Michigan needs sledgehammers to level crash rings

Fraud units are crucial players taking down rings in Mass. and Fla.

As if we need another reminder that states benefit heavily from fraud bureaus, just look to a lengthy article posted on Mlive this week.

“Lawsuits and legal filings by insurance companies and others describe an insurance fraud network of ‘accident runners,’ who work with lawyers and doctors to find clients involved in auto accidents and milk their (often unnecessary) medical treatments for maximum payouts, through private insurers and under Michigan’s no-fault insurance law,” the article notes.

Organized rings are feeding off of the state’s unlimited no-fault benefits — the most-generous in the U.S. Arguably an entire culture of crime has sprouted around the no-fault feeding trough, with many rings operating in the Detroit area.

Economically hard-pressed Michigan hardly needs another set of troubles, yet the state has no fraud bureau to act as a central coordinating agency for pushback against rings that most observers agree are widespread and contributing to high auto premiums for drivers.

Fraud fighters are gearing for another push to seek a new law creating an auto-fraud prevention authority for next year (see Howard Goldblatt’s FraudBlogs, July 11 and June 23).

If anyone has to ask why Michigan needs a fraud unit, just look to Massachusetts and Florida.

The Massachusetts fraud bureau was a driver in creating task forces that continue rolling back staged-crash rings. The scammers were almost literally out of control in the early 2000s. The task forces intervened with thudding impact. They’ve saved drivers in targeted cities at least $875 million in lower premiums with fewer dirty injury claims to hike auto premiums.

Then comes Operation Sledgehammer in South Florida — another region where staged-crash gangs have spread out like cockroaches. Body shops were wrecking cars with sledgehammers — get it, Operation Sledgehammer? — to inflate insured damage. Chiro and other clinics have lodged hundreds of thousands of dollars in false crash injury claims. It’s a familiar pattern, though involving exceptionally large networks of criminals.

At least 92 suspects have been charged, with numerous convicted.

The takedowns involve a coordinated federal-state-local collaboration. The Division of Insurance Fraud has been a central player in the effort.

Imagine how far behind the investigations would be today if Florida had no fraud unit to bring statewide staffing, strategic thinking and real-time field intelligence to bear.

How many premium dollars could Michigan drivers save if the state had its own Operation Sledgehammers and task forces to apply steady pressure on insurance criminals? How much safer would the roads be with fewer predatory vehicles trying to maneuver innocent drivers into wrecks for insurance payouts? Right now, a much-needed Operation Sledgehammer in Michigan isn’t possible.

Michigan needs an auto authority, and a law to create and fund the unit. Just ask drivers who pay the premiums, and insurers who must pass those increases along to their policyholders.

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

Strong fraud bills stall in N.Y. statehouse — again

Committee staff seeks mere misdemeanors prosecutors will ignore

New York crashesLast week Dennis Jay wrote a blog arguing about the need for stiffer penalties for those who cynically camouflage insurance arsons as hate crimes. Yet sometimes our desire for stronger penalties face other challenges — lack of strong felony laws.

New York is the poster child of a state that has yet to enact stronger auto insurance-fraud laws even though false treatment claims by crash rings have helped make auto premiums for New York drivers among the highest in the U.S.

For years we’ve have spoken about the dysfunction that surrounds how the state legislature is managed and works.

This year is a prime example: The Assembly speaker and Senate leadership were federally indicted, forcing them to resign their leadership positions. So both chambers ended up with new leaders and lost momentum in mid-session. Not a prescription for success.

The Coalition and our fraud-fighting partners were pushing three automobile-fraud bills: Make it a crime to lie about where you garage your vehicle … Make it a crime to recruit for staged-crash rings and medical mills; … Let insurers rescind a policy if premiums are paid from a bogus bank account. None of the bills went to the governor for his signature.

That’s where the dysfunction takes a twist. Take the premium-evasion bill. The committee chair overseeing the bill was supportive; the Assembly majority leader was the sponsor, and the new speaker sounded supportive.

So why did the bill stall?

Committee staff opposed the stiff penalty — a felony that could mean serious jail time. Staff thought the penalty was too strict and insurance fraud shouldn’t be a felony, they figured. Prosecutors also should take cases regardless of the penalty.

These staffers misunderstood how prosecutors and the courts work in New York. Most prosecutors who’d consider fraud charges come from the densely populated areas of New York City and its suburbs. There are plenty of felony cases to try— of all kinds. Few prosecutors would bother with mere misdemeanors.

The courts are similarly jammed with felony cases. What judge would look kindly on further crowding the docket with misdemeanors?

Yes, we need stiffer fraud sentences. Sometimes the problem, however, is less with the prosecutors and judges. Sometimes the problem involves the lack of strong fraud laws — and the vacuum of political will to enact them. New Yorkers deserve better.

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

Fake hate crimes victimize everyone

Two insurance scammers got off easy, deserve extra punishment

Frank Elliott had a hard time holding back the tears when his prominent Chicago-area gay bar burned down in June 2012.. “… everything that I’ve worked for … my whole life is on the line and I don’t know what to think or even begin with,” he told a TV reporter.

It was a good acting job. Elliott planned the fire, complete with spraypainting anti-gay slurs on the inside of the popular club just before his hired arsonist torched it.

Elliott got off easy when sentenced last week. No prison, just probation and a fine plus restitution of $107,000 for the insurance claim.

His wasn’t the only fake hate crime that hit the news last week. A federal jury in Tennessee ruled that a lesbian couple torched their Knoxville, Tenn.-area home in 2010 and blamed the insurance arson on a bigoted neighbor. Their insurer denied the $276,000 claim, and Carol Ann and Laura Stutte sued. The jury concluded the insurer had ample evidence that the couple burned down their own home.

They got off even easier than Frank Elliott. No criminal charges, no penalties other than the claim denial.

Committing a hate crime comes with extra penalties in many jurisdictions, including under federal law. There should be extra punishment for committing a fake hate crime as well.

People become more skeptical and more cynical every time one of these stories makes the news. Communities are less likely to reach out to real victims of hate crimes. People are less likely to believe their stories. Victims of hate crimes are victimized a second time by the devious attempts of those who fake hate crimes to file bogus claims.

Our courts should send decisive warnings that bogus hate crimes such as these latest insurance arsons are a ticket to swift and sure punishment.

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

Kentucky database weeding out doctor-shoppers

Painkiller use falls, showing progress against epidemic addictive meds

pillsKentucky is one of the nation’s most over-medicated states. A seemingly boundless supply of painkillers and other addictive prescription meds are keeping tens of thousands of residents in a medicated fog.

At least 1,000 Kentuckians die each year from overdoses — more than die in traffic accidents.

Sadly, Kentucky for years has been America’s poster state for prescription pills runamuck. Poverty plays a leading role. And insurance fraud from false prescriptions finances much of the drug trouble. Greedy pain clinics, pharmacies, crime rings and desperate addicts are all part of the action.

The state has struggled to halt the epidemic. And now Kentucky may have the makings of a success formula, a new study suggests …

Doses of the popular painkiller hydrocodone have dropped 9.5 percent since 2011. Another heavily abused pain pill oxycodone fell 10.5 percent. All told, that’s about 27 million fewer doses coursing through Kentuckians’ bloodstreams.

So what’s behind the fall-off?

Keeping close tabs on prescription trafficking by pain docs and other medical providers is pushing more crooked docs off the streets.

Look to a database that monitors traffic in opioid and other scripts. The prescription monitoring program is known by its acronym Kasper. A 2011 law requires docs who prescribe painkillers to register with Kasper, which tracks their drug-delivering patterns. State officials can quickly spot and halt over-prescribers who Kasper identifies.

More than 24,000 medical providers have registered, and are being tracked. This compares with 7,545 providers before the law passed.

And only licensed docs can own and run pain clinics under the law. That’s helping weed out sleazy lay profiteers who install puppet docs as stooge clinic owners.

Kentucky has shuttered 20 clinics since the law passed, and four others have received cease-and-desist orders. The state also disciplined 64 docs for prescription violations in the last year, compared to 53 in 2011.

Ten other states also have mandated that prescribers and pharmacists check prescription databases prior to prescribing and dispensing certain addictive drugs.

The Kentucky experience strongly suggests other states should follow this lead to curb a national addiction problem that taking its toll on patients, insurers and society.

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

Chiros fight Kentucky anti-solicitation law

Fraud fighters seek to thwart constitutional challenge

A federal court in Kentucky ruled the state’s anti-solicitation law unconstitutional last year. In response, anti-fraud community helped enact a new solicitation law this year that satisfies the court’s concerns.

The legislature overwhelmingly approved the fix.

Soliciting crash victims for potentially worthless medical treatment thus took a hit. The new law strictly limits soliciting of drivers and passengers for 30 days after the crash. It also blocks insurance payments to providers who violate the law, and protects consumers from making forbidden payments.

The law serves a timely purpose. Fraud rings are moving into Kentucky — some from Florida to escape ramped-up heat by law enforcement. They’re trying to lure often-traumatized crash victims for treatment at shady clinics that lodge inflated insurance billings for useless treatment.

Problem fixed, right? Wrong. Several chiropractors didn’t even wait for the law’s June 24 effective date.

They sued in federal court, saying the new law violates the First Amendment and due process. A hearing on an injunction to stop enforcement of the law is scheduled for late August.

Just hours before the Kentucky suit was filed, the Texas governor signed a new law restricting access to its crash reports. Much like Kentucky, the law aims to prevent insurance criminals from hounding crash victims to get injury treatment at shady clinics.

Only crash victims, their reps (insurers, medical providers, attorneys) and reporters now can obtain the full crash report. Anyone can buy the reports. Except that the personal information is redacted for outsiders, so the reports lose all value to fraudsters.

Kentucky’s new law builds on another initiative in Texas. After surviving court challenges, the state started enforcing a law restricting solicitation of auto crash victims for the first month after a crash. Fraud rings started moving out of Texas when the enforcement heat rose. They’re moving into other states like Kentucky, which the rings perceive as softer enforcement environments.

So fraud fighters must stop the Kentucky lawsuit. Success by the chiros could embolden challenges to anti-soliciting laws in other states such as Texas. 

The Coalition already has sent the Kentucky attorney general info that will help derail the suit. We also plan to team with partners to file friend-of-the-court briefs that provide strong legal support.

The new law keeping criminals from recruiting crash victims is a constitutionally sound idea that limits dishonest activity and protects crash victims from being victimized yet again.

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

The unspoken danger of optimizing auto premiums

Why give consumers another excuse to defraud?

price imageAny first-year college student studying insurance is taught that premiums must be commensurate with the degree of risk. It’s a basic concept at the heart of insurance pricing.

Over the years the industry has driven this point home to explain to consumers why 18-year-olds pay more than older people for car insurance. Or why a home far a from a fire hydrant is a greater risk for loss, and thus, requires a higher premium.

This concept is a basic tenant of insurance and risk, and is law in most states.

Some insurers now want to change the pricing model of auto insurance to allow them to charge more to people willing to pay more. Price optimization uses sophisticated computer algorithms to identify such people.

Some state regulators are crying foul. Seven states — Florida, Maryland, Ohio, Indiana, Washington, Vermont and California — have banned the practice. Opponents say price optimization deviates from risk-based pricing, and unfairly hits some lower-income people who may not be savvy enough to shop around for the best price, or even have the means such as an Internet connection.

My problem with price optimization is that it sends a terrible message to insurance buyers looking for another reason to justify fraudulent behavior.

If insurers are willing to price insurance at whatever the market will bear, why shouldn’t I look for every advantage at my disposal — legal and otherwise — to reduce my premiums, such as rate evasion or filing a questionable claim to get a rebate on those high premiums?

There’s a tidal wave of insurance buyers on the horizon — the Millennials — who show little loyalty to businesses unless those businesses act socially responsible. As a group, Millennials also are more likely to tolerate some unethical behaviors such as exaggerating claims and auto rate evasion.

Let’s not give them more excuses to commit fraud.

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

Opiods a gateway for rising heroin addiction

More people getting stuck on both heroin, insurer-paid painkillers

Heroine use and overdose deaths are exploding.

And guess what — the gateway drugs for many addicts are prescription opioids such as pain killers, muscle relaxers and other junk. Much of which insurers finance through patient doctor-shopping schemes and false prescriptions by crooked medical providers and pharmacists.

For the big picture, check out a new study released by the Centers for Disease Control.

“Heroin use has increased across the United States among men and women, most age groups, and all income levels. The greatest increases have occurred in groups with historically lower rates of heroin use, including women and people with private insurance,” CDC says.

Heroin overdose deaths have nearly quadrupled since 2002, and use has spiked 63 percent. Tellingly, the largest increase in heroin came from people who abuse addictive painkillers. There’s an explosion of people with multiple addictions, the study says.

The addiction chain often starts when people get hooked on prescription drugs. Maybe they have chronic pain from a back injury after slipping on the factory floor. Or whiplash from an auto crash, or an injured skiing knee that refuses to heal properly.

All too often crooked medical providers make it easy to spoon out false prescriptions that insidiously feed growing addiction. And all too often the prescriptions are financed by expensive insurance claims. In fact the new generation of multi-addicts have insurance, CDC says. It’s a big fraud market, with more than two million abusers in the U.S.

Heroin also is getting cheap and easy to obtain. Thus the addictions feed on each other. Heroin use intensifies your urge to steal insurer-paid opioids. And opioid craving intensifies your urge for heroin. And so the twin addictions spiral — with great personal, societal and financial costs. Let’s also add cocaine to the mix, by the way.

Another roadway to heroin addiction: In some respects, fraud fighters have done such a good job of drying up street access to prescriptions that addicts turn to the welcoming arms of heroin dealers.

Mexican drug cartels send large volumes of the heroin up north, so the opioid addiction chain helps feed the lawlessness they spawn.

The job of fraud fighters has just gotten more complicated. We’ll need a more comprehensive approach that includes heroin. Going after painkillers in a vacuum isn’t an option.

Street-level enforcement increasingly may require more partnering with heroin crime fighters.

Treatment and prevention strategies will need to tackle multiple addictions. Injured workers may come through the front door with ravenous cravings for muscle relaxers and heroin. HHS has several strategies that decisionmakers should closely consider. Insurers also will need to take a larger view of their roles — from combating fraud and opioid abuse to taking down their evil twin, heroin.

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

Summer is planning time for 2016 legislative initiatives

Must be primed for action when statehouses open

state legislationThe first half of 2015 earned us several new state fraud laws, I recently wrote in this space. Having celebrated those successes, we now should start thinking ahead to next year.

Summer is the perfect season to start that planning. Legislators already are thinking of what issues will fill up the agenda. We need to be part of that action, and ready to go as soon as statehouses open in 2016. Many sessions are short, so it’ll be a race to get our bills docketed and voices heard.

The Coalition and our partners are reviewing what bills to pursue, and in what states. Usually the bills are tagged to defined fraud problems affecting consumers and businesses in a given state.

New Jersey became the first state to make it a crime for drivers to avoid paying high auto premiums by lying that they garage and drive their vehicles in states where premiums are lower. We need to see what other states have similar problems and would be open for legislation like the New Jersey success.

The Coalition also will spend the summer crafting a model law to export to states on this issue. Of course, New Jersey offers us a good starting point.

New Mexico will be prime target for a bill allowing courts to peg a swindler’s penalty to the total dollar amount of convicted frauds. So the total of several scams against multiple insurers would fix the penalty instead of setting a smaller penalty for each scam. That bill stalled in 2015, and we think it stands a strong chance of enactment next year.

And will Michigan finally create the insurance fraud prevention authority that has percolated in the legislature for several years?

Will New York get serious about attacking no-fault schemes and criminalize recruiting for crash rings after years of stonewalling in Albany?

We’ll choose our legislative targets by talking to groups and listening to ideas.

So it’s your time to be heard: Suggest we can best help move the fraud fight forward. What state should we target, what kind of bill is needed, and what fraud problem will it take on?

Reach me at Howard@Insruancefraud.org. Your input will be very helpful as we speed into 2016.

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

Medicare strike force a high-value investment

Recent arrests point to benefits of focused force in action

Last week’s busts of 243 people suspected of collective mastodon Medicare ripoffs was good news.

The suspects pilfered $712 million of your taxpayer dollars with a cavalcade of phony claims for medical treatments and equipment such as power wheelchairs, the feds charged at a news conference in Washington.

The accused fraudsters were a disparate bunch, hailing from 17 hotspot areas beset with Medicare thievery. They were snagged by a strike force specially set up for such jobs.

The Affordable Care Act added $350 million to chase down Medicare and Medicaid thieves. The feds hired more prosecutors and expanded the strike force. Last week’s busts were just the latest high-visibility results in a long string of successes.

Yet vast amounts of Medicare-Medicaid fraud likely remain to be discovered and broken up. Arrests and convictions for eight-figure theft plots seem in endless supply. Just one suspect — Dr. Jacques Roy — allegedly tried to steal $375 million in dodgy home-healthcare claims in Texas. That case helped impel the feds to halt home-health payments in the Dallas and Houston areas for six months.

HHS says its anti-fraud investigations recovered nearly $8 for every $1 invested over the last three years. Such returns would be the envy of the for-profit sector. They also should remind us that the strike force — and Medicare-Medicaid fraud fighting in general — are high-value investments during a time of federal budget austerity.

If the national goal is more rational federal budget spending, it’s hard to imagine much better use of federal dollars. The fraud fight will be better served if the day comes when funding of strike-force efforts expands to where busts like last week’s become routine news instead of headline grabbers.

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

States marching ahead with new fraud laws in 2015

Grassroots letter-writing campaigns supported several bills

We’re almost at the halfway mark of 2015, with the summer months upon us. Most state legislatures have shuttered for the year, so this is a good time to evaluate the scorecard.

So far the tally looks pretty good. Several important anti-fraud laws have been booked, and several more are possible.

New Jersey provided a key victory. It’s now an insurance fraud for in-state drivers to deceptively register and insure their vehicles in states with lower premiums. Fraud fighters will seek to export this model to other states.

Minnesota gave the state commerce department power to lodge civil actions against fraudsters. The agency also now can kick fraudsters out of the insurance system — blocking crooks from receiving insurance payouts.  The Coalition urged both ideas a couple of years ago when the state started marching toward strengthening its anti-fraud efforts.

Kentucky limited the soliciting of crash victims for potentially worthless medical treatment. The new law fixes a court decision overturning the previous law as unconstitutional. Fraud fighters banded together to create the needed fix. Fraud rings are moving into Kentucky. They’re trying to lure often-traumatized crash victims for treatment at shady clinics that lodge inflated insurance billings for useless treatment.

Florida also confirmed that unlicensed clinics can’t make insurance claims — they’ll be charged with an insurance crime. This effort tightens clinic licensing standards.

Texas limits the use of auto crash reports by shady medical providers. The state already has made it a crime to solicit crash victims in person. Texas added teeth by restricting access to crash reports that recruiters use to identify target crash victims.

West Virginia added consumer protections against shady contractors. New Mexico and Iowa made it a crime to sell or use counterfeit airbags in vehicle repairs.

Grassroots letter-writing efforts by fraud fighters were a big factor in several states. The Coalition and IASIU jointly championed campaigns. Fraud fighters sent letters to their legislators in New Jersey, Kentucky, Minnesota and New York — urging “yes” votes on bills in their states.

More than two dozen letters were sent each in New Jersey, Kentucky and Minnesota, and a campaign record of more than 130 in New York. This likely is the first time any of these legislators has heard from constituents supporting an anti-fraud bill.

Needed no-fault fraud reforms Michigan are still in motion, while New York has crashed.

Michigan needs a state agency to add firepower against auto cons such as widespread crash rings. Yet a measure creating the agency is caught up by haggling about its larger parent bill. It’s a large package that tries to reduce spiraling medical costs of the state’s auto-insurance system.

New York once again stalled in fortifying its no-fault auto system. An auto rate evasion bill much like New Jersey’s has skidded to a halt. Also iced: clamping down on recruiting for crash rings, and using a phony credit card or bank account to pay for premiums.

We’re already looking at fraud bills to pursue for 2016 — both for Coalition work and the grassroots effort.  Let us know your thoughts.

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