Fraud News Weekly

Friday, August 7, 2020

* A new insurance regulation in Washington State works to notify consumers of their rights when insurers make adverse coverage decisions. Claim decisions involving fraud investigations are included. The rule defines “adverse decisions” as a claim denial … final payment for less than the amount of the claim … or a rescission, cancellation, termination or nonrenewal of a policy — unless initiated by the insured. Insurers must clearly notify consumers of the insurance department’s toll-free number and website so consumers will know how to appeal adverse decisions. The rule took effect Aug. 1. “… for the most part, [insurers] do right by their policyholders. But we’re well aware that many people have never heard of our services. We hope this new requirement will help educate people about our role in consumer protection and the free services we provide,” commissioner Mike Kreidler says.

* The NAIC’s Antifraud Task Force held its virtual summer meeting on Monday. The Coalition and our partner NICB reported to the commissioners and fraud directors on anti-fraud efforts amid the pandemic. California, Florida and Texas reported that the pandemic is not yet causing a spike of suspicious claims by financially stressed consumers in this most unusual year of 2020. Fraud referrals are tracking at the same levels as prior years, the consensus appears to be. However, referrals normally lag 3-6 months behind occurrences while insurers investigate, observed task force chair and Delaware Insurance Commissioner Trinidad Navarro. The Coalition will survey the nation’s fraud directors in September to better measure if there’s a spike of false claims across the U.S. We’ll repeat the survey in spring 2021 to benchmark the pandemic’s immediate and longer-term impacts on fraud referrals. The survey project has the support of task force members.

* Connecticut’s new Insurance Data Security Law takes effect Oct. 1. The insurance department has issued a bulletin to make certain that insurers are fully aware of the requirements. Among the provisions — which track the NAIC model act — insurers must develop, implement and maintain a comprehensive written information security program prior to Oct. 1. Insurers using vendors, including SIU, also must make certain that 3rd parties fully comply with the law. And cyber breaches must be reported to the DOI within 3 days. The DOI will provide an online form for reporting compliance by Oct. 1.

* California’s Proposition 24 will be the most-comprehensive privacy protection law this side of the Atlantic — if it passes in November. The ballot initiative will go farther than the state’s Consumer Privacy Act, which passed in 2018. Valid concerns exist about whether the loosely worded proposition may have an adverse impact on insurance-fraud investigations. Such decisions likely would be determined by court decisions interpreting the language. Concern over states adopting a patchwork of consumer data privacy acts has led to some, like Ohio Sen. Sherrod Brown, to call for a national law on consumer data privacy. Brown has circulated a working draft to measure interest and potential support. With the pandemic and November elections, however, it’s unlikely Congress will act before California voters have their say at the ballot box.

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

* Let’s all say hello to Arinze Ifekauche, the Coalition’s new Director of Communications. He joins Jim Quiggle, Senior Director of Communications, who retires this year. Arinze is an award-winning professional with wide-ranging experience in public policy, politics and communications. Before joining the Coalition staff, Arinze was Communications Director for the Maryland Democratic Party. He also worked on Capitol Hill, and helped elect Marilyn J. Mosby as State’s Attorney for Baltimore City in 2014. Less than six months into the start of the Mosby administration, Arinze wrote the internationally televised speech where Mosby announced charges against the police officers involved in the death of Freddie Gray. Arinze was named a “2015 Rising Star” by Campaign and Elections Magazine for helping elect Mosby and managing the Freddie Gray crisis. Arinze has led communications at the federal, state and local levels.

* Ross Compton allegedly burned down his home for an insurance payday in Butler County, Ohio. Creative county prosecutor Mike Gmoser obtained the data from Compton’s heart pacemaker to try and disprove Compton’s version of how the fire started. Yet Compton has just died, so we’ll never know if he’s guilty. “Even from the grave, Ross Compton reminds us that our sensor-driven society is dramatically raising limitless new opportunities for criminal data searches — and potentially new debates over America’s cherished constitutional privacy limits,” the Coalition blogs. “COVID-19 delayed Ross Compton’s trial, for good. No microbe will delay the world’s march into deeper digital connectivity. Nor will microbes slow our vital and necessary privacy debates. Insurance fraud fighters thus must remember one thing as they chase down digital data clues: The world is watching.”

Visit to read articles citing the Coalition.

* New Jersey fraud entrepreneur Christine Myers was a lead recruiter for an $8.8-million compound-med scheme. The plot targeted private and public health insurers that provided generous payouts for compound medications. Myers pocketed $1.5 million. She set up a marketing firm and hired sales reps to recruit people enrolled in insurance plans ripe for exploiting. Meyers’ sales team convinced the insureds with cash bribes and other methods to secure compound prescriptions — even if they didn’t need the goop. The insureds were told to send their ill-gotten prescriptions to designated telemed firms. The firms had the prescriptions filled at colluding compound pharmacies. Myers and her conspirators ran the scheme from 2015 to 2017 until the FBI blew it apart. She pled guilty to conspiracy to commit healthcare fraud, and faces up to 10 years in prison. Myers also must forfeit $1.47 million and pay at least $8.8 million in restitution.

* An exec at a DNA-testing firm bribed docs millions to order the firm’s tests of whether patients are at risk of drug addiction. Donald Joseph Matthews ran the $45-million scheme for Proove Biosciences, in Irvine, Calif. Matthews claimed the payments were for taking part in a clinical research program. But the money actually was tied to the volume of tests a doc ordered, and whether a doc continued ordering more tests from Proove. Docs who complained about not being paid were told to order more tests. Matthews admitted most docs weren’t interested in ordering Proove’s tests for their patients unless he bribed them. Matthews faces up to 5 years in federal prison when sentenced Oct. 26.

* Pay up, the feds told Karla Morales. The Bakersfield, Calif. dental office employee was convicted in 2018 for making 78 bogus claims for dental services she or family members never received. Morales was arrested this week for failing to repay nearly $44,000. The claim forms had the personal IDs and forged signatures of 4 dentists. All were her former employers. Morales and her husband received nearly $46,700. She was ordered to repay nearly $44,000.

* A cop secretly ran a private security firm that exploited and underpaid minority workers while underreporting payroll to his workers-comp insurer, prosecutors charge in Santa Clara County, Calif. Robert Foster ran Atlas Private Security. This allegedly happened: He hid the racket from his employer, the San Jose police, to avoid potential conflicts of interest. Foster bullied injured employees not to seek workers-comp benefits. He threatened to report the employees to immigration for deporting. An employee went to the hospital. An Atlas staffer showed up and tried to dissuade the employee from identifying herself as an Atlas worker — despite her being in uniform when she was injured. Foster also ordered her to claim her treatment with Medi-Cal instead of his comp policy. Atlas also lied to its insurer about another employee’s serious job injury. That meant more than $1 million of treatment was passed over to Medi-Cal. Foster also falsified hiring dates and under-counted about 400 employees to avoid $560,000 of workers-comp premiums. He funneled millions of dollars in payroll through Defense Protection Group, yet employees wore Atlas uniforms at all times. Foster and cronies laundered $18.2 million via subcontracting deals and a secret bank account that was separate from the account they formally disclosed for auditing. Foster and others are accused of dozens of crimes.

* Three fraud suspects were busted by the Louisiana State Police. Allegedly: Kentrell Collins (Mobile, Ala.) filed a false police report to support a claim that items were stolen from an apartment in which he no longer lived. Collins reported the theft to American Bankers Insurance and gave false receipts. … Alvin Vallery (Baton Rouge) forged insurance certificates from BXS Insurance Company for his business, Vallery Landscaping. He provided fraudulent insurance documents to larger firms, claiming he was insured with BXS. …  Gerard Toussaint (Denham Springs) filed bogus vandalism claims with Farm Bureau and Liberty Mutual. He made multiple fake claims with each insurer, claiming someone damaged his 2012 Ford F-150 pickup.

* Homefront Renovations hustled at least 6 homeowners by inflating roof damage, prosecutors allege in Roanoke, Va. The charges: Homefront Renovations doesn’t have a license to install roofs in Virginia, but that didn’t stop co-owners Shaun Edmonds and Nathan J. Laurian from bilking homeowners. According to court documents, Laurian paid a salesperson $600 to bribe a roofer $200 to simulate wind damage to a home insured by Liberty Mutual an hour before an adjuster arrived to review the claim. Laurian also sent forged completion certificates to the insurers of multiple victims. Laurian told investigators he was authorized to complete contract work via a $10 receipt from the Virginia State Corporation Commission.

* Dr. Michael J. Ligotti was the lead player in a $681-million behemoth of bogus urine testing and inflated rehab, the feds charge in Delray Beach, Fla. The allegations: Ligotti cheated insurers for nearly a decade. He billed roughly $681 million in fraudulent claims for $121 million in payments between 2011 and 2020. Ligotti used his Whole Health clinic to further his crimes. Ligotti set up “standing orders” for hundreds of millions of dollars worth of urinalysis tests, through partnerships with testing labs, sober homes and addiction treatment facilities. Ligotti was Medical Director for the treatment facilities, authorizing the urine tests. He received referrals to his Whole Health clinic in return. Ligotti did medically unneeded tests, and billed for office visits and therapy sessions that never happened. Some patients were billed as much as $20,000 for a single visit.

* A Texas couple says dentists yanked their teeth to have implants, falsified their insurance paperwork and left the woman toothless after her insurance didn’t cover the procedure. Juan and Maria Flores seek up to $1 million against Stonehaven Dental and Orthodontics, in Waco. The couple alleges this much: The dentists said Juan and Maria both needed all their teeth extracted. Their health policy would pay and their insurer approved the expenses, they were told. Stonehaven said insurance would take time to pay, so they both needed to get a CareCredit card for payment. Their insurer then would pay back CareCredit. Juan had all his teeth pulled and implants put in. Maria’s teeth were extracted later. When they returned for her implants, they were told that Juan’s CareCredit application was denied. Maria’s card was approved, but based on false info Stonehaven filled out on the application. They also learned their insurer had denied coverage because their policy didn’t insure any dental work. Maria still has no teeth.

DOJ is suing Cigna, alleging the health insurer fraudulently recorded the health of its Medicare Advantage enrollees to receive higher federal payments. A whistleblower who worked at Cigna says the insurer created a health assessment for its Medicare Advantage members called a “360.” The “360” reviews allegedly were used to record false health conditions for patients. Cigna also allegedly paid docs bonuses to complete a certain number of patient reviews. DOJ sued Anthem over similar allegations, highlighting the federal government’s aggressive stance toward resolving long-standing medical coding issues within Medicare Advantage plans.

* Laurie Delgatto-Whitten had shortness of breath and chest pain. The Houston-area woman decided she needed a drive-thru COVID-19 test at United Memorial Medical Center. She thought it would be a quick, no-fuss $150 test. Instead her health insurer was charged $3,165. The bill included $2,113 for an emergency visit and $602 for a physician’s diagnosis, plus $450 in lab fees for about 7 tests that she says were done without her permission. Delgatto-Whitten’s insurance paid the entire bill, though she’s worried her premiums will go up. The hospital says it’s investigating her charges and the facility’s billing practices.

* As fraud fighters keep adapting to an arms-length footing, an unexpected benefit is more training for more fraud fighters. Not to mention more CE credits. Take the investigative firm Ethos. In quieter times, Ethos held face-to-face analytics sessions with individual insurers. Locked out of that niche today, Ethos has pivoted to national webinars — thus expanding its training to potentially hundreds of fraud fighters at a time. Its digital forensics webinar on Aug. 20 will cover tech innovations using digital devices for today’s pandemic footing. One topic: crash data investigations and how insurers can validate witness claim statements and physical evidence to the vehicle safety systems reported.

* Irritating robocalls continue deluging consumers and stealing their money during the pandemic, new research shows. Nearly 5,000 COVID-19 scams were reported to the FTC through May 18 — costing Americans more than $35 million of losses. The scams center on: fake cures, PPE, stimulus checks, contact tracing, health insurance, student loans and more. San Antonio saw a 116% spike in robocalls sent to residents in July 2020 (8 million) compared to July 2019 (3.7 million).

* The FCC will spend $300 million to boost telemedicine to help social-distancing consumers have better access to healthcare. That money will go toward broadband connectivity and devices to better enable health providers to connect with patients in self-isolation. Priority will go to areas hardest hit by COVID-19. Another $100 million will fund high-speed internet connectivity and equipment to help docs offer connected care services.

An Iowa man’s cronies drive away his car for a bogus theft claim. … A San Diego psych bilks Tricare and buys a Jaguar and jewelry. … A Pennsylvania man fakes a SEAL combat career to bilk federal disability. Click the map to read about these and other fraud cases around the U.S.

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Fraud News Weekly is published each Friday except for Thanksgiving week and the week between Christmas and New Years. Copies of previous issues are available in the members-only section of Employees of member organizations may share this newsletter freely internally. Sharing by non-members strictly prohibited.