Axed prosecutor leaves gap in fraud fight

If I was an insurance scammer I’d be doing my happy dance. President Trump’s axing of Preet Bharara removes the nation’s most formidable federal fraud buster.

Bharara’s best-known for convicting crooked government officials, insider traders and ponzi artists like Madoff. Bharara also hunted down many of the nation’s largest insurance-fraud rings as U.S. Attorney for the Southern District of New York.

He assembled a crack team of super-smart attorneys who went after insurance fraudsters with a mission-drive passion. Bharara built an unmatched courtroom machinery.

Scores of the large insurance rings went down — Medicare, staged-crashes, disability and other corrupt operations. Hundreds of insurance scammers likely were swept off the streets since President Obama installed Bharara in 2009. The savings in stolen insurance money probably reaches many billions of dollars.

The largest no-fault crash ring in history crumbled under his grip. It was a $279-million behemoth of fake whiplash claims that earned ringleader Michael Danilovich a place in the Insurance Fraud Hall of Shame.

Dozens of Long Island Railroad employees lived the good life. They took early retirement after a corrupt doc falsely certified them — for bribes — as disabled. They took millions in taxpayer disability money while golfing, traveling, working out at the gym. Bharara earned guilty pleas from 28 swindlers and convicted the rest.

Wealthy Russian diplomats scattered after he went after them for swindling Medicaid, the federal health program for the poor.

In what may be his last case, Bharara charged ringleaders in a suspected $57-million Medicaid ripoff centered around a clinic in New York City in early March.

Incoming presidents routinely purge the U.S. attorneys, who are party appointees. It was inevitable that Obama’s brightest courtroom light would be ushered out the door.

New York is an epicenter of large insurance scams. Much is driven by vast underworld crime cartels and syndicates. Billions of insurance dollars are on the line.

We’ll urge Bharara’s Republican successor to keep insurance crime a high priority — and even expand operations with the same passion that drove Bharara. Let’s turn that fraudster happy dance back into a trail of tears.

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

 

Why dishonest claims turn violent

Prentice Ponds was trapped. He bought a damaged Chevy Camaro on eBay, then did a dumb thing. The Tulsa man billed his auto insurer for repairs, lying he crashed the car after buying it.

A suspicious insurer adjuster came to his Tulsa home for a chat. Mark Frayne had the original eBay photos. That damage matched the crunched auto parts in photos Ponds gave Repwest Insurance.

Ponds panicked and beat up Frayne — breaking his ribs, lacerating his head, and stealing his claim evidence. The jury came down hard. Ponds got life in state prison for the assault and robbery, and 25 years for the insurance plot.

Fraud fighters often put their safety and even lives on the line. Insurance cheaters can be panicky, jittery, unhinged when interviewed in the field. Jail’s coming on fast, their careers and jobs lost. They lash out, somehow thinking a fist or gun will bail them out of a conviction.

Kim Sledge and Rhett Jeansonne were respected investigators for the Louisiana insurance department. They knocked on the office door of an insurance agent suspected of stealing client premiums. The agent ambushed Kim and Rhett. He gunned them down, then shot himself.

Sallie Rohrbach was an auditor for the North Carolina insurance department. She was reviewing the books of an agent who might’ve stolen client premiums. Michael Howell clubbed Sallie to death with a chair in his office.

Fraudsters have ordered hits on witnesses, tried to bully them from testifying, and even plotted to murder judges. Fortunately the hits didn’t come off, though were just one trigger pull from erasing lives.

So let’s applaud fraud fighters, who know violence can come with their next knock on a door. Let’s also rethink insurance fraud. A few small, silly claims? Tell that to neighbors who’ve died in botched home insurance arsons. And especially, tell it to the families who Kim, Rhett and Sallie left behind.

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

Lawyers promote fraud bureau’s tip hotline

Rarely do you associate trial attorneys with anti-fraud efforts, but a law firm in Florida is doing just that with a new public service video warning consumers about door-to-door scammers looking to sign up auto accident victims.

“If you’ve been in an accident and a stranger knocks on your door to get you to sign up for a doctor or lawyer, they’re breaking the law. Some of these criminals even have the nerve to walk into your hospital room. They may even text you to get your case. They probably illegally obtained your police report…These people are not only annoying, they’re trying to steal from you. Don’t sign anything. Instead call the insurance fraud hotline. You could be entitled to a reward.”

The video then flashes the fraud hotline number of the Florida Division of Insurance Fraud.

Soliciting accident victims within 60 days of a crash is a crime in the state, thanks to a law enacted a few years ago that was pushed by fraud fighters in Florida and the Coalition.

Illegal soliciting still occurs, although much less frequently.

So what’s the motivation behind the Rubenstein Law firm in sponsoring this PSA? Are they trying to cut the crooked lawyers out of the action to gain more clients for themselves? Or perhaps they truly do care that solicitation scams hurt consumers.

Whatever their motivation, we commend the law firm for supporting anti-fraud efforts in the Sunshine State.

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

Humble and brazen health claims

$100,000 for ear wax removal? $46,000 to remove a bunion? Those are some of the outrageous charges cited this week by a judge who awarded Aetna $51.4 million from a Houston surgical hospital.

In a two-year period, Humble Surgical Hospital in Houston, Tex. billed the insurer more than $68 million. Humble billings these are not.

The five-bed surgical center, created by 10 doctors in 2010, charged patients in-network rates but billed the insurer at out-of-network rates. Some bills were as high as ten times what other hospitals charge.

Why did the insurer paid $41 million before challenging Humble’s bills? Aetna isn’t known for throwing money at medical providers, and it sponsors a good SIU team. (Full disclosure: Aetna provides health insurance for Coalition staff.)

Perhaps part of the problem is prompt-pay laws in many states that encourage insurers to “pay and chase” suspect claims. Some states grant delays in paying claims when fraud is suspected. Others do not.

The Humble claims spanned 2010 to 2012. Since then, new technologies such as predictive modeling have been developed to help insurers detect claim anomalies quicker and better. Another new development is the sharing of suspect claims information through the Healthcare Fraud Prevention Partnership.

As someone who pays a hefty monthly premium for health insurance, I hope Aetna and other health insurers use all the anti-fraud tools at their disposal to keep such brazen claims practices in check.

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

Fraud of the Month

Jamal Abu Samak blew up a New Orleans grocery store, firing up an insurance arson that went tragically wrong and incinerated a tenant living upstairs.

Samak has lodged unappealing appeals for years in Hail Mary efforts to reduce his life sentence in federal prison.

A federal court denied Samak’s latest bid in January 2017 after years in jail. He launched the botched scam in 1991. Still, that decades-old case reveals the chilling potential of insurance arsons.

The arsonists often botch attempts to burn down homes or businesses for insurance paydays. Think napalm strike: Unstable gas fumes explode, or clumsily set fires simply race out of control. Nearby homes and businesses are gutted. Innocent people are maimed or burned alive.

The owners of the Community Grocery Store hired Samak and his sidekick Samuel Joseph Lee to torch the place. The owners raised their insurance on the store’s contents to $75,000 from $50,000 just two months before the fire.

Filled gasoline containers

Samak and Lee filled four grey plastic containers of gasoline on the fatal night. The containers were lethal munitions — each held fully five gallons of gas.

The pair entered through an unlocked side door. They emptied two containers inside the store, and the other two in an upstairs apartment.

Samak plotted to make Lee take the fall. They stashed the empty containers in the getaway car’s trunk, and Samak sent Lee back inside to turn off a store light. Lee knew something was wrong just as he stepped inside. Samak had followed him, tossed a lit match inside and slammed the door shut — trapping Lee inside.

The building exploded, throwing Lee back outside the store and blowing out the store windows. Still, he survived. Samak received third-degree burns over much of his body. Neighbors thought a bomb went off.

A man sleeping in an apartment above the store was incinerated. Tenants James Quincy Whitehead and Melanie Williams were blown down the stairs, yet barely escaped the flames by crawling through a small hole in the wall.

Fire starter’s appeal denied

Lee pleaded guilty early on and gladly cooperated with prosecutors to finger the man who betrayed him. Samak was handed life in federal prison.

Samak was rehabilitated, he claimed in his latest appeal for early freedom. The court disagreed, sending Samak back to finish his life term.

In another bungled insurance fire, Bob Leonard helped open a natural-gas line in an Indianapolis home. A timer rigged to a microwave triggered the unstable fumes. It was a $300,000 insurance plot. The house detonated. A thunderous explosion burned next-door neighbors Jennifer and Dion Longworth alive, collapsing their house.

Much of the neighborhood was leveled, traumatizing families up and down the tree-lined streets. Leonard received life without parole in federal prison — and a coveted spot in the Insurance Fraud Hall of Shame.

Ill-conceived Washington bill would harm fraud fight, consumers

A valued and effective anti-fraud tool that benefits consumers would be hobbled under a misguided bill in Washington State. It’s called the examination under oath, or EUO.

Insurers interview claimants, who are legally bound to answer questions truthfully. Thoughtful questioning by trained investigators can expose lies and mistruths by claimants trying to hide suspected scams. Telltale clues often can be uncovered only by EUOs. This is why they’re crucial to exposing often well-hidden crimes.

Many fraudsters don’t even bother showing up for an EUO, which helps insurers halt suspected claim payments and close out bad claims.

Under the Washington bill, the statute of limitations for using EUOs would begin when a suspected scam happens, instead of when an insurer discovers it. This strict time limit imposes arbitrary legal handcuffs, regardless of the actual crime-fighting need.

The bill’s stated goal is to protect consumers from supposed insurer fishing expeditions — though where’s the proof of fishing trips? We’ve seen no evidence.

“This would set up a system where insurers would be forced to pay suspect claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote the chair of a subcommittee that’s vetting the measure.

Insurers use EUOs judiciously, only when clear red flags of possible fraud are uncovered first. Companies have neither the time nor budgets to conduct large volumes of EUOs on all claims.

The Washington bill thus would backfire. Insurers would be forced to pay suspicious claims because they wouldn’t have time to fully investigate for warning signals. More bogus claims means more crime and higher premiums for honest insurance consumers in Washington.

If an insurer is abusing the privilege of compelling claimants to appear at EUOs to answer questions, regulators and existing law have existing remedies to punish them. Curtailing this important tool across the board is not in the best interest of public policy.

The Coalition will publish a white paper on EUOs later this year. We will shed more light on how EUOs work, and why we need them to work effectively as anti-fraud tools.

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

8 worst scammers of 2016 chosen

A home explodes … hundreds of setup car crashes churn fake whiplash claims … a helpless cerebral palsy patient starves to death.

All to steal insurance money.

The year’s extreme schemers are among the eight worst insurance criminals of 2016. They were elected to the Insurance Fraud Hall of Shame by the Coalition Against Insurance Fraud.

The Shamers reveal the year’s most brazen, bungling or vicious convicted insurance swindlers.

Insurance fraud is one of America’s largest financial crimes. Scams steal at least $80 billion annually, and many insurers say fraud is growing. Many consumers believe it’s ok to inflate claims, and they’re at risk of committing this crime, research reveals.

Victims are traumatized, maimed, lose their savings and have their credit ruined. Some die.

Exploding home. Two neighbors were incinerated and an Indianapolis subdivision nearly leveled when Bob Leonard helped accidentally blow up a house in a botched $300,000 home arson. “Oh well, they died,” Leonard said of the next-door couple. Sentence: life without parole.

Faulty no-fault con. Michael Danilovich masterminded a $279-million attempted looting of auto insurers with hundreds of staged car crashes in the New York City area. It was the largest no-fault auto scam in U.S. history. Crooked medical providers deluged insurers with fake whiplash claims. Sentence: 25 years.

Deer deception. Mob associate Ron Galati used deer parts and blood to gore up cars and claim the vehicles crashed into deer. Galati’s Philadelphia body shop made $5 million of inflated damage claims from phantom deer and other collisions. He even took a sledgehammer to cars, and plotted to have a witness shot. Sentence: up to 29 years.

Lawless libido. John Alfonzo Smiley was shot and paralyzed while arguing with a couple after he and his wife swapped sex with them at a San Francisco swingers club. Smiley claimed $4 million of workers comp money. The corrections officer contended — with a straight face — that a former inmate with a grudge shot him. Sentence: eight months.

Samaritan scam. Shannon Egeland had his son shotgun him in the legs to scam his disability policy. Egeland’s legs were shattered and a foot amputated. He claimed he was ambushed after stopping to help a stranded pregnant motorist near Caldwell, Idaho late one night. Sentence: awaiting jail term.

Killer caregiver. Makayla Norman was a cheerful 14-year old — and bedridden with cerebral palsy. The Dayton teen’s home caregiver Mollie Parsons starved her to death while making large Medicaid claims for supposedly steady care. Makayla weighed 28 pounds. Sentence: 10 years.

Baby murdered. Moussa Sissoko shook his infant son Shane to death for $750,000 of life insurance he took out on the baby. The Washington, D.C.-area man seemed like a caring father, yet plotted Shane’s death from the start. Sentence: 50 years.

Mental error. Dr. Fernando Mendez-Villamil made $60 million in false Medicare and Medicaid claims for mental-illness drugs. The Miami physician plied patients with powerful drugs whether or not they needed the meds. Insurance fraud bought him a mansion and art collection. Sentence: 12 years.

Fortunately, a small army of fraud fighters is committed to turning the corner on this crime. Most insurers have agile investigators, and so do most states. Technology even can predict some scams. And most Americans are honest.

Progress is being made. Yet the insurance money’s too good and attracts too many scammers for easy answers. As the Shamers show us, sometimes a cold jail cell is the best deterrent.

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