Fraud News Weekly

Friday, May 18, 2018

* The feds are moving closer to authorizing so-called Association Health Plans — potentially opening the door to fake health plans much like bogus operators who swept through the U.S. in the early 2000s. Numerous groups — including the Coalition — are warning the feds about the high risk of fraud unless the Administration’s proposal fully empowers states to oversee AHPs against fraud. The proposal now has too many loopholes and could invite more fake health plans to take hold. The Coalition wrote the U.S. Labor Department, has been interviewed by reporters, and wrote several articles in influential news publications widely read by policymakers. The Coalition meets with the federal Office of Management and Budget next week to further drive home these concerns.

Michigan continues tackling no-fault reform, even with statewide offices up for election in November. A Senate bill would reform the  state’s expense-soaked PIP system, and create a badly-needed automobile fraud authority. Insurer assessments would fund the agency. In return, large and small insurers would have seats on the authority’s board, along with various state agencies, law enforcement and at least 1 citizen-consumer. A similar measure is stalled in the state’s House of Representatives. Michigan has no fraud bureau to coordinate crackdowns on widespread auto scams in the state. Michigan also has the nation’s most-generous no-fault system, making it a regular target for phony crash injury claims. Creating an auto fraud authority in a state rampant with PIP fraud is a high Coalition priority. The broader no-fault reforms, however, are contentious. The bill’s fate thus is uncertain in an election year when few legislators want to alienate powerful interest groups. The anti-fraud authority has wider support, and the Coalition is urging the statehouse to pass the authority as a freestanding measure.

* Insurance history was made when South Carolina Gov. Henry McMaster signed the nation’s first state insurance data security bill into law. Insurers must:develop and implement information-security programs to protect non-public information from being disclosed or stolen … designate an employee or vendor responsible for their data-security program … identify internal and external threats that could lead to data breaches … and develop programs to mitigate those risks through data security and managing of personal information. The bill moved quickly through both chambers, and to the governor’s desk. Insurance commissioner Raymond Farmer chairs the NAIC’s Cybersecurity Working Group. He helped lead the effort for his state to become the first to pass what may be a model for other states.

* “According to Dennis Jay, executive director of the Coalition Against Insurance Fraud which has pushed for tighter controls on juvenile insurance, congressional action is unlikely and would be challenged as counter to the 1945 McCarran-Ferguson Act, which gives states exclusive domain over insurance regulation,” the Washington Post said in an editorial supporting a new Maryland law requiring life insurers to be more diligent when insuring kids. The law was prompted by public outrage over the murder by Joaquin Rams of his 15-month son Prince for more than $500,000 of life-insurance in the Washington, D.C. area.

* “It’s a very personal issue. This is a very human, human problem with somebody getting over-prescribed,” Jim Potts, chair of the New York Alliance Against Insurance Fraud, recounts in a consumer podcast offering advice for avoiding excess painkiller use. “That’s just a terrible, terrible way to become an addict.” The podcast is part of NYAAIF’s statewide campaign to alert consumers about painkiller addiction and how to steer clear.

* Someone is calling Pennsylvanians, pretending to be an employee of the insurance department to extract insurance info. The department recently received 2 complaints from Pittsburgh-area residents who received suspicious calls. The caller asked about their Medicare supplemental coverage, and offered to visit their homes. The insurance department never makes unsolicited calls to consumers, and doesn’t sell insurance. Consumers shouldn’t give out personal or identifying information to cold callers, the department is warning consumers around the state. Consumers should call the insurance department’s consumer hotline (1-877-881-6388), the state AG (1-800-441-2555) and their local law enforcement.

* Everyone turned on everyone else in this vehicle-arson plot. The Bingham (Me.) Fire Department responded to a report of a smoking 2002 Dodge Caravan off Brighton Road. Officials stopped 2 males walking about a mile away from the scene — Anthony Salisbury and Michael Kennedy. They denied knowing anything about the vehicle fire. They were lost and trying to make their way to School Street in nearby Solon, they said. Vehicle owner Jennifer Sandoval called police later that day, claiming her vehicle was stolen from her driveway in Solon the prior night. Sandoval denied knowing Kennedy or Salisbury. Two witnesses later contacted police, saying Sandoval wanted to get rid of her van and collect the insurance money. One witness said she coordinated with Salisbury and Kennedy. Sandoval later fingered Salisbury and Kennedy, saying they stole and burned her car. Investigators interviewed Kennedy. He, Sandoval and Salisbury were drinking at Sandoval’s house that night, Kennedy said. Sandoval asked him and Salisbury to burn her Caravan so she could get the insurance money. So the duo crashed it in a ditch, Kennedy said — adding that he was just along for the ride. Salisbury lit a plastic bottle of accelerant and placed it in the front driver’s seat of the vehicle. Sandoval later admitted that Kennedy and Salisbury both helped burn her Caravan. She received $2,100 of insurance money, then met Salisbury in a parking lot and gave him $300. Sandoval pleaded guilty — no word on jail term. Salisbury pleaded not guilty. No word on Kennedy’s fate.

* Angel’s Recovery was devilishly corrupt. The multiple rehab centers were among the largest scams in the illicit sober-home business infecting Palm Beach County, Fla. Tovah Lynn “Tara” Jasperson and her father Alan Martin Bostom owned Angel’s Recovery. They trafficked addicts for millions of dollars worth of false drug-treatment and testing claims. The duo paid kickbacks and bribes to area sober homes in exchange for their referring insured addicts to Angel’s Recovery for treatment. The treatment center then tested residents for drugs — typically 3 times a week — and billed their insurers. Patients were bribed with free rent and money to pay their health premiums, if they lived at the sober homes and attended drug treatment. Payments were also made to the owners of sober homes. Jasperson and Bostom also hired a doc as straw medical director. The doc often pre-signed scripts for opioids that employees gave patients. The duo also secretly fronted the purchase and lease agreements for sober homes. The homes sent residents to Angels Recovery for bogus and inflated rehab. Jasperson received 6½ years in federal prison, and Bostom 2½ years.

* A gang made a living burning and soaking homes for $1.7 million of inflated damage claims, the feds charge in Jefferson County, Tex. Patrick Wayne Bronnon and Glenn Etienne allegedly led the suspected ring. As the feds allege:They found low-value homes and bought them using a straw purchaser. They provided the buyer with money for the downpayment and first insurance premiums. Within a couple of weeks, they damaged the home, usually by fire or water, to collect insurance money. Nine false fire claims, 3 water claims and 2 theft claims were filed for 9 addresses. Total insurance payouts were $1.7 million. The homes were located in Port Arthur, Port Neches, Beaumont, and Sugarland. Each of the 12 suspects faces up to 20 years in federal prison if convicted.

* An electrician’s workers-comp scheme was short-circuited, prosecutors say in the San Francisco area. The insurance department alleges: Michael Williams suffered a work injury and started receiving comp money. Williams got another job while still being paid comp from his first employer. He then supposedly was injured on his 2nd job, and started receiving yet another set of comp checks. William allegedly lied about his level of abilities, earnings and employment status to the state comp fund. He also tried to fool medical providers, including providing false statements to collect permanent disability money after exhausting his temporary benefits. Ultimately Williams worked for 3 firms while receiving comp from 2 of them. Williams illegally received more than $85,000 of comp money overall. And he used an employer’s credit card to buy an engagement ring and pay for other personal expenses. He’s charged with insurance fraud and grand theft.

* Whatever retired LAPD officer Terry Johns allegedly did to fake a disability claim, he could spend up to 12½ years in California state prison if convicted. The 32-year vet of the force joined a program that lets experienced first responders get pensions and regular pay. The goal is to keep seasoned talent around longer. Johns claimed a bad back, and took a long workers-comp leave. He collected nearly $250,000 in pension and salary during his supposed injury time off. Yet Johns allegedly did activities “inconsistent” with his claimed work injury. That’s as far as officials will elaborate. Johns is among more than 1,200 public-safety officers in Los Angeles who joined the special program, then quickly went out with claimed work injuries. Typically they claimed bad backs, sore knees and other ailments of aging bodies. This turned the program into an extended leave at nearly double the pay. The program has doled out more than $1.6 billion in extra pensions since 2002. Two married LAPD officers joined the program, then went out with claims of carpal tunnel syndrome and other cumulative injuries. They missed more than 2 years, and started a family business and vacationed at their condo in Cabo. They collected nearly $2 million in salary and pension. A firefighter claimed a bad back and sore knee, then worked part time as a longshoreman at L.A. Harbor while on injury leave.

* Samantha Jenkins was an applied behavior analysis instructor at an education center in the Wethersfield, Conn. area. She claimed a work injury, collecting $8,065 in comp money and $3,364 in salary. Except surveillance allegedly caught Jenkins running her own firm, Art Splash Smoothies, while reeling in benefits. She affirmed under oath that she wasn’t working and didn’t own a business, officials say. Jenkins is charged with comp fraud.

* Watch out for seniors and Millennials — they could be at risk of bilking insurers, the Coalition’s Matthew Smith said in a presentation at the Utah Insurance Department’s annual fraud conference. Older Americans are at increased risk of committing fraud, Smith warned. They’re turning age 65 at the rate of 10,000 every day until 2050. Many have little savings, and some may try to offset depleted finances with insurance scams. On the younger spectrum, Millennials are much more tolerant of insurance fraud. Up to ⅓ have few or no concerns about submitting fraudulent claims. Big Data also continues redefining anti-fraud efforts, Smith added. Peer-to-peer insurers are using artificial intelligence to resolve claims with no human SIU or claims involvement. Despite the many advantages of Big Data and other tech tools, insurers must “get it right” in using these tools when investigating fraud. This means protecting privacy and other consumer rights. Courts also must allow fair and reasonable access to data to assist fraud fighters in investigating scams. Utah insurance commissioner Todd Kiser and fraud director Armand Glick welcomed state officials and insurance fraud investigators to the well-attended event.

* Struggling rural hospitals are trying to stay alive by acting as pipelines for large and dubious billing schemes, officials say. Insurers reimburse rural hospitals at higher rates to keep healthcare in those communities. Outside labs and other medical firms use the hospitals to make huge and suspicious insurance bills, officials say. A management firm scooped up Putnam County Memorial Hospital, in Missouri. The firm allegedly made deals with testing labs around the U.S. They funneled $92 million of insurance bills through Putnam for the higher rates in just 6 months. Yet there was no testing lab in the hospital, news reports allege. Insurers are trying to claw back nearly $500 million they paid rural hospitals, officials allege. How much is fraudulent billing and how much is simply large billing will be decided in courts around the U.S.

* From our “U.S. Drivers Need More Dashcams” file: A UK man backed his scooter into a woman’s car, with a “witness” conveniently watching. The scooterist seemed pretty hurt until … check out the video to see what happens next.

A car is torched in California. … Florida rehab facilities traffic in addicts for insurance money. … Louisiana drivers allegedly make a hail claim for damage that happened before they bought their Volvo. Read about these and other goings-on by clicking 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 InsuranceFraud.org. Employees of member organizations may share this newsletter freely internally. Sharing by non-members strictly prohibited.