Fraud News Weekly

Friday, September 18, 2020


* Insurers in the Lone Star State are responsible for the accuracy of the data they use for claims investigations, regardless of the data source. That is the succinct, but very clear, message issued in a bulletin by outgoing insurance commissioner Kent Sullivan. Whether through internal data collection or based on third-party sources, the bulletin squarely places responsibility for basing claims decisions on accurate data solely on the insurance carrier. Blaming others as the source for inaccurate data is no defense. In fact, insurers should enable consumers to review and correct data to ensure its reliability, Sullivan both warns and encourages. “TDI may pursue enforcement action against an insurer if its use of inaccurate data harms policyholders. Insurers are encouraged to provide policyholders with a way to review and correct data being used by the insurer,” the bulletin reads. Sullivan recently announced he to plans to step down later this month after heading the department since 2017.

* Most legislation — including important anti-fraud bills — remains stalled as statehouses continue dealing with COVID-19 while also facing the November elections. Even so, the Coalition’s joint efforts with Honda North America to protect consumers from counterfeit airbags are still moving forward. Hawaii Gov. David Ige signed into law a bill on Tuesday that the legislature passed in July. … Meanwhile in Michigan, the Senate is expected to take up a similar airbag bill in the coming weeks. The measure passed the House back in February, before the pandemic took hold. “We all assume the airbag will work as it is supposed to — protecting us in a crash from serious injury or death. Counterfeit airbags do not give any such protection,” the Coalition says in a supportive letter to the Senate Judiciary and Public Safety Committee. “This is one of the worst types of insurance fraud as consumers have no way to know if they are the victim of a counterfeit airbag installation until another accident occurs and this crucial safety device fails to deploy.” The initial committee hearing is expected in the coming weeks. The Coalition and Honda feel confident we will reach the midpoint of at least 25 of the 50 states enacting these needed consumer safety and anti-fraud laws this year.

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


* People who’ve lost their jobs and health coverage due to the pandemic should beware of scammers peddling fake insurance, Washington state’s insurance commissioner warns. Nearly 100,000 more people are uninsured in the state than before the pandemic — many because they lost their job and employee health plans. People going online to find a new individual plan are Googling “affordable” or “cheap” health insurance. They aren’t sent to the state benefits page, where they might qualify for subsidies. Rather, they’re often directed to a commercial site. A dishonest broker sells them a worthless policy that doesn’t meet ACA requirements. Check the fine print — the plans may cover almost nothing, including pre-existing conditions. Make sure you’re at the state’s official health exchange site, wahealthplanfinder.org. Spelling it slightly wrong or using a “.net” or “.com” can lead you astray. The official site is the only place you can receive tax credits, subsidies or low-cost coverage through Medicaid. Also, you should never be asked to pay to sign up for coverage. Be sure it’s a legitimate plan before you share personal information.

Visit www.InsuranceFraud.org to read articles citing the Coalition.


* The hoverboard dentist hovers no more. Dr. Seth Lookhart pushed Medicaid patients to take expensive sedation not normally covered by their $1,150 annual limit for non-emergency procedures. Private insurance generally doesn’t cover sedation. So the Anchorage, Alaska doc offered clients the option of paying a $450 flat fee, then charged Medicaid up to $2,049 for the same service. Medicaid paid Lookhart about $1.9 million for IV sedation services. Lookhart’s sedating patients for extended periods of time “darn near killed some people,” the sentencing judge said. Lookhart was notorious for removing a sedated patient’s tooth while standing on a hoverboard — and filming the procedure without the patient’s consent. He was convicted of 46 counts, including reckless endangerment. Lookhart will have 12 years in state prison to perfect his hoverboard technique.

* The girlfriend of a pill mill doc teamed with him in a bid to illegally doll out fentanyl and other painkillers in the Pittsburgh area, and launder the insurance loot. Marcia Ramsier Arthurs wrote the scripts, counted the cash and generally managed Dr. Paul Michael Hoover’s operation. Arthurs also signed pre-authorization forms and sent the claims to Medicare and Medicaid. Fentanyl is a synthetic opioid painkiller that can be 50 to 100 times stronger than heroin. Just 2-3 nanograms per milliliter of blood can be deadly. Hoover traveled from California to the Pittsburgh area every 3 months to write illegal prescriptions without medical need. Arthurs was handed more than 5 years in federal prison, and Hoover received 10 plus years.

* A doc and marketer in California took kickbacks to recruit addicted patients for bogus sober home treatment and rehab in multiple states. Kevin Dickau helped run the firm. He had contracts with drug treatment facilities around the U.S., including the one run by Dr. Akikur Mohammad. The marketing company also ran a nationwide network of recruiters to bring in people who were addicted to heroin or other drugs — and had robust private health insurance. Mohammad’s facility and others paid Dickau’s group $5,000-$10,000 per patient. Mohammad billed a health insurer over $70,000 for purported rehab and drug testing for a patient. Mohammad paid the marketing firm a $5,000 referral fee the next month. Over all, the scam stole millions from private health insurers. Dickau and Mohammad pled guilty in federal court. Dickau faces up to 10 years in federal prison when sentenced this coming Jan. 20, and Mohammad 5 years.


* Roderick Jenkins reported his 2018 Polaris utility terrain vehicle was stolen from a friend’s home. The Little Rock, Ark. man quickly contacted his insurer and filed a $67,000 theft claim. Officials allege in this insurance scheme: Jenkins had stopped making payments, and the UTV was about to be repossessed. So he repainted the UTV purple to change its appearance, and still kept it in his possession. Jenkins was expected to attend a recreational ride at the Muddy Bottoms ATV Park in Serepta, La. Shortly after Jenkins arrived, another man showed up with a purple 2018 Polaris UTV loaded on a trailer and parked directly beside Jenkins’ recreation vehicle. The 2 men told deputies they didn’t know each other — except they’re brothers. Deputies also found the VIN was removed. And there also were several aftermarket equipment similarities with the UTV reported stolen by Jenkins. The vehicle was temporarily seized until the VIN could be confirmed. Officials took the UTV to a Polaris dealership in Bossier City, La. They electronically retrieved the VIN and verified it was the stolen UTV.

* Malissa Nuckles and husband Jeffrey Combs staged a vandalism claim on a 2003 BMW she bought from her husband’s colleague — David Mohammadi. Combs and he worked at a used car dealership called Abe’s Motorsports in the Sacramento area. Officials allege this played out: Mohammadi sold Nuckles the BMW that sat on the dealership’s lot for about 2 years. Insurance department investigators suspected the dealership was trying to eliminate old inventory. The car was covered in scratches that led to the totaling of the vehicle. She admitted the damage was staged, and that Mohammadi directed her in filing her claim. He did the same for Combs on a similar previous vandalism claim that GEICO paid without investigating. That claim implicated the owner of Abe’s Motorsports, Ayoub Shawesh. Shawesh, Combs and Nuckles face insurance fraud and conspiracy charges. Mohammadi surrendered and was booked into Sacramento County Main Jail.

* A Louisiana doc tried to illegally obtain prescription drugs for himself and others, prosecutors charge in Monroe, La. According to prosecutors: Gary Stamper owns Premier Family Walk-in Clinic. Stamper pressured employees to give him access to opioids at the clinic. One nurse practitioner said she witnessed Stamper dangerously mixing meds. He also asked her to sign paperwork allowing him to order controlled substances directly from a supplier under her DEA license. She refused. Stamper also arranged for his boyfriend and cousin to receive fraudulent narcotic prescriptions. And he often visited a local ER to receive narcotics from David Burkett — a physician also charged in the conspiracy. Stamper also accessed his clinic’s inventory system to edit prescriptions and billings and prescribe medications under other employees’ licenses. Stamper faces nearly 50 felony counts. The investigation was led by the Louisiana State Police and DEA.

* A pain doc and pharma sales rep disguised illegal kickbacks as paid presentations that actually were shams, the fed charge in Sarasota, Fla. Dr. Steven Chun prescribed large volumes of opioids. Daniel Tondre was a commissioned sales rep for the pain drug maker Insys. The feds allege: Insys marketed its pain med Subsys to Chun to boost sales in Tondre’s sales territory. Insys also used sham speaker programs to disguise kickbacks and bribes paid to high-prescribing doctors like Chun. Tondre arranged speaker programs that were attended only by family and friends, or repeat attendees. He also falsified signatures of licensed med providers as sham attendees, including Chun’s employees. Insys also bribed large Subsys prescribers like Chun by hiring cronies to work with the docs as Insys liaisons to approve insurance forms for Subsys. Chun was paid more than $275,000 in illegal bribes from Insys in connection with the sham speaker programs.


* A doc accused of both bribing a chiro via kickbacks and defrauding insurers is now suing New Jersey state prosecutors for $100 million after the judge dropped the charges. Terry Ramnanan was arrested for allegedly paying a chiro illegal kickbacks for patient referrals, and for falsely billing insurers. The charges were part of a statewide probe of alleged bribes that medical providers paid other providers for lucrative patient referrals to defraud insurers. But a judge dismissed all charges against the Paramus doc. Ramnanan sued this week. The lawsuit names as defendants state AG Gurbir Grewal, 4 AG employees and 2 chiros.


* It takes a committed team to successfully combat insurance fraud. That’s a core theme of the new annual report of the Massachusetts fraud bureau. The report highlights 234 cases referred to the bureau for prosecution in 2019. They resulted in 11 indictments and 166 suspects charged with fraud-related crimes. The IFB and insurers work closely together, the report notes. Some 2,913 of the year’s 3,307 case referrals came from insurers. Tony DiPaolo also was named Executive Director this year, with the bureau planning to soon mark its 3-decade anniversary. The bureau’s scope of work is large, requiring a team initiative. “The IFB continues to investigate all types of insurance fraud cases from automobile fraud to workers’ compensation fraud to autobody shop fraud to life insurance fraud to medical provider fraud to property insurance fraud. This is not possible without partners on the prosecution side like the Massachusetts Attorney General, various District Attorneys across the Commonwealth and the United States Attorney for the District of Massachusetts,” DiPaolo notes in his inaugural annual report as ED.

* Insurers are moving decisively toward adopting AI, reveals a new study of property-casualty insurer use of AI. The study was conducted by the Coalition and Shift Technologies. Nearly 60% of surveyed insurers now use AI, and roughly half of the insurers expect to ramp up their investment in anti-fraud AI within 12 months. Don’t miss the exclusive release of this study. REGISTER NOW for an AI webinar at 3-4 p.m. EDT, Sept. 30. What’s the future of AI? How can insurers better adopt AI to boost fraud-fighting results? Our panel of experts will discuss the findings — and implications for insurers and the fraud fight.

* IASIU’s Annual Seminar played out on a virtual stage, with the Coalition’s Matthew Smith giving a sobering yet uplifting look at the state of the fraud fight — and its future directions. He briefly discussed insights from the Coalition’s new study on artificial intelligence indicating that insurers are aggressively moving to adopt the newest tool in fraud fighting technology. Insurers’ excitement about AI is tempered by a reasonable fear of model bias and poor data sources that could lead to false flags on legitimate policyholder claims, Smith cautioned. Diversifying the next generation of fraud fighters by recruiting more women and people of color will help improve claim outcomes and reduce claim disparities that impact low- income people and people of color, Smith also said. The future is bright, but we must work diligently together to achieve our fraud-fighting goals for the future.

* Sellers of low-value, temporary health plans deceptively claimed the coverage meets key consumer protections, including insuring preexisting conditions such as diabetes, heart disease, asthma or cancer, the feds say in a covert GAO investigation released by Sens. Bob Casey (D-Pa.) and Sen. Debbie Stabenow (D-Mich.) on Wednesday. Eight customer service reps engaged in deceptive marketing, revealed a sampling of 31 covert calls seeking health coverage. Two other reps failed to consistently and clearly explain coverage. The remaining 21 calls — just 67% — met FTC marketing standards. The results illustrated only the sales behaviors the feds experienced, and aren’t generalized to the broader health insurance industry. Casey released a report last year detailing how the plans can mislead consumers using paid advertisements on search engine websites like Google, Bing and Yahoo.

* Telemed is the healthcare industry’s biggest cybersecurity risk for both patient and provider data, a new report says. Telemed providers have seen a rapid spike in targeted attacks as popularity skyrocketed. This includes a 30% increase of cybersecurity findings per domain of targeted telemed providers. There’s also a noticeable increase in mentions of major healthcare and telemed firms across the dark web since February 2020. There was evidence of prolific and emerging threat actors selling electronic patient healthcare data, malware toolkits that target telehealth technologies, and ransomware uniquely configured to take down healthcare IT infrastructure.

* Finally, something good about COVID-19: Stay-at-home orders are keeping robocallers off the phones and out of people’s hair. Bad actors launched 15% fewer robocalls in the first half of 2020 compared to the same period last year, says a report by Transaction Network Services. Still, more than 100 billion unwanted robocalls were made in the last 12 months. Notably, twice as many unwanted calls were placed to wireline (home/office) phone numbers over the past year than to wireless numbers (smartphone/feature phone).


* From time to time we’ll feature Coalition member insights on issues of interest to the antifraud community. We certainly invite your insights — just contact Jim Quiggle and we’d be glad to discuss your idea. Here’s our inaugural insight feature:

Shelter Insurance has discovered it’s paying fees for obtaining patient medical records that far exceed state-allowed invoice maximums in Arkansas. The fees are smaller, though can add up quickly. While Arkansas-specific, Shelter’s experience is a lesson for all insurers: Carefully watch for and challenge excessive “shadow” fees for smaller bills that might easily slip past your claims examiners. The fees in question cover medical records that Shelter requests from medical providers. The records help us evaluate injury claims accurately and fairly. I recently examined 6 random invoices for requesting medical records. I found more than $2,700 in charges that far exceeded what Arkansas allows medical providers to invoice patients and their lawyers for the same records. The fees may seem small. Yet they can easily add up to thousands or tens of thousands of claims each year. Most state billing codes clearly say what can be charged for medical records — and other smaller expenses. I’d advise my counterparts at insurers to audit these smaller invoices for over-billing. If you find a costly pattern, check and see what your codes allow, and how clearly worded the codes are. Can the codes be exploited with patently unfair and over-billed charges that are higher than others pay? Costs of medical records should not be an excuse to price-gouge insurers. Quality customer service should come with a price tag that is fair and balanced for everyone. — Candice Benton AIC, AIS, AIC-M, Casualty Claims Supervisor, Shelter Insurance.



An Oregon woman gets federal prison for healthcare fraud and tax evasion. … A Michigan man faces prison time for selling fake insurance certificates. … A New York woman bills for med treatment using a stranger’s ID. Click on the map to see 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 InsuranceFraud.org. Employees of member organizations may share this newsletter freely internally. Sharing by non-members strictly prohibited.