Why worry about fraud?

Victims and damage revealed in Hall of Shame

Ok, so insurance fraud steals $80 billion a year.

Impressive number. Helpful to know — though hardly a rousing battle cry.

As a wise person said … Stats are like a drunk using a lamppost — for support, not illumination.

So what makes our blood boil? Let’s look at true-life fraud cases. They show how seedy and sleazy fraud really is. And the innocent people who are damaged by this supposedly victimless crime.

Check out the Insurance Fraud Hall of Shame — the No-Class of 2015. Real cases … real victims … real damage.

Will you be next?

Financially strapped, Mark Leonard tried to burn down his Indianapolis home for $300,000 of insurance money. He blew it — literally. The home exploded, leveling much of the neighborhood and incinerating two neighbors.

Dion Longworth lived next door. He was trapped inside his burning basement, begging firefighters to free him. Too late — Dion was burned alive. His wife Jennifer died when the super-heated insurance blast first crashed into their home.

Gloria Lee tried to burn 28 terrified puppies in their cages at her Las Vegas pet store. Luckily Lee’s own fire sprinklers helped douse the flames in time.

Spine surgeon Dr. Aria Sabit sliced open perfectly healthy people, pretending to operate on their spines. The Detroit doc also botched surgeries of patients who needed spine fusions. All for $32 million of insurance money.

Patients were left disfigured and in permanent pain. Some needed more pain-filled surgeries to correct the damage Sabit caused.

Sure, these are the extremest schemers … the masters of disaster. Yet many more innocent people are being scammed around the U.S. Some more, some less — though victims all.

So why worry about insurance fraud? We all could be next. In fact you already are … higher insurance premiums are draining your bank accounts.

Stay alert and fight back. Let’s all help make insurance fraud a dead-end street instead of a fast road to riches.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Committing insurance fraud is funny, no big deal

That’s the message of crude TV programs

I’m no fan of Fox TV’s The Family Guy. To me, it’s crude, moronic and not very funny. But I recently found myself watching a rerun that featured a plot involving insurance fraud. The three main characters got caught burning down their friend’s financially troubled pharmacy.

They pleaded with the arresting officer to let them go. “Insurance agencies are all scumbags. They deserve to get hurt,” one character says. After thinking about how his health insurer had screwed him, the cop destroys the evidence and lets the trio go on their merry way.

Cringe factor aside, I realize that this is only a cartoon and few people take the messages seriously. Yet, those messages do have an impact. They plant seeds. And over time, as other similar messages pile on, they reinforce the idea that committing insurance fraud is no big deal.

More than five million people watched this episode of The Family Guy when it first ran — the most popular program on TV that evening. The fraud-fighting community struggles to reach five million people in a year with anti-fraud messages.

I was reminded of this episode today when I saw the tweet below from a young woman who wants to secretly push her car off a cliff. How did these ideas form in her head? How can we discourage such destructive thinking?

For one, public outreach needs to be beefed up bigtime. And secondly, let’s keep our young children from watching such crude and socially irresponsible TV programs like The Family Guy. What shows are your kids watching?


Oregon needs insurance-fraud law

Would court rule against an insurer if Oregon had fraud law?

Oregon fraud failNearly every state in the union has made insurance fraud a specific crime. Oregon and Virginia are the only states without a specific insurance fraud law.

At least Virginia has a fraud unit, housed within the state police. There are robust investigations, and prosecutors use the state’s false pretense law to convict scammers.

Oregon has little anti-fraud infrastructure to call on. The governor vetoed a bill back in 1997 because it wasn’t “good enough.” Efforts to make fraud a specific crime have been garaged ever since.

And here’s the fallout: An Oregon appellate court recently ordered an insurer to pay a $10-million loss after a claimant’s expensive home burned down. The insurer suspected a misrepresentation that could’ve been fraud. The insurer refused payout, and a lower court agreed.

My first reaction was that the appellate court wouldn’t have required that payout if the state had a robust insurance fraud law. An insurance-fraud law would’ve allowed the insurer to investigate, and refer the case to a prosecutor if it suspected fraud. Instead, the court decided the claim had to be paid, without a whiff of looking at whether fraud was involved.

Some 48 states plus Washington, D.C. have insurance-fraud laws, and for the most part, they work well. They all reference willfully misrepresenting or filing a false claim. Insurers thus have a potent tool for seeking justice when they suspect a false claim. Fraud laws adroitly cover willful and knowing lies about a claim and loss.

The Oregon case involved, among other things, the cost of chandeliers destroyed by the fire. The insurer believed the claimant had misrepresented by inflating the cost of those chandeliers.

Insurance fraud laws protect insurers and consumers from schemes. Insurers can keep premiums down if convictions can help reduce pass-along cost that scams impose.

Oregon has no insurance-fraud law, dedicated fraud prosecutors, or even a state agency to lead investigations. Instead, we have state courts coming down with questionable decisions like the latest one.

It’s high time Oregon joins the rest of the nation by making insurance fraud a specific crime.

Medical ID theft going mobile?

Scammers looking to hack mobile phones for patient medical info

Mobile phones may be the newest emerging battleground in combating widespread heisting of people’s medical identities. Two recent reports provide telling evidence.

More than 25 million people will have their medical and/or personal info stolen from their health providers between now and 2019, says a new report by Accenture. That’s one of every 13 patients.

Mobile transactions form the newest arena for ID theft in general, adds a report by IDology. The report focuses on broader ID theft, with some healthcare organizations taking part. Still, it’s a warning of emerging vulnerability for healthcare providers – and their patients.

Some 8 percent of polled organizations report rising mobile scamming this year, up from 3 percent last year. Spoofing, account takeovers and device cloning are favored tactics.

“Fraudsters have become quite skilled at exploiting the many nuances that accompany mobile devices — from the millions of change events to the increasing ability of fraudsters to attack mobile technology with methods similar to what we found in these survey results — porting, spoofing, cloning and more,” IDology says.

More organizations plan to invest in mobile-based transactions, yet nearly half say they lack resources to properly manage mobile security, IDology says.

“Mobile fraud has become increasingly top of mind for businesses as the use of smart devices gains in popularity and usage. With the convenience of smart devices being able to access a consumer’s personal accounts across multiple industries, security is becoming more and more of a priority for organizations of all sizes,” IDology says.

It takes only a small leap to see how mobile hacking and security will increasingly become next big fraud problem for the healthcare industry and their patients.

Mobile transactions are rapidly becoming prime portals for healthcare transactions. Just Google “health care mobile devices.” You get 46 million hits.

For more information on medical ID theft, check out the Coalition’s latest podcast.

HHS also is warning healthcare organizations about mobile security. We’re looking at a double security problem. The vast digital highway of healthcare records and record sharing, combined with a growing migration of everyday transactions to mobile devices.

With the healthcare sector accounting for nearly 43 percent of data breaches — the highest percent — the U.S. healthcare sector remains the largest target for sophisticated hackers. The 80 million records stolen in the famous Anthem breach drives that point home poignantly.

Health records are far more valuable to black marketeers than standard credit card info. Each record can easily command up to $50 in sale value compared to $1 or so for credit-card info. Why? Health claims can steal many thousands of dollars before they’re discovered and shut down. Credit card scams often are discovered and stopped in real time.

Nearly 2/3 of consumer victims each pays an average of $13,500 out of pocket to clear up the mess, says an earlier report by Ponemon Institute. That also can siphon hundreds of hours. Nearly half of frustrated patients will find another healthcare provider if they learn their personal records were hacked. The cumulative cost to breached providers will reach $305 billion by 2019, Accenture adds in its analysis.

So the Next Big Thing in medical ID theft may be little mobile phones. Younger mobile-savvy consumers, especially, should ask what their health providers are doing to ensure the safety of mobile-shared health transactions.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Surprise medical bills

Out-of-network charges a growing fraud ruse?

A patient goes to a medical facility for a surgery. Maybe a hospital or outpatient clinic. He checks to ensure the facility is part of his health-insurance network, and that it will cover his bills.

Then after the surgery … a surprise: A whopping bill from an out-of-network anesthesiologist who doesn’t take the patient’s insurance. The stunned patient has to pay several thousand dollars from his own pocket.

The facility is in-network, the primary medical provider is in-network. Then a consulting provider is brought in to treat the patient, and that person is out-of-network.

Many such charges could be unfair and abusive. Some could be fraudulent.

Uninsured billings are occurring more often. Consumers and insurers both are surprised. Yet the finger of public opinion typically points at insurers for supposedly having too few providers the patient could turn to. Or for simply not paying bills in general.

One insurer has sued hospitals and other facilities, alleging fraudulent out-of-network billing and kickbacks. Fraudsters may have discovered a large loophole in the healthcare billing system.

More states are stepping up to the plate and working to control this practice.

At least a dozen states restrict surprise billing. They should go farther.

New York, for example, requires insurers and health facilities to notify patients of expected out-of-network billings. New York also has a dispute- resolution procedure requiring providers to bill only for in-network cost sharing.

The National Conference of Insurance Legislators is developing a model bill based on New York’s law. NCOIL is working to complete the model in 2016.

California requires contracts between the network providers and insurers to disclose up-front to patients out-of-network providers who may provide care — and the estimated cost of that uninsured care.

Many health plans also are doing away with annual caps for policyholders’ out-of-network costs, leaving consumers facing unlimited financial exposure.

Patients shouldn’t be forced to pay high, surprise bills from in-network facilities. And insurers should be protected from billing and kickback scams disguised as routine out-of-network billings. There’s nothing routine about these charges.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Feds to snoop in private payroll data for disability cheats

New law could threaten privacy and be a headache for businesses

Congress recently passed legislation to shore up the funds dispersed to Social Security disability recipients. Included is a four-page bill allowing the feds to check private payroll data and see if people on the disability rolls are double dipping by collecting while working.

The provision is a sound fraud-detection tool that also would deter ineligible people from stealing benefits.

But concern is emerging about potential unintended consequences. Privacy advocates question whether giving the Social Security Administration the power to datamine private payroll might lead to fishing expeditions and abuse.

Business groups worry that requirements might impose a burden on employers to provide the data. Plus, they’re concerned about lawsuits filed by workers for sharing confidential payroll information.

The devil will be in the details when the SSA drafts regulations to implement the new law. The Coalition will review the regs when published. We’ll encourage regulators to balance the potential anti-fraud benefits against concerns by those that may be affected negatively.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Taking the wind out of airbag scams

Salvaged junk airbags dished to drivers — N.Y. insurers alert consumers

Trafficking in junk airbags earned a salvaged-car dealer an unwanted date with New York’s AG. And a brisk rebuke from insurers in the state.

The incident also makes you wonder … How many people are driving with unsafe and potentially death-dealing airbags tucked into their steering columns and passenger areas?

Don’s Automotive Mall illegally sold possibly hundreds of recycled airbags pulled from salvaged cars, the AG charges. Don’s denies all, yet agreed to test all salvaged airbags before selling them. A $12,500 fine drove home the point.

Those bags have filtered throughout the U.S. Nobody knows where they all went. Drivers and passengers could face injuries and death if the salvaged bags don’t deploy in a crash.

Luckless motorists have died in unrelated crashes when crooked body shops stole their airbags during repairs. Cheaters have filled airbag compartments with beer cans, sneakers, Styrofoam peanuts and other stuff. Great protection.

New York insurers rapidly responded to the AG’s agreement, launching a statewide news campaign.

“The flood of unsafe knockoff airbags places drivers and passengers at risk of severe injury during auto crashes. Tens of thousands of unsafe airbags are believed to be in circulation across the U.S. In fact, several injuries and deaths have been attributed to knockoff airbags,” the New York Alliance Against Insurance Fraud said.

Salvaged cars have been dunked in floodwaters, soaked by storms, reclaimed from crashes. An airbag module soaked by grimy floodwater and sludge, for instance, is a lousy bet to open in a collision.

The airbag could be a party balloon, for all the protection it gives.

A Chinese national was busted several years ago. His factory in China churned out knockoff bags cleverly disguised to look like real ones made by mainstream carmakers.

Dai Zhensong tried to flood the U.S. with hundreds of thousands of junky airbags. Some exploded like hand grenades and shot shrapnel into crash dummies when the feds tested them.

Like the bags from the Don’s salvage firm, nobody knows how many of Zhensong’s knockoffs are lurking inside vehicles. Fortunately, his scam was dismantled and he was handed three years in federal prison.

Frontline airbag specialists have privately told me they see junk airbags all the time.

The New York Alliance launches statewide outreach programs to educate consumers about insurance cons — and how people can defend against predators.

The group offers common-sense airbag advice:

  • Make sure your dashboard airbag light comes on for a few seconds when the car starts — especially if the car was repaired recently. If the light stays on, starts flashing or doesn’t flash on at all, the airbag system probably isn’t working;
  • After your car was serviced, check the body shop’s invoice to make sure the airbag came from a legitimate car manufacturer, dealer or recycler;
  • Deal only with a registered New York shop. It must have a green and white sign that says “Registered State of New York Motor Vehicle Repair Shop.” The shop also must have a valid Department of Motor Vehicles (DMV) registration certificate; and
  • When shopping for a used vehicle, get its history report from commercial services. If you discover the vehicle was in a major crash or flood, have a certified mechanic or airbag technician check it out before buying.

Wise words — whether you live in Rochester, Chicago, Walla Walla or Waco.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Drugs killing more White Americans

Stronger anti-abuse efforts needed to stem death spike

A recent study by a 2015 Nobel Prize winner has raised eyebrows: We’re seeing an increase in deaths of mid-life White Americans, partly due to our epidemic of drug addiction.

A professor of clinical psychology goes a step further in an op-ed. Richard Friedman points the finger at healthcare providers who’ve increased prescribing addictive pain medication to patients who may not need such strong narcotics.

Several years ago the manufacturer of OxyContin weakened the drug’s addictive properties. Many Oxy addicts then turned to illicit drugs. Heroin addiction thus is spiking, taking its toll in rural and suburban America more than in large urban areas.

Insurance fraud also is a large financier of prescription abuse. False prescriptions by doctors, pharmacists and addicts are putting narcotics into the hands of addicts, the Coalition wrote in Prescription for Peril. Strong state prescription drug monitoring programs are necessary to help stem the epidemic. The new morbidity study supports everything we say.

News stories routinely profile law-abiding middle-class men and women being investigated for doctor shopping and prescription addiction. The latest morbidity study adds a new wrinkle: An increase in the deaths of mid life White middle-class Americans — and not because of famine or war.

Nearly all states have databases that track prescription drug use by patients, and prescribing patterns by medical providers. A key goal is to head off abuse of drugs that often are charged to insurers as false claims. Yet only some prescription monitoring programs are fully funded and functional. The rest have leaks that can let addicts all-too-freely obtain painkillers and other drugs.

More states are working to plug the gaps. In fact 13 states recently began requiring physicians and pharmacists to check their state’s database before prescribing and dispensing narcotic drugs for new patients who claim acute or chronic pain. Providers also must regularly check while patients are being treated.

Workers-comp and health insurers have skin in the game — they pay billions a year in false prescriptions. Their involvement in state anti-abuse efforts also should be encouraged. Overdose deaths from prescription opioids have quadrupled in the U.S. since 1999, says the Centers for Disease Control. So have opioids prescribed and sold in the U.S. All the while, Americans still report the same amount of pain.

The feds are pumping a cool $20 million into preventing overdose deaths from painkillers and other addictive meds. The cash influx goes to 16 states from the CDC.

Medicare drug abuse also is growing. A new U.S. Senate bill would move pushback efforts several steps forward as well.

So fraud fighters, insurers and health policymakers must encourage and support these programs. Stronger state prescription monitoring programs are needed. Monitoring programs should be allowed to communicate with other. And all medical providers and pharmacists should be required to check the system before prescribing or filling scripts for addictive narcotics.

This is the least we must do so future studies produce encouraging drug-use and mortality results.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Should a firefighter collect comp money while working?

Judge in New York considers tossing charges against volunteer

A judge in Western New York is considering dismissing workers-comp charges against a volunteer fireman because he’s technically not working for money.

James Moreland, 66, claims he hurt himself two years ago at his blacktopping job, and filed for workers comp benefits. He’s collected $45,000 since then. Moreland also also gone out on 177 fire and rescue calls.

He’s not getting paid as a fireman, so he’s following the law in that area. But the question remains, if he’s fit to volunteer as a firefighter, should he continue collecting comp money?

If the judge dismisses the charges, as the defense has requested, it could affect volunteer firefighters across the state. It also would send a message to workers in Western New York that committing fraud is not a big deal. And that’s a shame, because people there already have a high tolerance for fraud.

Perhaps it stems from the tough economy that continues to plague the area. Yet there seems to be a large percentage of people in Western New York who are either on comp or drawing Social Security disability. I know from first-hand experience. I lived there for 22 years and visit often. Many people think it’s perfectly fine to fudge the truth if it means getting a check in the mail every month.

The judge’s decision will have an impact, one way or another. We’ll be watching and report back to you.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

It’s a dangerous world in Obamacare land

Cunning consumer cons foisted, though no evidence of fatal program flaws

Two news items caught my eye last week. They took place about 500 miles apart yet both spoke to fraud issues with Obamacare.

Obamacare signup can be easily duped. The feds easily slid 10 fake applicants with bogus SSNs through the signup system, online and by phone. The GAO was testifying on Capital Hill this month, and released a report about the test.

The contractor that handles Obamacare application documents isn’t required to look for fraud, only to inspect to make sure documents have not obviously been altered, the GAO report found.

Sleazy tax preparers also have told filers to pay directly to them the federal penalties for failing to buy health coverage. In some cases the payer has Medicaid or other health and doesn’t owe the penalty.

The scam takes various forms, the IRS says.

Swindlers were spotted at an Atlanta shopping center, trying to con hundreds of people into paying $500 for fake Obamacare “grants.”

And email phishing ploys also were reported early this year, with official-looking Obamacare emails trying to lure people into opening disguised malware links. There’s a large underworld of such spammy cons because they’re easy to mass-mail at little cost.

Often-amateurish schemers have tried to convince consumers to hand over their banking, medical and credit-card info in order to receive their “Obamacare cards” or “enroll” in the healthcare program.

Legitimate questions also have arisen about whether the feds can verify people’s eligibility for premium subsidies in certain states.

The GAO signup test and subsidy-eligibility concerns are fodder for Republicans determined to bring down Obamacare. The GAO test points toward self-admitted system weaknesses that need shoring up. Deeper investigation into the full extent of real-life expoiting of such soft spots needs conducting as well. Still, no evidence of a fraud pandemic revealing fatal flaws in Obamacare yet have publicly surfaced — so far de-fanging that part of the Republican beef.

Consumers, however, likely will remain targets of ID theft and other cons tagged to Obamacare. Slick hackers and other operators have effectively eliminated personal privacy. Consumers will have to stay alert, watch for “official” emails and phone calls and deals from strangers.

With or without Obamacare, it’s still a dangerous world out there.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.