Fraud News Weekly

Friday, November 15, 2019


* Proposals to curb widespread abuses of assigning auto-glass benefits in Florida already are pre-filed in the state House and Senate for 2020. Also expect another effort to reform or abolish the state’s fraud-ridden no-fault system. A new report supports no-fault repeal. “Despite its noble intentions, Florida’s PIP system has become plagued with growing fraud, litigation, and consequent auto insurance rate increases,” says the James Madison Institute. Floridians reportedly pay among the nation’s highest auto insurance premiums, with no risk factors to support such high costs. Replacing no-fault and reforming the state’s bad-faith laws are among the report’s recommendations. Florida remains ground zero for insurance fraud in the U.S. Yet the legislature meets for just 60 days — Jan. 14-March 13 for next year. So that puts the onus on swift action.

* Safe bets are being placed on data privacy remaining a major legislative issue in 2020. Fully 1/2 of states had bills to address concerns about consumer data privacy this year. More are expected as legislators pre-file bills for 2020. Almost all proposals will impact what data fraud fighters may access, and how personal data may be used for investigations. All of this year’s listed bills are “limited to the regulation of privacy practices of commercial entities, online services or commercial websites, covering legislation related to the privacy of consumer data, including bills related to online privacy, collection of consumers’ biometric data, data broker regulation and other miscellaneous consumer privacy issues,” NCSL says in a report. Many privacy bills remain pending, and some will carry over for debate in 2020. The Coalition supports proper protections for using consumer data. We also advocate for reasonable access to data for fraud investigations.

* Michigan is among the states getting serious about protecting consumers from surprise medical bills for out-of-network services. Three new bills have been introduced in Lansing. A Senate bill would require medical providers to notify patients of estimated out-of-network costs at least 14 days before a scheduled procedure. If the patient objects to the extra costs, the out-of-network provider still can opt to perform the procedure, but must accept either 150 percent of the Medicare reimbursement rate or the average in-network reimbursement the insurer normally pays. A companion bill with the same provisions was introduced in the House. Another House measure would go further. The payment provisions would apply to procedures requiring advanced notice — and to ER bills plus up to 3 days of followup in-patient care.

* It’s final call to suggest fraud bills the Coalition might pursue in 2020. Our Government Affairs Committee meets next week to recommend our legislative goals for full Coalition adoption. … California SIU Reg: Today also is your final chance to submit comments about changes to California’s SIU regs proposed by the insurance department. Please forward your comments to Matthew Smith by COB today.

Note: Texts of anti-fraud bills are available on the Coalition’s website here.


Sherry Lance bamboozled a TV reporter in a failed bid to deflect attention from her burning down her rental home in Henderson County, N.C. Lance loudly blamed police for falsely accusing her and her mother Jonnie Turner of setting their rented home ablaze. Lance went to the reporter with her complaint. They had a perfect excuse that night — they were dumpster diving, she said in a TV interview after being arrested. “To my grave I’ll fight this, because I’m that strongly adamant about it, you know? Right is right and wrong is wrong, and this is wrong,” Lance told News 13. She even claimed she had a brain tumor. The story was their downfall. Several viewers contacted police after the story aired. Lance told them she torched the house for insurance money. Lance was handed 21 months in prison for arson, insurance fraud and conspiracy to commit arson. Turner faces trial. No word if Lance’s claimed tumor is real.

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* Two chiros billed insurers for sessions when they were vacationing out of the U.S. Vacation time is over for Allan and Stacy Spagnardi. They ran the Dr. Allan Spagnardi Chiropractic clinic in a strip mall near Atlanta. They used their patients’ personal info to bill a private insurer for phantom services. The Spagnardis claimed their clinic had 296 patient visits during a week the couple were on a cruise vacation. Stacy spent much of the stolen insurance money at casinos. Allan bought a BMW motorcycle and 2015 BMW M4. Nor did they report $1 million of income to the IRS in 2014 and 2015. The Spagnardis filed no income taxes despite taking in well over $1 million in 2014 and 2015. Even after being indicted, the Spagnardis kept trying to hide their income from the IRS, including filing a false federal income tax return in early 2018. The Spagnardis each received 4 years and 3 months in federal prison.

* Homes, businesses and warehouses lit up in a $4-million string of arsons in the Santa Clara, Calif. area. Investigators received a tip through the insurance department’s consumer hotline. The tipster gave the exact address of where the next house fire would occur. A joint investigation ensued into fires at a business, and 2 homes in San Jose and Stockton owned by Tyler and Kim Chen. Both home fires were started when unattended chicken was left frying on the stove, the Chens lied. Tyler also planted smoke-damaged items in the homes. They’d used many in claims for fires in their warehouses and businesses. He also used smoke-damaged possessions from some warehouses to claim losses from fires in other warehouses. He also bought yet hadn’t received goods he said were damaged. Chen tried to claim $5.6 million in losses, with $4 million paid out by 5 insurers. The Chens pled guilty. They’ll be sentenced in January. Several business associates face trial.

* After 30 years in business, an agent tossed away his career by pocketing premiums from several clients in Stevensville, Mo. Kevin Donnellan’s theft came to light after a client was involved in a car accident. Her insurer and the other driver’s insurer sued her for damages. She looked into the charges, and found that her auto policy was canceled earlier for nonpayment. She called police, who investigated. Donnellan used client premiums to set up other policies to scarf commissions, leaving their own premiums unpaid. The policies eventually were canceled for nonpayment. Donnellan gave the insurers false client addresses and phones when setting up the policies, so the clients didn’t receive cancellation notices. Donnellan admitted to defrauding 2 clients this year, and several others in prior years. More victims may come forward. Donnellan will receive up to 4 years in jail when sentenced in December. He also must repay all defrauded clients.

* An informant and undercover officer undid Dr. Sheikh Ahmed’s pain con against Medicaid. The Hartford, Conn.-area man charged the informant and officer $500 cash for pain scripts. Ahmed didn’t examine the informant, who pretended he was a patient. Ahmed mainly talked about what dosage would be least-likely to attract regulators, and what pharmacy was easiest to slip through bogus scripts. Ahmed also wrote a 7-day oxycodone script for the operatives for $125. Ahmed told the undercover officer he’d need an exam. That consisted of merely answering questions from Ahmed’s billing specialist, having a nurse check his vital signs, giving a urine sample, and having Ahmed briefly touch his shoulder. The script was submitted electronically before the exam was complete. And Ahmed told his billing specialist to enter into the computer that the officer had back and shoulder pain — before the exam. Ahmed pled guilty. He’ll spend up to 20 years in federal prison for the drug crimes, and 5 years for tax fraud. Ahmed also must repay $260,000.


* Nine auto insurers were milked out of more than $500,000 by a no-fault clinic that illegally installed a doc as straw owner, Florida’s CFO alleges. As charged: Dr. Celestino Santi hid the ownership of Accident Care Center of Boggy Creek to avoid state licensing requirements. The clinic specialized in supposedly treating crash victims. Santi was the straw owner for 5 years. This disguised the true owner’s ID — an unlicensed cohort. The medical treatments were billed to auto insurers under the crash victims’ PIP policies. Among other things, Santi is charged with running an unlicensed health clinic. He faces up to 30 years in prison if convicted. More arrests are expected, the CFO says.

* An OB-GYN did needless hysterectomies and other invasive surgeries on patients without their consent, the feds charge in the Norfolk, Va. area. The disturbing allegations:  Many of Javaid Perwaiz’s victims were Medicaid patients. He told a patient that he detected cancerous cells during an exam. A hysterectomy would be the best solution, he said. The patient wanted a less-invasive procedure and thought they agreed to remove her ovaries. When she woke up from surgery, she found Perwaiz had performed a total abdominal hysterectomy — and perforated her bladder. She became infected and was hospitalized for 6 days. Perwaiz removed the fallopian tubes of another unknowing patient, making it impossible for her to become pregnant. Others were coerced into surgery by scare tactics that relied on cancer concerns. Perwaiz operated on 40% of his Medicaid patients — 510 total. Of those, about 42% had at least 2 surgeries. He was so busy wielding the scalpel that hospital staff had a hard time keeping up with Perwaiz as he ran from surgery to surgery. He faces varied federal charges and at least 8 malpractice suits.


* Appeal denied. Ryan Patrick Natividad was a police officer in Costa Mesa, Calif. He claimed he slammed and hurt his wrist while arresting a suspect in 2014. Video evidence debunked the claim, and a jury convicted him. He was handed 2 years in prison. Natividad appealed. He’d made a similar comp claim in 2009, and said that claim was inappropriately used against him in his latest trial. Natividad was correct that the lower court made an error, though it was harmless and didn’t affect the outcome, the court ruled. “We have watched the surveillance footage of Natividad escorting the Arrestee from his patrol car to inside the jail. Contrary to Natividad’s claim, it conclusively established he did not injure his hand in the manner he claimed,” the ruling says. [People v. Ryan Patrick Natividad, Court of Appeals of California, Fourth District, Division Three].


* Allstate is suing to stop Jeffrey Lereah from using bankruptcy to escape paying $3.7 million for his part in a massive no-fault scheme. Allstate sued the Hudson Valley, N .Y. man in federal bankruptcy court, arguing Lereah isn’t entitled to discharge a debt incurred by fraud. He helped run a no-fault ring that bilked auto insurers out of $279 million. He ran Novacare Medical and McGuire Medical. Lereah recruited docs to serve as paper owners of his medical clinics, paid kickbacks for patient referrals, and arranged for unneeded patient referrals to other clinics for kickbacks. He laundered money through shell firms and check-cashing services. The loot was returned as cash to the criminal organization. He was placed on probation for 2 years. Lereah also must forfeit nearly $1 million and repay the insurers. Allstate won a default judgment in 2016, when he didn’t defend himself against a civil complaint filed in federal court in Brooklyn. The actual damages were about $1.2 million, and the award was tripled to $3.7 million under RICO. Lereah sought Chapter 13 bankruptcy protection this year.


* Trish Martin slipped on ice, breaking her wrist and a vertebra in her spine. Some $36,000 of hospital bills piled up. The Philly-area woman thought she’d bought a comprehensive health policy after visiting a seemingly legit ACA portal. In fact, her policy was junk. Limited-benefit plans are legal. But websites selling them have grown bolder in their marketing as free-market Republicans chip away at ACA rules, saying people need more affordable alternatives, news reports contend. But shopping savvy isn’t always enough to protect consumers. Brokers who rely on deceptive websites for leads use carefully worded scripts to instill trust and push consumers to buy quickly — before they read the fine print. Consumer advocates warn: Tread carefully when searching for plans on Google. The top results likely are ads for private insurance websites. Google has removed the most-egregious ads.


Informants undo a pain doc’s con in Connecticut. … A surgeon allegedly removes a woman’s uterus without her permission in Virginia. … A husband and wife launch $4 million of arsons of homes, businesses and warehouses in California. Click on the pins to read about these and other fraud cases around the U.S.

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Fraud News Weekly is published each Friday except for Thanksgiving week and the week between Christmas and New Years. Copies of previous issues are available in the members-only section of Employees of member organizations may share this newsletter freely internally. Sharing by non-members strictly prohibited.