Sick health plan sticks desperate victims with large medical bills

Promises full benefits, bilks 17,000 consumers with fake health coverage

Oklahoma real-estate agent Bob Harper was desperate. His heart was failing. He was just days from having his heart pacemaker implanted, only to discover his health policy was worthless.

A Houston man had emergency back surgery, and his health plan refused to pay his $105,000 bill.

They were among more than 17,000 luckless Americans who Bart Posey duped into buying fake health coverage in a $22-million theft binge. The Springfield, Tenn. man’s heart-breaking scam is a consumer warning to avoid discount health deals that seem too perfect to be real.

Posey ran two bogus plans — American Trade Association and Smart Data Solutions.

Cold-callers, fax blasts and a slick website went after consumers. Scammers hawked seemingly low-priced plans that promised full-benefit coverage.

The sales pitches seemed a godsend. Health premiums were rising around the U.S. Posey promised an unbeatable deal. People quickly bought in.

Plans were empty promises

Posey raked in monthly premiums. Yet his health plans were just pieces of paper, empty promises.

People would call in crying. But we were instructed to tell them that their claims were ‘in process’ and to call back in 30 days. We were told to flat-out lie to people just to get them off the phone,” a phone reps admitted.

South Carolina resident Beth Wicker suffered a stroke and went to the hospital, only to discover her coverage was bogus. She owed $17,000 in medical bills and had no health insurance.

A New Jersey man began chemotherapy, only to have his doctor tell him his ATA coverage was fake. He had to file for charity care with his hospital.

Many victims were Hispanics and Asian, and could barely speak English. Some were dying of cancer and couldn’t get their treatment bills paid.

Posey was handed 14 years in federal prison on November 20.

Fake plan steals $100 million

Fake health plans have a long and sorry history. Simple Health Plans, for instance, stole more than $100 million from consumers around the U.S., federal officials say. The Florida outfit was shut down in November 2018.

Victims were stuck with large and unpaid medical bills. People thought they had a full-benefit health plan that covered preexisting conditions. Bogus sales pitches left victims virtually uninsured, the Federal Trade Commission says.

Consumers, watch for these warning signals. The plan’s deceptive websites claimed to:

  • Provide comprehensive health insurance.
  • Sell federal health insurance such as Medicare and the Affordable Care Act.
  • Be affiliated with AARP and private insurers such as Blue Cross Blue Shield.
  • deceptively offered “Health Insurance for Smart People” from “the Nation’s Leading Carriers” at “Low Affordable Premiums” with “Prescription Drug Coverage.”
  • promoted “Medicare Health Plans for Your Needs and Budget.”

Prosecutors had the last word in Posey’s scam. “To listen to the accounts of the life-altering consequences for so many people is truly heart- wrenching and drives our prosecutors to seek justice on their behalf,” U.S. Attorney Don Cochran said.

Disabled Kentuckians destitute when $550-million disability con busted

Lawyer bribes judge, docs to game federal disability and steal large payouts

Impoverished Kentucky coal miners scraped by with crippling injuries and pain, scratching out a sparse living in a declining industry with jobs disappearing.

Along came flamboyant lawyer Eric Conn. He launched an ad blitz that promised folks he’d get them federal disability money to ease their difficult lives.

The glitzy ads set up a $550-million disability insurance flimflam. It was the largest such ripoffs in U.S. history. In the process, Conn drove many clients into deeper despair when their disability money was denied after he was arrested. Some even killed themselves.

The self-styled “Mr. Social Security” built one of the nation’s largest disability practices through self-promotion and thievery. Conn was a celebrity for his loud, nutty billboard and TV ads that saturated the region. He hired a country music star and rapped in Spanish.

Sought lifetime disability money

Thousands of people flocked to his office complex of five connected trailers. They hired Conn to have them declared disabled, and get a lifetime of Social Security disability checks.

Many clients were in pain and urgently needed insurance money. Some people were healthy — they just wanted free insurance money for life.

Conn bribed a local judge, psychologist and doctors to rubber-stamp disability claims for anyone who wanted taxpayer money. Conn was glad to oblige. He took a healthy cut of every client’s disability award.

Many patients weren’t even examined. Medical records often were forged so Conn could quickly slide disability claims through the system and get client money coming in. Social Security was on the hook for nearly $600 million over the life of the claims.

Fugitive found in Honduras

Conn slipped out of his ankle monitoring bracelet after being federally convicted. He fled the U.S. Dogged investigators tracked him down at a Pizza Hut in Honduras six months later. They shipped Conn back to the U.S.

Hundreds of people lost their disability benefits after Conn was busted. Social Security halted payouts while sorting through the mess Conn’s insurance plot had left behind.

Tim Dye is a former coal miner — and Conn client. Social Security stopped his checks after Conn was busted. Dye’s wife sold her jewelry and possessions from their home. She even begged for water from neighbors to make ends meet.

Other Kentuckians lost their homes, and several committed suicide. Thousands of client files molder in Conn’s offices, waiting for the feds to review. People with painful backs and other disabilities are going without money they need to hold their lives and families together.

Disabled Kentuckian snaps

Leroy Burchett was a former crewman on a printing press, and delivery-truck driver. He lived with crippling pain after two spinal surgeries. He snapped after his disability money was cut off due to Conn’s crime.

His wife Emma said on the show American Greed:

“He came through the house yelling and cussing at me and cussing at the kids. … I opened the door and he was sitting on the edge of a bed with a gun. I took that gun away from him. And he said the same words to me again.

“He said, ‘You’re not going to top this. Nothing can fix this.’ He stormed back outside. And my kids were standing right there. And he said, ‘I just can’t take this.’ And he pulled another gun out from behind his back and he shot himself in the chin.”

Conn was handed 27 years in federal prison. That’s all he has to show for years of gaming the federal disability system — and luckless workers like Tim Dye and Leroy Burchett.

Attorney Ned Pillersdorf is trying to help hundreds of honest Kentuckians with their payouts. “I’ve got to get these people money quick,” Pillersdorf told the Kentucky Herald Leader. “I’ve got 800 people going without, and it’s a real humanitarian crisis.”

Owner made living torching salons for insurance

What desperate emotions flashed through firefighters Larry Leggio and John Mesh as the burning nail salon’s brick wall crashed down on them? Did they even have time for such emotions?

Flames shot through a nail salon that Thu Hong Nguyen set to steal a $40,000 insurance payout. The Kansas City, Mo. woman poured gallons of acetone and isopropyl alcohol into the stock room of her LN Nails and Spa. She lit the fire just before leaving work at 7 p.m. Nguyen was the last one out.

The fire needed just minutes to spread through the space between the first and second floors. It quickly grew into a three-alarm inferno battled by 110 firefighters. This was the largest fire Kansas City had seen in years.

People lived in 16 apartments above the Nguyen’s shop. Most escaped on their own, though some needed rescuing.

A commander then ordered 18 firefighters out of the structure, with the flames burning strong and the salon clearly a total loss.

Wall collapses with loud crack

Yet several firefighters stayed in the alley. Leggio was using a pike pole to pull a fan from a ground-floor window so Mesh could better hose the flames inside. Then a loud crack echoed out; the wall suddenly collapsed. Leggio’s body was crushed from head to toe and every organ was damaged. Two other firefighters were injured. Dan Werner had five leg fractures and surgery on his left ankle.

Missy Leggio was in the neighborhood. She saw the flames and knew her husband was fighting the blaze. She parked and walked over. Missy wanted to make eye contact with Larry to signal she loved him.

Instead she saw the wall collapse. A firefighter ran over to her and someone helped her into a car that sped to Truman Medical Center. “I remember screaming in the car, ‘Is my husband dead?’“ Missy said.

Burning salons: Nguyen’s living

Nguyen made her living burning down her nail salons for insurance money — five in all. Her modus: Buy a nail salon, usually in someone else’s name, and run it until a fire caused an insurance claim. Usually the claims were small enough that Nguyen likely wouldn’t spark an investigation, prosecutors said.

Nguyen lived off the insurance money for several months, then burned down another nail salon.

Nguyen earlier set fire to a shop in Lee’s Summit. No one was injured, and Nguyen received nearly $52,000 of insurance money.

A salon in Texas burned the same month her insurance policy expired. Yet another Texas salon flamed out after just four months. A salon in Grandview caught fire two days after Nguyen doubled her insurance. The average insurance payout was $46,000. She collected $268,000 over the years, for salons and other incidents.

Nguyen was convicted of the fires in Kansas City and Lee’s Summit, receiving 74 years in state prison.

More than 5,000 people attended a memorial service for Leggio and Mesh. The pair grew up in the neighborhood where they died. Leggio left his mourning wife and mother. Mesh never had a chance to say goodbye to his wife and four daughters.

“Our hearts are broken, but our resolve to honor these brave men is strong,” said Fire Chief Paul Berardi. “… I vow we will never forget.”

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.