Insurance FraudBlog

In courtrooms, attorneys tell jurors about the duty of insurers to protect consumers from higher premiums wrought by fraudulent claims. No matter what your background or perspective, that’s hard to disagree. I’ve just completed 32 years of legal practice, and often spoke those words to judges and juries. The “real world” of denying an insurance claim for fraud, however, is far different.

Insurers make mistakes, and should pay a fair price for missteps. Yet denying a claim — even for insurance fraud — is never the easy way out. Nor, do consumers or insurers often truly “save” money. Denying a claim almost guarantees a lawsuit. In most states, the plaintiff seeks damages for both breach of the insurance contract and bad faith. The latter is a tort that can open the door to unlimited monetary damages.

Insurers thus are risk-adverse. Denying a claim for fraud often is much-riskier than simply paying the claim. Some multi-million-dollar fraudulent claims are denied, yet the vast majority of claim denials involve suspicious lower-value thefts, injuries and smaller residential arsons.

Rarely do insurance-fraud cases, even if they are “victories” cover an insurer’s attorney fees, depositions, expert testimony and litigation expenses. So from a purely financial standpoint, it can be cheaper for an insurer to pay a suspicious claim than challenge and deny coverage.

Good plaintiff attorneys represent their clients well. They diligently review the claim, and can show legitimate weaknesses in the insurer’s investigation and actions. Those claims rightly should be paid. Bad-faith damages also should be factored in, if warranted. However, too many of these cases are exceptions rather than the rule.

More often, even strong fraud cases die a slow death. One or more causes typically factor in: Plaintiff attorneys take on any case, even when blatant fraud is evident. … Defense lawyers simply go through the paces to rack up fees, then claim“new information” to justify a settlement. … Insurers start strong, then back off when costs mount or they face a possible jury trial with judges who force unfairly large settlements.

Fraudsters often are the biggest “winners” — they receive insurance money they don’t deserve. Lawyers on both sides also win with fees they’re paid. The clear losers are honest consumers who pay the price when legal fees, expenses and payments raise premiums. So are Insurers that invest personnel time and monies to investigate, deny and litigate the claim — then still end up paying a bogus claim.

So what’s the answer? Perhaps everyone in the fraud-fighting community should look in the mirror and ask ourselves, “What I can do better today?”

About the author: Matthew J. Smith serves as general counsel and director of government affairs for the Coalition Against Insurance Fraud.


Dr. David Morrow ran a plastic surgery center in Southern California that billed insurers for millions of dollars in false claims. He said the surgeries were medically necessary, but they weren’t.

In March of 2016, Morrow pleaded guilty to insurance fraud.

In May of this year, he was sentenced to 20 years in federal prison.

Three days ago, the State Medical Board in California finally got around to yanking Morrow’s license.

Medical boards have been criticized for not being the best partners in combating fraud. Too many seem more interested in protecting medical professionals than helping to rid the profession of fraudsters.

Waiting more than a year and a half after a licensee was convicted of felony fraud in federal court seems like a long time to act. We don’t know if Morrow continued to see patients and bill insurers after his conviction, but apparently he could have.

Most medical boards are under-staffed and under-funded, and that may come into play here. But it’s discouraging to see insurers, investigators and prosecutors do their jobs diligently and then have medical boards take such a cavalier attitude in helping to combat fraud.

Perhaps a more important consideration is that medical providers who cut corners in their business operations often are the ones who give short shrift to patient care. Medical boards owe duty of prompt action to protect the public safety. Morrow botched surgeries. Keeping people safe and criminal providers off the streets should be a priority.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


Willis Price and Kevin Kerr were involved in automobile accidents in Memphis. Neither was happy about it. Their anger increased when, within days, they started receiving sales pitches to contact attorneys — possibly to exploit their mishap with bogus injury treatment and fraudulent insurance billings.

The attorneys found their names in local police crash reports. Price and Kerr are the lead plaintiffs in a federal class action lawsuit filed in Tennessee. The suit seeks to quash the sale of police crash reports by the City of Memphis.

Their suit may spur similar filings across the nation, whether or not it succeeds. Personal privacy rights are moving to center stage in today’s cyber-driven world. For years, local police departments and other government agencies have supplemented their budgets by selling the personal information of crash victims as public records. Report sales can earn quite a bit of money for cash-strapped departments and agencies. It’s a revenue stream they want to protect.

But who are the “customers” of the report sales? The U.S. Supreme Court authorized attorneys to advertise for clients in 1974. America’s “personal injury machine” has exploded since then. Shady lawyers, chiropractors, body shops and others use the crash reports to identify crash victims. They hound the victims. The goal is to lure them into getting unneeded — and sometimes medically dangerous — injury “treatment.” Auto insurers are billed for inflated claims. The lawyers may falsely sue insurers to extract yet more money.

It’s a booming scam industry in many states around the U.S.

Access to public records is a crucial to our democratic governance. Yet does the mere fact that you’re involved in a collision give someone the right to access your home address, phone number, drivers license number, date of birth, email and other sensitive personal information?

For all practical purposes, local law enforcement is feeding personal-injury mills by offering up your sensitive information for sale and profit. Do we need more state laws limiting this practice? Or do existing laws simply need better enforcement? Or both?

President Clinton signed into law the Driver’s Privacy Protection Act of 1994. It allows disclosure of personal information only with the person’s express consent. However, the law has many loopholes. Many states (including Tennessee) have similar privacy laws, though enforcement is minimal at best.

The Coalition supports reasonable limits such as a 30-day blackout period for outsider access to crash reports. It’s an uphill battle, however. Budget-minded pushback by state agencies often stalls state legislation limiting access to the reports. Sadly, budget concerns also trump needed policy debates over the privacy of crash victims.

We need better privacy debates, and stronger state laws. How much of our personal information do we want released by “accident”?

About the author: Matthew J. Smith serves as general counsel and associate director of government affairs for the Coalition Against Insurance Fraud.


If you’re just starting your career as an auto fraud investigator, you might consider broadening your portfolio of skills.

That’s sound advice if you believe the predictions of car guru Bob Lutz. The automobile will go the way of the horse and buggy in 15 years, 20 at the most, Lutz says In its place will be “standardized modules.” Here’s how he sees the future:

“The end state will be the fully autonomous module with no capability for the driver to exercise command. You will call for it, it will arrive at your location, you’ll get in, input your destination and go to the freeway.

“On the freeway, it will merge seamlessly into a stream of other modules traveling at 120, 150 mph. The speed doesn’t matter. You have a blending of rail-type with individual transportation.

“Then, as you approach your exit, your module will enter deceleration lanes, exit and go to your final destination. You will be billed for the transportation. You will enter your credit card number or your thumbprint or whatever it will be then. The module will take off and go to its collection point, ready for the next person to call.

“Most of these standardized modules will be purchased and owned by the Ubers and Lyfts and God knows what other companies that will enter the transportation business in the future.”

So … no human control means no staged crashes, no auto giveups and likely very few accidents because 99 percent are caused by human error.

Still, don’t count out the creativity, flexibility and skill of the fraudster community. Where there’s a will — and insurance dollars — they’ll find a way. Fortunately for us all, so will fraud investigators.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


Have you ever played the carnival game “Whack-A-Mole”? As the pesky little creatures pop-up from holes on the game board, the players holding a mallet in hand get points for how many moles they whack on the head before time runs out.

If you’ve played the game, maybe you were trying to escape work, but there really is a good comparison here. Fighting insurance fraud is amazingly similar to playing a game of “Whack-A-Mole.”

When a state insurance department, local law enforcement or insurers “whack” down a fraud ring or fraudulent service provider, the unsavory “creature” often soon pops back up from another hole. And the fraud game begins again.

We repeatedly see this with unethical medical providers simply changing a clinic name to secure a new tax ID number and popping up as a “different” entity. Meanwhile, nothing has changed “down in the hole” where the fraud occurs. Dishonest body shops do the same. Even disbarred lawyers “pop up” as “paralegals” in their former law firms.

On a larger scale when Florida began a more-serious crackdown on PIP automobile fraud, especially in South Florida, many medical clinics simply packed up and began popping up in and around Louisville, Kentucky. Why? Was it Kentucky’s great business opportunities? A rising population tide? Better weather? NO … a simple look at the “game board” holds the answer. Kentucky is the next state north of Florida with PIP auto coverage. The fraud game just picked up and moved to the next “hole” on the game board.

Any experienced fraud fighter has seen this game in action. Whether within a state, even a city or across the nation, fraudsters don’t give up. They often simply disappear and move on to “pop” out of a new “hole.”

So, what do we do? Giving up is certainly not in our DNA, or in our ethics. First, we must be aware of this issue, then do a better job of sharing more information — through sources like the Coalition, NICB and IASIU — of fraudulent activity so others are alert to watch out before the fraudsters “pop-up” somewhere else.

Next, insurer investigators need to notify their claims, SIU and both inhouse and panel counsel with the same information. Being informed, they can better watch for, and track, the spread of fraudulent activities and players.

Finally, we need to partner wherever possible with local, state and federal prosecutors. They have the power to “pull the plug” on the fraud game, and put the little varmints in a special hole covered with bars where they can’t pop out for a long time to come.

About the author: Matthew J. Smith serves as general counsel and associate director of government affairs for the Coalition Against Insurance Fraud.


Last time the Trump Administration forayed into health insurance, it created an ill-advised executive order allowing sales across state lines. The administration went further this week by announcing an order to allow association health plans (AHPs).

Both ideas likely will do little to expand coverage or lower premiums, most experts say. The proposals also could open the door to the worst type of insurance fraud.

Trump’s latest order would allow creation of health plans that bypass state regulation and important safeguards on solvency standards. We’ve gone down this road before, and the scenery isn’t pretty.

Trusting consumers bought thousands of such lower-priced policies15 years ago. People wanted to save money or get coverage that wasn’t available from standard health plans. Many plans were legitimately offered through trade and professional associations.

Thousands of consumers didn’t get health claims paid, though, when some plans went belly up. Other plans were outright frauds. They often paid small claims to pacify policyholders in the beginning. then refused to pay larger claims. The con artists collected millions of premium dollars and fled. Consumers by the thousands were defrauded. Many were left in financial ruin, stuck with large medical bills they had to pay from their own pockets. One couple had a child with brain cancer, only to discover they’d bought into a fake health plan.

That’s one reason the Coalition adopted a position opposing AHPs back in 2003.

If association health plans catch on this time around, state regulators and others will have their hands full helping consumers steer clear of the inevitable fraudulent ones.

In the meantime, some con artists who got caught in the last round of bogus health schemes are just getting out of prison. They may revert to selling more fake health plans. So the administration’s timing couldn’t be worse. AHPs are one health reform consumers can do without.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


Debates over fairness of jailing offenders typically traverse highly emotional concerns such as over-packing prisons with African-American men and nonviolent drug users.

How about terminally ill mothers of kids?

A federal judge’s recent decision turned a $13-million Medicare crook into a sympathetic figure.

Marie Neba deserves prison. But 75 years worth?

The Houston woman looted Medicare of $13 million. Neba co-owned a home healthcare firm. She recruited healthy seniors — lying they were frail, homebound and needed her firm’s expensive care.

Neba blew our taxpayer money on a pasha’s lifestyle. She was caught and rightfully convicted. Neba should’ve been quietly shuttled to federal prison for at least several years. Yet another cheater swept up by an protracted federal smackdown of Medicare criminals.

Instead, Judge Melinda Harmon inexplicably handed Neba 75 years.

The next-largest Medicare sentence is 50 years, for Lawrence Duran’s $205-million looting of mental-health services in the Miami area. Dr. Farid Fata got 45 years. He inflicted massive doses of painful and disfiguring chemo on healthy patients in the Detroit area.

Neba’s also dying. She has breast cancer that has spread to her lungs and bones. And she’s the mother of twin seven-year-olds.

Harmon struggled to justify 75 years. “I am not a heartless person. I think I am not. I hope I am not …” she told Neba at sentencing. “It’s just the way the system works, the way the law works.”

Justice should be fair, and tough when needed. It’s when sentencing appears robotic and punitive for its own sake that we erode the fairness and public trust that distinguish America from banana republics.

Neba is appealing. It’ll be vigorous debate about judicial discretion and strict adherence to sentencing guidelines. Her appeal deserves a very close look.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud


We all know today’s business mantra is to do more with less … the “less” meaning fewer personnel, less funding and stretching of resources. While accepting this “new reality,” many of us are quick to criticize these changes from what we were accustomed to for many years.

Without debating the pros and cons of the financial and human resources limits facing today’s fraud fighters, many positive things are occurring as well under new business models. These often require more-creative thinking and working cooperatively to achieve results.

While it is far too early to tell if this will be a major and continuing trend, one positive thing the Coalition is monitoring is the increase in our member (and organizations looking to strengthen their partnership with the Coalition. Jointly, we’re working to expand our impact on legislative initiatives and government-affairs efforts.

We regularly meet with our fraud-fighting partners, and non-traditional partners when necessary, to help move an anti-fraud agenda forward.

Partnerships are an important tool as we fight insurance fraud. For instance, we partner in several states including Kentucky, Virginia and New Mexico as members of statewide insurance advisory boards. We partnered with NICB to push for funding of dedicated fraud prosecutors in Virginia. We also partner with non-traditional groups like the carpenters union on workers compensation premium-avoidance schemes, and with Honda America to help thwart counterfeit airbags.

Working in partnership helps bring the anti-fraud message forward more forcefully. The message is good both for consumers and insurers. The Coalition is ready and able to partner and achieve shared legislative goals to help protect America’s consumers from both being victims of, and paying for, insurance fraud.

The more we work cooperatively as a multi-faceted team in approaching government affairs the more impactful, and successful, our efforts will become.

The Coalition remains a unique voice uniting America’s consumers, insurers and government agencies to let our message and concerns be known from the halls of Congress through 50 state legislatures. And now we’ve expanded those efforts with a program of amicus briefs in key U.S. federal and state courts.

We are here to serve all our members — and the American public — and welcome partnering with you to fight fraud.

About the author: Matthew J. Smith serves as general counsel and associate director of government affairs for the Coalition Against Insurance Fraud.


As the Coalition prepares to celebrate 25 years of combating insurance fraud, let’s glance back and explore milestones, key successes and discuss the great progress the fraud-fighting community has enjoyed.

But such wasn’t the case 11 years ago this month when plans were being drawn up to fold the three major anti-fraud organizations into one. A proposal to combine the Coalition, NICB and International Association of SIUs had been pursued aggressively for more than a year. The plan created controversy and deep distrust among the organizations.

The idea for a single organization to focus on fraud in the property/casualty arena arose from the consulting firm of McKinsey & Company, which sold the proposal to members of the Chief Claim Officers Roundtable.

On the surface, it seemed having one organization would improve efficiencies and create a united front against fraud. But digging deeper, which McKinsey failed to do, would’ve found three organizations with different missions and divergent constituencies. It was a half-baked idea that likely would have ended in disaster.

The dance of dealing with efforts to combine organizations lasted a full year. Our vital work on combating fraud slowed to a snail’s pace. Momentum was lost, and no one knew if the Coalition or IASIU would survive. There were hard feelings all around. The Coalition lost about $100,000 in dues revenue from insurers who wanted no part of consolidation. At least one insurer subsequently quit because it favored the proposal.

Fortunately, IASIU members came to the rescue in September 2006 and voted to stay independent. The merger then was abandoned.

While it wasn’t the finest hour for the fraud-fighting community, there was a silver lining. The merger discussions helped the three organizations know each other much better. All three soon signed a memorandum of understanding to work together against fraud crimes.

Since then, the three groups have been active partners working jointly on a variety of projects that have greatly benefited our common cause in curbing fraud. All three also have flourished in achieving great success — and we expect that will continue for the foreseeable future.

On an ironic side note, the lead consultant in this boondoggle from McKinsey & Company — the guy who came up with the merger idea — was convicted earlier this year of a $500,000-plus fraud scheme. He’ll be sentenced next month in federal court — while our three anti-fraud organizations continue thriving.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


Whatever your opinion of illegal immigration, you have to feel uneasy about a report last week that insurers in Florida are denying benefits to severely injured workers based on a legal technicality.

An investigation by ProPublica aired on NPR says one and maybe more insurers routinely deny claims by injured immigrant workers because they used fake Social Security numbers when seeking care. Thus, they’re committing workers-compensation fraud.

Identity theft is a serious problem, and the state fraud bureau rightfully is investigating.

But in the process, legitimately injured workers are being denied healthcare.

That’s not only wrong — no matter what their immigration status may be — but it also paints insurers as uncaring, greedy corporations that allow human suffering to make a buck. It places the credibility of combating real fraud at risk.

And if that’s not bad enough, the report suggests some employers intentionally hire undocumented workers. The employers know that if injured, the workers can be denied care, thus saving the employer on workers-comp costs.

In the absence of a functional federal government working to reform immigration laws, legislators in the Sunshine State need to correct this loophole so workers hurt on the job get the care they need.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


Billing practices of air-ambulance services is a “hot topic” among many insurance groups. The question involves the large and often unexpected charges airborne transports can impose on insurers and consumers.

Patients may need air transport when they’re physically and mentally unable to give consent, or to understand the cost impact or options.

No one questions the value of emergency air transport in times of great medical need. Yet issues abound about how the services are billed and paid for.

An air ambulance may sit unused for hours or even days, but expenses are constantly being incurred. Often four crews of pilots and medical professionals work six-hour shifts daily to be “on call.” Maintenance expenses continue even without flights.

Medicare and Medicaid are the largest payers for these services, and have fixed billing schedules on a state-by-state basis. Yet no state appears to cover the full cost for medical air services. Next come private insurers — including healthy and property-casualty insurers. Collecting from uninsured patients is sporadic at best.

Herein lies the issue, which some say is “tantamount” to insurance fraud via excessive billing.

Using what’s called “rate-based billing,” many air ambulance services “roll” insurance bills into the overall operating expenses. Insurers thus arguably pay a disproportionate share of expenses. The billing includes staff and operational expenses far beyond the time spent transporting the insured patient.

Equally concerning, patients are personally billed for the portion of air transport that their insurance doesn’t cover. That can impose thousands of dollars of surprise costs. Consumers are losing their homes from court judgments for air ambulance services the patients never requested or agreed to pay, one Western legislator recently said of incidents in her state.

Compounding matters is whether state insurance regulators have authority over air-transport companies; the federal Airline Deregulation Act covers these services. States lack jurisdiction, a federal court also recently ruled. This situation directly impacts consumers and health insurers. It also affects property-casualty carriers that pay for the services — while denying the state-regulated industry a direct say in oversight.

Large air-transport bills may fall short of traditional insurance fraud. Yet many observers are calling for legislation or for revising federal aviation law to permit more state regulation of air-service providers.

Air ambulances involve large insurance billings, and charges beyond actual services rendered. The Coalition will actively monitor developments for fraud implications, and keep members informed. Consumers and insurers equally should be aware of this important issue. The large bills directly impact on the cost of insurance, medical services, and premiums that consumers pay.

About the author: Matthew Smith is associate director of government affairs for the Coalition Against Insurance Fraud.


Franklin Roosevelt signed the McCarran-Ferguson Act in 1945. This groundbreaking law has led to the regulation of insurance — including insurance fraud — to the states rather through federal oversight.

The federal government does play a role, such as overseeing federal health-insurance programs like Medicare. Nonetheless, the states remain more in charge of insurance regulation than almost any other sector of American business.

The result is 50 separate states with differing laws, codes and regulations governing selling, underwriting, claims within their borders — and also insurance fraud. Mostly the states have risen to the occasion, with 48 of 50 states enacting anti-fraud laws.

Yet the actions of Congress do impact the battle against this crime. From major national disasters (FEMA) through healthcare legislation (the ACA and what lies beyond) by virtue of federal oversight and funding, many laws impact the world of insurance. While many organizations are involved with insurance and fraud-specific matters, no national organization “bridges” state insurance oversight and federal legislation or administrative actions.

To the positive, Congress does appear to appreciate the importance of knowing about, and fighting against, insurance fraud. The Coalition testified before a key U.S. Senate subcommittee this week. We shared insights into how insurance fraud hurts all Americans, and urged needed steps for turning the corner on this crime. Especially important, we urged more public and private sharing of medical data to better ferret out hidden crimes affecting both sectors.

In the process, the “age-old” debate of federal vs. state regulation of insurance resurfaced during the hearing.

While there is little doubt state regulation will remain in place, the question must be addressed: What role can and should the federal government play in fighting insurance fraud?

Going forward, Congress and the White House should keep in mind three mantras. First, stay keenly aware of the high cost insurance fraud imposes on consumers and the American economy. Second, make sure any federal legislation meets the “do no harm” test of not unduly burdening or hindering state anti-fraud efforts. And third, be vigilant in identifying where federal involvement will help combat fraud at all levels.

About the author: Matthew Smith is associate director of government affairs for the Coalition Against Insurance Fraud.


The largest Medicare-Medicaid takedown in history recently underscored the vast scope of America’s addiction epidemic — and the role insurance fraud plays as the deadly financier.

More than 400 people were charged with bilking health insurers out of $1.3 billion in bogus bills for addictive opioids across 20 states.

Corrupt sober homes are the newest discovery in the opioid crisis. Sober home owners routinely spoon drugs to addicts so they’ll keep relapsing. The homes, rehab facilities and drug-testing labs get more shots at inflated insurance billings.

Thankfully, the corruption is now wide out in the open. Investigative news stories have appeared in droves over the last few months.

We have to ask how so much fraud could’ve spread before anyone discovered the vastness of the crimes. Why did the safety net break down so badly, and how do we repair it?

The respected SunSentinel has done some of the best investigative reporting of sober-home fraud in South Florida. It believes:

“Shared responsibility also lies with insurance companies, who through incompetence or negligence seemingly have no problem pumping blood money into fraudulent schemes that feed a largely failed relapse industry by paying billions in insurance claims as if these were established medical procedures, which they are not, and which have, in fact, provided little in the way of sustained recovery for suffering addicts and desperate families,” the SunSentinel says in an oped.

Of course responsibility extends to lax policymaking, perhaps sleepy law enforcement and other corners of the safety net.

Once the drama of betrayed addicts and sleazy treatment dies down, will the story go away as just another news cycle? Or will we stay focused and keep up the pressure for workable solutions? Some of the hardest work lies ahead.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud


A court in Ohio this week gave the OK for prosecutors to use data from a fraud suspect’s pacemaker as evidence in his upcoming arson trial.

This is an interesting case, likely a first of its kind. Investigators obtained a subpoena to compel Ross Compton to sit so they could download the data from the device that keeps his heart beating. The data allegedly conflicts with Compton’s statements to investigators on how he escaped a fire in his home. He’s accused of burning down his home for insurance money.

Coalition members at the recent midyear meeting were briefed on this case by the prosecutor who brought the charges. He correctly predicted the court would allow the data to be used at trial.

This case is a reminder that fraud evidence increasingly will come from highly unusual sources as the “Internet of Things” picks up steam.

During another presentation at the June meeting, attendees heard about a case in Arkansas where investigators obtained audio recordings from an Amazon “Echo” device. Amazon fought the search warrant to turn over the evidence, but a court again sided with law enforcement.

These two cases  remind us that fraud investigators should creatively think beyond the typical sources to detect and investigate insurance crimes.

At the same time, fraud fighters need to follow legal and ethical lines to protect privacy and public trust. Consumer and privacy groups are rightfully concerned about how “Big Data” is used by government and business.

As expectations of privacy continue to fall, the landscape will be filled with court challenges and even attempts to legislate restrictions. Balance between proper use of data and privacy will be key.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


At least 20 states have enacted stricter laws protecting consumers and insurers from shady roofing contractors in recent years. Dishonest storm chasers prey on consumers whose homes were damaged by rain, wind, hail, fire and other natural disasters.

More states require more transparency from roofing contractors, and have empowered homeowners to back away from contracts they were duped into signing.

New York is in the crosshairs of enacting roofer reforms before Albany shuts down soon. It’s urgent we act right away.

New Yorkers should write your legislators now — urging your home-district legislators to support much-needed reform bills. It’s our last chance this year.

Assembly and Senate measures would: limit repair deposits to 50 percent of the contract … forbid roofers to act as illegal public adjusters … forbid contractors to dangle rebates to lure consumers for repair jobs … and let homeowners cancel contracts for unneeded repairs.

Albany needs to hear from New Yorkers now. Everyone in New York can send letters. We’re building a groundswell of support that tells legislators these bills deserve “Yes” votes.

An alliance of committed insurers, consumers and other groups is seeking to put crooked roofers out of business.

If you’re a New Yorker, send a letter today. Ask your New York colleagues to send a letter as well — just forward them the link to the letter-writing engine.

Together, we can pull the roof off roofer cons!

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


“I believe the children are the future. Teach them well and let them lead the way,” the late Whitney Houston sang in the iconic pop hit Greatest Love of All.

Those words generally resonate with anyone who has or knows a young son, daughter, brother, sister, niece or nephew. Or just simply knows an awesome and impressionable child.

Who would want to hurt an infant or toddler?

Or make the battle of puberty more challenging for juveniles and adolescents?

Or even ruin a child’s life, right?

Greedy insurance scammers do. More cases of children being exploited for insurance scams are making the news rounds lately.

Here are just some of the latest abuses:

Joaquin Rams no longer wanted his child. He had been financial having problems and planned on moving out of his home. The Manassas, Va. dad took out $524,000 of life-insurance policies on his 15-month-old infant son   Prince. Hard-up for money, Rams either suffocated or drowned the toddler though the cause of death could not be determined. Rams received life in prison for his terrible parenting skills and murder.

Troy Leonard sexually abused eight child patients. The Newton, N.J. special-ed consultant sexually assaulted the children under age 13 multiple times, then billed insurers for bogus treatment services he never provided the children. Nor was he even licensed to provide the counseling he advertised. Leonard received 10 years in prison and lost his license.

Dayton home-health provider Mollie Parsons was supposed to take care of 14-year-old Makayla Norman. The bedridden child had severe cerebral palsy and couldn’t move or talk. Parsons let Norman starve to death while billing Medicaid for no-show home care — sometimes on days she was on shopping sprees. Makayla was a skeleton, infested with lice and with a soiled diaper. Parsons received only 10 years in state prison and will serve up to five years in federal prison afterwards.

“Mother” Ana Ovando cared less about her children and more about her loyalty to a staged crash gang. The South Florida mom abused her children. She then packed them into cars as part of 3 staged crash wrecks so she could make false whiplash claims. The children even begged their mom to stop the crash cons. Although the children survived unharmed, Ovando asked them to lie for her in court about the crashes when caught. The kids’ rehearsed pleas and tears to let their mother go didn’t work: Ovando received 6.5 years in jail.

These are just a few of the awful insurance plots that victimized children.

You’d think there would be stronger procedures, laws or regulations preventing abuses of kids for insurance. While some exist, fraudsters always find loopholes … or better yet, a child to fill that loophole.

Regardless, children are the true victims. The physical and emotional scars from being used as collateral damage for insurance grabs can inflict years of psychological damage on the young.

Greater legal and consumers protections are needed to safeguard children from becoming victims and pawns of insurance greed. Insurers, legislators, fraud fighters and consumer advocates should consider the following:

  • More states should limit the age of kids for whom parents can take out life insurance. Few states have such limits. A recent Washington Post oped citing Dennis Jay highlights other needed reforms. Insurers should be alert to fraud when a parent buys a life policy on a child;
  • Consumer education will help alert parents of red flags for inflated, invasive and worthless treatment by shady dentists and docs; and
  • Laws and regulations should be enacted to prevent children from being exploited for insurance money. Maybe make exploiting a child for insurance fraud a specific crime, or a specific crime of child abuse;

“Show them all the beauty they possess inside,” Whitney continued to sing in The Greatest Love of All. “Give them a sense of pride to make it easier.”

Whitney is right. Every child deserves a chance to live and explore life and the beauty within themselves. Free of abuse and harm.

About the author: Elijah Mercer is research associate of the Coalition Against Insurance Fraud.


A father’s greed for $500,000 of life insurance ended the short life of smiling toddler Prince McLeod Rams.

His father Joaquin drowned the doe-eyed Washington, D.C.-area tyke, who was just 15 months old.

How could Joaquin get away with buying a fortune worth of life insurance on an infant?

Life insurance can keep a family running if a spouse dies of cancer, or a business afloat if a key partner has a heart attack. These are valid reasons for insuring someone’s life. It’s called an insurable interest. It’s a standard requirement that helps keep life policies from becoming murder weapons.

Yet Rams hoodwinked the life-insurance system.

In applying for coverage, Rams lied that the boy’s estranged mother was dead in order to avoid telling her about his plans to insure Prince’s life.

Simply trying to insure a newborn also should’ve raised red flags when Joaquin sought the coverage. His shaky finances gave him yet a deeper murder motive.

Rams was blowing through money. He even planned to move out of his Northern Virginia home to rent it out and make his mortgage payments.

His suspicious behavior finally did him in. Rams told his Realtor right after Prince died that he was moving back home. He said he was buying new appliances and re-painting his home, even though his finances were on quicksand at the time. Detailed forensics also revealed Prince was drowned.

Did any insurer check whether Prince’s mother was alive? Did they check Rams’ finances? Did the mere fact of a young father insuring a newborn’s life trigger enough alarm bells for a deeper look at his motives?

We need a high standard of scrutiny for insuring the precious lives of toddlers and other youths. That responsibility extends from life insurers to insurance agents to state laws that permit such sales.

Little Prince never had a childhood. But his death can help other kids live their childhoods. We must tighten a life-insurance system that sadly allowed Prince to perish all too young.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


There are many different types of identity theft, and different ways that data breaches can harm you. While this crime can have devastating consequences, one form can be life threatening.

Medical identity theft and medical data breaches are a growing concern for doctors’ offices, hospitals, law enforcement and lawmakers alike. About one of every three Americans had their medical records compromised. More than 1.5 million patients’ records have been compromised in 106 medical data breaches so far this year, placing the medical/healthcare industry second in the number of breaches, following the business sector.

Patient records often contain your complete identity profile, and perhaps even your Social Security number. That makes medical files a hot commodity for identity thieves.

For starters, a typical identity thief can use or sell your medical information to receive care. That’s where the life-threatening part can come in. Your medical identity might be used fraudulently by someone who receives care for conditions or illnesses you don’t have. Once that information is part of your file, any medicines, treatment plans, or diagnoses the thief receives can threaten your safety if they don’t suit your medical needs.

The sharp rise in ransomware hack attacks against medical facilities is also a growing concern. Some hospitals pay the hackers’ ransom to avoid lawsuits and HIPAA violations. That means your medical records can net a cybercriminal a lot of money, in a variety of damaging ways.

In addition, health and fitness apps are a newer avenue for stealing your medical information. While the connection between these apps and your privacy is still a gray area, 8 out of 10 health apps have left the door wide open to data breaches and privacy violations.

It’s better to be safe than sorry with your health-tracking apps. If left unprotected or allowed to have too many permissions (like accessing your location, connecting to your contacts lists or your social-media accounts, for example), it could pose a hacking problem.

Also, putting your information at risk is your smartphone which could easily fall into the wrong hands. It’s important to passcode-protect your phone, deny unnecessary permissions on your apps, and use a strong, unique password when setting up each app’s account. 

If the industry has learned anything from hackers, it’s that they’re always one step ahead with technology. Too often, once the technology is out there and in the cloud, hackers find a way to exploit it for their gain, then consumers must learn how to protect themselves.

Just as important, consumers must ask the hard questions of their healthcare providers about where their information will end up, who can access it, and how it’ll be protected. It’s fine (and legal) to refuse to turn over your Social Security number to those who don’t need it.

It’s also imperative to review all account statements, medical insurance statements and medical bills carefully for signs that someone is billing you for care you never received.

Handle those issues immediately, and remember, if your medical identity is stolen, there’s a real possibility your identity will be used in other illicit ways. Monitor all of your accounts carefully for suspicious activity. And, when in doubt, contact the Identity Theft Resource Center to have a victim advisor answer your questions.

About the author: Eva Velasquez is CEO and president of the Identity Theft Resource Center


Crafting a model fraud law was one of the Coalition’s first agenda items when we were founded in 1993. It took us two years to complete, and still is the most complete anti-fraud model law on the streets.

The larger the fraud the stronger the penalty, our model says. Arson and other potentially life-threatening schemes merit the most-serious felony sentences. We also created a unique law exposing leaders of crash rings and organized fraud schemes to large civil fines that can bankrupt their operations.

Our “unlawful insurance act” was ahead of its time — few policymakers grasped the civil penalty’s purpose when we wrote that model in 1994. Yet with many lawmakers reluctant to strengthen criminal penalties, maybe it’s time to go after more ringleaders in civil court.

New Mexico lawmakers resist allowing judges to aggregate the full amount of the scam when sentencing fraudsters. It would let judges mete out stiffer jail terms and fines.

New York is legendary for stonewalling much-needed laws clamping down on recruiters for crash rings, and other scammers. Key committee staff typically see little need for more felonies. And supporters of tougher laws are unwilling to compromise with light misdemeanors that would discourage over-worked prosecutors from taking cases.

Some states also want to decriminalize some offenses that, the thinking goes, might further clog already-crowded prisons with non-violent offenders. It’s also harder to push for stricter criminal insurance penalties when there’s a move afoot to decriminalize other offenses.

Maybe we should seek more civil actions when the winds of change for tougher criminal penalties blow in our faces. Enacting large civil penalties get inside the wallets of fraudsters and remove their profit motive.

The Coalition helped Maryland and Minnesota enact a civil penalty. Both states can quickly go after fraudsters on their own, without waiting for the often slow-moving criminal system to wind its course.  Maryland has seen success, and Minnesota wants to ramp up it effort.

To paraphrase Robert Frost — two roads diverge. One takes us on the difficult road for stronger criminal penalties. The other is less traveled. We seek civil actions when the criminal system isn’t set up to fully respond.

Fraud fighters need to have this discussion. Is it time to enact more civil penalties against fraudsters?

Let’s begin the talk.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


I’m often mistaken for an attorney. I’m not (much to my mother’s lament) but the law still is something I understand, or at least the kind that seeks to tamp down insurance fraud.

All states have laws setting timeframes for when prosecutions must be launched. Most statutes of limitation start the clock ticking when the crime is committed. That’s fine for crimes such as murder, which entail a very specific act.

Complex financial crimes such as insurance fraud are different. Insurers may discover a suspected scam well after the money was stolen. Staged-crash and medical rings might get away with bogus injury claims for years before insurers can discover them, and piece together enough evidence to earn a prosecution. Some life insurance scams can also take years to unravel.

Obvious insurance crooks who’d normally be convicted can go free on what amounts to a technicality.

Colorado and Arkansas recently gave fraud fighters more time to build cases against larger-scale scammers.

Colorado’s three-year statute of limitations starts running when the insurance crime is discovered. The clock used to start ticking when the scheme happened.

Arkansas allows five years for staged crashes (though still three years for other insurance crimes). The statute begins when the last scam occurred.

There’s also a wrinkle — fraud fighters have six-10 years if they couldn’t reasonably have discovered the scam in time.

These states grasp that complex insurance scams take time to discover and dismantle. It makes little sense to treat insurance fraud like a home burglary, bank robbery or murder. These are single acts that occur in specific moments.

Fraud fighters and victimized policyholders alike get a fair shake from the wise new laws in Colorado and Arkansas. Other states should review their statutes of limitation and follow this smart lead.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


It’s anyone’s guess what will happen with the off-again, on-again attempts to repeal/replace/improve the Affordable Care Act.

But one thing seems sure: Republicans in Congress and the White House seem bent on pushing a couple of changes every scam artist should love.

The first is H.R. 1101, the Small Business Health Fairness Act of 2017. It would allow health insurance to be sold through association health plans. It sounds like a solid idea — get a bunch of like-minded people or businesses together, form your own plan and buy coverage in the unregulated secondary market. There’s a lot of problems here, as consumer and healthcare groups point out in a recent letter to Congress.

Our biggest beef is that the bill would exempt AHPs from some state regulation. Lax scrutiny could tempt scam artists to set up their own AHP, collect a ton of premiums and then disappear. It’s happened before.

The same scenario is likely with selling health insurance across state lines. The lack of regulatory oversight is an invitation for scam artists to defraud individuals and businesses by setting up bogus health plans.

The White House likens selling health insurance across state lines to selling auto insurance across state lines, which to our knowledge doesn’t happen. Do supporters of these proposals simply not understand the potential consequences for consumers?

Most supporters probably don’t remember the last wave of bogus health plans during 2000-2002. The Government Accountability Office reported 144 unauthorized entities peddled bogus health coverage to more than 200,000 policyholders. The cons stole at least a quarter billion dollars in lost premiums and unpaid medical claims many victims were forced to pay out of their own pockets. One family had a child with brain cancer, only to discover they’d bought fake coverage.

Stricter laws and tighter regulation followed, and the bogus health plans seemed to disappear. Whatever happens with healthcare, let’s hope Congress has the wisdom to first do no harm in aiding and abetting healthcare scams.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


If I was an insurance scammer I’d be doing my happy dance. President Trump’s axing of Preet Bharara removes the nation’s most formidable federal fraud buster.

Bharara’s best-known for convicting crooked government officials, insider traders and ponzi artists like Madoff. Bharara also hunted down many of the nation’s largest insurance-fraud rings as U.S. Attorney for the Southern District of New York.

He assembled a crack team of super-smart attorneys who went after insurance fraudsters with a mission-drive passion. Bharara built an unmatched courtroom machinery.

Scores of the large insurance rings went down — Medicare, staged-crashes, disability and other corrupt operations. Hundreds of insurance scammers likely were swept off the streets since President Obama installed Bharara in 2009. The savings in stolen insurance money probably reaches many billions of dollars.

The largest no-fault crash ring in history crumbled under his grip. It was a $279-million behemoth of fake whiplash claims that earned ringleader Michael Danilovich a place in the Insurance Fraud Hall of Shame.

Dozens of Long Island Railroad employees lived the good life. They took early retirement after a corrupt doc falsely certified them — for bribes — as disabled. They took millions in taxpayer disability money while golfing, traveling, working out at the gym. Bharara earned guilty pleas from 28 swindlers and convicted the rest.

Wealthy Russian diplomats scattered after he went after them for swindling Medicaid, the federal health program for the poor.

In what may be his last case, Bharara charged ringleaders in a suspected $57-million Medicaid ripoff centered around a clinic in New York City in early March.

Incoming presidents routinely purge the U.S. attorneys, who are party appointees. It was inevitable that Obama’s brightest courtroom light would be ushered out the door.

New York is an epicenter of large insurance scams. Much is driven by vast underworld crime cartels and syndicates. Billions of insurance dollars are on the line.

We’ll urge Bharara’s Republican successor to keep insurance crime a high priority — and even expand operations with the same passion that drove Bharara. Let’s turn that fraudster happy dance back into a trail of tears.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


Prentice Ponds was trapped. He bought a damaged Chevy Camaro on eBay, then did a dumb thing. The Tulsa man billed his auto insurer for repairs, lying he crashed the car after buying it.

A suspicious insurer adjuster came to his Tulsa home for a chat. Mark Frayne had the original eBay photos. That damage matched the crunched auto parts in photos Ponds gave Repwest Insurance.

Ponds panicked and beat up Frayne — breaking his ribs, lacerating his head, and stealing his claim evidence. The jury came down hard. Ponds got life in state prison for the assault and robbery, and 25 years for the insurance plot.

Fraud fighters often put their safety and even lives on the line. Insurance cheaters can be panicky, jittery, unhinged when interviewed in the field. Jail’s coming on fast, their careers and jobs lost. They lash out, somehow thinking a fist or gun will bail them out of a conviction.

Kim Sledge and Rhett Jeansonne were respected investigators for the Louisiana insurance department. They knocked on the office door of an insurance agent suspected of stealing client premiums. The agent ambushed Kim and Rhett. He gunned them down, then shot himself.

Sallie Rohrbach was an auditor for the North Carolina insurance department. She was reviewing the books of an agent who might’ve stolen client premiums. Michael Howell clubbed Sallie to death with a chair in his office.

Fraudsters have ordered hits on witnesses, tried to bully them from testifying, and even plotted to murder judges. Fortunately the hits didn’t come off, though were just one trigger pull from erasing lives.

So let’s applaud fraud fighters, who know violence can come with their next knock on a door. Let’s also rethink insurance fraud. A few small, silly claims? Tell that to neighbors who’ve died in botched home insurance arsons. And especially, tell it to the families who Kim, Rhett and Sallie left behind.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


Rarely do you associate trial attorneys with anti-fraud efforts, but a law firm in Florida is doing just that with a new public service video warning consumers about door-to-door scammers looking to sign up auto accident victims.

“If you’ve been in an accident and a stranger knocks on your door to get you to sign up for a doctor or lawyer, they’re breaking the law. Some of these criminals even have the nerve to walk into your hospital room. They may even text you to get your case. They probably illegally obtained your police report…These people are not only annoying, they’re trying to steal from you. Don’t sign anything. Instead call the insurance fraud hotline. You could be entitled to a reward.”

The video then flashes the fraud hotline number of the Florida Division of Insurance Fraud.

Soliciting accident victims within 60 days of a crash is a crime in the state, thanks to a law enacted a few years ago that was pushed by fraud fighters in Florida and the Coalition.

Illegal soliciting still occurs, although much less frequently.

So what’s the motivation behind the Rubenstein Law firm in sponsoring this PSA? Are they trying to cut the crooked lawyers out of the action to gain more clients for themselves? Or perhaps they truly do care that solicitation scams hurt consumers.

Whatever their motivation, we commend the law firm for supporting anti-fraud efforts in the Sunshine State.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


$100,000 for ear wax removal? $46,000 to remove a bunion? Those are some of the outrageous charges cited this week by a judge who awarded Aetna $51.4 million from a Houston surgical hospital.

In a two-year period, Humble Surgical Hospital in Houston, Tex. billed the insurer more than $68 million. Humble billings these are not.

The five-bed surgical center, created by 10 doctors in 2010, charged patients in-network rates but billed the insurer at out-of-network rates. Some bills were as high as ten times what other hospitals charge.

Why did the insurer paid $41 million before challenging Humble’s bills? Aetna isn’t known for throwing money at medical providers, and it sponsors a good SIU team. (Full disclosure: Aetna provides health insurance for Coalition staff.)

Perhaps part of the problem is prompt-pay laws in many states that encourage insurers to “pay and chase” suspect claims. Some states grant delays in paying claims when fraud is suspected. Others do not.

The Humble claims spanned 2010 to 2012. Since then, new technologies such as predictive modeling have been developed to help insurers detect claim anomalies quicker and better. Another new development is the sharing of suspect claims information through the Healthcare Fraud Prevention Partnership.

As someone who pays a hefty monthly premium for health insurance, I hope Aetna and other health insurers use all the anti-fraud tools at their disposal to keep such brazen claims practices in check.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


A valued and effective anti-fraud tool that benefits consumers would be hobbled under a misguided bill in Washington State. It’s called the examination under oath, or EUO.

Insurers interview claimants, who are legally bound to answer questions truthfully. Thoughtful questioning by trained investigators can expose lies and mistruths by claimants trying to hide suspected scams. Telltale clues often can be uncovered only by EUOs. This is why they’re crucial to exposing often well-hidden crimes.

Many fraudsters don’t even bother showing up for an EUO, which helps insurers halt suspected claim payments and close out bad claims.

Under the Washington bill, the statute of limitations for using EUOs would begin when a suspected scam happens, instead of when an insurer discovers it. This strict time limit imposes arbitrary legal handcuffs, regardless of the actual crime-fighting need.

The bill’s stated goal is to protect consumers from supposed insurer fishing expeditions — though where’s the proof of fishing trips? We’ve seen no evidence.

“This would set up a system where insurers would be forced to pay suspect claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote the chair of a subcommittee that’s vetting the measure.

Insurers use EUOs judiciously, only when clear red flags of possible fraud are uncovered first. Companies have neither the time nor budgets to conduct large volumes of EUOs on all claims.

The Washington bill thus would backfire. Insurers would be forced to pay suspicious claims because they wouldn’t have time to fully investigate for warning signals. More bogus claims means more crime and higher premiums for honest insurance consumers in Washington.

If an insurer is abusing the privilege of compelling claimants to appear at EUOs to answer questions, regulators and existing law have existing remedies to punish them. Curtailing this important tool across the board is not in the best interest of public policy.

The Coalition will publish a white paper on EUOs later this year. We will shed more light on how EUOs work, and why we need them to work effectively as anti-fraud tools.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


A home explodes … hundreds of setup car crashes churn fake whiplash claims … a helpless cerebral palsy patient starves to death.

All to steal insurance money.

The year’s extreme schemers are among the eight worst insurance criminals of 2016. They were elected to the Insurance Fraud Hall of Shame by the Coalition Against Insurance Fraud.

The Shamers reveal the year’s most brazen, bungling or vicious convicted insurance swindlers.

Insurance fraud is one of America’s largest financial crimes. Scams steal at least $80 billion annually, and many insurers say fraud is growing. Many consumers believe it’s ok to inflate claims, and they’re at risk of committing this crime, research reveals.

Victims are traumatized, maimed, lose their savings and have their credit ruined. Some die.

Exploding home. Two neighbors were incinerated and an Indianapolis subdivision nearly leveled when Bob Leonard helped accidentally blow up a house in a botched $300,000 home arson. “Oh well, they died,” Leonard said of the next-door couple. Sentence: life without parole.

Faulty no-fault con. Michael Danilovich masterminded a $279-million attempted looting of auto insurers with hundreds of staged car crashes in the New York City area. It was the largest no-fault auto scam in U.S. history. Crooked medical providers deluged insurers with fake whiplash claims. Sentence: 25 years.

Deer deception. Mob associate Ron Galati used deer parts and blood to gore up cars and claim the vehicles crashed into deer. Galati’s Philadelphia body shop made $5 million of inflated damage claims from phantom deer and other collisions. He even took a sledgehammer to cars, and plotted to have a witness shot. Sentence: up to 29 years.

Lawless libido. John Alfonzo Smiley was shot and paralyzed while arguing with a couple after he and his wife swapped sex with them at a San Francisco swingers club. Smiley claimed $4 million of workers comp money. The corrections officer contended — with a straight face — that a former inmate with a grudge shot him. Sentence: eight months.

Samaritan scam. Shannon Egeland had his son shotgun him in the legs to scam his disability policy. Egeland’s legs were shattered and a foot amputated. He claimed he was ambushed after stopping to help a stranded pregnant motorist near Caldwell, Idaho late one night. Sentence: awaiting jail term.

Killer caregiver. Makayla Norman was a cheerful 14-year old — and bedridden with cerebral palsy. The Dayton teen’s home caregiver Mollie Parsons starved her to death while making large Medicaid claims for supposedly steady care. Makayla weighed 28 pounds. Sentence: 10 years.

Baby murdered. Moussa Sissoko shook his infant son Shane to death for $750,000 of life insurance he took out on the baby. The Washington, D.C.-area man seemed like a caring father, yet plotted Shane’s death from the start. Sentence: 50 years.

Mental error. Dr. Fernando Mendez-Villamil made $60 million in false Medicare and Medicaid claims for mental-illness drugs. The Miami physician plied patients with powerful drugs whether or not they needed the meds. Insurance fraud bought him a mansion and art collection. Sentence: 12 years.

Fortunately, a small army of fraud fighters is committed to turning the corner on this crime. Most insurers have agile investigators, and so do most states. Technology even can predict some scams. And most Americans are honest.

Progress is being made. Yet the insurance money’s too good and attracts too many scammers for easy answers. As the Shamers show us, sometimes a cold jail cell is the best deterrent.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


 

The late David Bowie sang about “ch-ch-ch-ch-changes” in his memorable rock song. This theme could define anti-fraud legislation in 2017.

A new year always brings aspirations for success. Same with fraud fighters seeking new state laws clamping down on insurance swindlers.

Several statehouses are opening this week, and anti-fraud bills already are being docketed for debate. All amid many ch-ch-ch-ch-changes in leadership this big election year.

New state legislatures, governors and insurance commissioners have taken office. A new U.S. president and Congress could change the face of anti-fraud efforts. We’re watching closely for signals on how they’ll fund scam-busting programs for Obamacare, Medicare and Medicaid.

The anti-fraud community needs to help policymakers see that their constituents benefit greatly from robust, well-funded anti-fraud efforts.

So here’s our bucket list for 2017:

  • Michigan finally creates a state insurance-fraud authority to go after widespread auto fraud rings in the state;
  • New York’s legislature sets aside turf wars to clamp down on staged-crash rings and shady contractors; and
  • Congress and the Administration properly fund the Healthcare Fraud Prevention Partnership. It has saved hundreds of millions of dollars by uncovering scams against private health insurers and taxpayer-funded health programs such as Medicare. And that’s just the beginning.

Other states will take up the call for stronger anti-fraud laws as well. The Coalition will work with our partners to get those laws onto the books.

We’re on board — will you be?

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


tech_study_mobile_blogTechnology is a valued ally of insurers in combatting insurance fraud. And for good reason — this crime is growing.

These are two findings of the Coalition’s newest study of how insurers use tech to combat billions of dollars in fraud each year.

The study is one of the surest barometers of progress in how insurers wield technology against fraudsters. It’s also a window into scams that most concern property-casualty insurers, and how they’re responding.

Fraud is climbing, more than 60 percent of insurers say in the study. Cyber-fraud is a newer problem area that insurers are using tech tools to combat.

Technology is especially adept at helping uproot auto-insurance scams — long among the biggest losses inflicted on insurers. High auto premiums are an emotionally charged issue for many consumers. Analytics help keep auto premiums more in line by controlling bogus crash claims. This does a service to drivers who pay their premiums honestly.

Organized rings, crooked medical providers and drivers who falsely register vehicles in other locales to lower their auto premiums are priority schemes analytics play an important role in counting, the study shows.

Fraud-busting tech plays an ever-growing role for insurers. Tech seems to have turned the corner internally. Anti-fraud departments have done a good job of selling upper management on the business benefits of tech in helping stem large losses. Fraud fighters see less need to keep justifying tech, and fully one-third of insurers expect larger IT budgets in 2017.

Predictive analytics — which can forecast the likelihood of certain fraud crimes — continues rising as a star player. Powerful software also helps insurers automate detection of false claims, thus making fraud-busting faster and more-efficient than ever.

For all the gee-wiz headlines that cool tech breeds as a kind of new-era fraud-busting messiah, we should remember that tech tools are mostly buckets of code and data until humans make sense of the findings.

More to the point … fraud fighters also bring an unmatched 360-degree ability to size up fraud investigations from every angle — digital and street-level — to reach correct conclusions about claims. Nor am I aware of software programs grunting through a home’s blackened rubble for a possible insurance arson.

Analytics also are more than just hi-IQ data crunchers. Anti-fraud tech helps insurers serve the ultimate master: policyholders. Claims can get resolved faster and more accurately. Premiums are better controlled. Honest policyholders have a better experience, and fraudsters have a worse one. That’s what insurance should be all about.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


angry_man_mobile_blogFear and anger are two emotions that drive human behavior. But only one of them — anger — is more likely to cause people to cheat.

That’s the finding of a recent study that tested how people’s emotions can influence ethical behavior. When situations put people in fear, they are more likely to be honest, the study concluded. This seems obvious. The threat of jail or embarrassment keeps people from committing insurance fraud.

But the new revelation here is that anger tends to have the opposite effect. It emboldens consumers to defraud, especially against businesses, the researchers say. This is in line with a Coalition study from 2007. It found that consumers who had a positive claim experience in the past three years were much-less-tolerant of fraud than those who didn’t.

Insurers should take note and adopt more customer-service policies that are less likely to tick people off.

Everyone seems to have an insurance horror story, and many originated from the lack of understanding about insurance. The insurance industry just doesn’t do a good job of explaining coverage and the nuances of underwriting.

I was reminded of that this week when a boater friend relayed his horror story about relocating his vessel eight miles from southern Georgia to northern Florida. His annual premium went from $1,500 to more than $4,000. He was livid, especially since the insurer didn’t bother explaining the 100-percent-plus premium hike.

Whether it’s underwriting, claims handling, marketing or any contact insurers have with consumers, insurers could profit by making their customers a little less angry and a lot more informed.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


medical_id_theft_mobile_blogIs your organization equipped to fight identity fraud? Insurance fraud costs the property-casualty insurance industry an estimated $32 billion per year.

It is unknown how much stems from identity-related crimes. But due to the shift of in-person agent interactions to a direct sales model, the risk of identity fraud has increased significantly.

Consider the nearly 75 percent of auto-insurance shoppers who obtained an auto quote online in 2015. Advances in technology have provided streamlined sales and claims, but also have opened customers to more identity-fraud risks.

One way this crime is perpetrated is when identities are stolen by organized crime rings to file fraudulent no-fault injury claims from staged crashes. A similar scheme is when stolen personal information is used to impersonate an insurance agent or policy applicant. This false or stolen identity information is then used on applications for auto or life insurance so the perpetrator can collect a commission on new policies.

These crimes should be a warning sign to insurers: Firm up your defenses against identity threats. You will protect your bottom line and ensure honest policyholders the safest insurance experience possible.

Use technology innovations to combat fraud: Mobile-device technology and capabilities, data and advanced analytics and linking tools all can quickly verify and confirm valid identities. They also can recognize anomalies through the driver license barcode imagery. And when mobile-device technology is used against fraud, it won’t slow policy application workflow.

Another way insurers can defend against identity fraud is by leveraging external data sets to gain a multi-dimensional view of policy applicants. This reduces dependence on self-reported information that may be false or inaccurate. These sources can include shared non-claims data from other industries that could shed light on investigations. Sources also can include public records data (name, phone number, address, SSN, and other “footprint” data such as bankruptcies, deceased files, watch lists and criminal records).

This week is Fraud Awareness Week 2016. LexisNexis Risk Solutions and the LexisNexis® Fraud Defense Network are partnering with the Coalition and several other leading fraud-fighting organizations to discuss the problems and solutions surrounding identity fraud. In recognition of this incredibly serious threat, this group is leading a global effort to minimize the impact of identity fraud. We encourage insurers to visit our microsite. It provides insights and actionable ideas for insurers to protect themselves and their customers from identity fraud.

We hope you join this important conversation all week. Stay up-to-date by following #StandUpToIDFraud and #FraudWeek.

About the author: Bill Brower is Vice President, Product Management, Claims for LexisNexis Risk Solutions. He leads the development of innovative products that help insurers achieve greater efficiency within their claims departments. With 30 years of P&C Insurance industry experience, Brower has held numerous leadership roles with top carriers such as Liberty Mutual and Nationwide Insurance Company. Most recently Brower served as Vice President and Manager of Strategic Partnerships for Liberty Mutual Personal Insurance. He led innovation efforts and managed vendor relationships across all claims disciplines. Brower earned his bachelor’s degree in Organizational Leadership from Franklin University and his MBA from Shorter University. 


election-fallout_mobile_blogWhile the shock of the national elections continues to be felt, the Coalition is sizing up the likely impact on fraud-fighting.

The biggest concern is whether the Trump administration will continue the federal government’s aggressive stand in combating healthcare fraud. FBI investigations and Department of Justice prosecutions have helped set records for arrests, convictions and financial recoveries in the last eight years.

Another potential concern is whether repealing the Affordable Care Act will gut anti-fraud programs that were part of the original bill. Medicare has much more capacity and authority to crackdown and prevent healthcare fraud today. Its ability to shut down scams quickly and use the latest technology such as predictive modeling could be in jeopardy.

Republicans also likely will push for interstate sales of health insurance. We’ve repeatedly warned that such an unregulated system will spur scam artists to sell fake policies to unsuspecting consumers.

Another potential casualty could be the Healthcare Fraud Prevention Partnership, an alliance of more than 60 private insurers and public agencies.

The partnership’s data-sharing program has helped save more than $260 million for healthcare payers. It would be foolish not to continue, but the program operates at the whim of the administration and HHS secretary. That’s one reason we advocated writing the program into federal law, but it’s too late for that now.

As for state elections, Wayne Goodwin, the insurance commissioner in North Carolina, lost his election. He’s a strong supporter of anti-fraud measures. Goodwin sponsors an effective fraud bureau, and chairs the NAIC Anti-Fraud Task Force.

The change of governors and insurance commissioners in other states, such as Delaware, also may affect law-enforcement efforts to combat fraud.

We’ll continue analyzing the federal and state results. We’ll report developments as they emerge. In the meantime, the Coalition stands ready to work with the new office holders to advocate strong measures that effectively combat insurance fraud.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


legislative-fraudblog_mobile_blog_11-1Voters will cast their Election Day ballots in a few days. We’re electing more than a President and members of Congress. A good number of state governors, insurance commissioners and legislators are on ballots as well.

They’ll barely be settled in when statehouses start opening for 2017. Quite a few fraud bills could be on tap — a lot of early chatter is making the rounds in several states.

Many policymakers know little or nothing about insurance fraud or how this crime damages their constituents. We’ll have many opportunities to convince state legislators to vote “yes” for bills that support fraud-fighting efforts.

I’ll share a secret that can open doors and increase your own impact.

But first, here’s what we know so far about 2017 — and more bills are sure to be introduced throughout the year. …

Restrict assignment of benefits. Insurers are concerned about contractors in Florida. Scofflaws inflate repair bills, and typically sue the insurer if the claims are denied or not paid quickly. All this happens behind the unsuspecting claimant’s back.

The vast damage damage caused by Hurricane Matthew will bring out legions of swindling contractors. That has vaulted the issue higher on insurer legislative agendas in the state.

Crashing staged crashes. Penalties for staging crashes in Nevada are pretty weak. The state AG is considering drafting a bill stiffening jail terms and fines. The Las Vegas area, especially, is a hotbed of crash rings and inflated whiplash claims.

Some rings target big-rig trucks. Current law does little to deter hardened fraud rings, many fraud fighters in the state believe. The AG is listening and may seek legislation to add more teeth in 2017, Coalition sources say.

Widening statute of limitations. Firming up the statute of limitations will be high on the Colorado AG’s 2017 agenda: Start the clock when the scam is discovered. The clock now runs for five years after the fraud occurred. The enhancement would be more realistic: The fraud crime often is detected well after it occurs. Also being looked at is adding insurance fraud as a crime to be covered under the state’s RICO, racketeering laws. Both would help the anti-fraud effort in the state.

More hotspot states. Look for action in Kentucky (expand immunity/information-sharing; limit access to crash reports; contractor cons). The Coalition is working with Kentucky fraud fighters to help strengthen the state’s anti-fraud laws … and New York (contractor scams and crash rings).

This is where fraud fighters come in. You need to start planning for 2017 right now. This means identifying current bills and the committees that will move the measures.

It also means thinking about introducing bills with friendly committee members or other legislators as the sponsors.

I’ve seen fraud bills start moving within days after the statehouse doors swung open. All the more reason to start thinking now.

Now about that secret — your impact in legislation is all about personal relationships. It’s the same principle you use so often to build close ties and contacts when pursuing fraud cases.

One fraud fighter I know convinced a state legislator to co-sponsor a bill simply by having a friendly chat about a fraud problem in his state. So few legislators know much about insurance crime in any real detail. You can be the trusted eyes and ears of legislators on scams that must be stopped to protect honest consumers.

You’ll have a strong leg up if lawmakers already know and trust your expertise as a frontliner. You can help educate them about an issue … weigh in about bill wording that makes sure the measures help shut down targeted scams.

You’ll find a great deal of support from the Coalition. I can personally assist in many ways — bill wording, overall bill strategy, effective talking points, helping set up meetings with key movers. You can easily reach me at Howard@InsuranceFraud.org with any ideas or questions.

More resources are tucked away on the Coalition’s website.

Check out suggested state legislation for laws other states enacted on your hot-button fraud issues. Auto rate evasion and tighter limits on using check-cashing stores in workers-comp scams are new additions. Model bills also take on crash-ring recruiters, immunity and other concerns.

Get involved through groups such as IASIU and NSPII. Check with me about what’s happeing in your state, and how you can get involved. 

Grassroots efforts work. You’re the roots of grassroots.  Once the November balloting is done, we’ll soon move into a election cycle: electing fraud laws. Let’s move fraud bills together as partners. We can pass smart fraud bills that are good for insurers, and right for the residents of your state.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


arson_10-16_mobile_blogKenny Allen was a likable fellow. He went to church, coached youth basketball in the Muncie, Ind. area, and was making his way through life with limitless potential ahead.

He also lived in a secret world: He was an insurance thief. Kenny was a driving force behind the largest home arson ring in Indiana history. And one of the largest ever in the U.S. His gang helped torch at least 73 buildings while he sang hymns of righteousness in pews.

Insurers were easy to defraud, Allen says. Their adjusters were so intent on making customers happy — he contends — that they rarely asked tough questions. Insurers could’ve quickly exposed the claims for burned homes as money grabs with a little more effort.

Kenny went straight after nearly five years in federal prison. He admits he screwed up, and today gives workshops for investigators to help make amends. He partners with Mike Vergon, the former ATF agent who arrested him. They’re friends and supporters in life — a touching story of Kenny’s redemption.

Yet his saga speaks to a bigger dilemma for insurers. If they investigate too many claims too closely, they risk policyholders thinking they’re cold and money-grubbing.

If insurers let too many suspect claims slide through too easily, they risk being prey for hunters like Kenny was. This slippery slope can grow fraud losses, help raise premiums and — yes — reinforce a belief among many consumers that insurers are cold and money-grubbing.

Life isn’t always fair when you’re an insurance company, no matter how many good deeds you perform. Corporations are targets of consumer upset simply because they’re big and make money.

Checking closely into suspicious claims can trigger a lot of emotions. Fair or not, people’s feelings of aggrievement or entitlement can quickly damage an insurer’s reputation. Especially when viral social posts can reach millions of sympathetic consumers in just hours.

Over the longterm, it’s a risk worth taking, and a story worth telling.
Insurers should do a far better job of telling people why they fight fraud — and why all policyholders benefit.

Being justifiably known for protecting policyholders from thieves seems like a pretty good way to build a business brand. And doing right by consumers.

If Kenny Allen’s right, taking the easy way out could’ve cost insurers more than millions in false arson claims. He’s the first to admit, it’s a miracle nobody died in his fires.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


nj_pre-trial_detention_mobile_blogPrisons and jails across the U.S. are overcrowded, costly and at a breaking point in many states. Jurisdictions are working to ease the pressure in a variety of ways. California, for example, has released more than 30,000 inmates early in the last five years. Other states use alternative sentencing.

New Jersey is taking a different approach. It has done away with pre-trial detention except for the most-violent crimes or people who are flight risks.

Fraud prosecutors in the Garden State say the new law makes their jobs tougher. A runner employed by a staged-crash ring who gets caught no longer has to worry about making bail. The threat of pre-trial detention often spurs a runner to cooperate with law enforcement and help nail the gang’s masterminds. But no longer.

Now, runners are  processed and given a summons, kind of like getting a traffic ticket.

The concern here is that the lack of pre-trial detention throws up one more roadblock for many local prosecutors who already are overworked and hesitant to take complex, time-consuming fraud cases.

There are no easy answers. It’s unlikely lawmakers will make an exception to the law for non-violent, white-collar crimes.

Deterring fraud rings is difficult, though achievable. The anti-fraud advertising campaign by the Office of Insurance Fraud Prosecutor and state AG is excellent, though it’s oriented towards everyday consumers, not organized criminals. Perhaps outreach to lower-level gang members about the dangers of committing fraud might help deter.

The best approach might be for insurers to focus even more on taking the profit out of insurance crime. Greater use of technology will detect scams earlier before claims money goes out the door. More civil suits with treble damages against crooked medical providers and other ringleaders will hurt them where it counts.

Fraud fighters around the U.S. will have to rely less on arrests and prosecutions. They still can curb insurance fraud by improvising and relying more on their creative expertise.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


health_interstate_mobile_blogI grew up in the Northeast, and now live in a Mid-Atlantic state. I understand Fall. The weather is crisp and the leaves turn colors. Happens every year.

Just like the leaves turning colors in the Fall, someone predictably come up with a supposedly great idea: let consumers buy health coverage from insurers across state lines.

The argument is always the same: Interstate sales increases competition and reduces costs for consumers. This sounds workable on paper. The latest go-around was raised in this past week’s presidential debate as the fall leaves tumbled — just like consumer protections.

Problem is, interstate sales open the door wide for fraud, and water down consumer protection. And, most people advocating this system usually don’t include important and necessary protections when pushing their interstate plans.

Yes, neighboring states can legally create partnerships that allow insurers to cover consumers in any state within the partnership. Yet partnerships have strict, built-in legal protections when states agree to work together. Insurance regulators know who’s doing business. Networks also offer consumers choices of doctors and facilities.

These protections and coverages may not exist under a blanket permit for consumers to buy coverage in any state.

Consumers don’t know what insurance regulator to reach for help. And would the regulator in the state where the consumer lives have much incentive to help if the health insurer is domiciled another state? Would the regulator where the insurer is domiciled help a consumer living in a different state?

We already see crooks peddling bogus health insurance to unsuspecting consumers and small businesses. This problem would be magnified if interstate sale of health insurance was allowed without strict and well-defined oversight. 

Insurers must be state-licensed to do business in a given state. How can state oversight properly protect consumers if anyone can offer insurance to any consumer in any other state?

Who makes certain the insurer is solvent and can do business in another state? And, would an insurer in one state have an adequate network of doctors, hospitals and pharmacies to cover the health needs of consumers in another state?

These questions are raised every time interstate health-insurance sale is broached. Yet we never hear answers — just the simplistic nostrum that interstate sales will help reduce healthcare costs.

Don’t just spoon out more words like falling autumn leaves — prove that consumers would be better protected.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


lemonade_mobile-blogDo insurance consumers have a thirst to buy policies using their smartphones? Will they be less fraud-prone knowing some of their excess premiums get donated to charity? And will the prospects of quick claim cash motivate them to switch carriers?

One new insurance startup is betting yes, offering to quench that thirst.

Lemonade, the first so-called peer-to-peer insurance company, debuted this week to much fanfare.

Started by technology entrepreneurs, the company is targeting smartphone users by offering ease-of-service transitions and cheap prices on homeowners and renters coverage.

Lemonade says most insurance “sucks” (their words) because insurers hassle claimants, are bloated and make too much profit. And thus, claimants are more likely to file inflated or fake claims.

The company says it will undercut traditional insurers by using streamlined, tech-oriented transactions and reduced fraud costs. In an interview this week, Lemonade president Shai Wininger said:

“With insurance, over 90 percent of the fraud is perpetrated by supposedly normal upstanding citizens like you and me. So what is about insurance that brings out the devil in us? Why is it that when it comes to insurance, we feel entitled to break the law?” 

Research suggests consumers are less likely to defraud a company they feel good about. Customers designate a favorite charity to receive their share of company profits at the end of the year, if there are any.

Call me skeptical, but I doubt Lemonade’s approach will make that much difference in policy pricing.

Still, Millennials who love transacting business on their cellphones and are socially conscious should be drawn to this model. It will be interesting to see if Lemonade has a magic formula to reduce fraud. We’ll be watching to see if this new player leaves a sweet or sour taste in the mouths of its customers.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


911_scammers_mobile_blogOne postscript to last week’s emotional 911 remembrances is that some folks with little conscience tried to exploit the tragedy by lodging dirty insurance scams.

Every disaster — whether by airliner smart bomb or Ma Nature’s hurricanes  — brings out a sordid bunch who see dancing dollar signs amid the strewn rubble.

The 911 scams were especially sordid because they played off of incalculable human suffering. Less than a week after 3,000 Americans died fiery deaths, Charles Gavett sadly told life insurers that his beloved wife Cynthia had perished in the collapse.

Cynthia was finishing a job interview with the investment firm Cantor Fitzgerald when a hijacked airliner plowed into the gleaming tower, Charles insisted. Cynthia hadn’t been seen since, and Charles sought more than $628,000 to help salve his grief.

How touching … except Cynthia was quite alive and well. She and Charles were living openly in Concord, Ga.

They figured insurers wouldn’t investigate claims involving such a profound national tragedy.

But insurers did investigate. Cynthia even invited a sheriff’s deputy over for the Thanksgiving holiday. The court invited the Gavetts over for 10-year jail terms.

Elderly New York City millionaire Beatrice Kaufman owned a $5-million apartment in Manhattan. She tried to charge insurers and charities about $1 million for renovations to her apartment and non-existent damage to her lawyer-recruiting business office.

Kaufman claimed the attacks forced her to leave her apartment and business for months. She racked up huge bills staying at a swanky hotel. In fact, she moved out before the attacks while renovating her unit. She tried to connive insurers into paying for the work. Kaufman received 52 weekends in an un-renovated jail cell.

In West Chester, Ohio, a man filed a $100,000 life-insurance claim, saying his father died when the Towers went down. His father lived in India.

People tried to bilk charities and relief agencies as well. Dozens of scams quickly showed up. Con artists hoped to quickly slip make-believe stories through the system amid the confusion after the Towers and Pentagon erupted in flames.

Expect similar cons as the Hurricane Hermine floodwaters retreat. You may see claims for flooded cars that drivers purposefully left near the beach. A Florida man filled his six-figure Rolls Royce with a garden hose after Katrina, claiming it was flood-damaged. Claim denied.

Floodwaters carried away (untraceable) high-priced home electronics, supposed Hermine victims might claim. Wind and debris and siding wrecked roofs that the homeowners damaged themselves.

Insurers are on high alert. They want to pay honest claims. Likely they’ll quickly pay as many claims as possible to make homeowners whole. Then the insurers will circle back to investigate claims that bears warning signs of fraud. Some blatant scams will be denied right up front.

So what can you do?

Aside from the obvious — don’t scam because insurers rightfully are watching — why look the other way when a neighbor brags about a Hermine scam, or any insurance con? Report them to the insurance department.

Honest Americans are trying to put their lives back together. Nobody needs knuckleheads taking the easy way out while the vast majority of Hermine victims play fair.

Americans suffer enough after unfathomable disasters. We all grieve for the victims. Insurance scammers who exploit human tragedy are an affront to all of us.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


Guyant_blog_mobileHello from Venus. To my neighbors from Mars, the NAIC’s Anti-Fraud Task Force discussed last week how we all have noticed a decline in referrals state fraud bureaus are receiving from insurer victims. Howard Goldblatt’s followup FraudBlog pursued that theme constructively.

Notice I used the word victim. We consider insurers just that, a victim.

Now we agree with SIU directors that the “black hole” still exists in some instances.  We find ourselves concentrating so hard on cases that make the cut that we often forget to give you feedback. We really don’t want you to stop reporting because you are weary of the “black hole.”

State fraud bureaus also hope you remember your obligation to report cases to us. Some states even have made it a crime not to report. Let me stress that reporting to us should not feel like an obligation. You should have faith that we will do the best we can to fight insurance fraud and make sure that every state’s residents are protected from paying for those who break the law.

We have really tried hard over the past few years to give you options to report to us in a convenient manner. Many of you have offered excellent and appreciated suggestions. We have listened to your input, and have implemented many of your ideas. We know the process is not always perfect, though it is getting better.

We have partnered with organizations such as the Coalition to educate you on how to report insurance fraud to us. We certainly welcome any dialogue that can put this issue to rest. I actually asked Howard this week for help in reaching out to you. We want to be the first to step up and ask that you join us in a dialogue that can help us serve all states’ residents while preserving your business interests.

I must say that we have a strong group of fraud directors across this great country. We are committed to eliminating insurance fraud. We are meeting in Seattle, Wash. in a few weeks. I am sure this issue will be discussed at length. We really seek your help. We are all in, over here in Venus.

About the author: Shane Guyant is director of the Criminal Investigations Division of the North Carolina Department of Insurance. He also chairs the NAIC’s Antifraud Task Force.


Fraud_bureaus_SIU_blog_mobile

I just returned from the NAIC’s summer meeting. It included the antifraud task force meeting, attended mostly by directors of state insurance fraud bureaus. I also met with insurer SIU directors before the NAIC event.

I felt as if I’d entered a time warp. Discussions at both meetings reminded me of a breakout session I chaired at a Coalition summit more than a decade ago on the status of insurance fraud fighting. SIU directors and fraud bureau directors both attended.

The main discussion by insurers then was about the “black hole” of information sharing. Insurers said they send cases to fraud bureaus for investigation, and never hear a word back. The fraud bureaus contend insurers send them weak cases, or ones not well-vetted.

That’s what I heard last week as well. Insurers seemed at a loss about what happens to their cases they refer to fraud bureaus. And, several fraud bureaus grumbled about the lack of good referrals from insurers.

Insurers and fraud bureaus clearly need better dialogue so everyone fully understands each other’s needs.

One fraud bureau chief talked about how a few insurers in his state haven’t reported a suspected scam in years, even though reporting is mandatory. Are those insurers doing such a good job that nobody’s trying to scam them anymore? Doubt that.

Insurance-fraud laws broadly define the crime, though there’s no definition of suspected insurance fraud. Each insurer could have its own definition, which determines which and how many cases it sends to the fraud bureau.

Most insurers don’t report all suspected frauds. We understand that. Besides, fraud bureaus don’t have the staff to handle every case. But for an insurer to say it has no suspected frauds to report does a disservice to the larger fraud-fighting community and our common cause.

Fraud bureau directors and SIU leaders need to come together, develop a greater understanding and find more common ground so they can work jointly to combat fraud in the most efficient and effective ways possible.

We urge both sides to reach out to the other to make that happen.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.



California_comp_system_mobile_blog

 

If you need more proof the workers-comp system in California is a mess, look no further than the report this week that indicted and convicted medical providers filed more than $600 million in liens against workers-comp claims.

The lien system in the state continues to be fertile ground for fraud. Designed as a safety net to ensure injured workers get treated, it’s now a slush fund for crooked medical providers and lawyers.

Fraud and abuse are rife in Southern California, where medical rings are targeting just-retired workers, says one insurance exec who wrote us this week. Runners hang out at Social Security offices and other venues frequented by retirees. They entice the retirees to file claims by offering free medical care and a windfall to supplement retirement income. The retirees are brought to lawyers’ offices, signed up and then shuttled off to medical offices for “treatment.”

The number of worker “injuries” occurring on the last day of the job is rising, this exec says.

Legislation to help weed some of these abusive providers out of the system is cruising through the California legislature. The bill would ban providers who’ve been kicked out of Medicare and Medicaid for over-billing. The bill sponsor says there’s evidence that crooked docs banned from government health plans have turned to workers comp to ply their trade.

The sponsor also says his legislation will target lawyers who sign up comp clients, but never actually interview them, then file claims for them in distant cities and ultimately settle the cases for their fees — often without the workers’ knowledge.

The legislation is a good idea, but much more needs to be done. Workers compensation in California is a huge, complex multi-faceted program. There are no easy answers on how insurers, employers, policymakers and others can hit that sweet spot of minimizing fraud while making sure injured workers get the treatment they deserve. But finding a better way than the lien system might be a good start.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


mafia_fraud_mobile_blog

Reputed mobsters from the Luchese, Bonnano and Genovese crime families were busted up and down the East Coast last week.

The epic lasso roped nearly 50 suspected hoods, including high-ranking capos who called the shots.

Extortion, gambling, loansharking, muggings and other standard Mafia schemes were alleged in the federal indictments.

Unwise wiseguys?

What stood out was health-insurance fraud. The gangsters allegedly convinced docs to write “unnecessary and excessive” prescriptions for expensive compound creams. Allied docs overbilled insurers and received kickbacks, the feds say.

Street hoods turning to respectable white-collar crime?

“Many of the Italian mafia families across the nation have sought to diversify their interests into more high-tech, white-collar crimes for a while now, dating back, really, to the 1980s,” mob expert Scott Burnstein tells Vice. “Smart mobsters in this day and age no longer just line their pockets with traditional rackets (gambling, loansharking, extortion) — and some try to stay away all together. When you compare prison sentences, it makes the most sense.”

Organized crime sinking its grubby paws into insurance fraud is a known phenomenon. The Coalition has tracked the trend for years. Complex rings, and ethnic gangs such as Russians and Armenians, have gotten rich from staged crashes, inflated health-insurance claims, medical ID theft and other insurance rackets.

The latest busts add new insights into how the Mafia itself may be larding family ledgers with insurance crime.

Drug dealers and other street types are branching into insurance crime. It’s safer, more-profitable and less likely to earn you a bullet to the head in a dark alley, they reason. Same often holds true for larger crime rings.

All this is hardly surprising. Corporations inevitably follow a good money-making idea. They add efficiencies and scale, thus magnifying profits. This is as true of insurance fraud as honest entrepreneurial ventures such as coffee, copier and hamburger franchises.

There always will be a generous niche for mom-and-pop fraudsters — average consumers who inflate claims for “lost” engagement rings or “stolen” sound systems.

It’s the corporate fraud players who may be the most dangerous. In addition to size and organization, many complex rings could have resources to bring in tech-savvy players who can hack and breach insurers.

Sensor-driven devices such as telematics also may be hackable, thus allowing hi-tech crash rings to alter data and seemingly legitimize setup car wrecks. Shifting alliances among fraud rings with differing skill sets likely will surface. Align medical providers with breach techies and the theft potential is great.

The Mafia may not be the unstoppable octopus of yore. Yet the upcoming Mafia trials still will give fraud fighters useful field intel on the threat they’re up against. They’d be smart to watch closely and mine for actionable insights. Whether the Mafia is a bit fraud player or serious actor, they’re another reminder that size does matter with insurance fraud.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


fraudblog_08-09-16Two truths will govern our success in getting strong state fraud laws onto the books: We must prepare our 2017 legislative agenda now; waiting until December or January is too late. Fraud fighters also can play a pivotal role in getting fraud bills on the front burner in many states.

We’re in an election year, with less than 90 days until we vote for a new president and Congress. We’ll also vote for quite a few state legislators, and a handful of governors.

We tend to be Washington-centric, thinking that who we put into the White House and Congress will affect us the most.

Actually, most of us are directly affected more by what happens in our state capitals than in Washington. Fraud fighters thus should be alert to creating opportunities in our own backyards.

The Coalition is using the summer to plan the states where there’s the strongest need for new fraud laws — and a solid chance we can get bills enacted into law.

The Coalition’s government affairs committee meets this week to discuss the best hotspot states. Later this month, I’ll be on a conference call with state IASIU chapters. We’ll discuss the grassroots role that fraud fighters can play in writing their legislators in key target states next year.

The best way to convince insurers to make anti-fraud bills a priority in a given state is to make a business case why statehouse efforts are in everyone’s best interests.

Let me know if you think your state is a prime candidate for strong fraud bills in 2017. Partnerships among fraud fighters and other allies give us the best chance of success.

Together, we can make a difference.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


moritorium_blog_mobile
What to make of the federal government extending its moratorium on allowing new medical providers to bill Medicare and Medicaid in six states?

Does CMS still need to get a handle on pre-screening providers before allowing them to bill?

Or is fraud is so rampant in those areas that CMS must weed out existing bad actors before allowing new providers to enter?

Probably both.

Shutting down enrollment is a drastic move that can hurt honest providers. It also can limit patient access to needed care. But it’s a necessary step for the federal government to effectively manage fraud in its programs.

The areas affected by the extension include home-healthcare and medical transport — two that are rife with fraud.

Congress gave CMS the power to shut down enrollments a few years ago, but CMS hesitated at first. Nudged by Congress, CMS started restricting enrollments in limited areas where fraud was most out of control.

The enrollments seem to be a qualified success, but it will take a few years to fully know if provider fraud has started moving downward.

In the meantime, CMS is taking a smart approach to using its power to restrict enrollments. Moratoria are targeted. The latest extensions, for example, impose home-health enrollment limits in Florida on just three of the worst counties. Plus, CMS now allows exceptions to the moratoria if providers pass heightened screening.

Taking action before crooked providers can bill is the best answer to the old “pay-and-chase” model. It should also deter many would-be cheaters, especially organized fraud rings looking to soak federal programs.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


First came Prince, who died from an overdose of the painkiller fentanyl in his Minnesota home.

Next came singer Chaka Khan. She beat the reaper by entering into rehab this month, along with her sister.

The Grammy winner admitted fentanyl is her escape drug of choice. Chaka wisely gave up her summer concert appearances to focus on getting clean.

“The battle of addiction is a serious and long process, which is why I chose to address my use of prescription medications — which came about as a result of the knee surgery I had a few years ago,” she said.

Fentanyl is one of latest prescription painkillers to grab headlines. It’s used for severe pain, and is approved for longterm treatment. The stuff also is up to 100 times stronger than morphine, and 50 times stronger than heroin.

Fentanyl quickly shoots into the bloodstream. Dopamine then elevates, stoking the brain’s reward areas. The sweet euphoria grows into dependence, then addiction.

States like New Jersey and Mississippi are reporting spikes in fentanyl overdose deaths.

Insurance fraud is the largely untold story. It’s helping finance America’s epidemic of opioid addiction — billions of stolen insurance dollars worth.

Some fentanyl addicts reportedly are scamming health insurers to score prescriptions that feed the need. Same with other painkillers such as hydrocodone, or anti-anxiety meds and muscle relaxants.

Insurance scams may or may not have funded Prince’s or Chaka’s highs. Yet scams still are part of the bigger opioid picture, so we should be very concerned.

Insurers are stepping up investigations, plus education of doctors and patients to head off addiction. Law enforcement is going after shady pain clinics and pharmacies that dole out insurer-paid scripts.

Still, we risk getting exhausted by it all. We’re subject to steady parades of news stories about people dying from insurance-paid overdoses. Plus welcome busts of cold-blooded pain docs. They’re keeping addicts fed with pills — are we getting fed up?

Sadly, it may take a celeb’s drug death or rehab to keep headlines fresh and the public concerned. Let’s stay concerned, whether it’s a Grammy winner or small-town factory worker just trying to get clean.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


court-decisions-euo

A Kentucky lower court has thrown a wrench in the campaign to combat the growing scams involving PIP crashes in the Bluegrass State. The court agreed with two claimants in an auto crash. They’re suspected of fraud. Insurers have no right to compel them to attend an examination under oath (EUO), the lower court ruled.

The Coalition and NICB filed an amicus brief this week asking the Kentucky Supreme Court to overturn the decision and restore insurer rights to use EUOs.

EUOs are a powerful weapon to get at the truth. When summoned, many fraudsters don’t bother showing up —especially lower-level ring members. They feel the few dollars they’re making don’t offset the potential of getting caught.

EUOs are a deterrent as well. Knowing there’s a chance you might have to give details of a claim under oath helps keep people honest.

Take the EUO away, and more fraud rings likely will escape detection and feel emboldened to commit more fraud.

The Kentucky claimants contend insurers use EUOs to harass and intimidate honest claimants. We’ve found no evidence to support this contention. We determined that insurers use EUOs very infrequently, and only when necessary to discover truth about a claim.

In fact, EUOs can be an important tool to validate legitimate claims.

Sometime later this year, the Kentucky supreme court will announce its decision. Here’s hoping they support uncovering the truth about potentially fraudulent auto claims.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.


open-dialogue

Last week I took part in a public meeting the Maryland Insurance Administration held in Baltimore to review anti-frauds effort in the state. Part of the discussion surrounded anti-fraud bills that stalled this year when the 2016 session closed in mid-April.

The state insurance commissioner Al Redmer Jr. chaired the meeting. He stayed the entire time. He went beyond simply giving an opening statement, then handing the meeting to the fraud unit’s chief. Redmer’s lengthy presence showed a strong interest in strengthening state’s anti-fraud efforts.

I called for the state to redouble its efforts to target drivers who lie where they garage their cars to illicitly lower their auto premiums.

Maryland drivers should register and insure their vehicles in the state. Similarly, out-of-state drivers should pay a steep penalty for lying that they drive and garage their vehicles in Maryland to lower their auto premiums.

Maryland should be applauded for last week’s effort. The session started dialogue for targeting auto-premium evasion and other insurance crimes. This could spark renewed pushes for anti-fraud legislation next year. The 2017 legislative session opens in January.

Other states can learn from sessions like this one. A state’s anti-fraud effort is organic. Fraud fighters and the insurance department must continually review its direction and impact. No state should rest on its laurels, thinking it’s doing a great job. Nor should a state grow reluctant to act, believing the anti-fraud environment can’t be changed so why talk about it.

Maybe such a meeting in New York could help break up the logjam in Albany that has stalled so many worthwhile anti-fraud measures in recent years. Or, a state like Oregon which has no insurance fraud law or anti-fraud infrastructure. Imagine what the insurance departments and governors would learn if they held such meetings. Same with Michigan, which needs a fraud bureau.

More often than not, legislatures act in a vacuum when they look at anti-fraud laws. Too often they’re pulled in several directions, making it hard to focus on enacting anti-fraud laws.

Fraud fighters should assume leadership and start action-driven dialogue. Reach out to the state insurance department, insurance commissioner and state attorney general. Co-sponsor open meetings to review their state’s fraud trends, and where new fraud laws are needed.

These joint efforts can go a long way toward enacting needed laws and regulations that make a state’s anti-fraud efforts stronger than ever.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


slipfall

Slip and falls: the big waste

Imagine coming home from a long day at work. You climb on a full bus. Soon the vehicle suddenly screeches to a halt. An elderly man outside falls onto the pavement. The bus hit him at a stop light, he screams in seeming pain. The passengers have to clear out, and you’re still a mile from home.

You hear ambulance sirens rushing to the scene. Yet nobody’s fooled. Children and adult passengers are calling out this fraudster. They’re yelling things like, “He just wants to get money!”

You remember sitting in the front of the bus, and it never touched the man … at all. No bump, no thump.

If you’re wondering if that insurance grab happened … it did … to me.

I’m an insurance-fraud researcher with the Coalition Against Insurance Fraud. I read about and see videos of fraudsters faking slip and falls all the time. They seemed like a fantasy until I saw this guy’s scam first-hand.

Slip-and-fall cons may steal billions of dollars a year. Honest businesses are sued. They pay in higher premiums. We pay in higher prices at the cash register.

Some fraudsters place liquid detergent or other slippery stuff on supermarket floors. They sit down on the floor and scream they slipped on the mess. They’re blithely unaware that security cams record every false move.

Selena Edwards of California claimed a scalding cup of hot coffee with a loose lid slipped off and burned her hand at a McDonald’s drive-thru. But she’d used a photo of someone else’s burned hand. And her medical records also were forged. Edwards was convicted.

Some consumers even joke about it on social media.

Slip-and-falls are a quick way to make big bucks, people often yack. Search the hash tag #BoutToSlip on Twitter. You’ll see youngsters joking about slipping and falling to claim insurance money. This kind of peer-to-peer chatter can egg others to fake a money-grabbing slips.

Or check out the #insurancefraud hash tags on Vine and Instagram. Plenty of quick videos of young people joking how to pay college tuition by scamming insurers with bogus tumbles.

My experience on the bus plus my research with the Coalition made one thing clear: Slip-and-falls are a big waste for everyone. This is especially true of scammers who end up with permanent criminal records after their cons slipped, fell and broke.

About the author: Elijah Mercer is research associate of the Coalition Against Insurance Fraud.


assignment_of_benefits_FL

Let’s warn about crooked contractors before storms

Early notice gives consumers more chance to guard against scammers

BY DENNIS JAY | June 7, 2016

Hurricane season is only a week old, but it’s already active with two tropical storms hitting the southeastern U.S. This season likely will see more storms than the last few years, forecasters say.

And that gives crooked home contractors a chance to ply their trade. Insurers, government agencies and anti-fraud organizations have stepped up efforts in recent years to warn consumers about contractor fraud. But much of that communication comes after the damage is done. Vulnerable and often-traumatized homeowners are focused on getting repairs done quickly at that point

Such outreach is helpful, but the time to start is when  storms  approach, not afterward. One insurer in Florida e-mailed  its policyholders this week, urging them to “Call before you sign.”

“If a contractor promises to take care of ALL of the paperwork, think twice and call your insurance company before you sign away your rights,” the message reads “Florida homeowners are becoming victims of insurance fraud because of a common scheme used by a variety of dishonest contractors that abuses the ’Assignment of Benefits’ (AOB) law to hijack your claim.”

Assignment-of-benefits scams involve contractors who are in cahoots with attorneys. As soon as the homeowners signs over a claim to the contractor, the attorney sues the insurer for repair costs, which may be inflated. The law firm then is entitled to legal fees, often at levels most people would consider outrageous. The attorney then might kick back a few dollars to the contractor.

Consumers usually aren’t aware of what’s happening behind the scene and probably don’t care. They just want their property fixed.

That’s why the word needs to get out as soon as storms approach — when homeowners are thinking about the possibility of damage — and before some slick contractor can lure consumers into signing away their valuable policy rights.

About the author: James Quiggle is director of communications for the Coalition Against Insurance Fraud.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Legislative_signing

Tag team is winning formula for fraud bills

Investigators wield impact as expert constituent voices
by Howard Goldblatt

A couple of years ago I blogged about how fraud investigators can be key to enacting strong fraud laws.The state legislative season is heating up, so let’s revisit. We need to think of how to mobilize for action.

Lobbying legislators can be top-down and bottom-up.

Top-down involves national groups like the Coalition or insurers raising the issues with legislators. Often we testify before committees or the full chamber. That carries weight. We discuss the big picture, and how a state bill is good (or bad) for combating fraud from a larger viewpoint.

The bottom-up approach is the grassroots level. Investigators and other frontliners can take a lead role.

Investigators can wield great influence. State lawmakers listen to constituents. Local people put a local face on fraud bills. Investigators also are respected crime-fighting experts. That voice speaks convincingly to lawmakers. They may know little about a fraud bill — or the crime it combats.

A tag team is the best formula for rallying support for fraud laws: Local investigators work with national groups like the Coalition. We all bring vital strengths to the table.

State legislators usually don’t receive letters or messages about fraud issues. So when an investigator writes a letter, that could be the first time a legislator hears about the fraud bill, and why it’s good for the state.

This leads to my Rule of Five. One constituent letter raises few eyebrows in a legislator’s office. Five letters, and the legislator thinks about the issue. And 25 letters signals a groundswell of support. That can convince a legislator to support a fraud bill.

Enacting strong fraud laws has four positive goals. 1) Create an infrastructure for insurers to investigate and report scams; 2) Give fraud fighters laws and regs that are pillars for chasing down swindlers; 3) Oppose weak bills that undermine the fraud fight; and 4) Educate lawmakers about the benefits of strong fraud laws.

Together, our influence can place more fraud laws onto the books. We will educate lawmakers about how strong fraud laws benefit consumers throughout a state.

So let’s add a fifth goal for fraud laws: Empower consumers and insurers to better fight back against insurance fraud.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.