Fraud News Weekly

Friday, November 22, 2019


* Contractor fraud issues still plague homeowners and insurers facing fraudulent repair bills nearly a decade after Superstorm Sandy crashed ashore in New Jersey. Companion bills in the state Senate and Assembly would make it easier for contractor victims to seek recovery from federal disaster funds. Currently, victims must show the contractor was charged with a crime involving fraud or theft by deception. The new bills would remove that requirement. Victims could recover disaster funds if they can show other reliable proof of fraud or theft by deception.

* A bill to boost oversight of public adjusters in Wisconsin has passed the Assembly and is now in the Senate. Among the provisions: Public adjusters must register with the insurance department every 2 years. … Contracts must disclose all fees and expenses. … Fees would be capped at a maximum 10% of insurance recoveries if the insurer agrees to pay the full policy limits within 5 days, or the claim arises from a catastrophic loss. Senate prospects for passage currently appear favorable.

* Congress should empower states to oversee billing by air ambulance firms, 35 state insurance commissioners urge in a letter to key U.S. House leaders. The feds now regulate air ambulances as airline operators — states have no authority. A Senate bill would exempt air-ambulance billing practices from federal oversight, and grant those powers to state insurance regulators. State billing oversight should be included in any House bill that surfaces, the commissioners urge. Their goal is to protect Americans from exorbitant surprise bills, especially for air ambulances. “State insurance commissioners have been fighting for years to protect consumers from outrageous surprise bills from some air ambulance providers,” the joint letter says. The Coalition has long-supported state oversight of air ambulances. There’s repeated evidence of consumers being harmed by excessive and questionable bills.

* The Coalition weighed in with more proposed changes to California’s draft SIU regulations, reflecting numerous ideas from Coalition members. Among the Coalition’s multiple concerns: The proposal should reference “suspected insurance fraud” instead of “possible suspected insurance fraud.” Also … better streamline insurer reporting requirements that now would divert resources from fighting fraud by forcing undue time dealing with compliance. “The Coalition supports fully the identified goal of the California Department of Insurance to better protect consumers from insurance fraud through higher quality referrals and identification of suspected insurance fraud,” the Coalition adds. The latest draft regs were released Nov. 6. We filed initial comments on the prior draft in August. A release date for the final regs has yet to be announced.

* After months of waiting, the Coalition-backed New York storm-chaser bill finally went to Gov. Cuomo for his hoped-for signature. Among the important provisions are requirements for written contracts, which must disclose liability coverage and limits. … and prohibiting of rebates or payment of deductibles by contractors. Because the legislature is no longer in session, Cuomo has 30 days to sign or veto the bill. If Cuomo takes no action, the bill is deemed vetoed. The bill cleared the legislature earlier this year.

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


“Let’s stay alert and avoid insurance traps. Even more, let’s stand for something bigger as Americans,” the Coalition says in a blog celebrating International Fraud Awareness Week. “We’re better than a few tempting insurance dollars. Fraud Awareness Week is a nice five days to think about avoiding scams, and scamming. But really, honesty is a year-around idea we can all live with.”

* Engineering reports were doctored to deny repair claims by numerous homeowners after Hurricane Sandy. Policyholders fought back. “In the past, allegations of insurance fraud almost always involved policyholders faking damage claims,” reads the latest JIFA article. “Organized action among insurance-fraud investigators almost exclusively was the domain of the insurance industry, working with law enforcement to expose bogus claims against insurers. The opposite is true today, and now the road goes both ways. For the first time, that same law-enforcement strategy was successfully used to pursue criminal allegations of insurance fraud by the industry against the policyholders.”

Visit to read articles citing the Coalition.


* Rescue teams rushed to the cliffs above the Black River near, Elyria, Ohio. A nearby golfer had reported an overturned SUV in the river. Not realizing the Kia Sorrento was empty, the responders mounted a dangerous rescue. They rappelled down a 100-foot cliff with a lot of vegetation and rocks. A license check showed that owner Randall White had reported his vehicle stolen from in front of his apartment. He wanted to collect on his auto policy. Surveillance cameras at a nearby restaurant showed White driving along the river, pulling the SUV into an opening above the cliffs, and the pushing it over the side. The video next showed White walking with a flashlight back to his apartment. He then called police and his insurer to report the fake theft. White pled guilty to insurance fraud, making false alarms and inducing panic. He must repay the responding police and fire departments — more than $10,000 total. No word on jail term.

* A contractor lied that he had no employees and thus needed no workers comp. Except Ricardo Batres had a crew of 12. He forced an injured and uninsured worker to apply for charity medical help, prosecutors charge in Twin Cities, Minn. Batres used undocumented workers for wood wall framing and installing sheetrock. He employed a dozen men. Several were injured on the job. They stepped on nails, had the prefab walls fall on them, or fell from various heights. Batres lied to state agencies that he had zero workers. He sent employees to a massage therapist, and stopped paying them during recovery. One man was seriously injured when a prefab wall fell on him. His coworkers drove him to the hospital. Batres caught up to them and translated for the man with the hospital docs. He lied that the injury occurred at Batres’ house. Medicaid thus paid $31,000, MinnesotaCare paid more than $10,000, and a charity helped with $4,200. Batres pled guilty to comp fraud, payroll fraud and labor trafficking. Prosecutors recommend just 9 months in prison.

* A jury took less than 4 hours to convict Patrick Frazee of bludgeoning his former fiancee to death with a baseball bat for life insurance and other perks in Cripple Creek, Colo. Kelsey Berreth was found dead in her townhouse on Thanksgiving day. Frazee was a beneficiary of Kelsey’s life policy through work. And he was strained by financial burdens, including defaulting on a $42,000 loan. Frazee openly mused to friends and his mistress that he couldn’t be charged with murder if investigators couldn’t find a body. Frazee also wrote 17 notes to press a fellow inmate with prison gang ties to kill the lead prosecution witness and most of her family. Somehow Frazee thought the murders wouldn’t tie him to Kelsey’s killing. Security cams also reveal him driving to and from the direction of Kelsey’s townhouse. That matched the timeline the day of the murder. Cell records show he had Kelsey’s phone for 2 days after her murder. Frazee was handed life without parole.


* Six more suspects were busted for their alleged roles in a $23-million ring that exploited crash victims in South Florida. Three clinic owners, an attorney and 2 chiros are the latest charged. Ring members paid kickbacks ranging from $500 to $2,100 to tow-truck firms to recruit crash victims for needless injury treatment. Colluding clinics inflated med bills charged to auto insurers. The clinics falsified pain levels that patients reported so they could bill the maximum $10,000 worth of PIP coverage. The treatments included costly and invasive nerve tests. Accident victims were convinced to visit the clinics at least 30 times, in order to inflate the billing. Key ring members have been convicted, with more facing charges.

* Landon Pilkey ran afoul of fraud fighters in Utah and the feds in a lengthy string of troublemaking. His dilemma started with John Taylor Williams, who reported his 2008 Subaru was stolen. State prosecutors allege: The vehicle broke down at Exit 2 on Interstate 15 in St. George. The car was gone when he returned the next morning. Williams filed a $7,300 claim. He said he and Pilkey were in the Subaru when it broke down. Investigators grew suspicious after several police calls to Williams about the theft report went unanswered. The state fraud bureau investigated. Pilkey’s cell records show he wasn’t near Exit 2 the night of the claimed theft. His last call was more than 40 miles away. Pilkey abruptly hung up when an investigator called to tell him he was a suspect. Williams admitted he lied about the stolen vehicle. He said he gave Pilkey the car to sell. Pilkey’s also charged with stealing a Cadillac CTS after posing as the owner of a body shop. He was handed 2 years in federal prison for filing 60 false federal tax returns worth $58,650 as well.

* A San Francisco sheriff’s deputy gave her firearm to a convicted felon then lied it was stolen to cover up her ill-considered handoff. April Myres had an affair with Antoine Fowler while she was a county prison guard and he was incarcerated. She gave Fowler her handgun when he was released. Myres then told her insurer that her home was burgled. Stolen were numerous luxury goods, plus her pistol, radio and ballistic vest, she claimed. Fowler’s cellmate ratted out the plot. Fowler and Myres were planning a Hawaii vacation when he left prison, and Myres said she’d get him a pistol. Fowler carried her handgun on the streets for a full year. He was found with her gun in his possession. Myres was handed 14 months in federal prison. Fowler pled guilty to federal gun charges last May, and awaits sentencing.

* Urine testing at a sober home and rehab center was a way to squeeze patients’ health insurers for money in a $58-million rehab scheme, the feds allege in Delray, Fla. As the feds see it: Double billing for urine testing was part of bogus treatment at the Real Life Recovery Delray rehab center and the Halfway There Florida sober home. Giving unneeded treatments, billing for phantom rehab and testing, and paying kickbacks for patient recruiting are among the wrongdoings. Unqualified and unlicensed employees gave bogus insurer-paid rehab. Docs signed for or back-dated documents as though they’d done treatment, and completed in-take forms for patients they hadn’t seen. When patients were discharged at the beginning of the month, their insurers were billed through the end of the month. Patients also were billed for rehab sessions they didn’t attend. One patient was billed for 2 sessions while he was in prison. Rehab facilities used cash, gift cards, trips, airline tickets and rent discounts to illegally recruit insured clients.


* New York’s immunity law shields against defamation suits aimed at insurers by medical providers reported in good faith to the state medical board for suspected fraud, New York’s highest court ruled this week in a major victory for fraud fighters. The important precedent could support anti-fraud immunity laws in other states. New York’s public-health law grants explicit immunity from defamation suits involving good-faith reporting of suspected scams, the Court of Appeals says. “… in order to encourage increased reporting of unprofessional conduct, the legislature specifically sought to shield complainants from liability by imparting a limited immunity from civil actions commenced by regulated entities …” the court says. The state’s highest court agreed with an amicus brief the Coalition and NICB jointly filed. “The Legislature decided to remove what it considered to be an obstacle to reporting — namely fear of litigation — by granting insurers qualified immunity,” the Coalition and NICB contended. The amicus was drafted by Susan Phillips Reed. She’s a former associate judge of the New York State Court of Appeals — the state’s highest court — and now of counsel to the law firm of Greenberg Traurig.


* Patents are left in deep debt by a faith-based health plan the Washington insurance department has ordered shut down. Aliera HealthCare must stop selling illegal plans and pay a $1.1-million fine. Aliera calls itself a “health care sharing ministry” the state can’t regulate. Dozens of customers, however, are complaining. Sandi Kamuf’s husband broke his wrist, dislocated his shoulder and bruised ribs in a biking accident. The ER bill was $7,000, and Kamuf says Aliera didn’t pay a nickel. Another customer has throat cancer, and says Aliera won’t pay. He’s maxing out his credit cards to get chemo. A speaker in an Aliera training video even says the outfit is selling health insurance. The outfit acts “in every respect” like a health insurer, commissioner Mike Kriedler says. The insurance department is looking into possible criminal charges.

* An agent filed a complaint against Ohio National Life Insurance Co., alleging illegal use of a customer’s insurance premiums plus a coverup. Elisia Lattimer was an agent with the insurer. She alleges her manager offered to pay half of a customer’s $2,000 monthly life premium if the client reinstated the lapsed life policy. Rebating is illegal in Ohio. Lattimer contends the insurer ignored her internal complaints, and eventually fired her.


* At least 288 million robocalls pitching health coverage bombed consumers in a focused national campaign last month, says the call-blocking app YouMail. The campaign was a highlight moment among the 5.7 billion robocalls sweeping the phone lines in October. The spike coincided with open enrollment. The health campaign came from a single source using a series of names such as “Executive Health” and “Whitestone Health.” They delivered a pre-recorded pitch with the same male voice. Scams like these typically are crude efforts to convince people to hand over their identifiers for medical ID theft cons, or financial ID theft. Auto-dialing isn’t illegal. But federal law generally requires mass-callers first to obtain the consent of those called. Callers also must give people the ability to withdraw such consent later.

* The improper payment rate in traditional Medicare fell to the lowest level since 2010. The rate for federal FY 2019 was 7.25%, down from 8.12% in FY 2018. This is the 3rd straight year the improper payment rate for fee-for-service payments fell below 10%. Improper payments declined by more than $7 billion from FY 2017 to 2019. Durable medical equipment and prosthetics saw improper payments decrease $1.29 billion from FY 2016 to 2019. Aggressive enforcement against bad actors is among the reasons for the improvement.


An Ohio man pushes his SUV off a cliff for insurance. … A Minnesota contractor lies he has no workers, and thus needs no workers comp. … A Colorado man bludgeons his former fiancee to death for life insurance. Click on the pins to read about these and other 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.