000 feet toward almost certain death?

The UK woman was an experienced parachute instructor and army physiotherapist with 2,600 jumps to her credit. Yet the impossible had happened. Both her main chute and backup had failed on a routine jump at the Netheravon Airfield, home of the Army Parachute Association.

Time for final prayers, really.

Yet the impossible happened, again. Victoria slammed into a newly plowed field. The churned soil cushioned her body like a pillow. Officials rushed a body bag to the site, expecting the worst. Yet Victoria survived, barely. She was airlifted to the hospital with fractures of her pelvis, vertebrae, leg, collarbone and ribs — yet somehow alive.

Victoria’s survival was a one-in-a-million fluke, yet the errant parachutes were no accident. Her husband Army Sgt. Emile Cilliers tampered with her chutes in a bid to kill Victoria for £120,000 ($160,000 U.S.) of life insurance money.

Owed upkeep money for mistress

He wanted to be rid of Victoria and start a new life with his mistress Stephanie Goller, who he met on the dating app Tinder.Cilliers also was loaded up with debt after taking her on expensive holidays. All the while, he was sleeping with his ex-wife, and cavorting with prostitutes.

Cilliers invited Victoria for the jump as a treat — just six weeks after she gave birth. He vanished into the toilets with her chute to disable it the day before she jumped. Cilliers was an experienced military parachute packer. He knew how to disable them. He twisted the lines of her main chute, and removed half of the clips connecting Victoria’s harness to the parachutes.

Cilliers seemed strangely unemotional right after her fall, despite her grievous injuries and harrowing brush with death. He texted Goller the next day, while Victoria lay immobile in the hospital. He sent flirty 50 Shades of Grey-inspired texts, asking his mistress to call him “Mr Grey” and be his “nude house cleaner.”

Opened kitchen gas valve

Cilliers also tried to kill Victoria before her fall. He opened a gas valve in a kitchen cupboard of their home in Amesbury Wilts. He sought to trigger a fatal explosion while he was at work — with their two kids at home.

Victoria woke up and walked into the kitchen that morning. She smelled gas coming from a cupboard next to the stove. She opened the kitchen windows to air out the house, and called an engineer to fix the valve.

Victoria quickly messaged Cilliers, who’d spent that night in the army barracks. She jokingly ask if he’d tampered with the gas valve and was “trying to kill me.” He asked Victoria to go on the fated skydive later that same day.

Cilliers was found guilty of twice trying to kill Victoria. He’s scheduled for sentencing in June 2018.

“This is a man who cared absolutely nothing for her and treated her with absolute contempt,” prosecutor Michael Bowes said. “He wanted to be rid of Victoria and wanted to live his life on his own terms. He cared nothing for her, and in truth cared only for himself.”

Enlisting policyholders could tip the scale in enacting anti-fraud bills

If you use eBay, chances are you received an email this week encouraging you to sign on to its campaign to limit taxes on and regulation of selling stuff online. Its message is simple: More taxes = more costs for both buyer and seller.

A link in the email takes you to a sample message  you can send to legislators. You just need fill out a brief form with your personal info, and click “submit.”

We have no doubt that such grassroots tactics work. A similar program created by the Coalition a few years ago found that generating as few as a handful of emails to a legislator can make a difference. Legislators do notice email from constituents. Legislators often vote for constituent wishes, and even co-sponsor bills based on support from voters.

That said, why don’t more insurers enlist the support of their policyholders in their own legislative battles when those initiatives serve the public interest?

For example, homeowners in South Florida face steep increases in homeowners premiums thanks to the state’s allowing assigning of insurance benefits and payment of outrageous attorney fees. The outrage expressed by consumers should be turned into a campaign to pressure legislators for relief from related scams.

Drivers in New York face some of the highest auto rates in the U.S., due in part to the state’s loose no-fault laws. Surely auto policyholders would sign on to a legislative campaign if they thought the outcome could put downward pressure on rates. The list goes on and on.

When questioned, insurers don’t always have good answers. Many are reluctant to enlist policyholders out of fear of offending them. Such campaigns also could backfire by inspiring adversaries (lawyers, doctors, roofers, etc.) to aggressively counter other legislative initiatives important to insurers.

I get all that. But it still seems that selectively enlisting policyholders could tip the scale on anti-fraud bills, and help insurers convey that they’re looking out for their policyholders’ best interests.

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

Families torn apart by relentless pursuit of bogus whiplash claims

Corruption by stealing insurance money can creep up on normally decent people. The opioid-like lure of easy money grinds away at even your deepest-held values, shifting a well-lived life into a corrosive money grab that breaks apart a helpless family when fraud prosecutors come knocking.

Jason Dalley was a personal-injury lawyer. He also was a loyal Little League Coach, respected in the community and a devoted family man.

Andrew Rubinstein was a Ukrainian emigre, and the glue that held his family together amid the weight of personal tragedies. Dalley’s and Rubinstein’s decisions to steal insurance money for a fraud ring in South Florida sliced through families that depended on them.

The duo signed up with a staged-crash ring that siphoned $23 million in bogus whiplash claims from 10 auto insurers in South Florida. All the while, helping drive up auto premiums for honest Florida drivers.

A cartel of medical clinic owners, chiropractors, attorneys and others teamed to fleece auto insurers with inflated and fake whiplash injury claims. Recruiters steered the crash victims to them. Dalley and Rubinstein were key cogs.

Greed caught up attorney

At first, Dalley was a bit player with the ring. He paid kickbacks of $2,000-$2,500 to tow-truck drivers and street recruiters to illegally bring him the crash victims. Medical providers inflated claims for chiropractic treatments, often forging medical records for treatments that never happened.

“The remorse you felt was only after you were caught. The illegal activities … affect every consumer by increasing their annual insurance premium cost,” the judge said.

Dalley filed bogus insurance claims for the crash victims, whether they were injured or not. He helped force large claim settlements with the defrauded auto insurers. The entire ring was hyper-efficient, seemingly invincible. Millions of insurance dollars tumbled down. Everyone got a cut of the money, lining their bank accounts handsomely.

Fraud investigators and prosecutors eventually cracked open the ring, hauling Dalley, Rubinstein and other cohorts into court.

Dalley had lived a clean, respectable life until greed overcame his values. He was involved in community causes, including coaching a Little League team for 15 years in Boca Raton. Be good people and play the game well, he urged the young ballplayers as their ball coach and life mentor.

His wife and three teen sons were devastated when Dalley was convicted. He was in tears when he admitted to the court that he started slowly with scamming until becoming drunk with easy money. He was the family’s rock, dumped into federal prison for a year and nine months. Dalley’s law career also is over. He’s losing his license, leaving his family to somehow make do on its own. Dalley also must come up with $1.8 million in repayment.

Made clinics into puppet operations

Rubinstein took over ailing clinics, installing straw owners to hide his illegal ownership of the puppet operations. The clinics were little more than factory lines churning out bogus whiplash claims.

He spent his wads of insurance money on day-to-day expenses, his family’s home, vehicles and vacations. Rubinstein’s 16-year-old daughter, Michelle, cried as she made a heartbreaking plea to try and keep her father out of prison. Rubinstein held their family together as her mom struggled with mental health problems and alcoholism before suffering a fatal stroke, Michelle told the judge.

Rubinstein had every chance to make a clean living. He’s an Ivy League-educated occupational therapist and former engineer. Instead he kept scamming auto insurers for two years even after learning he was being investigated. Judge Beth Bloom knew sentencing would be hard for Michelle and Rubinstein’s step-son, their family now broken up. Bloom still handed him six years in federal prison.

“The remorse you felt was only after you were caught,” the judge said. “The illegal activities … affect every consumer by increasing their annual insurance premium cost.”

Many consumers complicit with “little white lies,” more Americans need to report scams to fraud hotlines

The header is hardly a typo, nor does it refer to the honest organization called the Coalition AGAINST Insurance Fraud. I’ve talked with many people about my work with that alliance. Often with a smile or chuckle, I’m asked, “Well, is there also a coalition in favor of insurance fraud?” These humorous exchanges made me realize that there IS such a group. It’s informal, and millions of people belong. Many of us may be active members, or at least complicit. 

It seems almost everyone knows someone who has committed, or is committing, insurance fraud. Maybe not a crass arsonist or hardened leader of a large staged-crash ring. Though instead, maybe a co-worker, friend or family member who wasn’t injured, yet made a false workers-comp or bodily-injury claim. Or maybe the person (or ourselves?) who adds just a “little bit” to inflate a claim and compensate for the insurance “hassle,” cover a deductible, or get a new TV that’s better than the one that was stolen from the living room. 

People can be surprisingly tolerant of this crime, and hence members of the “Coalition FOR Insurance Fraud.” At least a quarter of U.S. adult consumers believe it’s okay to pad a claim to make up for the deductible. Nearly 20 percent approve of inflating claims to cover premiums paid in the past. Fully 10 percent believe insurance fraud doesn’t hurt anyone. These could be our neighbors, co-workers, friends and family members. 

So why would someone join this crime-committing group? Nearly seven of 10 people believe people steal insurance money because they feel they can get away with it.

So how many “members” belong to this nefarious Coalition? The U.S. has slightly more than 325 million people. This means 65-80 million U.S. adults could be fine with padding claims, and more than 30 million feel insurance fraud has no impact on them or our society. Given the 150 members of the good-guy Coalition … we’re outnumbered by thousands of percentage points!

Normally honest consumers may claim we, and perhaps even close friends or family, aren’t members of the dishonest “coalition.” Yet how often have we heard others, or even ourselves, suggest someone try a false personal-injury claim to line their bank account? Or we know a co-worker who complains of back pain for years, then falsely claims a “new” workplace back injury? 

And how many insurers pay a claim, knowing the entire claim or a large  portion, may be fraudulent? Yet for a variety of reasons — from getting rid of a nuisance claim to budgetary constraints — the insurer simply pays the claim and quickly moves on. 

Those of us who are attorneys are eligible for “club” membership too. In more than 30 years of insurance practice, many of the worst claims I was involved in had insurance professionals and sometimes defense counsel as claimants. I recall phone calls directly asking how to “maximize” the claim payout, and even insurer employees as well as defense lawyers saying this was their “chance” finally to be on the receiving end of a settlement check. This occurred far too often to be isolated incidents or coincidence. 

Far too many of us may be fraudsters indirectly and be complicit by failing to speak out when we see a scam happening.

Will this blog change the equation? No. But blogging raises issues we may not be comfortable talking about. Maybe this blog incited a moral “twinge” if you made an inflated claim that was a “little white lie.” No one is immune from getting caught up in the world of insurance fraud — directly or on the periphery. Hopefully we may learn and grow more honest — regardless of our role or age. Perhaps the next time we see the “dishonest coalition” in action, we’ll speak up or report a scam to our insurance department’s fraud hotline. We can act instead of turning a blind eye or unhearing ear. 

If we’re willing to take that small step, maybe we can remove one more member from that other “coalition,” and strengthen our own Coalition AGAINST Insurance Fraud. 

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

Cold callers try to steal medical, financial IDs, threaten to cut off Medicare benefits

Seniors, watch out. A move to prevent your identity from getting stolen actually is breeding those schemes.

Nearly 60 million seniors will receive new Medicare cards without Social Security numbers over the next year. Seniors are getting red, white and blue paper cards with a mix of 11 numbers and digits instead.

HHS is mailing the cards to keep SSNs from the grubby hands of thieves, who use the numbers to filch seniors’ medical and financial identities.

The biggest fear is that swindlers will try and trick seniors into giving up their SSNs or other info during the one-year phase-in period. Medicare ID scams are hardly new, though the momentous shift could breed all manner of chicanery.

Cheaters are cold-calling seniors, lying they’re from Medicare. The seniors are due for a refund on their old Medicare cards, and need to provide their bank info to process the refund, the crooks say.

Or there’s a fee for the new cards, so just hand over your banking or credit-card info and we’ll gladly take your payment over the phone.

Some callers threaten — you’ll lose your Medicare benefits unless you pay up now.

Other times the claimed Medicare rep wants to “verify” the senior’s SSN.

Text and email pitches are reaching seniors as well.

Medicare won’t contact you by phone, text or email about the new cards. The cards also are free, and nor do seniors have to report or verify info.

Yet three of four seniors know little or nothing about the new cards, an AARP survey says. Six of 10 seniors think they must pay a fee. Half might not question a call from a claimed Medicare rep.

Scammers have cold-called seniors for months during the run-up to the switch. Sleazy pitches are picking up speed with the new cards being mailed.

Staying safe is easy:

• Just hang up;

• Sign up for an alert that your new card was mailed; and

• Destroy your old plastic Medicare card when your new one arrives.

The new Medicare cards are here to protect your identity. With common-sense precautions, you can let the cards do their work well.

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

Leg amputated after claiming ambushed while helping stranded motorist

Shannon Egeland stopped to help a pregnant woman stranded on a roadside late one summer night near Caldwell, Idaho. It was an ambush. 

Someone snuck up behind, bopped him in the head and shotgunned him. The blast tore into Egeland’s legs. He had large blood loss and shattered bones, forcing surgeons to amputate his left leg.

Or so the former Idaho developer told his disability insurer.

Egeland had his teenage son Ryland blast him in his legs with a 20-gauge shotgun, then left him lying by the roadside in a bizarre insurance scam. Egeland dialed 911 after his son sped off.

He invented the ambush to make a false disability claim to boost his finances. But the Samaritan Scam fizzled. Fraud investigators soon saw through the ruse. 

The attack had no logic or motive — why did robbers leave his wallet, cellphone and fancy BMW behind?

Egeland also bought the death-and-dismemberment disability policy just a week before the shooting. Suspicious timing.

He also lied on the insurance application. 

Egeland had no arrests in the last 10 years, he told Standard Insurance Company. He actually faced federal sentencing for a $20-million mortgage-fraud scheme in Oregon.

Egeland finally admitted all. On top of the insurance con, Egeland hoped the setup shooting would delay his sentencing for the mortgage plot. He finally was handed 10 years. Egeland later received nearly four years for the insurance shooting in March 2018.

“What bothers me the most is my son — the pain is on him,” Egeland said. “If I could take it all back, I would, but I can’t. That will haunt me the rest of my life.”

Fraud fighters have a duty to use reliable data

Like or loathe, the term “fake news” is now part of our national culture. Even the venerable Webster’s Merriam Dictionary now includes “fake news.”

Fakes, frauds and scams are well-known to the fraud-fighting community. Yet how often do we consider the source of information or data we rely upon in our investigation or advocacy efforts?

As a child I remember my father somewhat cynically stating the adage: “Figures don’t lie, but liars make figures.” We often use data and reports to support our positions and advance our goals. As an attorney, I was taught to cite the law and information if you want to prevail. It remains good advice.

But fraud fighters especially owe a special duty to the public to be cautious about what reports and statistics we cite, and even define what constitutes insurance fraud.

A good case in point recently was discussed among insurance policymakers. The battle has raged for many years over whether insurers have the “right” to use aftermarket versus original (OEM) parts in making vehicle repairs.

Proponents argue that aftermarket parts are at least of equal quality, while critics say insurers use shoddy knockoffs to avoid paying for higher-priced OEM parts. The usually impartial Insurance Institute for Highway Safety recently was embroiled in a battle about the safety of aftermarket parts.

A Dallas law firm is handling a case involving injuries allegedly caused by using aftermarket parts. The firm ran crash tests supposedly showing increased risk of injuries to passengers in vehicles repaired with aftermarket parts. The findings ran counter to tests by others, and referenced by IIHS, which issued a news advisory questioning the validity of the law firm’s findings.

This is one example of how statistics can support far-differing positions on issues affecting insurance overall, and fraud specifically. Leaders such as the Coalition spoke to legislators, often citing studies and data, at the recent NCOIL spring meeting in Atlanta.

One debate showed how “reliable” data can support far-differing views. Of growing national importance are Pharmacy Benefit Managers (PBMs). The “Big 3” PBMs control 78 percent of the prescription drug market, with more than 180 million enrollees. One PBM just made national news by announcing Cigna’s plan to spend $54 billion to take over Express Scripts. Combined, they had revenue of about $142 billion as of last year.

Even before this mega-merger was announced, NCOIL speakers cited statistics, data and pricing analysis to favor and demonize PBMs and their impact on America’s health and prescription drug insurance markets. Statistics were cited to praise and ridicule. Certainly, both sides couldn’t have talked about the same data and “facts” … yet they did. The Coalition was asked if we view PBMs as “insurance fraud.”  We’re monitoring the issue, though are carefully researching before taking a stance, if even at all. Why?

First, is the data itself. Today there’s plenty of data on almost any issue. As we consider what constitutes insurance fraud, we seek accurate and verifiable data. Our credibility rests on having good data on which to base a reliable and informed decision. Often that takes time, and willingness to weigh many viewpoints. Having important groups such as NCOIL, NAIC and NCSL as vital parts of the Coalition gives our members an “ear” and “voice” to address these fraud issues on the national stage.

Second, there is a major difference between insurance fraud and abuse. Some practices are disdainful, yet legal, abuses of America’s insurance systems. With hundreds of billions at stake every year, fraud and abuse run rampant. The Coalition uses our 25-year history as a barometer to help decide what to target as fraud versus abuse.

To prove the point, the Coalition recently filed strongly worded comments voicing concern about the Administration’s proposal to authorize  Association Health Plans potentially under sole federal control. The Coalition educated federal decisionmakers using our first-hand experience of seeing tens of thousands of consumers defrauded by fake health plans when AHPs ran amuck in 2002-2004. Citing this sorry history, we urged policymakers to allow all-important state oversight of AHPs in conjunction with federal involvement.

Whether the debate is over AHPs, PBMs, OEMs or another string of acronyms, data can support potentially all sides of a debate. We talk about the importance of SIUs deciding whether a claim is fraudulent only when the investigation is complete, with all the facts. We caution younger adjusters to be thorough to avoid allegations of bad faith.

It’s always wise to be certain that data we rely upon is tested and derived from reliable sources. Or does it represent only the views of a special interest group with an agenda? And, is the issue about insurance fraud, or abuse of our insurance system? America’s insurance consumers rely upon carefully weighed opinions and actions by the Coalition, our members and allies as we protect the public from insurance fraud. To that viewpoint, certainly, the Coalition is committed.

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