Fraud News Weekly

Friday, December 7, 2018

* A prefiled Assembly bill would boost penalties for staging auto crashes in Nevada. Crashers would get 1-20 years in prison plus a fine up to $50,000 under the bill championed by the state AG. Nevada has seen a dramatic rise in staged crashes, especially in the Las Vegas area. Stepped-up prosecutions are a major focus of the AG. Stiffer penalties would sweep more ring members off the streets longer, deter would-be crashers and give the AG more leverage in plea talks.

* Consumer insurance-fraud victims in Montana would receive civil and criminal recoveries under a bill spearheaded by the state auditor. The bill would revise the state’s law impacting consumer insurance restitution. The draft should be released in early January, before the legislative session opens.

* No-fault fraud reforms to help offset the nation’s highest auto premiums still have life in the waning days of Michigan’s 2018 session. A new Senate bill would create an auto-fraud authority and catastrophic claims board to oversee high-risk losses — including fraud. The bill doesn’t address how the auto authority would mesh with the broader fraud bureau the outgoing governor created in September. Still, legislating the auto agency would give it more staying power and budget security than the governor’s administrative order creating the state fraud unit.

Also in Michigan … Auto and workers-comp insurers are paying ever-higher claims for drugs during injury treatments. A state House bill would offer relief. The measure would tighten oversight of pharmacy benefit managers in the state. The insurance department would oversee PBMs — including imposing fines and revoking licenses. Drug prices offered through PBM-managed plans also would be uniform. PBMs would be state-registered, and pay a fee to help fund oversight. Both bills face uphill battles with only weeks remaining in the 2018 session. Expect them to return in 2019 if the clock runs out for this year.

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

* “A Houston man had emergency back surgery, and his health plan refused to pay his $105,000 bill,” the latest Fraud of the Month recounts. “[He was] 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.”

Visit to read articles citing the Coalition.

* A radiology firm showered kickbacks onto a chiro for patient referrals to try and cheat California’s workers-comp system out of $22 million. The office manager of a radiology firm is the latest to fall. The scheme involved bribing a primary-care doc and chiro to recommend a host of medical services to supposedly injured workers. Gonzalo Paredes was office manager for chiro Ronald Grusd at Advanced Radiology, in Beverly Hills. Paredes helped negotiate kickback deals for patient referrals to the firm’s mobile clinic in San Diego. Paredes also paid the bribe money, and falsely billed comp insurers for treatments. He was convicted of 51 felony counts and could spend up to 43 years in federal prison when sentenced in February. This is the latest victory for Operation Backlash. The San Diego DA teamed with the feds and state insurance department in a large-scale operation to take down the scheme. Grusd earlier received 10 years in federal prison.

* Kayla Breann Payne, Davon Francis and D’Aundre Wilson claimed they were in a hit-and-run crash in the Sumter, S.C. area. Payne was the owner and driver, and filed an injury claim. She handed USAA an $8,608 medical bill — except the real hospital bill was $4,405. The fraudulent bill also was changed to self-pay. Yet the crash was staged, and set up by suspected ringleader Gregory Vaughn. He allegedly altered Payne’s hospital bill. USAA paid only $800 for car damage before realizing the claim was bogus. Payne pled guilty and received 18 months of probation, the state AG announced. The others remain charged.

* Kickbacks and false identities were the core of an $8.6-million theft from Medicare in Miami. Alexander Ros Lazo ran a home-health agency called T.L.C. Health. It bribed cohorts for home-health services scripts and referral of Medicare patients to T.L.C. Misleidy Ibarra gave therapy using the names of licensed therapists — she wasn’t licensed to give physical and occupational therapy. Medicare paid $8.6 million in undeserved benefits. Lazo and Ibarra pled guilty and will be sentenced Feb. 5.

* An educator was taught a lesson. Major Smith was employed by the East Orange (N.J.) Board of Education. He stole $74,000 in disability payouts by claiming several bogus slip-and-falls. Smith submitted more than 2 dozen forged medical documents to his insurer. He filled out the forms in his doc’s name. Smith documented phantom treatments for various dates for supposed injuries. He also pretended to be employed by the Board of Education in claim forms verifying his employment in the district, even after he no longer worked there.

You be the jury. … John Lee says an elderly man drove into him in a Winn-Dixie parking lot. He wants $10,000 for pain and suffering. The Tampa, Fla.-area senior says Lee set him up. His insurer paid the guy, then changed its mind after suspecting something was wrong. The pedestrian is criminally charged. The trial outcome depends on how the jury interprets surveillance video. Look closely — what’s your verdict?

* Jesse J. Finnegan claimed his Dodge Ram hit a tree after swerving off a road to miss an oncoming vehicle. The Coalport, Pa. man filed a damage claim in the early-morning hours after the 8:04 p.m. crash. Finnegan’s truck had damage to the passenger-side tire, bumper and headlight. He was uninsured. This much allegedly ensued: Finnegan called Safe Auto at 1:57 a.m. and reinstated his liability-only policy. Safe Auto had canceled it for failure to pay premiums. He also added comprehensive and collision coverage. Safe Auto verified it covered acts of nature, plus hitting another vehicle. Finnegan then filed a claim at 6:32 p.m. He lost control of his truck and struck a tree between 3-4 p.m. that day, he said. The insurer asked Finnegan if he recalled filing a claim and providing false info about the crash date and time. Finnegan only called to tell Safe Auto about the crash — he didn’t file a claim, he said. The insurer confronted him. Finnegan was “foggy” about the date and time because he hit his head when his truck rammed the tree, he replied. The story didn’t wash, and Finnegan’s charged with insurance fraud and other crimes.

* A child poured water on Richard E. Weber’s computer and ruined the machine, the Erie, Pa. man claimed. His insurer had an independent company inspect the computer. Weber provided documents alleging that a repair firm inspected the supposedly damaged machine. Yet the firm doesn’t exist, investigators allegedly discovered. Separately, Weber also filed an auto-repair claim within days of adding the vehicle to his auto policy. Yet his vehicle allegedly was damaged in a traffic crash about a month prior. Weber’s charged with insurance fraud in both cases.

* Democrats in the U.S. House are trying to thwart potential waves of fraud by backing state efforts to block Association Health Plans authorized by the Trump Administration. An amicus brief supports a federal suit by 11 blue-state AGs plus the District of Columbia. So-called AHPs loosen federal rules allowing small employers to form group health plans. The laxer rules invite scammers to set up bogus health plans that rob consumers, the AGs contend. AHPs also are a subterfuge to thwart the Affordable Care Act, the suit and amicus add. The amicus brief is signed by, among others, House Minority Leader Nancy Pelosi. Fake health plans exploiting AHPs could rapidly spread unless states have wide oversight authority, the Coalition told both the White House in a private meeting last spring, and the Labor Department in a strongly worded letter.

* The Coalition welcomes these 8 new members as our 25th anniversary member meeting approaches Dec. 13-14 in Washington, D.C. Coalition membership now tops 180 organizations. Claims & Litigation Management Alliance … Frankenmuth Insurance … Rolfes Henry Co. … GladstoneWeisberg… Katten Muchin Rosenman LLP … Marshall Dennehey Warner Coleman & Goggin … New York State Insurance Fund … and Permanent General Insurance Company.

* Top anti-fraud leaders from across the nation will celebrate the Coalition’s 25th anniversary next week. A record number of attendees will hear from experts on the latest trends, cases and developments in the insurance-fraud world. More than 120 reps from industry, government, business and consumer advocacy will attend. Watch this space next week … you’ll see all the breaking news from the Coalition’s annual membership meeting.

* Data quality means a lot to insurers in combating fraud, says a new FRISS tech survey of 150 insurers. Some 45 percent of insurers say they’re challenged by the quality of fraud data collected. That’s up from 30 percent in 2016. Too little info is also available, and poor-quality info is disrupting the claim process. More carriers also want to exchange info for immediate access to quality data to make smart insuring decisions. This includes info about: false claims, unreliable repair shops and medical providers, imagery and insured assets. More than 60 percent of carriers also use automated anti-fraud software to enable real-time fraud detection. Still, while 86 percent of insurers believe their systems are updated, 43 percent report difficulty with integrating data. And they find too many false positives, thus delaying the claim process.

* From our “What do Americans think?” files: Consumers in Ontario, Canada want action. That’s the upshot of an attitude survey about insurance fraud. Over half of Ontarians believe that 25 percent of insurance claims are fraudulent, says the Aviva Fraud Report. Ontarians pay some of the nation’s highest insurance premiums at $1,428 (Can.) per year. Among other findings: 86 percent support investing more resources to investigate and prosecute fraudulent claims — an 8 percent rise from last year. Also … 70 percent say insurers should invest more resources to combat fraud.

A South Carolina driver doubles a claimed hit-and-run hospital bill. … A California radiology form hands out kickback in a $22-million medical con. … A New Jersey educator steals $74,000 of disability money. Learn more about these and other crimes by clicking the pins on the map.

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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.