Coalition partnering for stronger government affairs

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.

11 years ago there was a troubling disturbance in the anti-fraud force

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.

Kind man burned alive in home insurance arson

David O’Dell was a gentle man, mentally slowed by a head injury, yet good-natured and trusting. He lived alone in an aging wooden house. He had no idea the home would become his coffin. O’Dell was burned alive for insurance money by someone he considered his best friend.

O’Dell worked for Joseph Meyers in upstate Wayland, N.Y. Meyers and his wife Iryn wanted to buy a double-wide trailer to upgrade their living quarters, and Joseph planned to buy two tow-truck businesses.

O’Dell and insurance money were their gateways to the good life. The couple abused his trusting nature. They maneuvered to buy the aging house from him for half its value. Cunningly, they let O’Dell keep living there as he had since childhood.

The couple insured the house and Iryn’s possessions for about $125,000, and secretly bought a $40,000 life-insurance policy on O’Dell. The insurance setup was in place. Joseph and Iryn used a blow torch to burn down the old tinder-box home, leaving O’Dell inside to roast alive.

Victim burned alive

He died a horrific death. Flames quickly engulfed the brittle wooden home early that chilly February morning in 2016. O’Dell had no chance. He was quickly incinerated down to 97 pounds of charred debris and seared bones. Medical examiners had to compare his singed backbone with an old X-ray to identify him.

Joseph and Iryn tried to make O’Dell take the fall. He’d lost touch with reality and wanted to kill himself, they told investigators. O’Dell left his clothes on the heater after hearing “voices” telling him to burn down the house. Increasingly unhinged, he also stole $40 from a tool box at Meyers’ business shortly before the fire. At least that’s the sham story the couple fed investigators. The fairy tale quickly fell flat.

In fact O’Dell was careful about using fire around the house he so enjoyed, grieving relatives countered. He knew the home was a fire hazard and made sure flammables were handled well.

“When he was using the wood burners, he was always very careful. He could smell the smoke, and he would get up and take care of it, so he was extremely wary of any kind of smoke in that house,” older brother Phil O’Dell said.

Burn patterns found on furnace

Experts also discovered “ignitable liquid patterns” on a wood-burning furnace in the basement, meaning someone intentionally set the fire. And surprise, a propane torch was found at Joseph’s business.

Joseph also forgot to turn off his cell phone. A phone mapping analyst tracked him and Iryn back and forth between their place and O’Dell’s house three times just hours before the fire. Surveillance video from Joseph’s business, which was based at his home, matched the phone findings.

O’Dell’s siblings loyally sat in the courtroom, looking for justice for their youngest brother. More relatives joined in, such was their caring for O’Dell.

Instead of that snazzy new double-wide, Joseph and Iryn will spend 23 years to life in cramped jail cells. They were convicted of arson, insurance fraud, murder and other offenses.

“It tears your heart right out,” said older brother Phillip O’Dell. “Your baby brother. (That) somebody whose is supposedly good friends would do something like that to him, to that extreme. Why they would do it at all, I don’t know. It just rips your heart out.”

Credibility of anti-fraud efforts placed at risk

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.

Costs of air-ambulance transport flying high

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.

Leaders in $375-million scam lie that seniors infirm, homebound

Wilbert James Veasey Jr. and nurse Charity Eleda mounted a form of home invasion. They’re the latest criminals who’ll serve prison time for one of the largest Medicare cons in history.

Veasey and Eleda were prime-time players in an elephantine $375-million plot that cranked out thousands of false claims for phony care of supposedly infirm and homebound seniors. The pair shines a cold light on how a Dallas-area doctor named Jacques Roy masterminded the home-healthcare ripoff.

Medicare gives seniors a leg up if they’re stuck in their homes, too unhealthy to get around. Uncle Sam pays for specialists to come to their homes and help with their day-to-day medical needs.

Phony home-health claims have robbed Medicare for years. What’s new was Roy’s dark genius for amping up patient recruiting and fake claims to unheard-of levels of industrial efficiency. One more reason Medicare thievery of all kinds could be America’s single largest form of insurance fraud.

Claimed 11,000 seniors in his care

Roy specialized in certifying people for home healthcare benefits, taking this con to new heights. He created a fantasy world, falsely certifying 11,000 seniors as eligible for home healthcare. He convinced Medicare that somehow these seniors were all under his close medical care and supervision.

Veasey and Eleda ran home-health agencies in the Dallas area. They helped Roy convince Medicare that often-homeless street people were eligible for home-health visits. Or that perfectly healthy, mobile seniors were bedridden and needed homecare.

Roy bribed 500 home-health agencies like Veasey’s and Eleda’s to pump him with patients. The gang paid many beneficiaries cash, food stamps and groceries to hand over their Medicare identifiers. The seniors’ personal information such as SSN was rocket fuel for his con.

Roy falsely certified the seniors for homecare. He received a slice of fake claims the home agencies billed, and soaked Medicare for his own home visits as the supervising doctor. Roy even set up a boiler room where employees worked all day robo-signing his name on Medicare claims.

Veasey knocked on doors, convincing healthy seniors to hand over their Medicare and other personal information for Roy. Veasey was a large and reliable source of patients, feeding Roy their names and personal information for false billing.

Eleda pulled in homeless seniors off the streets, for example. She often bribed cohorts $50 per beneficiary they found and sent to her vehicle parked outside a Dallas homeless shelter’s gates. She promised the homeless people free McDonald’s meals for their medical information.

Forged patient care plans

Eleda also invented medical records to make it seem the seniors qualified for home healthcare. And she forged patient care plans, and helped dummy up daily logs supposedly documenting hundreds of worthless or phantom patient-care visits.

This frenetic activity let Roy and the collaborating home-health agencies pour bills into Medicare under the happy illusion of homebound seniors getting care they needed, under the watchful eye of a physician.

Roy was bound to attract attention. On paper, he ran the largest home-health operation in the U.S. — dozens of times more than any specialist practitioner.

Medicare got wind and started investigating. Investigators found healthy seniors mowing their lawns and working on cars in their driveways. Veasey was handed 14 years in federal prison, and Eleda four years. Roy will face up to life in federal prison when sentenced.

The welcome mat for Roy’s uncaring homecare plot was yanked, replaced with a lock and key that will keep the conspirators, well, homebound in jail for years to come.

Hill hearing reignites question: What’s federal anti-fraud role?

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.

Sober home: Will we demand reform?

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

“Internet of Things” reveals new sources for detecting 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.

Forward thinking: 3 things SIU leaders should consider

Special Investigation Units (SIUs) are key components of any healthy insurance company because of their ability to recognize and fight fraud. However, these units often operate today more or less on their own, separate from the general claims function within insurance enterprises.

Like much of the insurance industry, SIUs are finding ways to adapt to the technology-driven changes that are rapidly transforming the entire anti-fraud field. These units may not be first adopters of new technologies, and therefore may be at risk of losing their edge in the fight against fraud.

To meet these challenges, today’s SIU executives must come to terms with the insurance industry’s changing environment. So many opportunities might open up if claims leaders resolve to find solutions not only to adapt to the present, but to thrive in the future. To do so, it is helpful to break from departmental silos and create a fully integrated claims process with data science, updated analytics and a balanced workforce.

Keys: Data science, analytics

Technology and analytics continue to advance, and are key components to claims investigations. It is important that SIU leaders stay in front of this technology and drive it forward, rather than just try to keep up with current technology.

One suggestion to consider is developing in-house data science teams. They can provide custom support to claims, as opposed to purchasing off-the-shelf products to which other carriers have equal access.

SIUs have historically used rules-based anti-fraud models, or models that required manual combining and reviewing of data. Data scientists now can build predictive anti-fraud models combining claims, fraud and behavioral analytics. This approach can help better identify potentially fraudulent claims and criminal rings that target insurance organizations.

Having these analytics and data teams in-house could help drive SIUs to be more-effective and efficient.

Plan for a balanced workforce

Nearly 30 to 40 percent of the insurance industry workforce will be eligible for retirement in the next five years. To attract much-needed new talent, claims leaders should consider embracing diversity of thought by hiring individuals who “break the mold” of a stereotypical SIU employee.

Instead of only searching for candidates with law-enforcement backgrounds, leaders and hiring managers should think about targeting individuals with backgrounds in leadership, banking, data, security, customer service — and even military experience. A team with a diverse skillset is a team that is often well-equipped for a competitive market.

Become a millennial magnet

I would argue that most of the general public doesn’t know what SIUs do, or even what they are. Because SIUs often are lumped in with claims departments, job seekers may overlook opportunities in the field. SIU leaders should promote the unique qualities of our work — especially with the growing cohort of millennials looking for meaningful and rewarding work.

This would mean finding ways to position SIUs as attractive places to work for young adults, because that’s where our future talent lies. Leaders can do this by creating workplaces that allow for professional growth and educational opportunities. They should also work to develop strong management teams that stay focused on their people first.

When an industry undergoes major changes at a rapid pace, the next steps often are unclear. But like a puzzle, the picture becomes clear when you fit the right pieces in place. As claims leaders, we must challenge ourselves to seek the right tools that will enable SIUs to meet the fraud threats of the future. It’s up to us to make our workplaces more efficient and better equipped.

By staying ahead of technology, implementing data strategies and hiring the strong talent, we can ensure that claims and SIUs are well-positioned to handle the uncertainties of the future.

About the author: Keith Daly is Executive Vice President and Chief Claims Officer of Farmers Insurance.