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.

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 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.

Let’s armor instead of oppose electronic health records

Rising technology can better catch shysters who find gaps in the system

A recent column by syndicated conservative columnist Charles Krauthammer mourns the federal requiring of electronic health records. Doctors are leaving the profession because they can’t keep up with record-keeping requirements, he says.

“Virtually every doctor and doctors’ group I speak to cites the same litany, with particular bitterness about the EHR mandate,” writes Krauthammer .

Besides, the electronic data highway makes it easier to commit fraud by cutting and pasting false info into data fields, the columnist writes.

Reminds me of the same futile complaints when desktop computers started replacing typewriters back in the early 1980s. The strange new technology would ruin the efficient manual record-keeping of office staffers using their trusty IBM Selectrics, the cry went out in many circles.

Doctors also have complained about paperwork ever since large medical groups began buying up small practices and implementing streamlined software and tighter procedures to make their practices more efficient and protect against scamming.

There may be at least some grain of truth to the complaints. But hardly enough to stop the inevitable march of progress. The best doctors will adapt. The best crooks also will find gaps in the electronic networks; that’s what they do well.

High-gear technology such as predictive and predictive analysis increasingly also is arming fraud fighters with tools to better uproot the best-hidden crimes. Investigators are poised for a potential revolution in how they uncover medical and health-insurance schemes. This is especially true of long-abused Medicare, which is connected to the electronic-record highway like Siamese twins.

So instead of taking the Luddite path of decrying the electronic highway, let’s continue armoring the system against insurance shysters. We make progress by, well, making progress work for us.

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

Lawsuit threatening N.J. fraud fight tossed

Vigilance against such suits needed in any state

A federal judge tossed out a New Jersey doctor’s lawsuit that could’ve threatened the state’s fraud fight. It’s a call for vigilance despite the win.

Harshad Patel owns a diagnostic imaging firm — X-rays and the like. The state and insurers are investigating him for possible bogus claims. He fired back with a lawsuit. Patel alleged that insurer funding of the state Office of Insurance Fraud Prosecutor allows insurers too much insider influence over who the state investigates for suspected scamming.

Fraud fighters followed the case closely. A successful lawsuit could’ve jeopardized funding of state anti-fraud efforts. Like most states, New Jersey’s fraud bureau is funded by annual assessments of insurers. Funding, however, has zero influence over which cases the state investigates or prosecutes, the state and insurers steadily argue.

Patel filed his original complaint to try and sidetrack their investigation of potentially false treatment claims, insurers contended.

Fortunately, the judge dismissed Patel’s case — with prejudice. He had no legal standing to bring the suit, the judge ruled. Prejudice means Patel can never bring that kind of suit in New Jersey again.

The win ensures that New Jersey fraud fighters can safely return to busting the bad guys. For now.

Fraud fighters must stay vigilant. Patel lost on procedural grounds, leaving his “outsourcing” allegations untested in court. So that legal ball could easily remain in play, even if Patel is out of action. Another medical provider could try the same legal outsourcing gambit, and work around the issue of legal standing.

Several years ago there was a similar outsourcing suit in Massachusetts. We won there also. The Coalition wrote an amicus “friend-of-the-court” brief to support fraud fighters opposing the suit. Where else could a lawsuit rear up?

Fraud fighters should stay alert and watch for outsourcing suits in your backyards. All it takes is a willing claimant with a beef, and a special-interest group with deep pockets.

Insurer funding of state anti-fraud efforts is a time-honored approach that’s fair and works. Let’s keep the system away from ill-conceived lawsuits and instead working to catch fraudsters.

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

Dishonest drivers avoid auto premiums

Frustrated states make evasion an insurance crime

The Coalition surveyed state laws a couple of years ago to see how states deal with residents who falsely register and insure their vehicles in other states with lower auto premiums. Very few states consider this scheme an act of insurance fraud, we found.

North Carolina is an exception. Drivers must show proof of residence before they can buy auto insurance. North Carolina is trying to head off rate-evasion cons. Drivers in several states falsify North Carolina residence to obtain cheaper auto insurance than in their home states.

Rate evasion is a lose-lose for the victim state where the vehicles are garaged. Honest insurance consumers pay higher premiums to subsidize the smaller pool of drivers. Scofflaws also rob the state and local governments of registration fees or vehicle taxes.

Yet few prosecutors will go after dishonest drivers unless there’s a specific fraud law that makes convictions of violators more likely.

We may be seeing a surge of other frustrated states that have seen enough of dishonest drivers.

New Jersey is about to make life much harder for cheaters by strengthening its law targeting those who use out-of-state addresses to avoid higher New Jersey insurance. The governor signed the bill into law late last week.

New York is on tap tap with companion bills (S 4900/A 7237). The sponsors are well-placed legislators from both parties, suggesting a strong chance of success.

The Coalition is joining with insurer partners to push the legislation into law. Fraud fighters shortly will start a grassroots letter-writing campaign to show legislators in Albany why they should vote “Yes” for passage.

We strongly encourage New York fraud fighters to write their legislators. Let’s push for a surge of legislation that turns this scam into a dead-end street for cheaters.

Yet more states could see bills clamping down on premium evaders. It seems there’s a growing feeling that enough is enough. Let’s turn avoiding auto premiums into a dead-end street.

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

Guest blog: Staged crashes a common theme in N.C.

Insurance swindlers growing more sophisticated

North Carolina insurance commissioner Wayne Goodwin is the new chair of the NAIC’s antifraud task force. He replaces long-time chair Sandy Praeger, who retired as Kansas insurance commissioner at the end of 2014. 

We invited Commissioner Goodwin to be our guest blogger this week. He discusses emerging fraud trends his fraud bureau sees, and ongoing schemes he battles year in and year out.

We have the oldest insurance fraud bureau in the country. We are celebrating our 70th anniversary this year. We have a proud history, but we know that success in fighting fraud hinges on keeping in front of evolving criminal trends.

Fraudsters can cripple our economy unless we find a way to combat their unscrupulous acts. Far from being a victimless crime, every policyholder foots the bill for insurance fraud.

Technology is a common denominator in many of the fraud trends we are currently seeing. It’s amazing how sophisticated criminals have become. With the hardware and software currently on the market, criminals are becoming more and more sophisticated. With the advent of digital currency as a method of payment, I am sure we will see this become a factor in insurance fraud.

Cyber laundering is a new way to hide the proceeds of crime, and fighting money laundering in cyberspace is a daunting task for law enforcement agencies. There is little to no training available, and it is my hope the antifraud task force can draw attention to this issue and create training to combat this new criminal element.

Staged crashes have been a common scheme over the years, but more recently they’ve taken on a new twist. We are seeing more cases in which people stage actual car crashes rather than cases in which the accidents only occur on paper in insurance documents.

Furthermore, to take advantage of the medical payouts associated with staged crashes, some people include children into their schemes. When individuals resort to involving children in a car accident for money, there is a whole new level of concern.

We have to get ahead of the trends, and we can do that with proper training and equipment. I read that the Coalition has determined 95 percent of states are using some form of anti-fraud technology. With the reductions to state budgets, I was excited to hear this. States do take insurance fraud seriously.

The mission of the antifraud task force is to serve the public interest by assisting the state insurance regulatory officials, individually and collectively.  We are promoting the public interest through the detection, monitoring and appropriate referral for investigation of insurance crime, both by and against consumers.

I want those who commit insurance fraud to know that we are united in our efforts, and will do all that we can to stop them. I look forward to our relationship with the Coalition and can’t wait to get started.