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.

Drone for anti-fraud cases ready to fly high

Laws and regs should allow legitimate use of insurer surveillance

drone photoDrone use has left the launch pad and is increasing rapidly. Insurers are showing a big interest in drones for anti-fraud operations, underwriting and claims handling.

The feds and states are working to impose order on the evolving dronescape. Recreational users soon will have to register their machines. The Department of Transportation is creating task force with the Federal Aviation Administration to develop a registration system.

Using these little eyes in the skies for anti-fraud operations and other functions is drawing considerable attention in statehouses as well. Privacy is the main issue driving drone debates, says the National Conference of State Legislatures.

Some 45 states considered more than 100 drone bills and inked 20 laws this year alone.

Several bills also required law enforcement to obtain search warrants for drone use. Others were skyway-safety measures limiting where drones can be used (e.g., away from commercial airports).

These bills harken back a decade or more when states began imposing stricter control of video surveillance.

A New York bill, for instance, tried to make it a crime for insurers to shoot surveillance video unless they had permission of the persons being filmed. Critics said the language was so broad it would’ve criminalized tourists filming the sights and sounds of Times Square.

Most state legislation during this time recognized a legitimate insurer purpose in using surveillance video. Society struck a rational balance between allowing crime-fighting while protecting people’s privacy.

New York is back again with another potentially over-reaching surveillance bill. Unless it’s carefully worded, it could put the kibosh on legitimate insurer drone use for anti-fraud operations.

The national debates over proper drone use are gaining steam. Protecting privacy rights will be a major aspect of the debates once again. Rules and limits will be imposed. Upcoming laws, regulations and court decisions also must allow legitimate insurer use of drone surveillance to protect society from insurance schemes.

It’s time to fly high with a national dialogue on insurer drone use. And fraud fighters should be front and center.

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

Are insurers evolving as fraud-fighting entities?

2015 SIU benchmarking study seeks to answer that question and many more

Are property/casualty insurers getting more adept at detecting and investigating insurance crime? Are they managing their anti-fraud operations for optimum impact?

benchmarkingIt’s hard to tell sometimes. The 2013 SIU benchmarking study by the Coalition Against Insurance Fraud and Ward Group gave us a snapshot of where insurers stood on a wide range of metrics. No doubt we’ve seen huge advances by insurers in becoming more-astute fraud fighters over the last several years.

But how are they doing lately?

We’re about to find out. The Coalition and Ward Group are teaming up again to conduct another comprehensive benchmarking study. The results will help determine how things have changed with budgets, staffing, structure, quality assurance and varied input/output metrics.

Has the percentage of claims referred to SIU, for example, risen or declined? Have insurer referrals sent to fraud bureaus changed, and if so, why?

The study is an excellent weather vane to understand fraud-fighting trends. Participating insurers also will better compare their own programs with insurers of similar size and scope.

We encourage all property-casualty insurers to take part in this study — the only one of its kind. More information is available at www.InsuranceFraud.org.

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

“Looking for tips and pointers on committing insurance fraud”

Having fun with people who tweet about fraud

Most people who go online looking for help in committing insurance fraud probably aren’t serious, but it’s still an opportunity for a teaching moment.

At the Coalition, we troll Twitter at least once a day and finds all kinds of conversations about committing fraud. Some people are seriously seeking co-conspirators while others are just having fun.

Last night we saw a tweet from someone named Addison, whose photo appears to be a young women:


Pretty straight forward. Rather than judge or condemn people who cheat, we think a better approach is to give them ideas to consider.

In this case, we suggested she set aside a few dollars for bail money:


Usually, our tweets don’t get a reply, or if they do, they insist they were just kidding. Some Twitterers, though, say nasty things about us.

In this case, Addison retweeted our reply! She obviously thought it was funny.


Thus, Addison received a subtle message about the seriousness of committing fraud and so did her 275 followers. In a small way, we hope this warns the online world that committing insurance fraud is a lousy idea that can lead to big trouble.

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

Geeky financier revealed fraud oversight oversights

Fraudster ruined insurers; stress test hardened insurance oversight

One of the most tumultuous periods of insurance and securities oversight quietly drew to a close recently when convicted swindler Martin Frankel finished his 17-year federal sentence.

The geekish financier recently was released from federal prison in New Jersey. He’s in a transition facility, prepping for life back on the streets.

Frankel sent shockwaves through the securities and state insurance systems. He launched a daring swindle that exposed large gaps in how states oversee insurance and protect against scams.

He secretly bought several small, ailing life insurance companies back in the 1990s. Hiding his ownership, Frankel looted more than $200 million of their assets and hid the money in Swiss bank accounts. He ran the insurers into the ground. Several hundred innocent employees lost their jobs and livelihoods.

It’s one of the largest insider lootings of insurers in history.

He hid the conniving from state regulators for a decade. Frankel had been banned from securities for bilking investors. Yet incredibly, he next created an investment firm called Thunor Trust as a front for his looting. Yet state insurance regulators had no idea a crook was brazenly doing insurance business.

Frankel lived a princely lifestyle off the stolen insurance loot. He bought a 25-room mansion in swanky Greenwich, Conn. A bevy of live-in girlfriends kept coming and going. Frankel showered them with diamonds, trips and other goodies, while stabling a fleet of 30 luxury cars. By day, he did business in an onsite NASA-like command center with 80 computers and widescreen TVs.

Mississippi and Tennessee insurance regulators finally got wind of Frankel’s maneuvering and busted him.

He tried to burn down his mansion to hide the evidence as law enforcement closed in. Officials found a partially burned to-do list: “Launder more money NOW.” Frankel fled to Europe and was captured in Germany. He had nine fake passports and 547 diamonds.

Frankel even bribed a Vatican official to vouch for a false charity he’d set up to hide his conniving.

The scheme exposed widespread shortfalls in how securities and insurance regulators oversaw such entities.

Call the problems oversight oversights.

“We found inadequate tools and measures for assessing the appropriateness of insurance company purchasers, analyzing securities investments, evaluating the appropriateness of asset custodians, verifying insurers’ assets, and sharing information within and outside the insurance industry,” the feds warned in a report.

Major reforms and stricter oversight went into place. Future Frankels will have a much harder time operating the way he did. Certainly the insurance system is better equipped with tripwires to expose such cons earlier in the game.

On the cusp of freedom, however, Frankel was packed off to jail again this week. He’s already charged with unspecified rules violations.

Whatever. Marty Frankel still did regulators a backhanded favor, putting the systems through a much-needed stress test that hardened oversight considerably. Several hundred honest Americans lost their jobs and careers while Frankel luxuriated in BMWs and diamonds. Yet we can still say “Thanks Marty – sort of.”

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

Murder for life insurance money too common this year

Prevention might be key to deterring spousal homicides

A jury in Denver on Monday convicted Harold Henthorn of pushing his wife of 12 years over a 128-foot Rocky Mountain cliff to her death. His motive, investigators say, was $4.7 million in life insurance. Henthorn faces life in prison when sentenced on December 8.

The murder-for-insurance story has become all too common this year. More than a dozen cases have been filed across the country, mostly involving the death of spouses who are heavily insured.

There’s another common thread in many of these cases over the years: murderers have killed previously. Investigators now are convinced Henthorn killed his first wife in 1995. She died when the couple’s Jeep fell off a jack while changing a flat tire on a remote road, crushing her beneath it. Henthorn collected $600,000 in insurance in that case.

So the question must be asked: If investigators had dug just a little deeper back in 1995, and gathered a bit more evidence, could they have prevented or at least deterred Henthorn from killing again? Maybe. Maybe not.

Investigators might not even have known he’d taken out a life insurance policy on her. We often hear from detectives in homicide investigations, asking about how they can find out if a policy exists. This suggests that other investigators don’t bother asking. Learning that a murder victim is heavily insured is crucial because it often opens the door to other motives and evidence.

The other thing we’ve learned from exploring these cases is that killers often are smart and calculating. They research their potential crimes on the Internet. So it’s good that the Henthorn case is receiving widespread coverage. It sends a signal that killers get caught and punished for this crime, and hopefully that causes people to think twice.

Let’s hope so.

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