Un-civil civil penalties can thwart fraudsters

States need civil actions when criminal system slow to respond Continue reading

nullCrafting a model fraud law was one of the Coalition’s first agenda items when we were founded in 1993. It took us two years to complete, and still is the most complete anti-fraud model law on the streets.

The larger the fraud the stronger the penalty, our model says. Arson and other potentially life-threatening schemes merit the most-serious felony sentences. We also created a unique law exposing leaders of crash rings and organized fraud schemes to large civil fines that can bankrupt their operations.

Our “unlawful insurance act” was ahead of its time — few policymakers grasped the civil penalty’s purpose when we wrote that model in 1994. Yet with many lawmakers reluctant to strengthen criminal penalties, maybe it’s time to go after more ringleaders in civil court.

New Mexico lawmakers resist allowing judges to aggregate the full amount of the scam when sentencing fraudsters. It would let judges mete out stiffer jail terms and fines.

New York is legendary for stonewalling much-needed laws clamping down on recruiters for crash rings, and other scammers. Key committee staff typically see little need for more felonies. And supporters of tougher laws are unwilling to compromise with light misdemeanors that would discourage over-worked prosecutors from taking cases.

Some states also want to decriminalize some offenses that, the thinking goes, might further clog already-crowded prisons with non-violent offenders. It’s also harder to push for stricter criminal insurance penalties when there’s a move afoot to decriminalize other offenses.

Maybe we should seek more civil actions when the winds of change for tougher criminal penalties blow in our faces. Enacting large civil penalties get inside the wallets of fraudsters and remove their profit motive.

The Coalition helped Maryland and Minnesota enact a civil penalty. Both states can quickly go after fraudsters on their own, without waiting for the often slow-moving criminal system to wind its course. Maryland has seen success, and Minnesota wants to ramp up it effort.

To paraphrase Robert Frost — two roads diverge. One takes us on the difficult road for stronger criminal penalties. The other is less traveled. We seek civil actions when the criminal system isn’t set up to fully respond.

Fraud fighters need to have this discussion. Is it time to enact more civil penalties against fraudsters?

Let’s begin the talk.

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

Statutes of limitation should start when scam discovered

Fraud fighters gain more time to unravel crash rings, other complex frauds Continue reading

I’m often mistaken for an attorney. I’m not (much to my mother’s lament) but the law still is something I understand, or at least the kind that seeks to tamp down insurance fraud.

All states have laws setting timeframes for when prosecutions must be launched. Most statutes of limitation start the clock ticking when the crime is committed. That’s fine for crimes such as murder, which entail a very specific act.

Complex financial crimes such as insurance fraud are different. Insurers may discover a suspected scam well after the money was stolen. Staged-crash and medical rings might get away with bogus injury claims for years before insurers can discover them, and piece together enough evidence to earn a prosecution. Some life insurance scams can also take years to unravel.

Obvious insurance crooks who’d normally be convicted can go free on what amounts to a technicality.

Colorado and Arkansas recently gave fraud fighters more time to build cases against larger-scale scammers.

Colorado’s three-year statute of limitations starts running when the insurance crime is discovered. The clock used to start ticking when the scheme happened.

Arkansas allows five years for staged crashes (though still three years for other insurance crimes). The statute begins when the last scam occurred.

There’s also a wrinkle — fraud fighters have six-10 years if they couldn’t reasonably have discovered the scam in time.

These states grasp that complex insurance scams take time to discover and dismantle. It makes little sense to treat insurance fraud like a home burglary, bank robbery or murder. These are single acts that occur in specific moments.

Fraud fighters and victimized policyholders alike get a fair shake from the wise new laws in Colorado and Arkansas. Other states should review their statutes of limitation and follow this smart lead.

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

Could bogus health scams emerge from health reform

Lack of oversight could attract new wave of scam artists Continue reading

It’s anyone’s guess what will happen with the off-again, on-again attempts to repeal/replace/improve the Affordable Care Act.

But one thing seems sure: Republicans in Congress and the White House seem bent on pushing a couple of changes every scam artist should love.

The first is H.R. 1101, the Small Business Health Fairness Act of 2017. It would allow health insurance to be sold through association health plans. It sounds like a solid idea — get a bunch of like-minded people or businesses together, form your own plan and buy coverage in the unregulated secondary market. There’s a lot of problems here, as consumer and healthcare groups point out in a recent letter to Congress.

Our biggest beef is that the bill would exempt AHPs from some state regulation. Lax scrutiny could tempt scam artists to set up their own AHP, collect a ton of premiums and then disappear. It’s happened before.

The same scenario is likely with selling health insurance across state lines. The lack of regulatory oversight is an invitation for scam artists to defraud individuals and businesses by setting up bogus health plans.

The White House likens selling health insurance across state lines to selling auto insurance across state lines, which to our knowledge doesn’t happen. Do supporters of these proposals simply not understand the potential consequences for consumers?

Most supporters probably don’t remember the last wave of bogus health plans during 2000-2002. The Government Accountability Office reported 144 unauthorized entities peddled bogus health coverage to more than 200,000 policyholders. The cons stole at least a quarter billion dollars in lost premiums and unpaid medical claims many victims were forced to pay out of their own pockets. One family had a child with brain cancer, only to discover they’d bought fake coverage.

Stricter laws and tighter regulation followed, and the bogus health plans seemed to disappear. Whatever happens with healthcare, let’s hope Congress has the wisdom to first do no harm in aiding and abetting healthcare scams.

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

Axed prosecutor leaves gap in fraud fight

Took down large rings, successor must keep up pressure Continue reading

If I was an insurance scammer I’d be doing my happy dance. President Trump’s axing of Preet Bharara removes the nation’s most formidable federal fraud buster.

Bharara’s best-known for convicting crooked government officials, insider traders and ponzi artists like Madoff. Bharara also hunted down many of the nation’s largest insurance-fraud rings as U.S. Attorney for the Southern District of New York.

He assembled a crack team of super-smart attorneys who went after insurance fraudsters with a mission-drive passion. Bharara built an unmatched courtroom machinery.

Scores of the large insurance rings went down — Medicare, staged-crashes, disability and other corrupt operations. Hundreds of insurance scammers likely were swept off the streets since President Obama installed Bharara in 2009. The savings in stolen insurance money probably reaches many billions of dollars.

The largest no-fault crash ring in history crumbled under his grip. It was a $279-million behemoth of fake whiplash claims that earned ringleader Michael Danilovich a place in the Insurance Fraud Hall of Shame.

Dozens of Long Island Railroad employees lived the good life. They took early retirement after a corrupt doc falsely certified them — for bribes — as disabled. They took millions in taxpayer disability money while golfing, traveling, working out at the gym. Bharara earned guilty pleas from 28 swindlers and convicted the rest.

Wealthy Russian diplomats scattered after he went after them for swindling Medicaid, the federal health program for the poor.

In what may be his last case, Bharara charged ringleaders in a suspected $57-million Medicaid ripoff centered around a clinic in New York City in early March.

Incoming presidents routinely purge the U.S. attorneys, who are party appointees. It was inevitable that Obama’s brightest courtroom light would be ushered out the door.

New York is an epicenter of large insurance scams. Much is driven by vast underworld crime cartels and syndicates. Billions of insurance dollars are on the line.

We’ll urge Bharara’s Republican successor to keep insurance crime a high priority — and even expand operations with the same passion that drove Bharara. Let’s turn that fraudster happy dance back into a trail of tears.

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

Why dishonest claims turn violent

Claimant mugs adjuster, showing danger to fraud fighters Continue reading

Prentice Ponds was trapped. He bought a damaged Chevy Camaro on eBay, then did a dumb thing. The Tulsa man billed his auto insurer for repairs, lying he crashed the car after buying it.

A suspicious insurer adjuster came to his Tulsa home for a chat. Mark Frayne had the original eBay photos. That damage matched the crunched auto parts in photos Ponds gave Repwest Insurance.

Ponds panicked and beat up Frayne — breaking his ribs, lacerating his head, and stealing his claim evidence. The jury came down hard. Ponds got life in state prison for the assault and robbery, and 25 years for the insurance plot.

Fraud fighters often put their safety and even lives on the line. Insurance cheaters can be panicky, jittery, unhinged when interviewed in the field. Jail’s coming on fast, their careers and jobs lost. They lash out, somehow thinking a fist or gun will bail them out of a conviction.

Kim Sledge and Rhett Jeansonne were respected investigators for the Louisiana insurance department. They knocked on the office door of an insurance agent suspected of stealing client premiums. The agent ambushed Kim and Rhett. He gunned them down, then shot himself.

Sallie Rohrbach was an auditor for the North Carolina insurance department. She was reviewing the books of an agent who might’ve stolen client premiums. Michael Howell clubbed Sallie to death with a chair in his office.

Fraudsters have ordered hits on witnesses, tried to bully them from testifying, and even plotted to murder judges. Fortunately the hits didn’t come off, though were just one trigger pull from erasing lives.

So let’s applaud fraud fighters, who know violence can come with their next knock on a door. Let’s also rethink insurance fraud. A few small, silly claims? Tell that to neighbors who’ve died in botched home insurance arsons. And especially, tell it to the families who Kim, Rhett and Sallie left behind.

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

 

Personal injury law firm’s PSA alerts to crash soliciting

Lawyers promote fraud bureau’s tip hotline Continue reading

Rarely do you associate trial attorneys with anti-fraud efforts, but a law firm in Florida is doing just that with a new public service video warning consumers about door-to-door scammers looking to sign up auto accident victims.

“If you’ve been in an accident and a stranger knocks on your door to get you to sign up for a doctor or lawyer, they’re breaking the law. Some of these criminals even have the nerve to walk into your hospital room. They may even text you to get your case. They probably illegally obtained your police report…These people are not only annoying, they’re trying to steal from you. Don’t sign anything. Instead call the insurance fraud hotline. You could be entitled to a reward.”

The video then flashes the fraud hotline number of the Florida Division of Insurance Fraud.

Soliciting accident victims within 60 days of a crash is a crime in the state, thanks to a law enacted a few years ago that was pushed by fraud fighters in Florida and the Coalition.

Illegal soliciting still occurs, although much less frequently.

So what’s the motivation behind the Rubenstein Law firm in sponsoring this PSA? Are they trying to cut the crooked lawyers out of the action to gain more clients for themselves? Or perhaps they truly do care that solicitation scams hurt consumers.

Whatever their motivation, we commend the law firm for supporting anti-fraud efforts in the Sunshine State.

Humble and brazen health claims

More must be done to keep outrageous hospital charges in check Continue reading

$100,000 for ear wax removal? $46,000 to remove a bunion? Those are some of the outrageous charges cited this week by a judge who awarded Aetna $51.4 million from a Houston surgical hospital.

In a two-year period, Humble Surgical Hospital in Houston, Tex. billed the insurer more than $68 million. Humble billings these are not.

The five-bed surgical center, created by 10 doctors in 2010, charged patients in-network rates but billed the insurer at out-of-network rates. Some bills were as high as ten times what other hospitals charge.

Why did the insurer paid $41 million before challenging Humble’s bills? Aetna isn’t known for throwing money at medical providers, and it sponsors a good SIU team. (Full disclosure: Aetna provides health insurance for Coalition staff.)

Perhaps part of the problem is prompt-pay laws in many states that encourage insurers to “pay and chase” suspect claims. Some states grant delays in paying claims when fraud is suspected. Others do not.

The Humble claims spanned 2010 to 2012. Since then, new technologies such as predictive modeling have been developed to help insurers detect claim anomalies quicker and better. Another new development is the sharing of suspect claims information through the Healthcare Fraud Prevention Partnership.

As someone who pays a hefty monthly premium for health insurance, I hope Aetna and other health insurers use all the anti-fraud tools at their disposal to keep such brazen claims practices in check.

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

Does Super Bowl ad encourage fraud?

Check out this preview of a Super Bowl ad by Sprint — Dad pushes car off a cliff to fake his death in front of his kids. The guy’s portrayed as a loser, but still … does the ad plant … Continue reading

Check out this preview of a Super Bowl ad by Sprint — Dad pushes car off a cliff to fake his death in front of his kids. The guy’s portrayed as a loser, but still … does the ad plant criminal ideas with at least some of the 100 million fans expected to watch the NFL extravaganza this Sunday evening? What do you think?

Examining examinations under oath

Ill-conceived Wash. bill would harm fraud fight, consumers Continue reading

A valued and effective anti-fraud tool that benefits consumers would be hobbled under a misguided bill in Washington State. It’s called the examination under oath, or EUO.

Insurers interview claimants, who are legally bound to answer questions truthfully. Thoughtful questioning by trained investigators can expose lies and mistruths by claimants trying to hide suspected scams. Telltale clues often can be uncovered only by EUOs. This is why they’re crucial to exposing often well-hidden crimes.

Many fraudsters don’t even bother showing up for an EUO, which helps insurers halt suspected claim payments and close out bad claims.

Under the Washington bill, the statute of limitations for using EUOs would begin when a suspected scam happens, instead of when an insurer discovers it. This strict time limit imposes arbitrary legal handcuffs, regardless of the actual crime-fighting need.

The bill’s stated goal is to protect consumers from supposed insurer fishing expeditions — though where’s the proof of fishing trips? We’ve seen no evidence.

“This would set up a system where insurers would be forced to pay suspect claims before they could adequately decide whether the claim is legitimate,” the Coalition wrote the chair of a subcommittee that’s vetting the measure.

Insurers use EUOs judiciously, only when clear red flags of possible fraud are uncovered first. Companies have neither the time nor budgets to conduct large volumes of EUOs on all claims.

The Washington bill thus would backfire. Insurers would be forced to pay suspicious claims because they wouldn’t have time to fully investigate for warning signals. More bogus claims means more crime and higher premiums for honest insurance consumers in Washington.

If an insurer is abusing the privilege of compelling claimants to appear at EUOs to answer questions, regulators and existing law have existing remedies to punish them. Curtailing this important tool across the board is not in the best interest of public policy.

The Coalition will publish a white paper on EUOs later this year. We will shed more light on how EUOs work, and why we need them to work effectively as anti-fraud tools.

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

8 worst scammers of 2016 chosen

A home explodes … hundreds of setup car crashes churn fake whiplash claims … a helpless cerebral palsy patient starves to death. All to steal insurance money. The year’s extreme schemers are among the eight worst insurance criminals of 2016. … Continue reading

A home explodes … hundreds of setup car crashes churn fake whiplash claims … a helpless cerebral palsy patient starves to death.

All to steal insurance money.

The year’s extreme schemers are among the eight worst insurance criminals of 2016. They were elected to the Insurance Fraud Hall of Shame by the Coalition Against Insurance Fraud.

The Shamers reveal the year’s most brazen, bungling or vicious convicted insurance swindlers.

Insurance fraud is one of America’s largest financial crimes. Scams steal at least $80 billion annually, and many insurers say fraud is growing. Many consumers believe it’s ok to inflate claims, and they’re at risk of committing this crime, research reveals.

Victims are traumatized, maimed, lose their savings and have their credit ruined. Some die.

Exploding home. Two neighbors were incinerated and an Indianapolis subdivision nearly leveled when Bob Leonard helped accidentally blow up a house in a botched $300,000 home arson. “Oh well, they died,” Leonard said of the next-door couple. Sentence: life without parole.

Faulty no-fault con. Michael Danilovich masterminded a $279-million attempted looting of auto insurers with hundreds of staged car crashes in the New York City area. It was the largest no-fault auto scam in U.S. history. Crooked medical providers deluged insurers with fake whiplash claims. Sentence: 25 years.

Deer deception. Mob associate Ron Galati used deer parts and blood to gore up cars and claim the vehicles crashed into deer. Galati’s Philadelphia body shop made $5 million of inflated damage claims from phantom deer and other collisions. He even took a sledgehammer to cars, and plotted to have a witness shot. Sentence: up to 29 years.

Lawless libido. John Alfonzo Smiley was shot and paralyzed while arguing with a couple after he and his wife swapped sex with them at a San Francisco swingers club. Smiley claimed $4 million of workers comp money. The corrections officer contended — with a straight face — that a former inmate with a grudge shot him. Sentence: eight months.

Samaritan scam. Shannon Egeland had his son shotgun him in the legs to scam his disability policy. Egeland’s legs were shattered and a foot amputated. He claimed he was ambushed after stopping to help a stranded pregnant motorist near Caldwell, Idaho late one night. Sentence: awaiting jail term.

Killer caregiver. Makayla Norman was a cheerful 14-year old — and bedridden with cerebral palsy. The Dayton teen’s home caregiver Mollie Parsons starved her to death while making large Medicaid claims for supposedly steady care. Makayla weighed 28 pounds. Sentence: 10 years.

Baby murdered. Moussa Sissoko shook his infant son Shane to death for $750,000 of life insurance he took out on the baby. The Washington, D.C.-area man seemed like a caring father, yet plotted Shane’s death from the start. Sentence: 50 years.

Mental error. Dr. Fernando Mendez-Villamil made $60 million in false Medicare and Medicaid claims for mental-illness drugs. The Miami physician plied patients with powerful drugs whether or not they needed the meds. Insurance fraud bought him a mansion and art collection. Sentence: 12 years.

Fortunately, a small army of fraud fighters is committed to turning the corner on this crime. Most insurers have agile investigators, and so do most states. Technology even can predict some scams. And most Americans are honest.

Progress is being made. Yet the insurance money’s too good and attracts too many scammers for easy answers. As the Shamers show us, sometimes a cold jail cell is the best deterrent.

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