Dodging auto premiums should be crime

Lying about garaging vehicles burdens honest drivers

Summer driving season is in full swing. It’s a reminder that dishonest drivers are illicitly registering their vehicles in states where premiums are lower. The Coalition is calling for states to go after these drivers.

Using out-of-state addresses to insure a car illegally reduces the driver’s auto premiums. It also burden honest insurance consumers who insure their vehicles with their real address. They may pay higher auto premiums thanks to drivers who cheat the system.

North Carolina was the first state to tackle this issue by requiring new insureds to show proof of residence before an insurer could write a policy. Out-of-staters were registering their vehicles in North Carolina for the lower auto premiums.

North Carolina recently went a step further and put more teeth in the existing law. Trucking firms are falsely registering their fleets in the state yet have no operations there. The new law requires businesses to prove they ply the roads in the Tar Heel state.

Falsely registering vehicles in New Jersey is a specific insurance crime.

The Coalition seeks a similar law in New York. Bills have stalled, though we and our partners there are planning to reboot in 2017.

A Maryland bill would’ve let insurers rescind policies of drivers who falsely registered their vehicles in the state. The state held a public meeting. An insurer told about a claimed loss in Maryland by an insured who lived in New York — where the insurer doesn’t write coverage. The insurer paid the claim to avoid a baseless yet potentially costly bad-faith suit.

The statehouse will revisit legislation in 2017.

The Coalition strongly supports targeting auto rate evasion. Tough state laws can remove a driver’s incentive to take the risk.  Consumers who lie about where they drive to lower their auto premiums add burdens to the many thousands of honest drivers. This undermines the integrity of the auto-insurance system.

Fraud fighters have taken the forefront on this issue. Stay alert to auto-premium evasion in your state. Tell the Coalition and your state insurance department. Falsely registering a vehicle should be a ticket to jail, not an easy source of summer spending money.

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

Protecting insurer rights to EUOs vital to fraud fight

Adverse decision in Kentucky could embolden crash rings

A Kentucky lower court has thrown a wrench in the campaign to combat the growing scams involving PIP crashes in the Bluegrass State. The court agreed with two claimants in an auto crash. They’re suspected of fraud. Insurers have no right to compel them to attend an examination under oath (EUO), the lower court ruled.

The Coalition and NICB filed an amicus brief this week asking the Kentucky Supreme Court to overturn the decision and restore insurer rights to use EUOs.

EUOs are a powerful weapon to get at the truth. When summoned, many fraudsters don’t bother showing up —especially lower-level ring members. They feel the few dollars they’re making don’t offset the potential of getting caught.

EUOs are a deterrent as well. Knowing there’s a chance you might have to give details of a claim under oath helps keep people honest.

Take the EUO away, and more fraud rings likely will escape detection and feel emboldened to commit more fraud.

The Kentucky claimants contend insurers use EUOs to harass and intimidate honest claimants. We’ve found no evidence to support this contention. We determined that insurers use EUOs very infrequently, and only when necessary to discover truth about a claim.

In fact, EUOs can be an important tool to validate legitimate claims.

Sometime later this year, the Kentucky supreme court will announce its decision. Here’s hoping they support uncovering the truth about potentially fraudulent auto claims.

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

Zero tolerance of fraud?

Strengthening backbone rewards insurers, customers

Zero tolerance is an popular catchphrase for insurers to bandy around. It implies a blanket boycott of dubious claims, the marshaling of an insurer’s full resources at every turn.

In practice, zero tolerance is a moving target. Few insurers can assert they contest every dubious claim. Even the most principled insurers decide which claims to challenge, and which to let slide through.

Focusing limited staff resources on a complex staged-crash ring that’s stealing hundreds of thousands of dollars might make more sense, from an insurer’s standpoint, than taking on a handful of smaller homeowner claims that prosecutors likely aren’t interested in pursuing.

Perhaps paying a $5,000 nuisance claim from a clearly setup fall in a restaurant makes more sense, as an insurer sees it, than spending many times that amount in legals fees to defend against the determined crook’s civil suit. A sympathetic jury could dole out $500,000 to the swindler, who’s faking a convincing limp in court. Just pay off the guy and make his claim go away.

That said, one of best business cases for zero tolerance recently was mapped by former CNA chief claims officer George Fay. He writes movingly in the Journal of Insurance Fraud in America

Most claim denials for fraud result in a lawsuit against the company, no matter how solid your case,” George wrote soon after retiring. “A strong anti-fraud position can earn your insurer a reputation within the criminal underworld for being an undesirable target to try and bilk. This principled stance saves legal fees in the long run.”

And helps build customer loyalty: “When you make customers aware of your anti-fraud efforts, they see it for themselves and usually stay with you for life.

Zero tolerance also reflects an insurer’s character, from the leadership down through line staff. “An insurer that knowingly pays a fraudulent claim violates its values statement,” George writes. “And certainly the insurer lacks character. The same is true of insurer employees — from the SIU director to claims personnel to adjusters. Character is critical to building the foundation of successful fraud-fighting efforts.”

Zero tolerance — strengthen your backbone, stop false claims and reap rewards. George Fay writes an inspiring roadmap. Insurers should study that vision closely — your honest policyholders will be glad you did.

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

New fraud laws start with open dialogue

Md. public meeting helped focus on needed reforms

Last week I took part in a public meeting the Maryland Insurance Administration held in Baltimore to review anti-frauds effort in the state. Part of the discussion surrounded anti-fraud bills that stalled this year when the 2016 session closed in mid-April.

The state insurance commissioner Al Redmer Jr. chaired the meeting. He stayed the entire time. He went beyond simply giving an opening statement, then handing the meeting to the fraud unit’s chief. Redmer’s lengthy presence showed a strong interest in strengthening state’s anti-fraud efforts.

I called for the state to redouble its efforts to target drivers who lie where they garage their cars to illicitly lower their auto premiums.

Maryland drivers should register and insure their vehicles in the state. Similarly, out-of-state drivers should pay a steep penalty for lying that they drive and garage their vehicles in Maryland to lower their auto premiums.

Maryland should be applauded for last week’s effort. The session started dialogue for targeting auto-premium evasion and other insurance crimes. This could spark renewed pushes for anti-fraud legislation next year. The 2017 legislative session opens in January.

Other states can learn from sessions like this one. A state’s anti-fraud effort is organic. Fraud fighters and the insurance department must continually review its direction and impact. No state should rest on its laurels, thinking it’s doing a great job. Nor should a state grow reluctant to act, believing the anti-fraud environment can’t be changed so why talk about it.

Maybe such a meeting in New York could help break up the logjam in Albany that has stalled so many worthwhile anti-fraud measures in recent years. Or, a state like Oregon which has no insurance fraud law or anti-fraud infrastructure. Imagine what the insurance departments and governors would learn if they held such meetings. Same with Michigan, which needs a fraud bureau.

More often than not, legislatures act in a vacuum when they look at anti-fraud laws. Too often they’re pulled in several directions, making it hard to focus on enacting anti-fraud laws.

Fraud fighters should assume leadership and start action-driven dialogue. Reach out to the state insurance department, insurance commissioner and state attorney general. Co-sponsor open meetings to review their state’s fraud trends, and where new fraud laws are needed.

These joint efforts can go a long way toward enacting needed laws and regulations that make a state’s anti-fraud efforts stronger than ever.

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

Slip and falls: The big waste

Scams suddenly real when guy fakes tumble during bus ride

Imagine coming home from a long day at work. You climb on a full bus. Soon the vehicle suddenly screeches to a halt. An elderly man outside falls onto the pavement. The bus hit him at a stop light, he screams in seeming pain. The passengers have to clear out, and you’re still a mile from home.

You hear ambulance sirens rushing to the scene. Yet nobody’s fooled. Children and adult passengers are calling out this fraudster. They’re yelling things like, “He just wants to get money!”

You remember sitting in the front of the bus, and it never touched the man … at all. No bump, no thump.

If you’re wondering if that insurance grab happened … it did … to me.

I’m an insurance-fraud researcher with the Coalition Against Insurance Fraud. I read about and see videos of fraudsters faking slip and falls all the time. They seemed like a fantasy until I saw this guy’s scam first-hand.

Slip-and-fall cons may steal billions of dollars a year. Honest businesses are sued. They pay in higher premiums. We pay in higher prices at the cash register.

Some fraudsters place liquid detergent or other slippery stuff on supermarket floors. They sit down on the floor and scream they slipped on the mess. They’re blithely unaware that security cams record every false move.

Selena Edwards of California claimed a scalding cup of hot coffee with a loose lid slipped off and burned her hand at a McDonald’s drive-thru. But she’d used a photo of someone else’s burned hand. And her medical records also were forged. Edwards was convicted.

Some consumers even joke about it on social media.

Slip-and-falls are a quick way to make big bucks, people often yack. Search the hash tag #BoutToSlip on Twitter. You’ll see youngsters joking about slipping and falling to claim insurance money. This kind of peer-to-peer chatter can egg others to fake a money-grabbing slips.

Or check out the #insurancefraud hash tags on Vine and Instagram. Plenty of quick videos of young people joking how to pay college tuition by scamming insurers with bogus tumbles.

My experience on the bus plus my research with the Coalition made one thing clear: Slip-and-falls are a big waste for everyone. This is especially true of scammers who end up with permanent criminal records after their cons slipped, fell and broke.

About the author: Elijah Mercer is research associate of the Coalition Against Insurance Fraud.

Let’s warn about crooked contractors before storms

Early notice gives consumers more chance to guard against scammers

Hurricane season is only a week old, but it’s already active with two tropical storms hitting the southeastern U.S. This season likely will see more storms than the last few years, forecasters say.

And that gives crooked home contractors a chance to ply their trade. Insurers, government agencies and anti-fraud organizations have stepped up efforts in recent years to warn consumers about contractor fraud. But much of that communication comes after the damage is done. Vulnerable and often-traumatized homeowners are focused on getting repairs done quickly at that point

Such outreach is helpful, but the time to start is when  storms  approach, not afterward. One insurer in Florida e-mailed  its policyholders this week, urging them to “Call before you sign.”

“If a contractor promises to take care of ALL of the paperwork, think twice and call your insurance company before you sign away your rights,” the message reads “Florida homeowners are becoming victims of insurance fraud because of a common scheme used by a variety of dishonest contractors that abuses the ’Assignment of Benefits’ (AOB) law to hijack your claim.”

Assignment-of-benefits scams involve contractors who are in cahoots with attorneys. As soon as the homeowners signs over a claim to the contractor, the attorney sues the insurer for repair costs, which may be inflated. The law firm then is entitled to legal fees, often at levels most people would consider outrageous. The attorney then might kick back a few dollars to the contractor.

Consumers usually aren’t aware of what’s happening behind the scene and probably don’t care. They just want their property fixed.

That’s why the word needs to get out as soon as storms approach — when homeowners are thinking about the possibility of damage — and before some slick contractor can lure consumers into signing away their valuable policy rights.

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

Anti-fraud efforts removed from MLR

Keeping in MLR improves healthcare for everyone

Health insurer anti-fraud expenses will be left from the Medical Loss Ratio  in a rule released by the feds. This decision deals with Medicaid managed care, and frustrated state and federal fraud busters. The impact will spread throughout the world of healthcare.

First, a short history: The Affordable Care Act requires health insurers to spend 80 or 85 percent of costs on claims and health services. This limits how much insurers can spend to run the business.

Regulators were left to decide what insurer expenses will be included in the MLR. The Coalition and other fraud fighters diligently tried to show federal and state regulators why anti-fraud expenses should be included. Effective fraud fighting is directly linked to the quality of healthcare that consumers receive in many cases.

What makes this decision a bit grating is that federally funded health programs like Medicaid are required to have anti-fraud efforts. Yet those expenses are excluded from the MLR, and thus, health plans have little incentive to invest more in combating fraud.

This decision has impact well beyond state-federal Medicaid.

States usually look to the feds for guidance when writing their own regulations. If the feds exclude fraud expenses from the MLR, then states will be reluctant as well.

We’ve urged insurance regulators to include the MLR. They’re often sympathetic, yet gamely stick to excluding anti-fraud expenses.

Fraud fighting is essential to quality patient care; this isn’t mere overhead. Scams often harm patients with worthless and botched treatments that also can max out their policy limits. Stopping money-draining schemes also helps reduce the cost of health services. This benefits everyone.

That’s the rub. Fraud fighters know that good anti-fraud efforts reduce healthcare costs and improve services. Yet regulators stubbornly stay reluctant to even consider including anti-fraud expenses in the MRL.

It’s time for fraud fighters to speak out, and tell regulators and policymakers that fraud-fighting expense should be included in the cost of paying healthcare claims.

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

New Jersey court gets it right about insurer/fraud bureau partnership

But too close a relationship could harm public interest

Accused fraudster Harshad Patel said his rights were violated because New Jersey’s anti-fraud agency works too closely with insurers to root out fraud. The Office of Insurance Fraud Prosecutor “outsources” investigations to insurers because it lacks financial resources to fully investigate on its own, Patel contended.

So he sued the state, alleging his constitutional rights were violated.

A U.S. Court of Appeals tossed the case this week. Patel didn’t prove he was harmed by the relationship between the fraud bureau and insurers, the court ruled. But the judge left the door open to revisit this issue in the future.

Other fraud defendants have claimed a fraud bureau has gotten too chummy with insurer investigators to beat up on citizens. Yet their legal challenges all failed.

Still, future challenge could succeed if fraud bureaus and insurers cross a line in working together. As state agencies, fraud bureaus need to make their own decisions about which cases to investigate. And they must conduct their own investigations.

Insurers can and should provide case information and offer assistance, such as providing pretext policies and bait cars.

But insurers should never attempt to direct a fraud bureau investigation or in effect, become an investigative arm of the state. It’s bad public policy. The legal and public-relations consequences also could be disastrous.

Patel’s ill-conceived challenge was a stretch. Yet it reminds us that state and private investigators must stay vigilant.

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

Chilling mob-style hits reveal fraud’s violent roots

Mob-style hits sought in name of insurance money

Recent charges against a foot doctor challenge a belief among many consumers that insurance fraud is a relatively low-level, white-collar scam.

The issue: fraud as violence.

Foot doctor Ira Bernstein allegedly tried to hire thugs to beat up two insurance-fraud investigators and throw them off the track.

The Ramapo, N.Y. man and his girlfriend met with someone they thought was a hitman to kill his wife Susan — and rough up the fraud investigators, federal prosecutors contend. The investigators were looking into whether Bernstein bilked health insurers with false claims.

The purported hitman was a wired informant. He revealed the suspected plot to police.

Police also set up Hollywood-style murder photos. They applied makeup so the investigators would look mugged. The snitch then showed Bernstein the seemingly grisly images to fool the foot doctor into revealing more suspected evidence.

Bernstein could be innocent. He’ll have his justly deserved day in court.

Whatever the outcome, the case shines a light on a broader concern that insurance fraud is widely perceived as a relatively tame white-collar scam with few real victims.

Once embedded as a norm … this lax attitude edges dangerously closer to making an $80-billion insurance crime a socially acceptable way people can lard their bank accounts, live well, or exact policyholder revenge against insurers for high premiums paid out without claims.

Insurance fraud has a seedy history of Mafia-style violence — or threatened harm — against against investigators … judges … witnesses … and other hardworking professionals just trying to do fair justice. Blind panic and fear when cornered by courts and investigators can turn swindlers into murderers.

An insurance agent shot and killed two fraud investigators who were looking into his practices. Rhett Jeansonne and Kim Sledge were with the Louisiana insurance department. John Melvin Lavergne gunned them down at his Ville Platte agency, then shot himself.

Alarmed insurance regulators around the U.S. quickly strengthened procedures for how investigators can stay safer when visiting a suspect’s office or home.

Sallie Rohrbach died doing her duty as well. She was an auditor with the North Carolina insurance department. A troubled agent clubbed her to death with a chair while she was in his office reviewing his books for  possible theft of client premiums.

Tyesha Towanda Roberts offered to hired someone to shoot a witness involving insurance torchings of a home and two vehicles. The Baltimore woman wanted $10,000 to set up the murder. A cohort offered to help shoot the witness himself. Except that Roberts and her cohort spilled the plot to an undercover officer. Roberts was convicted, and will be sentenced in August 2016.

Nightclub insurer mogul Jeffrey Cohen plotted to assassinate the judge overseeing the bankrupt insurer’s liquidation.

Cohen deceived regulators into thinking his failing insurance empire was financially solid.

A former nightclub bouncer, Cohen drew up a hit list of Maryland and Delaware officials involved with his case. Plus driving directions to the home of the judge overseeing the insurer’s liquidation.

Seven assault weapons were seized at Cohen’s home. “Society needs to look at the fact that killing isn’t wrong in certain circumstances, and killing culls the weak,” he said in a sound recording. Cohen was handed 37 years in federal prison.

Buying the narrative that insurance fraud is tame feeds the dystopian mindset that eggs people to use violence to defend their schemes. Even seemingly average people can become killers when their fraud plots start unravelling.

So when you think of insurance fraud as a soft and minor crime … just visit Sallie Rohrbach’s grave. She’s buried in Raleigh Memorial Park in Fuquay-Varina, N.C.

Proposing ongoing blog about all things insurance fraud. Consumer attitudes that let fraud thrive … strategies for changing minds … new fraud trends and why they’re important …

Profile how people are victimized. How fraud crimes are investigated and convicted. Highlight breaking cases and fraud trends — and why they’re important.

Also look on light side — knuckleheads who bumble to bogus fake workers comp injury claims.

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

Pay me now or …

Police are responding less and less to minor auto accidents

If you crash cars for a living in New Orleans, your life may be getting a bit easier.

Thanks to a bill in the state legislature, police in the Crescent City may no longer be required to respond to fender benders. If you’re involved in a minor accident, just head over to your local police station, give them the details, and they’ll  hand you an accident report you can use to file your insurance claim.

Crashers will no longer need to  stage a collision. Just report it. How convenient.

The bill aims to relieve the cash-strapped city so police can focus more on violent and more-serious crimes. Responding to some 14,000 minor accidents each year is a drain on city resources, according to news reports.

That argument is hard to argue with. And it’s one that more and more jurisdictions are grappling with as cities continue struggling with adequate funding for police.

The extra dollars residents likely will pay in auto premiums rarely gets discussed in these deliberations. It’s a hidden tax that’s better spent paying for more police.

So while fraud fighters likely won’t win this policy battle, they can try to minimize the losses by educating the public and beefing up anti-fraud training of claims reps.

Pay now or pay later. Either way, this legislation will cost taxpayers and consumers.

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