Fraud bills coming, start planning for 2017 now

legislative-fraudblog_mobile_home_11-1Voters will cast their Election Day ballots in a few days. We’re electing more than a President and members of Congress. A good number of state governors, insurance commissioners and legislators are on ballots as well.

They’ll barely be settled in when statehouses start opening for 2017. Quite a few fraud bills could be on tap — a lot of early chatter is making the rounds in several states.

Many policymakers know little or nothing about insurance fraud or how this crime damages their constituents. We’ll have many opportunities to convince state legislators to vote “yes” for bills that support fraud-fighting efforts.

I’ll share a secret that can open doors and increase your own impact.

But first, here’s what we know so far about 2017 — and more bills are sure to be introduced throughout the year. …

Restrict assignment of benefits. Insurers are concerned about contractors in Florida. Scofflaws inflate repair bills, and typically sue the insurer if the claims are denied or not paid quickly. All this happens behind the unsuspecting claimant’s back.

The vast damage damage caused by Hurricane Matthew will bring out legions of swindling contractors. That has vaulted the issue higher on insurer legislative agendas in the state.

Crashing staged crashes. Penalties for staging crashes in Nevada are pretty weak. The state AG is considering drafting a bill stiffening jail terms and fines. The Las Vegas area, especially, is a hotbed of crash rings and inflated whiplash claims.

Some rings target big-rig trucks. Current law does little to deter hardened fraud rings, many fraud fighters in the state believe. The AG is listening and may seek legislation to add more teeth in 2017, Coalition sources say.

Widening statute of limitations. Firming up the statute of limitations will be high on the Colorado AG’s 2017 agenda: Start the clock when the scam is discovered. The clock now runs for five years after the fraud occurred. The enhancement would be more realistic: The fraud crime often is detected well after it occurs. Also being looked at is adding insurance fraud as a crime to be covered under the state’s RICO, racketeering laws. Both would help the anti-fraud effort in the state.

More hotspot states. Look for action in Kentucky (expand immunity/information-sharing; limit access to crash reports; contractor cons). The Coalition is working with Kentucky fraud fighters to help strengthen the state’s anti-fraud laws … and New York (contractor scams and crash rings).

This is where fraud fighters come in. You need to start planning for 2017 right now. This means identifying current bills and the committees that will move the measures.

It also means thinking about introducing bills with friendly committee members or other legislators as the sponsors.

I’ve seen fraud bills start moving within days after the statehouse doors swung open. All the more reason to start thinking now.

Now about that secret — your impact in legislation is all about personal relationships. It’s the same principle you use so often to build close ties and contacts when pursuing fraud cases.

One fraud fighter I know convinced a state legislator to co-sponsor a bill simply by having a friendly chat about a fraud problem in his state. So few legislators know much about insurance crime in any real detail. You can be the trusted eyes and ears of legislators on scams that must be stopped to protect honest consumers.

You’ll have a strong leg up if lawmakers already know and trust your expertise as a frontliner. You can help educate them about an issue … weigh in about bill wording that makes sure the measures help shut down targeted scams.

You’ll find a great deal of support from the Coalition. I can personally assist in many ways — bill wording, overall bill strategy, effective talking points, helping set up meetings with key movers. You can easily reach me at Howard@InsuranceFraud.org with any ideas or questions.

More resources are tucked away on the Coalition’s website.

Check out suggested state legislation for laws other states enacted on your hot-button fraud issues. Auto rate evasion and tighter limits on using check-cashing stores in workers-comp scams are new additions. Model bills also take on crash-ring recruiters, immunity and other concerns.

Get involved through groups such as IASIU and NSPII. Check with me about what’s happeing in your state, and how you can get involved.

Grassroots efforts work. You’re the roots of grassroots. Once the November balloting is done, we’ll soon move into a election cycle: electing fraud laws. Let’s move fraud bills together as partners. We can pass smart fraud bills that are good for insurers, and right for the residents of your state.

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

Arsonist to insurers: Check fire claims more closely

arson_10-16_mobile_homeKenny Allen was a likable fellow. He went to church, coached youth basketball in the Muncie, Ind. area, and was making his way through life with limitless potential ahead.

He also lived in a secret world: He was an insurance thief. Kenny was a driving force behind the largest home arson ring in Indiana history. And one of the largest ever in the U.S. His gang helped torch at least 73 buildings while he sang hymns of righteousness in pews.

Insurers were easy to defraud, Allen says. Their adjusters were so intent on making customers happy — he contends — that they rarely asked tough questions. Insurers could’ve quickly exposed the claims for burned homes as money grabs with a little more effort.

Kenny went straight after nearly five years in federal prison. He admits he screwed up, and today gives workshops for investigators to help make amends. He partners with Mike Vergon, the former ATF agent who arrested him. They’re friends and supporters in life — a touching story of Kenny’s redemption.

Yet his saga speaks to a bigger dilemma for insurers. If they investigate too many claims too closely, they risk policyholders thinking they’re cold and money-grubbing.

If insurers let too many suspect claims slide through too easily, they risk being prey for hunters like Kenny was. This slippery slope can grow fraud losses, help raise premiums and — yes — reinforce a belief among many consumers that insurers are cold and money-grubbing.

Life isn’t always fair when you’re an insurance company, no matter how many good deeds you perform. Corporations are targets of consumer upset simply because they’re big and make money.

Checking closely into suspicious claims can trigger a lot of emotions. Fair or not, people’s feelings of aggrievement or entitlement can quickly damage an insurer’s reputation. Especially when viral social posts can reach millions of sympathetic consumers in just hours.

Over the longterm, it’s a risk worth taking, and a story worth telling.
Insurers should do a far better job of telling people why they fight fraud — and why all policyholders benefit.

Being justifiably known for protecting policyholders from thieves seems like a pretty good way to build a business brand. And doing right by consumers.

If Kenny Allen’s right, taking the easy way out could’ve cost insurers more than millions in false arson claims. He’s the first to admit, it’s a miracle nobody died in his fires.

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

 

Fraud prosecutors in N.J. lose tool against defendants

nj_pre-trial_detention_mobile_homePrisons and jails across the U.S. are overcrowded, costly and at a breaking point in many states. Jurisdictions are working to ease the pressure in a variety of ways. California, for example, has released more than 30,000 inmates early in the last five years. Other states use alternative sentencing.

New Jersey is taking a different approach. It has done away with pre-trial detention except for the most-violent crimes or people who are flight risks.

Fraud prosecutors in the Garden State say the new law makes their jobs tougher. A runner employed by a staged-crash ring who gets caught no longer has to worry about making bail. The threat of pre-trial detention often spurs a runner to cooperate with law enforcement and help nail the gang’s masterminds. But no longer.

Now, runners are  processed and given a summons, kind of like getting a traffic ticket.

The concern here is that the lack of pre-trial detention throws up one more roadblock for many local prosecutors who already are overworked and hesitant to take complex, time-consuming fraud cases.

There are no easy answers. It’s unlikely lawmakers will make an exception to the law for non-violent, white-collar crimes.

Deterring fraud rings is difficult, though achievable. The anti-fraud advertising campaign by the Office of Insurance Fraud Prosecutor and state AG is excellent, though it’s oriented towards everyday consumers, not organized criminals. Perhaps outreach to lower-level gang members about the dangers of committing fraud might help deter.

The best approach might be for insurers to focus even more on taking the profit out of insurance crime. Greater use of technology will detect scams earlier before claims money goes out the door. More civil suits with treble damages against crooked medical providers and other ringleaders will hurt them where it counts.

Fraud fighters around the U.S. will have to rely less on arrests and prosecutions. They still can curb insurance fraud by improvising and relying more on their creative expertise.

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

Selling interstate invites scams

health_interstate_mobile_homeI grew up in the Northeast, and now live in a Mid-Atlantic state. I understand Fall. The weather is crisp and the leaves turn colors. Happens every year.

Just like the leaves turning colors in the Fall, someone predictably come up with a supposedly great idea: let consumers buy health coverage from insurers across state lines.

The argument is always the same: Interstate sales increases competition and reduces costs for consumers. This sounds workable on paper. The latest go-around was raised in this past week’s presidential debate as the fall leaves tumbled — just like consumer protections.

Problem is, interstate sales open the door wide for fraud, and water down consumer protection. And, most people advocating this system usually don’t include important and necessary protections when pushing their interstate plans.

Yes, neighboring states can legally create partnerships that allow insurers to cover consumers in any state within the partnership. Yet partnerships have strict, built-in legal protections when states agree to work together. Insurance regulators know who’s doing business. Networks also offer consumers choices of doctors and facilities.

These protections and coverages may not exist under a blanket permit for consumers to buy coverage in any state.

Consumers don’t know what insurance regulator to reach for help. And would the regulator in the state where the consumer lives have much incentive to help if the health insurer is domiciled another state? Would the regulator where the insurer is domiciled help a consumer living in a different state?

We already see crooks peddling bogus health insurance to unsuspecting consumers and small businesses. This problem would be magnified if interstate sale of health insurance was allowed without strict and well-defined oversight. 

Insurers must be state-licensed to do business in a given state. How can state oversight properly protect consumers if anyone can offer insurance to any consumer in any other state?

Who makes certain the insurer is solvent and can do business in another state? And, would an insurer in one state have an adequate network of doctors, hospitals and pharmacies to cover the health needs of consumers in another state?

These questions are raised every time interstate health-insurance sale is broached. Yet we never hear answers — just the simplistic nostrum that interstate sales will help reduce healthcare costs.

Don’t just spoon out more words like falling autumn leaves — prove that consumers would be better protected.

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

Lemons or lemonade?

lemonade_mobile-homeDo insurance consumers have a thirst to buy policies using their smartphones? Will they be less fraud-prone knowing some of their excess premiums get donated to charity? And will the prospects of quick claim cash motivate them to switch carriers?

One new insurance startup is betting yes, offering to quench that thirst.

Lemonade, the first so-called peer-to-peer insurance company, debuted this week to much fanfare.

Started by technology entrepreneurs, the company is targeting smartphone users by offering ease-of-service transitions and cheap prices on homeowners and renters coverage.

Lemonade says most insurance “sucks” (their words) because insurers hassle claimants, are bloated and make too much profit. And thus, claimants are more likely to file inflated or fake claims.

The company says it will undercut traditional insurers by using streamlined, tech-oriented transactions and reduced fraud costs. In an interview this week, Lemonade president Shai Wininger said:

“With insurance, over 90 percent of the fraud is perpetrated by supposedly normal upstanding citizens like you and me. So what is about insurance that brings out the devil in us? Why is it that when it comes to insurance, we feel entitled to break the law?” 

Research suggests consumers are less likely to defraud a company they feel good about. Customers designate a favorite charity to receive their share of company profits at the end of the year, if there are any.

Call me skeptical, but I doubt Lemonade’s approach will make that much difference in policy pricing.

Still, Millennials who love transacting business on their cellphones and are socially conscious should be drawn to this model. It will be interesting to see if Lemonade has a magic formula to reduce fraud. We’ll be watching to see if this new player leaves a sweet or sour taste in the mouths of its customers.

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

 

 

911 scammers victimized everyone

911_scammers_mobile_homeOne postscript to last week’s emotional 911 remembrances is that some folks with little conscience tried to exploit the tragedy by lodging dirty insurance scams.

Every disaster — whether by airliner smart bomb or Ma Nature’s hurricanes  — brings out a sordid bunch who see dancing dollar signs amid the strewn rubble.

The 911 scams were especially sordid because they played off of incalculable human suffering. Less than a week after 3,000 Americans died fiery deaths, Charles Gavett sadly told life insurers that his beloved wife Cynthia had perished in the collapse.

Cynthia was finishing a job interview with the investment firm Cantor Fitzgerald when a hijacked airliner plowed into the gleaming tower, Charles insisted. Cynthia hadn’t been seen since, and Charles sought more than $628,000 to help salve his grief.

How touching … except Cynthia was quite alive and well. She and Charles were living openly in Concord, Ga.

They figured insurers wouldn’t investigate claims involving such a profound national tragedy.

But insurers did investigate. Cynthia even invited a sheriff’s deputy over for the Thanksgiving holiday. The court invited the Gavetts over for 10-year jail terms.

Elderly New York City millionaire Beatrice Kaufman owned a $5-million apartment in Manhattan. She tried to charge insurers and charities about $1 million for renovations to her apartment and non-existent damage to her lawyer-recruiting business office.

Kaufman claimed the attacks forced her to leave her apartment and business for months. She racked up huge bills staying at a swanky hotel. In fact, she moved out before the attacks while renovating her unit. She tried to connive insurers into paying for the work. Kaufman received 52 weekends in an un-renovated jail cell.

In West Chester, Ohio, a man filed a $100,000 life-insurance claim, saying his father died when the Towers went down. His father lived in India.

People tried to bilk charities and relief agencies as well. Dozens of scams quickly showed up. Con artists hoped to quickly slip make-believe stories through the system amid the confusion after the Towers and Pentagon erupted in flames.

Expect similar cons as the Hurricane Hermine floodwaters retreat. You may see claims for flooded cars that drivers purposefully left near the beach. A Florida man filled his six-figure Rolls Royce with a garden hose after Katrina, claiming it was flood-damaged. Claim denied.

Floodwaters carried away (untraceable) high-priced home electronics, supposed Hermine victims might claim. Wind and debris and siding wrecked roofs that the homeowners damaged themselves.

Insurers are on high alert. They want to pay honest claims. Likely they’ll quickly pay as many claims as possible to make homeowners whole. Then the insurers will circle back to investigate claims that bears warning signs of fraud. Some blatant scams will be denied right up front.

So what can you do?

Aside from the obvious — don’t scam because insurers rightfully are watching — why look the other way when a neighbor brags about a Hermine scam, or any insurance con? Report them to the insurance department.

Honest Americans are trying to put their lives back together. Nobody needs knuckleheads taking the easy way out while the vast majority of Hermine victims play fair.

Americans suffer enough after unfathomable disasters. We all grieve for the victims. Insurance scammers who exploit human tragedy are an affront to all of us.

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

 

Insurers urged to report cases

 

Guyant_home_mobileHello from Venus. To my neighbors from Mars, the NAIC’s Anti-Fraud Task Force discussed last week how we all have noticed a decline in referrals state fraud bureaus are receiving from insurer victims. Howard Goldblatt’s followup FraudBlog pursued that theme constructively.

Notice I used the word victim. We consider insurers just that, a victim.

Now we agree with SIU directors that the “black hole” still exists in some instances.  We find ourselves concentrating so hard on cases that make the cut that we often forget to give you feedback. We really don’t want you to stop reporting because you are weary of the “black hole.”

State fraud bureaus also hope you remember your obligation to report cases to us. Some states even have made it a crime not to report. Let me stress that reporting to us should not feel like an obligation. You should have faith that we will do the best we can to fight insurance fraud and make sure that every state’s residents are protected from paying for those who break the law.

We have really tried hard over the past few years to give you options to report to us in a convenient manner. Many of you have offered excellent and appreciated suggestions. We have listened to your input, and have implemented many of your ideas. We know the process is not always perfect, though it is getting better.

We have partnered with organizations such as the Coalition to educate you on how to report insurance fraud to us. We certainly welcome any dialogue that can put this issue to rest. I actually asked Howard this week for help in reaching out to you. We want to be the first to step up and ask that you join us in a dialogue that can help us serve all states’ residents while preserving your business interests.

I must say that we have a strong group of fraud directors across this great country. We are committed to eliminating insurance fraud. We are meeting in Seattle, Wash. in a few weeks. I am sure this issue will be discussed at length. We really seek your help. We are all in, over here in Venus.

About the author: Shane Guyant is director of the Criminal Investigations Division of the North Carolina Department of Insurance. He also chairs the NAIC’s Antifraud Task Force.

 

Soldier fakes injury to steal Purple Heart, disability money

stolen_valor_home_mobileA rocket exploded by Army soldier Darryl Lee Wright’s Humvee while he was patrolling in Iraq during Operation Iraqi Freedom. The blast knocked him unconscious, scattering rubble and debris everywhere, he said.

The Seattle man ended up with post-traumatic stress syndrome and a brain injury, he said. Wright curled into a fetal position most of the time back home. He couldn’t cook, hold down a job or even button his shirt.

Sad story of a brave lieutenant hurt while doing his job for the sake of freedom. Wright received a Purple Heart and Combat Action Badge.

Wright parlayed that iconic medal of personal sacrifice into more than $750,000 worth of federal disability and other benefits. The medal legitimized his insurance claims to the feds. At one point he raked in $10,000 of taxpayer dollars a month.

Except his rocket wound was an elaborate lie. When applying for the medals, Wright included a photo of a mangled Humvee unrelated to his incident. And the rocket landed more than 300 feet from his Hummer. Wright never mentioned injuries in reports right afterward, nor was anyone else on his patrol injured.

Yet Wright said he needed a full-time caregiver, house cleaner and yard worker. He couldn’t cook, take public transport or be in crowds. His crumbled attention span lasted only five-10 seconds, and he couldn’t follow instructions.

Wright hired his sister Karen Bevens as his home caregiver. She supposedly spent more than 40 hours per week caring for him; he could function only with the help of Bevens or other hired workers.

Meanwhile, Wright played in a rec basketball league and coached a high school team. He belonged to an emergency team that responded to fires and did rescue searches in Snoqualmie, east of Seattle. He had a “sport” membership at a local country club, and took vacation trips.

Wright also was a board member for a hospital foundation, and ran for political office. Investigators caught him pushing a lawnmower outside his home as well.

His sister Bevens was a no-show caregiver. Her role was fake. Wright sent false invoices to the feds to show he’d paid her for work she performed. She was his round-the-clock in-home caretaker, Bevens lied in an affidavit.

Wright somehow got a full-time federal job while supposedly being stuck in a fetal position at home. A unit director grew suspicious when Wright began skipping work after awhile on the job.

PTSD caused the mounting absences, Wright claimed. He submitted a bogus Military Order to justify his actions. He ended up in federal court, pleading guilty in August 2016.

Wright could spend up to 20 years in federal prison when sentenced. Bevens also pleaded guilty.

“Darryl Wright has engaged in a long-lasting, persistent, epic offense,” federal prosecutors wrote in a sentencing memo. “He sullied the reputations of people, institutions and agencies. Worst of all, he hurt the heroes who fully deserve recognition, respect, and honor.”

More common ground needed on reporting, acting on suspected scams

Fraud_bureaus_SIU_home_mobile

I just returned from the NAIC’s summer meeting. It included the antifraud task force meeting, attended mostly by directors of state insurance fraud bureaus. I also met with insurer SIU directors before the NAIC event.

I felt as if I’d entered a time warp. Discussions at both meetings reminded me of a breakout session I chaired at a Coalition summit more than a decade ago on the status of insurance fraud fighting. SIU directors and fraud bureau directors both attended.

The main discussion by insurers then was about the “black hole” of information sharing. Insurers said they send cases to fraud bureaus for investigation, and never hear a word back. The fraud bureaus contend insurers send them weak cases, or ones not well-vetted.

That’s what I heard last week as well. Insurers seemed at a loss about what happens to their cases they refer to fraud bureaus. And, several fraud bureaus grumbled about the lack of good referrals from insurers.

Insurers and fraud bureaus clearly need better dialogue so everyone fully understands each other’s needs.

One fraud bureau chief talked about how a few insurers in his state haven’t reported a suspected scam in years, even though reporting is mandatory. Are those insurers doing such a good job that nobody’s trying to scam them anymore? Doubt that.

Insurance-fraud laws broadly define the crime, though there’s no definition of suspected insurance fraud. Each insurer could have its own definition, which determines which and how many cases it sends to the fraud bureau.

Most insurers don’t report all suspected frauds. We understand that. Besides, fraud bureaus don’t have the staff to handle every case. But for an insurer to say it has no suspected frauds to report does a disservice to the larger fraud-fighting community and our common cause.

Fraud bureau directors and SIU leaders need to come together, develop a greater understanding and find more common ground so they can work jointly to combat fraud in the most efficient and effective ways possible.

We urge both sides to reach out to the other to make that happen.

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

 

Taming the workers-comp monster in California

California_comp_system_mobile_home

If you need more proof the workers-comp system in California is a mess, look no further than the report this week that indicted and convicted medical providers filed more than $600 million in liens against workers-comp claims.

The lien system in the state continues to be fertile ground for fraud. Designed as a safety net to ensure injured workers get treated, it’s now a slush fund for crooked medical providers and lawyers.

Fraud and abuse are rife in Southern California, where medical rings are targeting just-retired workers, says one insurance exec who wrote us this week. Runners hang out at Social Security offices and other venues frequented by retirees. They entice the retirees to file claims by offering free medical care and a windfall to supplement retirement income. The retirees are brought to lawyers’ offices, signed up and then shuttled off to medical offices for “treatment.”

The number of worker “injuries” occurring on the last day of the job is rising, this exec says.

Legislation to help weed some of these abusive providers out of the system is cruising through the California legislature. The bill would ban providers who’ve been kicked out of Medicare and Medicaid for over-billing. The bill sponsor says there’s evidence that crooked docs banned from government health plans have turned to workers comp to ply their trade.

The sponsor also says his legislation will target lawyers who sign up comp clients, but never actually interview them, then file claims for them in distant cities and ultimately settle the cases for their fees — often without the workers’ knowledge.

The legislation is a good idea, but much more needs to be done. Workers compensation in California is a huge, complex multi-faceted program. There are no easy answers on how insurers, employers, policymakers and others can hit that sweet spot of minimizing fraud while making sure injured workers get the treatment they deserve. But finding a better way than the lien system might be a good start.

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