Fraud News Weekly

Friday, July 23, 2021

Coalition Executive Director Matthew Smith discussed the rising national risk of long-haul truckers being targeted for staged crashes on a webinar co-hosted by our partner the American Trucking Association and ERoad. The ”Crooked World of Staged Accidents” program addressed how dashcam video recordings are useful in identifying staged collisions designed to defraud insurers with fake injury claims. Fraudsters often target long haul truckers, knowing their insurance generally has high policy limits. States such as Florida, Louisiana and Nevada are hot targets. But as the webinar noted, the risk — and fraud problem — are rising nationally. Smith explained to commercial vehicle owners and operators how to document suspected staged accidents, what to do when law enforcement arrives, and how to best work closely with insurers to better make certain that insurers investigate and deny fraudulent claims. The ATA is working with the Coalition and APCIA to enact both staged-accident and towing-fraud legislation across the nation.

Insurers are breathing a sigh of relief while body shop owners fume over the surprise veto by Rhode Island Gov. Daniel McKee of a bill to expand the state’s Unfair Claims Practices ActThe bill would have prohibited insurers from refusing or failing to pay body shops based on “the most recent version of industry software programs,” or for refusing to pay for services documented as necessary but sublet to others by the body shop. Coalition member APCIA led the industry’s successful effort to secure the veto. With the state’s 2021 legislative session over, many expect the issue to return in 2022.

Maine has joined the rapidly growing list of states to ensure consumers have access to medical care via telehealth. Among its provisions are permitting licensed medical providers to offer telehealth on an ongoing basis. However, they must act within the scope of their licensed practice, and follow any requirements or restrictions imposed by law or standards of practice. The state licensing boards also gain authority to create telehealth standards of practice and restrictions. The bill was signed by Gov. Janet Mills.

Cybersecurity continues to be the watchword for 2021 legislation. In Wisconsin, a new insurance data security law was signed by Gov. Tony Evers. “From ransomware to data breaches, insurers and consumers are at an increasing risk of experiencing a serious cybersecurity incident. The new consumer protections in this act will help protect personal data and keep Wisconsin insurance companies secure,” Insurance Commissioner Mark Afable notes. The new law takes effect later this year. It closely follows the NAIC Cybersecurity Model Act. Meanwhile, the push continues for possible federal legislation to address cybersecurity on a national level after the recent rise of ransomware attacks. Both the U.S. House and Senate are considering bipartisan bills. 

Ohio legislators are taking up a consumer privacy bill that includes provisions impacting insurers with more than $25M of annual revenues in the Buckeye State. The House measure seeks to protect consumers’ personal data by requiring businesses to adopt a corporate privacy policy, and by prohibiting dissemination or resale of personal data without consumer consent. Consumers also could request businesses to provide a copy of their personal data at no charge. Consumers can request that their personal data be deleted as well. From the Coalition’s perspective, the bill contains an important exemption for data used to identify insurance fraud.

A record number of insurance legislators gathered for the recent NCOIL Summer Meeting in Boston. The Coalition attended to support the NCOIL’s work as a Coalition member. Legislators heard updates across all lines of insurance, including programs on the rise of ransomware and the relationship with cybersecurity insurance. In a joint session, NAIC and NCOIL committed to continuing to address improper “rebating” for insurance services. Rebating frequently involves fraud. Post-disaster claim-handling legislation was covered in a program by Coalition member United Policyholders and Oregon Rep. Pam Marsh. The Health Insurance Committee continued its discussion toward NCOIL adopting a model act on telemedicine authorization and payment practices. The pandemic’s impact on Massachusetts was covered in an address by Gov. Charlie Baker. Baker previously was CEO of Harvard Pilgrim Health Care.

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

Coalition Outreach Coordinator Dominic Dugo recently spoke to more than 50 key California state prosecutors of the California Golden Gate Consortium. The Consortium is composed of insurance fraud prosecutors and district attorney investigators, together with investigators from the California Department of Insurance. Dominic explained the Coalition’s history, mission and how the Coalition opens access to critical information and contacts to improve how fraud cases are investigated and prosecuted. Attendees came from the counties of Alameda, San Francisco, Marin, Napa, Solano, Sonoma and Contra Costa. The presentation was an outgrowth of efforts by the Coalition and California insurance department to work cooperatively to increase insurance fraud prosecution across the state. This also includes advocating for adopting an Assembly bill to make application fraud a specific insurance crime across all lines. 

Terri O’Brien is the new CEO for the recently formed national hub of insurance fraud investigations in Canada, Équité Association. O’Brien brings over 25 years in financial services, including risk management, fraud, capital markets, leadership and growth strategies. Among her prior leadership roles, O’Brien was VP for TD Bank’s North American anti-fraud strategy. Équité detects and prevents insurance crime for all insurers in Canada using advanced analytics, intelligence best practices and coordinated investigations. Équité is a new entity created by the insurance industry to integrate the cross-insurer data analytics company CANATICS and the fraud unit of the Insurance Bureau of Canada. Insurers gain access to fraud prevention, investigative solutions and an intelligence-sharing hub.

A large crash ring bought vehicles at auction at a significantly reduced cost in the San Diego area. They were already damaged, had high mileage, or both. Ring members next registered and insured the vehicles, then filed false claims for theft or total loss, state prosecutors charge. Officials allege this much: The ring stole $822K from 12 auto insurers and shared the profits. At least 45 false claims were filed over four years, involving 56 vehicles. Numerous vehicles had their odometers rolled back to increase the vehicle’s value before it was damaged or reported stolen. Other vehicles had significant damage that wasn’t disclosed to the insurers, or which the group damaged after being insured. Ring members also staged collisions that wrecked vehicles enough to be declared total losses. Staged thefts earned insurance payouts as well. Some suspects filed claims shortly after taking out an insurance policy, collected a check for their reported loss — then let their policy lapse without paying the premium. The case was investigated by the San Diego County Organized Automobile Insurance Fraud Task Force. It comprises the California insurance department, San Diego DA’s office and California Highway Patrol.

Matthew Walker torched his car at a dealership to steal insurance money, prosecutors charge in Albuquerque, N.M. Walker’s car was at the dealer for repairs. The fire also damaged three other cars. His insurer denied his damage claim. Walker spent the day with a friend and then went straight home, he alibied to investigators. He then switched alibis and said he went instead to his girlfriend’s place. Investigators then told Walker his cell phone was pinged at the parking lot at the time of the explosion. Surveillance cameras also caught him running away from the explosion moments after it happened. “Right there is the car dealership. See the little flame? That’s exactly where the fire was. This is the cell phone tower putting you in multiple spots in the parking lot,” an investigator tells Walker.The investigator then tries to reason with Walker, hoping he’ll confess: “It’s not the crime of the century, man. It’s really not. Everything is going to work out. Right now, we’re in a position to get the truth of what happened.” Instead, Walker cuts off the conversation. “You don’t understand. I’m hypoglycemic, I’m about to pass out,” Walker says. Walker’s charged with arson and filing a false claim. He faces up to eight years behind bars if convicted. 

Kerry R. Evans and his grandmother reported her sedan was stolen in Reading, Pa. Police earlier had received a report that her car was the striking vehicle in a hit-and-run crash. The grandmother told investigators that she picked up her grandson at his apartment, and he drove the car around with her while he ran errands. They returned to his home and he parked the car in the alley next to his apartment building. Evans said he saw the vehicle in the same spot when he went out to smoke at about 10 p.m. He said he went outside the next morning to see if his hat was in the car, and discovered the vehicle missing. The investigator explained the car was towed after being involved in a two-vehicle accident, and that Evans resembled a witness description of the driver fleeing the scene. Footage from pole-mounted security cameras determined the fleeing driver was Evans. Law enforcement arranged three times for Evans to come in for an interview, but he didn’t show. He was declared a fugitive before finally being arrested and taken into custody. Evans is charged with insurance fraud, making false reports, hit and run, and driving with a suspended or revoked license.

Law enforcement responded to a two-vehicle collision in Sumter County, S.C. Six people reported injuries and filed claims that included altered medical bills. DeMarkus Marquel Daijhon Lane assisted with the filing of three claims for occupants of one of the cars. Over $85K in claims were made, almost all of which insurers paid out. Eight defendants were arrested. The second collision was a two-vehicle incident. Five people reported injuries and filed claims using altered medical bills. Lane provided the medical bills for two claimants. Insurers paid more than $95K, and six people were arrested and Lane was a ringleader. He received five years in prison — suspended to five years of probation if he repays $234.7K. The case is part of a larger Sumter County fraud ring involving multiple staged accidents, hundreds of thousands of dollars’ worth of forged or altered medical bills, and the use of false IDs. The South Carolina Law Enforcement Division has been investigating, with the state AG prosecuting. 

Patrick Nolan could spend 20 or more years in prison after burning his home for insurance money, prosecutors charge in Wayne County, Mich. The state AG alleges: The infotainment system on Nolan’s truck showed he’d parked outside the house less than two hours before a neighbor reported the fire. The blaze started in three locations — Nolan’s master bedroom, basement storage room and a hallway at the top of the stairs. Gasoline vapors were ignited in each area using an open flame. The state AG teamed with the fraud unit of the Michigan Department of Insurance and Financial Services to investigate the case.

A married couple working at their son’s Vancouver, Wash. body shop lied they were hurt at the shop and illegally received $180K of workers comp benefits, the Washington State Department of Labor & Industries says. Investigators recorded more than 100 video clips of Jeffrey and Karen Pierson working at the shop while they regularly stated on official forms they weren’t working because of job-related injuries. Investigators also discovered that My Dad’s Automotive & Exhaust was late paying comp insurance premiums for several years. The L&I revenue agent assigned to collect the past-due premiums discovered that while he was corresponding with Karen about the business, she claimed to another unit of L&I that she was too injured to work. Jeffrey stole more than $116K of comp benefits and Karen stole more than $64K. 

This disability claim was for the birds. John Swank was a bird specialist with a pest control firm in the Sacramento area. He made a disability claim with his employer for heart and intestine issues. He also had a long term disability policy through his employer for illnesses or injuries that aren’t work-related but would supplement his income if disability payouts were less than 20% of his weekly earnings. Swank collected $108.8K of LTD payments over about four years. His disability insurer interviewed him for a status update. Swank hadn’t returned to work, he said. Yet he’d worked for several pest control firms between January 2017 and 2020, receiving more than $63K of disability payments he wasn’t entitled to receive. The disability insurer of Swank’s original employer sent him a denial letter. Due to his return to work, he was no longer eligible for LTD payments as of Jan. 6, 2017, because his earnings were greater than the policy allowed. The California insurance department uncovered the suspected plot. 

A pharma sales rep recruited employees of Bergen County (N.J.) to help loot the county’s prescription drug plan out of $3.4M with forged scripts for expensive and unneeded compound meds. Paul Comarda ran a business called Dynasty Medical to sell compound meds for several specialty pharmacies. The Bergen County health plan reimbursed the pharmacy thousands per employee for a month’s supply of compound creams — such as vitamins, pain, anti-fungal, migraine and libido ointments. Comarda gave county employees blank prescription pads and steered them to a corrupt Newark doc to authorize the meds. Colluding compound pharmacies mixed the creams, and paid Comarda a percentage of the insurance money. He pleaded guilty. Comarda will receive up to 10 years in federal prison for insurance fraud when sentenced, and five years for obstruction of justice and money laundering.

Cookie-cutter diagnoses earned a Boca Raton allergy doc a date with jail bars. Max Louis Citrin came under scrutiny when witnesses told investigators that he wrote narcotic scripts for their boyfriends in exchange for illegally recruiting drug-recovery patients to his allergy practice. Undercover officers posing as patients then went to his office. Citrin gave one officer an allergy test and Xanax script. Yet the officer never complained of allergy problems, nor did Citrin tell her the test results. He billed her insurer nearly $20K for the “allergies” visit and “preparation of allergy shots.” Investigators dug deeper. Citrin cut and pasted virtually identical diagnoses, symptoms, medical backgrounds and vital signs on the insurance forms for seven patients — including the same grammar errors and typos. The claims were worth nearly $450K. All told, Citrin stole more than $2.4M through varied health-insurance crimes. He pled guilty and received 30 months in state prison.

Click the map to read about these and other fraud cases around the U.S.

Fraud fighting lost a pioneer with the recent passing of John Massucco, former Chief Deputy DA for San Diego County. John spent 37 years taking down fraudsters for the DA — whose office is a Coalition member — until retiring in 2007. John was among the first to make insurance fraud a DA priority, and many of his anti-fraud innovations were adopted by other DAs around the U.S. This included adding fraud-focused investigators and other staff focused solely on this crime. John started with a fraud staff of three, and retired with an army of nearly 60. John also created the nation’s first multi-agency task force to chase down rampant workers comp premium scams exploiting the county’s growing underground economy in 1996. And he added task forces on auto theft, disability, healthcare and life — greatly ramping up the DA’s fraud investigations and convictions. John was the first prosecutor to earn IASIU’s prestigious Public Service Award, in 2002. “John built a strong program beyond any funding from assessments. He understood the impact insurance fraud had on the community. He believed that prosecution, tied to public outreach, was the only way this crime could be impacted. Our industry has lost a true pioneer,” says Donald Marshall, Vice President, Zenith Insurance Company SIU.

The latest installment of the Coalition’s popular webinar series Decoding Medical Fraud attracted nearly 1K registrants! Fraud fighters tuned in to a panel featuring three experts in the field of medical fraud to discuss how large data sets are being shared across private and government organizations to spot fraud trends; techniques used to connect with juries in complicated fraudulent billing trials; and the vulnerabilities of the telehealth system scammers are exploiting to enrich themselves. Thank you to our panelists and fellow Coalition members Nicole Liebau of Senior Medicare Patrol, Dan Kreitman of HFPP, and Tami Rockholt of Rockholt & Associates/INFORM. If you missed this fascinating session, you may view it here on our channel.

Fraud trends are ever-changing. Keeping up is critical for our ability to identify, investigate and defeat fraudulent claims. You’ll learn the latest at the IASIU 2021 Annual Conference in Orlando. Are you building a strategic plan to address the fraud against your company? What are the costs and benefits of your SIU operation? Do you have the right skill set and technology to find the scams? Do you know how NFPA 921 has changed, and may impact your arson investigations. And what about emerging arson technologies? How does money laundering impact fraud? How well do you know event data recorders? What’s your workers’ comp exposure? Learning how to maximize tech, knowing the fraud trends, evaluating our legal exposures and assessing how COVID has impacted our investigations are among the added topics you’ll learn at IASIU 2021 Annual Conference. If you haven’t registered yet, then sign up now. Your success in thwarting scammers will go farther and faster.