Fraud News Weekly

Friday, October 12, 2018

* Legislation in Congress would require insurance departments to follow federal standards for releasing private info and dealing with data breaches. The bill works to protect against ID theft, fraud and economic loss. It’s pending in the House Financial Services Committee. The bill would amend the well-known Gramm-Leach-Bliley Act. Insurers are called out specifically to protect data. Keep your hands off our state, retorts Dave Jones, California’s insurance commissioner. Jones opposes the bill. It lags behind California’s current consumer privacy protections. “California law, by contrast, always requires notification to consumers when personal information is reasonably believed to have been acquired by an unauthorized person, irrespective of any subjective judgment as to whether such acquisition is reasonably likely’ to result in theft, fraud or financial harm that may befall the consumer,” he says. Privacy and cyber-security legislation will be actively debated in statehouses and on Capitol Hill in 2019, the Coalition predicts.

* The feds will create an advisory committee to study spiraling costs of air-ambulance trips that often force injured and sick policyholders to pay large and uninsured transport bills from their own pockets. The bill tackles so-called balanced billing as part of an FAA overhaul. The law would start an FAA study of provisions for air ambulance services and their fees. So-called balanced bills often have no tie to the real cost of air transports. Insurers that refuse to pay can leave injured policyholders liable for bills of $50,000 or more. Consumer complaints are rising; people can be charged for helicopter rides when a ground ambulance would do the job, critics say. The advisory committee will review ways to improve disclosure of charges and fees for air medical services … better inform consumers of insurance options … and recommend ways to protect people from excessive balanced-billing fees.

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

* “Insurance Fraud. Report It. End it.” That’s the action call of a 3-month ad blitz by New Jersey’s top fraud fighters. The campaign is sponsored by the Office of Insurance Fraud Prosecutor (OIFP) and state AG. Ads are running on billboards and busses throughout the state, and on cable TV. Spots on social networks and radio, plus college and professional sports events, also are appearing. The OIFP also is promoting a handy website so consumers can report suspected schemes. Info on what is insurance fraud and how to spot scams is posted as well. The campaign coincides with Fraud Awareness Month. The state’s top insurance-fraud cop Tracy Thompson is conducting news interviews and educational events to call attention to fraud — and show consumers how to identify and deter scams.

* It’s time to honor prosecutors who go above and beyond in convicting insurance swindlers. Nominate a courtroom whiz for the Prosecutor of the Year Award. Federal, state or local prosecutors are eligible. The Coalition honors single convictions such as a staged-crash or arson ring. Or consider a larger body of cases that show remarkable overall impact in taking insurance cheaters off the streets. Leadership in the profession is encouraged as well. The award primarily recognizes achievement in 2017-2018. Convictions that require multiple years of courtroom effort also are eligible. Nominating is easy and convenient. We’ll also honor qualified runners-up. The national winner will be recognized at a special ceremony during the Coalition’s 25th anniversary membership meeting Dec. 13 in the Washington D.C. area. Nominations are due Oct. 30. Normally 1-2 pages of details is enough. Feel free to include news articles or other info. You can email nominations to Jim Quiggle. Questions? Feel free to email or call Jim at 202-393-7331.

Visit to read articles citing the Coalition.

* Smoke filled the Beechcraft Baron airplane 30 miles off the Louisiana coast. Pilot Theodore R. Wright III radioed for help when flames spat out from behind the instrument panel. He bellied the failing plane into the ocean. Or so Wright claimed. The Texas man crash-landed and sank it on purpose. That jumpstarted a plot to over-insure then wreck the 1966 Beechcraft Baron … 1971 Cessna 500 … 2008 Lamborghini Gallardo… and 45-foot sailboat — all for nearly $940,000 of inflated insurance claims. Wright’s Beechcraft sank after landing. He and passenger Raymond Fosdick free-floated in yellow life vests for 3 hours. Wright even recorded the life-and-death ordeal on his iPad while they floated in the choppy waters. A Coast Guard helicopter scooped them up just before nightfall. Wright had bought the plane for just $46,000, yet insured it for nearly twice that. His survival story made him a sensation on TV and social media. Wright will settle for being sensational in federal prison for the next 65 months.

* A chiro and his wife bribed St. Louis cops to turn over personal info of crash victims so he could solicit them for nearly $700,000 of pumped-up treatment at insurer expense. Mitchell Davis’ wife Galina was the point person for bribing cops to hand over un-redacted police crash reports with injured crash victims’ phone numbers and addresses. The couple paid $6.50-$10 per report — good for up to 200 reports a week. Officer Cauncenet “Sunny” Brown was among 4 go-to cops. She hooked up the couple with Terri Owens after leaving the department. Owens stopped forking over reports after awhile. That dried up a big money stream. Galina desperately cold-called officers, looking for someone to hand over crash reports. “[W]e are in big trouble,” she says in a recorded call. “Terri Owens says that she no longer wants to do anything.” Michel and Galina discussed recruiting past moles, plus officers who were patients. Galina called at least 3 officers, and all refused. Davis pleaded guilty. He’ll spend 2½ years in federal prison and must repay more than $1 million. That includes $696,000 of insurance claims and $350,000 in fines. Galina, Brown and Owens await sentencing. Two other former cops have pleaded not guilty.

* Evelio Suarez ran 3 check-cashing stores in South Florida that helped launder $500 million of loot stolen by Medicare schemers, workers-comp crooks, tax cheaters and others. The Cuban national cashed checks — many ranging from $150,000 to $400,000 — for scofflaws in the healthcare and construction sectors of Miami-Dade’s robust black-market economy. Suarez was their money man because some ran pharmacies in other people’s names while falsely billing Medicare. Or they paid undocumented construction workers in cash to avoid paying for workers-comp coverage and federal taxes. Other swindlers filed false tax-refund claims with the IRS, which issued checks up to $150,000. Suarez paid people to pose as the owners of his check-cashing stores — Minimalist Solutions, Don Koky Enterprises and Doger Group. He had a criminal history and couldn’t put the firms in his name. Suarez’s customers paid tens of thousands of dollars to “ghosts” who rented out their names as cover for the real business owners. After playing their roles and getting paid, many fled back to their native Cuba. Suarez’s check-cashing stores charged exorbitant fees of 10-30 percent. The fee depended on the illicit activity that needed covering up. Suarez pleaded guilty. No word on potential federal sentence.

* Phantom work injuries and disputes were filed in reports by a doc who milked the reports for $90,000 in consulting fees, prosecutors charge in Riverside, Calif. Dr. Benjamin Gould Cox said he was qualified to write “medical-legal reports” to resolve disputes between injury claimants and their workers-comp insurer. The state comp appeals board requires the reports. Yet Cox forged reports to resolve non-existent disputes and hike his fee income. He sent reports to Berkshire Hathaway, Employers Insurance, The Hartford, Liberty Mutual, the state comp fund, Zenith Insurance and Zurich Insurance. Cox wasn’t a state-designated medical reviewer yet kept lying to the state medical board that he was. Cox could spend up to 18 years in prison when sentenced in November.

* Two fraudsters in the UK maneuvered more than 500 crashes around the town of Slough to steal millions of pounds from auto insurers. Fraudsters braked erratically and carried out dangerous maneuvers at mini-roundabouts. The drivers caused innocent drivers to crash into them. Ringleaders handed out crib sheets with the drivers’ fabricated personal details, including phones and insurance info at the crime scenes. The gang also scrapped at least 80 vehicles at the same junk yard to cover their tracks after crashes. Investigators found the crib sheets, which helped connect multiple collisions via common handwriting and cell numbers. Common addresses on the policies plus identified IP addresses also helped piece the scam together. The ring kept meticulous crash records, a seized computer showed. A car in the driveway of ringleaders Boota Ram and Gangadeep Gagandeep also contained about 80 fraudulently obtained driver licenses and passports. These IDs were presented to insurers for fake injury claimants. Ram and Gagandeep each received 9 years in jail.

* Too drunk to drive, Cody Edward Watson said he left his 2015 Chevy Silverado in a private parking lot. The Silverado was gone when he returned the next day, the Weatherford, Okla. man claimed in seeking $31,690. Not so fast, prosecutors allege: Watson gave the truck to a friend in Texas for helping make a fake theft claim. Progressive discovered the address in Fort Worth where it was kept by tracking On-Star GPS coordinates. Police found the truck parked in front of buddy Brad Dixon’s house. No signs of forced entry, and the license plate was gone. One of Watson’s “boys” dropped off the pickup at his house and told him he could drive it, Dixon said. Police asked Dixon why the tag was removed and why he hadn’t contacted Watson for over a month while the pickup sat in Dixon’s driveway. He had no answer, then changed his story. He met with Watson at a travel-stop bar where Watson told him to drive the pickup to Fort Worth, Dixon said. He admitted to the bogus insurance theft. Watson’s texts to Dixon didn’t help: “Fold the tag and throw it away, or take it off at least,” reads a text. Yet another: “Keep that bitch parked until it’s time.” Watson faces multiple charges, including insurance fraud.

* Steven Francis Notter was driving his Ford Econoline E-350 van when he collided with a 2002 GMC Savana van at an intersection in Upper Hanover, Pa. The other driver took cell photos. They were timestamped between 3:56 p.m. and 4:17 p.m. That driver contacted police at 4:07 p.m. and the trooper arrived at 4:13 p.m. Prosecutors charge: Notter didn’t have insurance when the trooper asked. Notter called Nationwide at about 4:20, and took a suspiciously long time to get the info for the trooper. He actually was buying a 6-month liability policy. “Uh, no,” he told Nationwide when asked on the recorded call if he’d had any accidents in the last 3 years. The policy was issued at 4:47 p.m. The timelines didn’t add up, so Notter’s charged with insurance fraud and attempted theft by deception.

* Richard Weber filed a $2,000 damage claim for his 2007 Aston Martin with Geico in March. The Erie, Pa. man filed the claim within days of adding the car to his and wife Anissa’s auto policy. The couple allegedly told Geico that the Aston Martin was in perfect condition when they bought the policy in March. It was later damaged while parked at a store, they said. In fact, it was damaged in a traffic accident on Feb. 4, Geico alleges after investigating. The couple is charged with insurance fraud and attempted theft by deception.

* A longtime billing clerk figured out how to game the claim system of Arkansas Medicaid. She also taught other billers her tricks in a $2.3-million taxpayer bilking, prosecutors charge. The allegations: Vicki A. Chisan works for a nonprofit in Batesville. She manipulated the electronic records system to improperly bill Medicaid for treating patients — before seeing if Medicare should cover the costs. Medicaid reimbursements are higher, so Medicare payments thus were elbowed out of the way so Medicaid billing could take over. Chisan spent hours studying the records system before learning how to submit false Medicaid claims. The nonprofit’s billing chief Helen Balding then ordered staff to illegally bill Medicaid at the direction of the executive vp Robin Raveendran. Chisam, Raveendran and Balding are charged.

A dialysis provider will pay $270 million to settle a whistleblower suit that it helped Medicare Advantage insurance plans cheat the government for several years. The settlement is among the largest involving charges that some Medicare Advantage plans exaggerate how sick their patients are to inflate payments. Medicare Advantage plans enroll more than 1 in 3 seniors nationwide. The plans face growing government scrutiny. At least a half-dozen whistleblowers have filed lawsuits. They accuse the insurers of boosting payments by overstating how sick patients are. Two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit last year. HealthCare Partners made “unsupported” diagnostic codes that allowed the health plans to receive higher payments than they deserved. The company also contracted with a Nevada firm that sent health providers to visit patients in their homes. The practice is done largely to inflate Medicare payments, critics contend. These house calls also generated “unsupported or undocumented” diagnostic codes. The parent firm DaVita Inc. admits no fault.

* Ohio saved $60.1 million of comp funds thanks to 166 criminal referrals and 101 convictions in FY 2018, says the fraud unit of the Ohio Bureau of Workers’ Compensation. The agency also received 3,150 fraud allegations. And there were 298 closed employer-fraud cases with a savings of $8.7 million. Some 54 closed healthcare cases with $3.4 million of savings and 1,270 closed claimant cases with $47.8 million in savings also were reported.

* And speaking of state money-saving … the North Carolina workers-comp agency has recovered more than $8 million in penalties in FY 2017-18. That’s a 465-percent increase over the prior FY, the North Carolina Industrial Commission says. The money will support public schools in the state. The fraud unit also closed 5,314 cases this FY, issuing 688 criminal charges. That compares with 3,146 cases and 405 criminal charges the prior FY.

A pilot ditches his plane in the Gulf of Louisiana to fleece his insurer. … A chiro bribes St. Louis cops for police crash reports to inflate crash-injury bills. … UK fraudsters stage more than 500 crashes. Click the map to read about these and other scams around the U.S.

Watch the Coalition’s new annual report video.

Subscribe to other Coalition publications
Join the Coalition

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.