Fraud News Weekly

Friday, May 29, 2020


* Before COVID-19 disrupted state legislatures, insurance cybersecurity bills to protect consumers were at the forefront of many statehouse agendas. The NAIC rolled out its Insurance Data Security Model Law in late 2017. The model has been enacted in 8 states. Pressure to adopt the model has grown due to the coronavirus pandemic. The UN, for example, reports a dramatic 600% rise in phishing scams and cyberattacks occurring every 39 seconds. Worldwide efforts to fight back include joint communiques issued by key U.S. and UK cyber-security agencies. All of this has state legislators ready to enact stricter laws for data security in America’s insurance markets. Here are the 2 latest bills:

Louisiana. A cybersecurity bill is moving swiftly in Louisiana. Among the provisions:

• Creating standards for data security, and for investigating cyber breaches involving insurers.

• Mandatory notifying the commissioner of cyber security events involving any insurance licensee.

• Requiring all licensees to maintain a comprehensive, written data security program.

• Authorizing the commissioner to revoke or suspend a license for violations, and impose fines.

The measure passed the House unanimously last Friday, and is already before the Senate Insurance Committee.

Rhode Island. Just before the shutdown, Sen. Mark McKenney introduced a bill that tracks the NAIC model language. The legislation is assigned to the Senate Insurance Committee. What happen next is unclear with the legislature’s sessions currently cancelled due to the virus. A planned adjournment in mid-July, however, may be extended. If the bill moves forward, it’s likely that even more-restrictive amendments will be debated in committee and on the floor. Rhode Island is known for aggressive insurance regulation. Several other anti-fraud bills also are being considered, such as vehicle inspections and patient brokering.

* COVID-19 may have taken its toll on 2 Kansas fraud bills that stalled when the state legislature suspended its session for the year in March. One Coalition-favored bill would’ve expanded the authority of the commissioner and appointed investigators, including granting them subpoena powers, ordering of depositions and seeking contempt orders from the courts. All would’ve been important fraud-fighting tools. … Consumers and insurers alike would’ve been shielded from surprise medical bills under a measure prohibiting health insurers from engaging in balanced billing. Policyholders also would’ve been responsible only for in-network billing rates — and required the insurance commissioner to set up a dispute-resolution plan to resolve conflicts between insurers and health providers. Legislators suspended their session on March 19, and will wait until January 2021 to return. Initial prospects look good for both proposals to move forward at that time.

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


Consumer resource alert: Even with a pandemic, insurers and others are gearing for International Fraud Awareness Week, Nov. 15-21. Now is prime planning time — and the Coalition has resources to support your efforts. Check out the Bright Ideas resource toolkit. Ideal if you’re educating staff, consumers or policyholders. You’ll find high-impact videos, infographics and amazing cases. … Adopt COVID-19 or contractor infographics with your name, URL and logo. … Coalition scam alerts can be adapted to your event and format. … The Hall of Shame and Fraud of the Month have over-the-top cases to perk up presentations and the company intranet. Videos and infographics are exclusive Coalition member benefits. To customize with your name, URL and logo — just contact Kendra Smith.

* Pandemic distancing or not … homeowners will need contractors to repair homes with wind and hurricane season nearly here. People won’t need the crooks. Learn about new contractor swindles and advise consumers during a Twitter chat 1-2 p.m. (EST) Tuesday, June 2. #NoContractorScams. Just direct message us to participate. It’s a great chance to weigh in, learn, advise and set the record straight about cheaters. The Coalition is teaming with our partners AARP and NICB in this event.

* Reports of shady “free” roof inspections are surfacing around the U.S., the BBB reports. Homeowners receive a call or a person shows up at the door, claiming to represent a roofing company. Con artists often combine the state’s name with “Roofing” or “Construction” as their business name. The “roofer” offers a free inspection. The person may claim they’re working on a neighbor’s home and are offering inspections to those living nearby. But if you ask where the business is located or how their services work, you get vague answers. Or if you’re speaking on the phone, they may simply hang up. An “inspector” shows up at your house if you accept the “free” inspection. If they don’t find enough damage to merit a new roof, they may tear off shingles to mimic wind damage. Or they may simply show you pictures of someone else’s damaged roof.

* How does the pandemic affect insurers and best practices in combatting fraud? It’s all changing so fast. A new webinar will arm fraud fighters to stay ahead of criminals who exploit the pandemic for profit. Register today for a COVID-19 webinar at 12 p.m. EDT, June 4. What are the latest COVID-19 scams affecting insurers? … How do you investigate safely in the field? … How to integrate technology with boots-on-the-ground fraud fighting? … How are states tracking and sharing info on surging pandemic claims such as vehicle giveups? Find the answers to these and more essential fraud-fighting questions. More than 800 people have signed up. Register now — and find out why.

* You’re back on the front lines with an info-packed TV show warning about the influx of COVID-19 scams in New York — 11:30 a.m. this Sunday on WCBS TV (Channel 2, NYC). It’s hosted by nationally known consumer reporter Tiffany Aliche. The show is another outreach success of the New York Alliance Against Insurance Fraud. Heading the interviewee team is Jim Potts, NYAAIF chair … Matthew Smith, the Coalition’s Executive Director … and a senior state consumer advocate. Click here for a sneak preview.

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


* New details are surfacing from court records about a $31.7-million slip-and-fall ring that was earlier dismantled in New York City. Runners recruited hundreds of low-income New Yorkers — some from homeless shelters — to stage phony slip-and-fall accidents around the city. The recruited “plaintiffs” were bribed with cash, often to get unneeded surgeries from colluding medical providers. The surgeries included discectomies, spinal fusions, non-surgical epidural injections, and knee and shoulder operations. Bryan Duncan was a ringleader. He recruited patients, organized their legal and med appointments, and helped procure funding for treatment and lawsuits. Duncan and his partner Kerry Gordon started case-management and legal-funding companies, making over $1.5 million. Robert Locust and Ryan Rainford recruited patients, took them to med and legal appointments, IDd accident sites, paid the recruited patients, and coached them how to fake injuries. Inflated lawsuits were filed against property owners and insurers, seeking damages for sidewalk cracks and other claimed defects. The latest convictions were handed down earlier this year.

* A doc used her OB-GYN practice to front a pill mill. Dr. Felicia Lyn Donald distributed more than 1.2 million milligrams of opioids at or above CDC dosage guidelines in Northern Virginia. The drugs had a street value of more than $1.2 million. Donald also illegally distributed at least 325,190 milligrams of oxycodone and other opioids. And she illegally prescribed opioid pills to a close associate, who sold them on the streets. Donald also issued prescriptions to the associate for alprazolam pills, which can prove fatal when combined with opioids. Further, she issued prescriptions for high doses of oxycodone to pregnant women. Donald falsified medical records to make it seem she treated people she never examined or gave medical care. She also bilked Medicare fraud. Donald pled federally guilty and will be sentenced Aug. 21.


* Towing schemes broke out in a Wild West spree of murder, turf wars and insurance crime in the Toronto, Canada area, officials allege this week. Police made 19 busts after investigating warring operators. Prosecutors charge: Towing cartels morphed into organized-crime gangs with escalating violence and insurance fraud. Tow truck firms colluded with body shops, car rental companies and even physical-therapy clinics to inflate insurance bills for repairs and fake injury treatment, the Guardian reports. Some rogue towing firms staged crashes to illegally boost insurance profits. Body shops enhanced or invented damage to the cars. At least 4 murders and 30 arsons also are connected to the turf war. One victim was Carr Law, a firm hired by insurers to contest bogus claims. The firm’s office was set ablaze early last year. Soon after, a gunman assaulted and robbed an employee in the parking lot. Next, a volley of shots blasted through the firm’s windows during business hours. Police seized 11 tow trucks, more than 40 firearms plus drugs, the BBC reports. More arrests are expected. Only 17 of the Ontario province’s 444 municipalities require licensing. A news conference announced the takedown, which included U.S. insurers and Coalition members writing in Canada.

* Two more suspects were busted in an ongoing probe of towing crime in Mobile, Ala. The city’s towing issues arose last summer after local law enforcement accused several towing companies of price gouging customers and charging them more than legally allowed by the city’s towing ordinance. Not long after announcing the probe into the industry, AL.com discovered that the Mobile Police Department impound lot was also overcharging customers for towing services and storage since at least late 2015. Some in the towing industry claim the practice has been going on for more than a decade, news reports say. Criminal warrants were issued to the owners of 4 towing companies.

* A pharmacist in New York City bought thousands of rare N95 masks on the black market and sold them at much higher prices during the early stages of the COVID-19 pandemic, the feds charge. This allegedly happened: Richard Schirripa bought $200,000 of masks and charged up to $25 per mask. He sold most from the trunk of his Audi just as the pandemic arrived full force and masks were hard to find. Schirripa was recorded selling 16 boxes of N95 masks to a customer on a Manhattan street. Agents recovered 6,660 masks from Schirripa’s house on Long Island, his apartment in New York City and his car. Schirripa also falsely billed Medicare and Medicaid for opioids, allegedly using customers’ personal data to fabricate prescriptions. Investigators found prescription bottles with more than 2 dozen different names on the labels. Schirripa faces than 30 years in federal prison if convicted of all charges, including healthcare fraud.

* Jeremiah Faber peddled bogus “whole body” COVID-19 tests in a bid to fleece Arizona’s state health program, the feds charge. The suspected ruse: The Gold Canyon man runs Harmony Healthcare. He used Harmony’s Facebook and other social media sources to offer free COVID-19 testing if patients completed a “Comprehensive Whole-Body Assessment.” Harmony then made false claims to Mercy Care. Faber billed for unneeded services, often using the stolen IDs of docs. He’s charged with healthcare fraud and money-laundering.

* Dead people made this Medicaid scheme come alive, prosecutors charge in Raleigh, N.C. Latisha Harron and Timothy Mark Harron ran a home-health firm called Agape Healthcare Services. As the charges unfold: They searched online obits for recently deceased North Carolinians. The Harrons extracted their names, DOBs and date of death. They then queried NC Medicaid if the deceased had accounts with the agency, or were eligible while living. The Harrons then back-billed Medicaid for up to a year of fake home health supposedly given while the recipients were alive. Medicaid paid out more than $10 million in just 3 years. The Harrons laundered the money into private jets, penthouses, jewelry, business properties and luxury resort living. They forfeited a 2017 Aston Martin DB 11 sports car, wine and liquor collection and 2016 Ford F-150 Supercrew truck. When setting up Agape, Latisha hid from Medicaid that she had a felony conviction for ID theft. The Harrons face state charges that could amount to life in prison if they’re convicted.


* “Transnational crime is well-embedded in U.S. markets. Insurance fraud is a lucrative profit center. Schemes operate across all lines of insurance, in all U.S. states,” warns BAE’s Dennis Toomey in a groundbreaking JIFA article about this global threat. “Complex criminal networks often bring together bad actors from multiple nations. Just as often, organized crime entrenched in a given nation exports its skillsets to the U.S., setting up large networks on U.S. soil. Transnational insurance fraud also is a global pandemic that is draining the resources of insurance companies, consumers and governments around the world. Complex insurance rings target also widely operate against insurers and consumers across Europe, Asia, Africa and elsewhere.”

* COVID-19 cons are truly a global menace with a 600% spike in malicious emails worldwide since the pandemic hit, the UN reports. Growing digital dependency has increased our vulnerability to cyberattacks, and about 1 such attack happens every 39 seconds. Nearly 90 countries are still only at the early stages of making commitments to cybersecurity. Yet there is some global progress at the UN: A group of government experts developed 11 voluntary, non-binding norms of responsible state behavior in using such technology.

* Nearly 52,500 Americans have filed complaints this year with the FTC over COVID-19 cons — reporting $38.6 million of losses. About 45% of consumers reporting scams say they were victims. They lost about $470 on average. Texts are trending as top scam devices, the FTC also says. A new robotext scam starts with a message purportedly from the IRS, asking to confirm info for a stimulus payment through a link. Clicking takes you to a realistic-looking IRS webpage. You’re prompted to provide your name, contact info and SSN. Once you enter the info, you’re sent to the real IRS website to make the scam look less-suspicious. … Fake COVID-19 refunds also are trending. The scammers never say what the refund is for. With so many auto insurers, utilities and others offering refunds and discounts, consumers assume it’s something like that. The robocaller says something like: “We cannot provide services due to COVID-19, but you have been charged $399. Press 1 to claim a refund.” When you press 1, you’re asked to provide your credit card info to get the charges reversed or repaid.

* The Coalition is launching a new initiative to learn more about our diverse members needs, plus seek input on added benefits the Coalition may provide. Operation Outreach responds to the Coalition’s rapid growth to more than 210 diverse member organizations. Members run the full gamut of the anti-fraud community — consumer groups, insurers, regulators, law enforcement and more. The Coalition will reach out via email and phone calls twice yearly. Former, and now retired, Executive Committee members Carmen Russo and Dominic Dugo will be program coordinators. They’ll ask about member assistance we can provide, and seek suggestions for new programs. The calls will reveal more about what anti-fraud services, info and other benefits our members want — and how we may better meet those needs. The goal is to position the Coalition to play an ever-stronger leadership role in today’s rapidly evolving anti-fraud environment.


A Tennessee woman allegedly slips her daughter onto her health policy. … A medical assistant allegedly steals prescription pads in Florida. … A Las Vegas woman is charged with running an ID-theft lab. Click on the map to read about 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.