Fraud News Weekly

Friday, October 23, 2020


Surprise medical billing continues to be a major issue, and legislators in Michigan are taking action. Gov. Gretchen Whitmer received a bill mandating medical providers give notice to patients of out-of-network costs at least 14 days before scheduled procedures. If the patient objects to the extra costs, the out-of-network provider has the option to perform the service and accept either 150% of the Medicare reimbursement rate, or the average in-network reimbursement rate the insurer normally pays. For emergency procedures, where advance notice cannot be provided, charges would be capped at 125% of the local Medicare reimbursement rate. The legislation had overwhelming support and the governor is expected to sign the bill into law as a consumer protection initiative. 

California Insurance Commissioner Ricardo Lara issued an SIU Bulletin to make insurers fully aware of important changes in California’s new SIU regulations, which went into effect on Oct. 1. Lara focuses on revisions to Section 2698.38(d)(9) of the California Code of Regulations (CCR). Specifically, the change modifies the questions posed to insurers when filing an EFD-1 summary. Here are the newly revised questions:

  1. What facts caused the reporting party to believe insurance fraud occurred or may have occurred?
  2. What are the suspected misrepresentations and who it was that allegedly made them?
  3. How is the alleged misrepresentation(s) material, how do they affect the claim or transaction?
  4. Who are the pertinent witnesses to the alleged misrepresentation and what documentation exists?
  5. Include a statement as to whether or not the investigation is complete.

All EFD-1 submissions made to CDI after Oct. 16 must reflect the revised questions. Referrals prior to that date may still use the questions in place before the regulatory change.

“The pandemic has led to an exponential growth in telehealth utilization,” Kathleen Birrane, Maryland’s insurance commissioner, recently told two House Health and Government Operations subcommittees. She backed up her report with some pretty shocking numbers. Prior to COVID-19, Maryland’s 5 primary insurers covered 719 telehealth visits, on average, per month. By April, the average spiked to nearly 48,000 visits per month. While the summer numbers showed a decline, telehealth now accounts for 85% of all patient/doctor interactions in the state according to the report. Conclusions regarding the longer-term impact remain unknown, says David Cooney, Associate Commissioner for Life and Health at the Maryland Insurance Administration. He noted insurers have adapted quickly. “Across the board all the carriers acknowledge there’s no way we’re going to be returning to pre-COVID levels, and a lot of this increased utilization is here to stay,” Cooney said.

Connecticut residents are being warned about the risks of seeking protection through Healthcare Sharing Ministry programs by the state’s Insurance Commissioner, Andrew Mais. In a special bulletin released this week, Mais points out such offerings are not health insurance plans, nor do they meet Affordable Care Act requirements. He wants consumers in his State to know ministry plans are not an authorized insurance product. They do not fall under the jurisdiction of insurance regulators if any problems arise. The warning comes almost 1 year after Mais issued a cease and desist order against a health care sharing ministry the DOI asserted was operating illegally as an insurance provider. “Consumers should research, prior to purchasing a product, if it comes with protections required by Connecticut and/or federal law and is marketed by a licensed insurance carrier or licensed broker in Connecticut,” Commissioner Mais said.

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

Save the date: Fraud fighters are rapidly learning a new playbook for tricky legal issues in crafting civil and criminal cases during today’s arms-length pandemic. Discovery … EUOs … venue … witnesses … jury selection … trial management. Many of the familiar rules of the road continue changing fast. So save the date for a one-of-a-kind Coalition webinar: Master the Pandemic Playbook: Legal Strategy & Fraud, 1 pm (EST), Tuesday, Nov. 17. Four of the nation’s top insurance attorneys will share practical, actionable advice on crafting your cases — civil and criminal. You’ll hear more details shortly. Your nationally known panelists: James Hailey (Lewis Brisbois) … Fred E. Karlinsky (GreenbergTraurig) … Dennis Kass (Manning & Kass) … Gary Reinhardt (KPM Law).

Just hang up. That’s the scam warningthe New York Alliance Against Insurance Fraud urges for the state’s 2.3 million seniors during Medicare’s open enrollment period (Oct. 15-Dec. 7). Scam artists step up their game during open enrollment. Swindlers phone seniors with sham Medicare deals and even threats of lost coverage. Deceptive phone spoofing can make calls appear to come from an official or approved Medicare source, the New York Alliance says. Hang up and don’t engage unsolicited callers claiming they represent Medicare — the federal health program doesn’t call seniors with health plan deals. Also ignore pressure tactics and threats. Scam callers threaten seniors with loss of Medicare coverage or “special discounts.” All to try and trick seniors into giving up their Medicare and other info to sign up for sham Medicare deals, the New York Alliance urges.

A pill mill doc kept spooning out opioids while ignoring red flags that doctor-shopping patients struggled with addiction. Dr. Richard Stehl was handed 15 years in federal prison in Montgomery, Ala. Amanda Bagents said her addiction peaked when she took 1,500 milligrams of the painkiller Tramadol every day. Stehl even confronted Bagents about her doctor shopping but kept prescribing to her. Several patients testified their addictions worsened under Stehl’s prescribing. He prescribed 11 different different types of controlled meds to another patient. The patient ODd twice, though Stehl kept prescribing the med he overdosed on. The case against Stehl began when a patient’s family grew concerned the doc was over-prescribing controlled meds, and reported Stehl to the state medical board. Stehl ranked in the top 1% of Alabama docs for prescribing opioids in 2018. Stehl underwent professional evaluation in 2012 after 2 women reported him for “inappropriate sexual advances.” 

An electrician’s $125,000 workers-comp scam was short-circuited. Michael Ray Williams claimed a work injury and started receiving benefits from the State Compensation Insurance Fund, in California. The Daly City man began working for another employer while taking in state workers-comp money. He then claimed another work injury and started receiving comp money from Travelers Insurance. Williams worked for 3 different employers between March 2015 and November 2016. At one point, he collected money from the state comp fund and Travelers for 2 claimed injuries, while continuing to work. Williams lied about his level of injury, abilities, earnings and employment status to the state fund and medical providers. He also lied to the Qualified Medical Examiner to collect permanent disability after exhausting his temporary benefits. And he was charged with using a former employer’s credit card for personal expenses, including an engagement ring. Williams pled guilty and received 60 days in county jail. He’s repaid $40,000 to the state comp fund, and also must repay Travelers and his former employer.

Eugene Gosy will spend 5 years in prison for operating a Western New York pill mill. He pleaded guilty earlier this year to conspiracy to distribute controlled substances and healthcare fraud. Authorities say he was the top controlled substance prescriber in the entire state. Gosy was fast and loose with his prescription pad, handing blank scripts to allow others to fill them out; prescribing opioids without exams; and issuing doses and drug combos that could harm his patients. On top of his controlled substance endeavors, Gosy also signed death certificates without an autopsy or medical exam.

A Miami pill mill operator who distributed 11 million tablets of oxycodone, oxymorphone, and morphine was sentenced to 33 years in prison. Sylvia Hofstetter operated multiple pain clinics in Florida and Tennessee. Hofstetter’s operation began in Hollywood, Fla. where she worked in an illicit clinic for 3 of her co-conspirators. Her team began making plans to move to East Tennessee when law enforcement sweeps began shutting down hundreds of pill mills in South Florida. Hofstetter stepped into the role of operator, once the operation relocated to Knoxville, Tenn. Prosecutors say Hofstetter’s role in Tennessee was to run the pill mills and ensure that patient volume remained high. Once in Tennessee, however, Hofstetter opened her own pill mills in secret from her Florida employers and went into competition against them. Hofstetter personally reaped over $4 million from her role. Hofstetter was convicted of RICO conspiracy, 2 counts of drug conspiracy, money laundering and maintaining drug-involved premises. 

April Rose Ambrosio falsely claimed she performed 800 root canals on 100 patients within a 4 year timeframe. Investigators learned Ambrosio billed for work on days her office was closed or she claimed to be on vacation. Her fraudulent billing practices were brazen. For one family of 4, she billed insurance companies for more than 100 root canals in a 90-day period. Ambrosio even billed for root canals performed on non-existent or missing teeth. She also double billed for teeth she previously claimed to have performed root canals on. Ambrosio’s license to practice dentistry was suspended on Sept. 24, 2019. The California dentist was handed a 6-year sentence for fraudulently billing multiple insurance companies nearly $900,000 to reap more than $400,000 in personal profit.

A 285-pound body fell on police chief Brenda Lynn Cavoretto during a police call in a barn — inflicting back, shoulder and abdominal injuries. So said the top cop in a small town in Grant County, Wash. Cavoretto also claimed such severe PTSD that she couldn’t work, leave her house or be around other people. Cavoretto collected $67,000 of workers comp. Except this allegedly occurred: Cavoretto worked as a pinup model under names such as Tuff as Nailz, and The Black Widow Bette for nearly 5 years. She posted on social media that she appeared as a model and photographer in 52 publications — including 3 magazine covers and 3 calendars. Some of her pinup activities were through a modeling, event and photo business. Her pinup work was a “fulltime job,” Cavoretto told a crowd at a bar and grill in Snohomish County. Cavoretto faces workers-comp fraud charges after an investigation led by the state Department of Labor and Industries.

A New Haven, Conn. man stole identification data from individuals enrolled in the city’s adult and continuing education programs, prosecutors say. According to authorities: Cortney Dunlap, who worked as a New Haven Board of Education Adult Education employee, accessed a database to obtain students’ birth dates and Social Security numbers to determine who was insured by Medicaid. Once his targets were identified, he fraudulently billed for psychotherapy sessions that never happened. Dunlap billed Medicaid for more than 24 hours of psychotherapy on 67 different dates in 2020. Dunlap billed Medicaid for fraudulent psychotherapy services for workers at Inspirational Care, Inc., a company he owns that provided in-home and community-based services to persons with disabilities. He also required survivors of domestic violence living in group homes operated by his company to provide copies of their Medicaid cards. He later billed for therapy services he did not provide.

Massachusetts has filed a False Claims Act complaint against CleanSlate Centers Inc. CleanSlate Centers Inc., a national addiction treatment center chain formerly headquartered in Northampton for allegedly submitting millions of dollars in false claims to the state’s Medicaid program. AG Maura Healey alleges the chain submitted millions of dollars in false claims to MassHealth for urine drug tests that were medically unnecessary, and violated federal and state self-referral laws because the tests were performed at their own laboratory. In 2017, CleanSlate Centers and Total Wellness Centers LLC agreed to pay $750,000 in a settlement with the U.S. attorney’s office for improperly prescribing and billing for the opioid Suboxone.

The world’s leading reinsurer Swiss Re is rejoining the Coalition. While primarily known for its reinsurance portfolio, Swiss Re Corporate Solutions, Ltd is a division that provides direct lines of insurance for mid to large sized commercial businesses. Its corporate solutions operation has a keen interest in engaging in the fraud fight with its SIU unit run by Vice President Kimberly Beaudreau. Beaudreau says she often shares compelling cases, trends, and other fraud news with her team, generated by the Coalition. She also finds great value in the legislative and regulatory updates pushed out by the Coalition. “Compliance is an ever-changing and growing piece for any fraud unit and the Coalition does a great job of keeping us up to date,” said Beaudreau. Despite the disruptions caused by COVID-19, the Coalition’s growth continues to more than 220 members. We are thrilled to welcome Swiss Re and its tremendous industry influence back into the Coalition.

In the face of an ever-growing array of large and small scale cyber attacks, state fraud directors, SIUs, and other fraud fighters need to get up to speed as the use of cyber insurance grows. Insurance companies have begun offering personal cyber insurance to policyholders as a way to mitigate the risk of threats such as ransomware attacks state fraud directors, SIUs, and other fraud fighters need to get up to speed as the use of cyber insurance grows. 

Insurance companies have begun offering personal cyber insurance to policyholders as a way to mitigate the risk of threats such as ransomware attacks. Cyber attack insurance, which is often sold as an add-on to homeowners insurance, could include coverage for a range of risks including:

  • Cyber attacks 
  • Cyberbullying 
  • Cyber extortion
  • Data breaches
  • Online fraud

These policies may also include additional services such as access to fraud specialists; cyber monitoring; lawsuit protection from online libel or slander suits; data recovery; and restoring financial and personal identification documents. The relentless attacks of cyber scammers have unwittingly created a new insurance product and market for insurers. And with every new line of insurance, novel scams and fraudulent claims are sure to follow.