Fraud News Weekly

Friday, January 12, 2018

Efforts to stop sleazy home contractors from taking over damage claims to inflate repairs and frivolously suing insurers are facing an uphill battle in Florida. The legislature meets for just 60 days (Jan. 9-March 9). It’s a tight window that makes substantive laws hard to enact. The powerful trial bar also opposes reforms of so-called assignments of benefits (AOB): Bills would curb contractor lawsuits against insurers, and hence attorney fees. And it’s a big election year. Many legislators are focused on getting votes — they may avoid contentious and distracting reform bills. Yet abuse of AOBs is a big problem in Florida. Contractors convince homeowners to sign over control of damage claims, especially after storms blast through neighborhoods. The contractors secretly inflate the claims. They also frivolously sue insurers, behind the homeowner’s back. Home premiums are rising in many areas of the state, as bogus claims and suits keep spiraling. With all the static, it’s questionable how far controversial — though urgently needed — AOB reforms will move in 2018. Leaving distressed homeowners to hold the heavy bag of higher premiums for another year. Reforms are a Coalition priority, however. We’ll work to keep building momentum for reforms this year — or build a stronger base of support for next year if needed.

* Efforts to curb dangerous counterfeit airbags continue moving across the U.S. Bills have been introduced in Massachusetts and Nebraska, and Tennessee soon will follow. The bills are similar — they’d make it a specific crime to market and install bogus airbags during auto repairs. Dishonest repair shops install cheap knockoffs bought for a few dollars on the gray market. The bodyshops bill insurers full price for legitimate replacement airbags. Sadly, motorists often discover the con only when the useless airbag fails to deploy in a crash. Drivers have been killed and injured in crashes without functioning airbags. The Coalition is partnering with Honda America to enact strong airbag-fraud laws across the U.S.

* Theodore Wright belly-flopped his plane in 3,000 feet of water off the coast of Louisiana. A seemingly miraculous piloting feat after the plane caught fire and lost power. Yet all was not as it seemed. “Ditching the Beechcraft actually was a ditzy insurance hoax — Wright crash-landed and sank it on purpose,” the Coalition writes in the newest Fraud of the Month. “The deep-six dunking jumpstarted a doomed plot to wreck the Beechcraft … another plane … a Lamborghini … and 45-foot sailboat — all for nearly $940,000 of inflated insurance claims.”

* Texas has its biggest fraud screwups for 2017the state insurance department announced. Among the plotters: Mark Allen Cox (Gainesville) billed for chiro services without a licensed chiro on staff. He must repay $1 million. … Reginald Cofer (Dallas County) owned a restoration business. He got involved with arsons to drum up business. He received 6 years in prison. … James Halsel (Bexar County) used SSNs, DOBs and addresses to create fake people as applicants for life policies. He collected commissions then let the policies cancel. He was handed 5 years in prison. … Damon Carter (Harris County) claimed a driver swerved into his lane and caused him to veer off the road into a tree. Carter actually rammed his vehicle repeatedly into the tree. He and 3 others made injury claims. Carter was sentenced to 6 years.

* Two concerned citizens each received $20,000 from Florida’s AG for helping break open a Medicaid scheme. Tranquility Healthcare Solutions bribed homeless people with free hotel rooms and cell phones to bill their Medicaid numbers for psychosocial rehab. Both concerned citizens provided info vital to the investigation and arrests of senior Tranquility employees. Tania Medina-Carmenate called the AG’s fraud hotline and complained that Tranquility billed her more than $11,000 for services she never received. Brandi Bailey was a Tranquility employee, and reported the scam. Tranquility billed Medicaid recipients for services before even establishing a patient relationship, Bailey said. Bailey provided a detailed picture of Tranquility’s operations in Orlando and North Carolina. … described how the firm back-billed recipients. … outlined kickback schemes that enticed business … and provided detailed info about the roles of each Tranquility employee. Medina-Carmenate and Bailey received their reward checks in a presentation. The owner of Tranquility is serving 4½ years in prison, and forfeited more than $170,000 to Florida.

* Agent Frederic Donald Rollins collected workers-comp premiums from several clients but placed no coverage. The Moreno Valley, Calif. man stole more than $100,000 of premiums. An insurer complained after a business attempted to file a claim for an injured employee under a non-existent policy. A business also complained after discovering it had no comp or liability coverage. Even after leaving the agency where he worked, Rollins kept selling phony policies from an agency he registered in Nevada yet kept unlicensed in California. He issued fake insurance certificates to cover his tracks. Rollins was handed a year in state prison. The California insurance department led the investigation.

* Pharma sales rep Kirtis Green needed just 10 months to recruit enough people to grease a $5-million insurance billing for worthless compound creams. Green worked for a Tennessee company called Top Tier Medical. Green and other Top Tier reps brought in the customers, collected their healthcare info, then acquired fraudulent scripts. Some docs prescribed without seeing any patients. Another doc stole a patient’s ID and DEA number, and faxed 90 scripts to a compounding pharmacy without her knowledge. Top Tier earned a “commission” from the dispensing pharmacies. They paid 30-40 percent of the bill for each script. Customers had no co-pays, and received kickbacks for taking part. The kickbacks were disguised as fees for a non-existent “evaluation” or “study.” The fees were minimal, often only $100 or $200, but enough to convince people to join the plot. Green was given 65 months in prison.

* Dementia was Paul Cote’s dodge when accused of falsely claiming his motorboat was stolen. The Augusta, Me.-area man said his boat, trailer and accessories were gone when he returned home. Prosecutors say: Police found video footage showing Cote driving his truck and towing his boat at the time he said it was lifted. Cote may be suffering dementia and didn’t remember what he did with the boat, he retorted when a police officer confronted him. The insurer denied his $5,000 claim. Cote finally admitted he hid the boat on someone’s property, and the property owner didn’t know about it. He also removed the serial number. Cote is accused of attempting to commit insurance deception, and 2 other misdemeanors.

* The head of a community watchdog focused on police accountability lied about the date of an uninsured crash, prosecutors charge in the Pittsburgh area. As alleged: Brandi Fisher leads the Alliance for Police Accountability. She let her auto coverage with Safe Auto Insurance lapse for a few days, then got into a minor collision. Her son was driving her vehicle, with her in the passenger seat. He struck a vehicle while trying to pull into the road at an intersection. Fisher lied about the time the accident occurred. She said it happened about 45 minutes later than it did, so the crash would be insured. The first 911 call was made at 10:13 a.m. and police arrived at 10:24 a.m. The crash was listed as happening at 10:10 a.m. on a police report. Fisher reinstated her auto policy at 10:14 a.m., and told the insurer the crash happened “around 11 a.m.” An insurer investigator alerted police to the discrepancy. Fisher is charged with insurance fraud.

* Scammers falsely claimed patients were dying in a $150-million Medicare theft of unneeded hospice and healthcare in Texas. The feds allege: Rodney Mesquias owned a collection of hospice firms called Merida Health Care Group. The San Antonio man and cohorts took kickbacks to falsely refer and certify patients as dying and ready for hospice. Patients often were kept in hospice for several years to keep piling up Medicare bills. The money poured in. Mesquias and a crony bought expensive vehicles such as a Porsche … expensive jewelry … luxury clothing from high-end retailers such as Louis Vuitton … exclusive real estate … and season tickets for premium seating to see the San Antonio Spurs. “The way you make money is by keeping them alive as long as possible,” the outfit’s medical chief Dr. Francisco Pena told a confidential informant. The gang laundered the money, and told co-conspirators to manufacture false records for the federal grand jury. Mesquias and the others face numerous federal charges.

* Cell phones kept getting lost, damaged or shorted during customer shipments of phones he sold online via Amazon Marketplace, entrepreneur Scott Reaston told his shipping insurer. Damage was so endemic that the Madison, Wisc. man allegedly made $480,000 in claims under various names. Except the shipments were phantom, the feds say. The alleged details: Reaston sent the insurer phony documents to support the claims. They included counterfeit invoices from cellphone retailers as proof of cost of the phones, and fake Amazon Marketplace purchase orders as proof of sales. Reaston also fabricated email between himself and supposed customers. They “wrote” that they didn’t receive the phones they ordered. Reaston’s charged with fraud.

* Rubbing elbows with a $1.5-million crash ring has ended Miami attorney Anett Lopez’s career. The allegations: Lopez gave up her license, and now is dealing with criminal insurance-fraud charges. Lopez allegedly filed numerous lawsuits demanding payment for treating patients at Care Resources Group. The PIP clinic illegally operated under a straw ownership, the state CFO charges. The clinic avoided state licensing requirements. The straw owner Dr. Mario Torres and 5 cohorts were arrested. The charges include straw clinic ownership, bogus treatment claims, money-laundering and soliciting crash victims.

* California’s workers-comp division bounced 7 more convicted medical providers and others from the state comp system. Some 166 have been suspended all told. Among the latest batch:  David Dwayne Fish (Los Angeles) organized dozens of lawyers and docs to steer more than 4,000 cases to preferred medical providers in order to run up high bills. … Dr. Boyao Huang (San Marino) falsely diagnosed patients and falsely certified they were terminally ill to falsely bill for hospice services. … Dr. Eleanor Mela Santiago (Irvine) was federally convicted for her involvement in a pill mill that generated scripts for unneeded OxyContin. She billed Medicare and Medi-Cal for needless and phantom services.

* Kids were treated to painful and unneeded baby root canals, tooth extractions and stainless steel crowns so dentists could feast on millions of Medicaid money. More than 130 Kool Smiles dental clinics around the U.S. were part of a federal whistleblower settlement. The corporate chain pressured dentists to meet “production goals,” rewarding high performers with large cash bonuses. Low-income families often use chains like Kool Smiles, which take Medicaid. The kids are vulnerable to abuse such as unneeded tooth yanking to inflate Medicaid payouts. The kids and their families often are least-likely to lodge complaints. The chain’s own dentists warned about excessive claims. Kool Smiles and parent Benevis LLC will pay $23.9 million to the feds and participating states.

* Insurers only sparingly sue workers-comp premium cheaters, attorney Dennis Kass writes in the latest JIFA article. Yet civil suits may be an insurer’s best way to met out justice and recoup stolen insurance money. “One of the most-promising yet least-deployed solutions is civil litigation — suing businesses that lie and cheat to avoid paying their full share of premiums,” Kass writes. “Civil suits may be the best choice if the premiums owed are substantial and/or an insurer is faced with a plethora of claims. Several affirmative civil litigation avenues can help return the money owed, recoup damages, and possibly deter other employers from similar premium schemes.”

* Insurers are using more software robots in their anti-fraud efforts, an expert says. “In addition to human resources to combat the [fraud] problem, insurers are taking a different tack by adding software robots (also known as robot-processed automation, or RPA, solutions) to their fraud investigation workforce,” the CEO of a software-engineering firm writes in Property-Casualty 360. “These solutions automate the process of sifting through personal and other data found online to substantiate or disprove the fraudulent nature of any claim.”

* Contractors and plumbers who con innocent homeowners into signingover insurance claims to the repair pros can inflate claims and continue ripping off insurers. The so-called assignment-of-benefits cons are raising homeowner premiums. “Floridians deserve more faithful attention be paid to their needs, rather than the needs of unscrupulous contractors and trial attorneys,” write 2 thinkers with the American Consumer Institute. “Consumers don’t want legislators who ignore the AOB problem and then ask for support to get elected, and consumers don’t need one-way reimbursement rules to enrich a handful of dishonest attorneys and contractors on the backs of insurance consumers. Consumers pay enough for insurance. It is time for the Florida Legislature to get this problem fixed.”

* Scammers are telling their insurers that their cell phone was stolen, and then selling them on the gray market, news reports say. Vladimir Gonzalez bought a new iPhone for $400 from a Facebook ad. The South Florida man says it stopped working after a couple of months. He took the phone to an AT&T store, which told him it was reported stolen. False phone claims are a 3rd-degree misdemeanor insurance fraud in Florida, news reports say.

Cell phone cons are being dialed up in Wisconsin, people were falsely diagnosed as terminal in Texas and an agent hands clients phony workers-comp policies in California. Click on the pins to learn more.


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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.