Fraud News Weekly

Friday, November 20, 2020

Anti-fraud leaders from nearly 30 nations gathered this week for the second Global Insurance Fraud Summit.
This year’s virtual event follows the inaugural Summit held last year in Barcelona. Kicking off this year’s events were sessions introducing NICB’s new President and CEO, Dave Glawe and “fireside chat” between BAE Systems’ Global Director of Counter Fraud Analytics and Insurance Solutions Dennis Toomey and the Coalition’s Matthew Smith. The Coalition also moderated the lead-off United States Fraud Panel. The U.S. has a unique system of insurance regulatory oversight, the panelists informed the world leaders. Regulators, insurers and consumer groups  work together in the fraud fight. Panelists included California’s George Mueller, head of the California Department of Insurance Enforcement Branch; Massachusetts Insurance Fraud Bureau Director Tony DiPaolo; Ohio’s Director of Fraud Enforcement, Michelle Rafeld; and Simon Blank, head of Florida’s Division of Investigative Forensic Services. The Coalition’s Matthew Smith served as the U.S. representative to a select panel addressing COVID-19 fraud on Wednesday. Organizers are looking to return to an in-person Summit in Europe in 2021.

Minnesota’s Fraud Bureau has published its 2019 Annual Report. Among the highlights: A 14% increase in investigations over 2018, with the CFB opening 3,236 fraud cases in 2019. The CFB noted the 5 largest areas of suspected fraud are in automobile, health care, homeowner, workers compensation, and agent or broker fraud.“Criminal investigations resulted in prosecutions of individuals who were responsible for committing crimes that had an economic impact on Minnesotans totaling $29,252,961,” says Fraud Bureau Director Michael W. Marbe.

As expected, the NAIC Antifraud Task Force on Monday voted unanimously to adopt the standards for the Antifraud Plan Guideline developed by the Technology Working Group. After numerous meetings seeking input, the Working Group also unanimously adopted the Guideline last month. The next and final approval will come from the NAIC Market Regulation and Consumer Affairs “D” Committee. Approval there is also expected. Once adopted, the Technology Working Group will start the next phase to create a central electronic portal for fraud plan filing.

Washington State’s newly re-elected Insurance Commissioner Mike Kreidler has again extended his emergency order regarding telehealth coverage. The extension will run through December 11th. Among the order’s provisions:Using platforms such as Facetime, Facebook MessengerGoogle HangoutSkype and GoToMeeting for healthcare evaluations.Mandatory coverage for medically necessary diagnostic testing for COVID-19, flu or other respiratory illnesses with no copay, deductible or co-insurance payments.Using telehealth platforms to speed up home healthcare or long-term care evaluations for patients being discharged from hospitals.

“This continues to be a critical time for all Washingtonians and we need to provide safe and flexible access to care,” Kreidler says. “During this unprecedented time, people should not have to worry about their insurance coverage.”

Note: Texts of anti-fraud bills are available on the Coalition’s website here.
Coalition members Luxoft and IBM are hosting a 6-part webinar series on Combating Insurance Fraud with AI.
The series brings together leading experts in insurance fraud. They’ll discuss how to detect and prevent financial crime using AI, and share insight into the operational, financial and ethical considerations of this game-changing  technology. Register here!

We’ve made very-real progress against insurance fraud in recent years. Yet there’s no accounting for the prodigious lust for insurance money out on our streets. Fraudsters can range from that lone dishonest contractor to large and heartless crime rings that will gleefully separate you from every hard-earned dollar they can,” the Coalition FraudBlogs as part of our campaign during Fraud Awareness Week. “Believe me again, they’re good at their deceptive craft. So we have to be better. Our nation will find a cure for COVID-19, inevitably. There’s also a personal vaccine for insurance fraud. Stay alert and know insurance fraud, before insurance fraud knows you.

Michigan’s Fraud Investigation Unit (FIU) spent a busy week educating consumers about the dangers of insurance and financial fraud as part of International Fraud Awareness WeekThey’re also encouraging consumers to join in the fight against scammers. “Consumers can arm themselves against fraud with resources available from DIFS, including our website and publications, our call center, and the fraud reporting tool on our website,” says DIFS Director Anita Fox. The unit is housed within the Department of Insurance and Financial Services (DIFS),  and hasn’t wasted any time engaging in the fraud fight. Created in 2019 as part of Michigan’s historic bipartisan auto insurance law, the FIU investigates criminal activity related to the insurance and financial industries.
Latisha Harron lived large off Medicaid, pretending her home health firm gave needed care for lower-income residents of North Carolina.  In fact, she ran a fake firm that tried to steal nearly $14 million from the state’s Medicaid program. Taxpayer money flowed from bogus home-health claims. Harron and her husband owned a British Aerospace Bae 125-800A Aircraft … Aston Martin sports car … Ford F-150 Super-Crew pickup truck … and expensive properties in several states. Harron ran Agape Healthcare Systems in Roanoke Rapids, N.C. She scoured online obits to locate recently deceased North Carolinians. Using their names, DOBs and other info, Harron queried the Medicaid eligibility tool to see if the deceased was eligible for Medicaid during their life. Harron then back-billed NC Medicaid for up to a year of phony home health services that she supposedly gave while the residents were alive. Medicaid sent millions to Agape. Harron and her husband carried out the fraud via the internet from locations around the globe, including their corporate office building and penthouse condo in Las Vegas, a corporate office in North Carolina, and hotels and luxury resorts in and outside of the U.S. Harron pled guilty and awaits sentencing. Her hubby Timothy Mark Harron still faces federal charges.

An Iowa stand-up comic could sit in jail for up to five years for stealing disability payments. Dustin Ruzicka took more than $123,000 in benefits while earning over $164,000 selling Visalus weight loss products during the same timeframe. Meanwhile, on social media, Ruzicka showed off his BMW and claimed he retired in 2011 because of his financial success with Visalus. Ruzicka claimed on his disability paperwork that he had daily leg pain, and that his ability to walk, stand or sit was limited. However, these claims didn’t stop him from promoting or performing stand-up comedy. The feds were kind enough to sit in on one of his Cedar Rapids performances. They witnessed Ruzicka kneeling to wire sound equipment, climbing a ladder to prepare for his show, all while standing on his feet the entire time without having to take a break from the pain. No word on Ruzicka’s comic material, but the agents clearly didn’t find his bogus claims funny. He awaits sentencing.

Dr. Yolanda Hamilton falsified info used to make patients fraudulently appear eligible for home health services. The Harris County, Tex. woman owned and operated HMS Health and Wellness Center. She paid patients to receive home health services,  which were often medically unnecessary or not provided. Hamilton also required home health agencies to pay illegal kickbacks, which Hamilton disguised as a “copay,” in exchange for Hamilton certifying and recertifying patients for home health services. She often refused to release the companies’ paperwork until she was paid her kickback. Hamilton made over $300,000 in the scheme. She was sentenced to 5 years in prison for her crimes.

A convicted fraud ring leader took the stand against alleged co-conspirator Dr. Gregory Auzenne in a $510-million health fraud trial in Mississippi. According to Wade Walters’ testimony: Auzenne supplied large numbers of prescriptions for compounded pain and scar creams, vitamin supplements and other pills to Sunflower Discount Pharmacy. He networked through former pharmacist Marco Moran, an Alpha Phi Alpha fraternity brother. Auzenne had an assistant pull medical records for patients at Rush Health Systems. These patients fit the criteria to qualify for the expensive medications that often cost thousands of dollars per dose. Auzenne attached the scripts to their medical records, then signed and sent the scripts to Moran. The sprawling enterprise defrauded TRICARE of more than $1.5 billion. It originated in Mississippi and grew to touch nearly every state. At least 25 people have been charged, with 20 either pleading guilty or being convicted. The trial is expected to continue into next week.

A pain doc billed insurers for 24-hour workdays — at least 900 times — in a $24.6-million scheme, the feds charge in the Monmouth, N.J. area. As alleged: Morris Antebi billed for dates when he was overseas. That included trips to China, Israel, Turkey, Dominican Republic and across Europe. Surveillance caught Antebi leaving his clinic early, yet he later billed as if he saw many patients those days. He also saw some patients for only very brief periods and often did no medical exams or evaluations. Sometimes Antebi had no medical equipment or exam tables in rooms where patients met with providers. Patients also met with providers on folding chairs in clinic hallways. Antebi fleeced Medicare, Medicaid and private insurers. The suspected con lasted 6 years. He runs a chain of clinics in several cities in South Jersey. 

Pastor, agent and construction owner. Codie Malesker abused all 3 roles to steal insurance payouts intended for his church, the feds charge in the Lincoln, Neb. area. Malesker ran the Malesker Agency. He also was a pastor and board member at Faith Community Tabernacle — and partner at Shaun Peck Family Construction. The suspected scam allegedly looked like this: Malesker diverted $107,402 of legitimate and illegitimate insurance claim proceeds and refunds from policies he issued to the church. Malesker sold a policy for Faith Community Tabernacle through Sentinel Insurance. He filed a fake storm-damage claim 3 years later, falsely saying he was the church’s board president. Malesker included fake contractor and subcontractor invoices. Sentinel sent $81,859 into the church’s bank account. Malesker issued $49,088 in checks from the church account to his construction firm. He then diverted $19,238 of those funds to his personal accounts, and transferred $29,293 from the church’s account to his personal accounts. Malesker also made multiple fraudulent claims on separate policies about cash stolen from his insurance agency, and about stolen cash church donations. Malesker faces federal mail and wire fraud charges that could earn him up to 20 years if convicted.

Two men allegedly sold fake air sanitizer cards that were little more than bleach and pesticide, the feds charge in Brooklyn. The allegations: Po Shan Wong and Zhen Wu pitched “Virus Shut Out Cards.” They looked like credit cards that supposedly provided constant, on-the-go protection from COVID-19. The cards killed the COVID-19 virus by emitting chlorine dioxide, Wong and Wu claimed. Yet chlorine dioxide is a bleaching agent and pesticide. The gas can cause severe respiratory problems. Wong and Wu pitched their cards via the JCD Distribution website, Facebook and phone calls. Ads showed people wearing the cards on a lanyard around their neck, or on the lapel of a man’s suit. The cards were sold in minimum batches of 50, at $9.50 per card. Wong and Wu each face up to a year in prison when sentenced.

A businessman sold fake health coverage to consumers, the feds allege in El Paso, Tex. The feds suspect: Daniel Steadley lied to customers that he was an attorney, an expert in healthcare law, and a military vet. Steadley falsely claimed his plan complied with the ACA. Among the false marketing pitches: The plan provided minimum essential healthcare coverage; plan members wouldn’t owe taxes for not complying with the ACA; his plan provided specific benefits such as maternity and hospitalization; and the plan covered work by specific healthcare providers. Steadley caused victims to issue IRS Form 1095 to insurance agents and plan members. The forms falsely stated Steadley’s companies provided minimum health essential coverage. He’ll spend up to 20 years in federal prison if convicted.

A member of the public has standing to sue as a whistleblower on behalf of the state regardless of whether they suffered direct financial damage, the Illinois Supreme Court ruled in a major victory for the fraud fight and the Coalition’s amicus program yesterday. The state does not have to incur a monetary loss before empowering residents with important information about suspected insurance fraud to file whistleblower lawsuits in Illinois. The ruling was handed down in State of Illinois ex rel. Leibowitz v. Family Vision Care. The state Supreme Court firmly agreed with positions in the Coalition’s amicus brief seeking to uphold the constitutionality of the Illinois Insurance Claims Fraud Prevention Act — whistleblower law. Any member of the public has standing to file a civil suit under the whistleblower law as an “interested party” if they have nonpublic information about anyone who knowingly made fraudulent claims with private insurers. The whistleblower doesn’t have to suffer direct injury from the fraudulent claims, the court ruled. In the Leibowitz case, the whistleblower “interested party” was a former employee of the defendant. The court also upheld the constitutionality of the whistleblower act because the state suffered an “injury in fact” solely by virtue of its insurance-fraud laws being violated — even though the state did not suffer any direct economic harm. The state thus had a right to civil penalties, and it was constitutional for the state to partially assign to members of the public the state’s right to enforce those civil penalties by filing a civil suit under the Whistleblower Act, the court ruled. Defendants face penalties of $5,000-$10,000 per fraudulent claim, plus penalties of up to 3 times the fraudulent claims, under the state’s whistleblower law. Recoveries are split between the whistleblower and state. The Coalition thanks the law firm of Katten Muchin Rosenman, LLP and its lawyers Ross Silverman, Jonathan Marks, John Reale and Matthew Ryan, for preparing the Coalition’s amicus brief and helping achieve a successful decision.

 Also this week, the Coalition filed its latest amicus brief with the Pennsylvania Supreme Court. The Keystone case addresses issues of separation of powers and compound pharmaceutical abuse. The Coalition thanks the Katten and Marshall Dennehey law firms for their assistance on these important cases.

The National Rifle Association has agreed to halt insurance sales in New York after selling insurance without a license in the state and concealing that it routinely kept some premiums for itself. The suspension lasts 5 years under the settlement with the state Department of Financial Services. The settlement resolves charges over the NRA’s 2-decade relationship with insurance broker Lockton Companies, including the sale of 28,015 policies to New Yorkers and the NRA’s receipt of more than $1.8-million in related royalties and fees. The NRA’s “Carry Guard” program illegally offered policyholders coverage for criminal defense costs and the “intentional” use of firearms in shooting incidents, the department says. The NRA also allegedly misled gun collectors, dealers, instructors, clubs and shows by promising coverage at the “lowest possible cost.” Yet the group typically kept 13.7%-21.9% of premiums paid, the state says. The NRA says it didn’t underwrite its insurance programs. Like “countless” affinity groups, the NRA insists, it relied on industry experts to market products to members. The NRA doesn’t admit to wrongdoing in agreeing to settle. 

Kaiser Foundation Health Plan of Washington reached a $6.3-million settlement with the Justice Department to resolve allegations that it manipulated patient diagnoses to receive inflated payments from the Medicare Advantage program. “When insurance providers take advantage of Medicare and falsely claim that they are entitled to repayment for unsupported diagnoses, American taxpayers suffer in the form of higher costs,” U.S. Attorney James Kennedy, Jr. of the Western District of New York says. The settlement resulted from a whistleblower lawsuit filed by a former Kaiser employee who alerted authorities to the irregularities in the MAO’s diagnosis reporting.

We’d like to welcome one of our newest members, Frankenmuth Insurance, into the Coalition.  The company recently celebrated its 150th year in business and has grown from its humble beginnings in Michigan to be represented by more than 600 independent insurance agencies in 15 states. Frankenmuth offers commercial, personal and life insurance to its customers. The insurer was recognized as an A.M. Best “A” rated company and a Ward’s 50 Property-Casualty Top Performer in 2019, 2018 and 2017. The Coalition boasts membership from the best in the consumer advocacy space and the insurance industry. Frankenmuth’s “neighbor-to-neighbor” approach will fit right in! 

The South Carolina Department of Insurance also has joined the Coalition. It’s headed by Raymond Farmer — who’s also NAIC president. The SCDOI protects South Carolinians from insurance fraud, supports the public interest, and implements and enforces the state’s insurance laws. We look forward to having the SCDOI and Director Farmer’s support for years to come.

 How do you make your fraud case to trial in a pandemic? How do investigators and counsel succeed in today’s strange new courtroom world of Zoom and facemasks? Four of the nation’s leading insurance attorneys revealed winning legal strategies in an exclusive Coalition webinar — Master the Pandemic PlaybookView the free webinar replay. Tripwires must be overcome at every step. Witnesses and jurors may be wearing facemasks. How do you “read” them correctly? With video EUOs and depositions, how can you tell if someone else is in the room coaching their responses? How do you read their body language by Zoom? Even small details such as ensuring proper system compatibility and bandwidth can make a difference. With many cases stalled and backlogged, consider settlements and other legal strategies. Equally important is to have your cases 100% “buttoned-up” and ready to have the best chance of being heard in a cluttered docket. The presenters: James Hailey (Lewis Brisbois). Gary Reinhardt (KPM Law); Dennis Kass (Manning & Kass); Fred Karlinsky (Greenberg Traurig).
 A private nurse is suspected of stealing from Medicaid in Wisconsin … An Iowa doc is sentenced for prescribing unneeded pain meds … Authorities in Nevada bust apparent firearms and fraud lab.