Subsidies with fake IDs prompt premature howling

Fraud a needless political football, give Obamacare time to succeed or fail

Critics of Obamacare were handed another case of ammunition with the revelation that undercover federal investigators used fake identities to obtain taxpayer-subsidized health coverage.

Operatives slipped through the system in 11 of 18 tries, the nonpartisan Government Accountability Office says.

Republicans jumped all over the findings, contending this is more evidence that Obamacare is a mismanaged boondoggle that’s wide open to fraud and abuse.

Six of the GAO’s fake online applications were blocked by eligibility checks built into computer systems at But the GAO says its undercover agents evaded that and enrolled anyway.

GAO investigators created fake identities using invalid Social Security numbers and falsely claiming citizenship or legal residence. Some operatives invented income levels that should’ve disqualified them from obtaining subsidies.

Some contractors handling the applications told the GAO that they weren’t hired  to root out fraud, the GAO found.

In the bigger picture of things, Republicans and Democrats are trading blows over whether nearly 3 million inconsistencies found in consumers coverage applications suggest rampant fraud.

Republicans are predictably squealing with apocalyptic rhetoric. Yet nobody knows how deeply the revelations about Obamacare subsidies and application inconsistencies suggest deeply rooted and possibly fatal fraud. These are initial findings, not wrote truths.

Yes, football season is approaching, but let’s not make fraud such a political football. Obamacare is a new program. Any program of this size and complexity will leak some water at first. America itself was an experiment after the Civil War. The nation was untidy and full of deep structural problems as it rebuilt during the Reconstruction period. Critics could’ve easily howled that the America was a doomed train wreck of a nation.

Let’s allow the followup findings to paint a more-accurate picture of fraud in Obamacare. If there’s a lot, then work to fix the system at its leakage points. Obamacare and consumers are better-served by intent problem solvers. Give it a chance to succeed or fail on its merits, not on premature and single-minded badmouthing for political gain.

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

Ridesharing: Old laws, regs collide with new technology

Explosive industry raises concerns about fraud, and who’s covered when

The issue of ridesharing has exploded in recent months. Concerns about whether the drivers have proper insurance are just one of the questions raised by regulators, insurers and consumer groups. Insurance fraud is a side concern for now, but is growing with the rideshare industry.

News coverage has mostly focused on state and local oversight of ridesharing, and complaints by local taxi drivers and companies about their new competitors. In the past several weeks taxi drivers here in Washington D.C. demonstrated against the ridesharing firm Uber’s growing presence in the nation’s capital.

Cabbies are worried that the largely unregulated rideshares will cripple the mainstream taxi industry. Ridesharing firms should meet the same regulatory standards as taxis and other for-hire vehicles, the cabbies argue.

State insurance regulators, state attorneys general, consumer groups and local taxi commissions increasingly are vocal about insurance and oversight issues. The California insurance commissioner has actively voiced insurance concerns. A big question is for rideshare drivers to manage auto coverage so a private vehicle is covered when it’s operating both privately and as a commercial rideshare.

I have a friend who owns a livery service. He’s affiliated with Uber. He has an app on his smartphone that when turned on tells Uber he’s available to pick up passengers.

We talked while he drove me to the airport recently. He has a proper state license and insurance for livery use of his vehicle. Still, he’s unsure when Uber’s auto policy protects him when driving an Uber passenger, and whether Uber’s insurance covers him while driving to or from picking up a passenger.

This raises questions about insurance fraud. At least one insurer has been reported to denying several damage claims by San Francisco rideshare vehicles the insurer says were personal vehicles used commercially. Several fraud-related issues thus arise from this new industry:

  • Do ridesharing drivers and cars have adequate insurance to act as a commercial driver and vehicle?
  • Does a rideshare driver’s personal-auto insurer know that the vehicle also is being used commercially?
  • Is the driver lying to his or her personal auto insurer that the vehicle is used commercially for part of the time?
  • Is the driver filing a fraudulent personal auto claim for a loss that occurs when driving commercially?
  • What protections do injured passengers have if the personal auto insurer denies claims because the vehicle was used as a rideshare outside the scope of the policy?

Ridesharing reveals how 21st technology is outstripping laws and regulations that have been mainstays for at least a century. Consumers can use a smartphone to arrange a ride without hailing a taxi from a street corner.

Clearly we are heading into a new era. Taxis are heavily regulated. Laws and regulations must be updated and adapted to ridesharing — it is here to stay. Fraud fighters must ensure that ridesharing companies do an honest business with their insurers — and the consumers entrusted to their care.

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

More courts need to hear from insurers about how fraud affects them

In many states, fraud victims have a right to have their say in court

Justice imageLawyer Joseph Haddad stood in a Connecticut courtroom yesterday and pleaded guilty to masterminding an auto fraud ring that swindled millions from insurers.

Before the judge announced Haddad’s sentence, the court heard how crimes like his negatively affect insurers and society.

John Sargent, investigations director for MetLife, read an impactful statement in court that detailed how automobile fraud schemes raise rates, disrupt the lives of innocent crash victims, compromise medical records and cost insurers a ton of money.

The statement helped educate the judge, other court officials, reporters in attendance and even the convicted fraudster about how fraud is detrimental to society and erodes trust.

The fraud-fighting community does a good job of reaching out to consumers, legislators, the news media and others, but sorely lacks in educating the judiciary. Many states have enacted “victims’ rights” laws that allow victims — including insurers — to make a statement in court either during a trial or at sentencing, but few insurers take advantage of this opportunity.

We don’t know if John’s statement influenced the sentence in this case (51 months in prison, $1.7 million in restitution), but hopefully this information will be recalled the next time a fraud mastermind comes before the court.

As John concluded in his statement: “With all the resources the insurance industry and law enforcement dedicate to combating fraud, we will never be able detect, investigate and prosecute all of the schemes like this one. We must rely on deterrence to encourage professionals not to cross the line into committing fraud. We must rely on the criminal justice system to administer swift and sure punishment that will send a clear message to others that society will not tolerate such unethical and criminal behavior — and if they do cross that line, they will pay the price.”

The Coalition has posted facts, figures and a sample statement on a webpage for anyone wishing to make such a statement in court.

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

How Obamacare likely will impact p/c insurance

Changes will be both positive and negative, but real impact still unknown

obamacare logoFull implementation of the Affordable Care Act — with tens of millions of added people covered by healthcare policies — will have substantial impact on property/casualty insurers and their policyholders. Some of the effects, including coverage, regulatory and legislative changes, will be positive for insurers. Other unintended consequences could hurt.

Four years after passage, there’s no consensus on the net effect of Obamacare, said a panel of experts from yesterday’s ACE claims conference in Washington, D.C. Yet, there was agreement that insurers and state regulators must prepare for upcoming changes, including a likely uptick in medical fraud.

Among the interesting observations made by panelists:

• Gamesmanship involving provider upcoding will accelerate, and unfortunately property/casualty insurers usually do not respond quickly enough to detect and counter these schemes, says Dr. Rick Wakefield of International Health Consultants. State insurance regulators should give insurers more flexibility to respond quicker to upcoding schemes, he said.

• With Obamacare squeezing some medical disciplines, providers likely will turn to property/casualty insurers to make up the difference, Dr. Wakefield also predicts.

• With universal healthcare, a major reason for keeping no-fault automobile coverage is fading, says Peter Foley, vp of claims administration for the American Insurance Association. No-fault was enacted in many states because low-income drivers lacked healthcare coverage. With Obamacare, no-fault is not as necessary as it once was.Lawmakers and policyholders may be apt to dump no-fault and its added fraud costs.

• The collateral-source rule, which prohibits admitting evidence that plaintiffs have received compensation from some source other than the damages sought against the defendant, could encourage “double dipping” where medical providers get compensated from healthcare policies and from auto or comp insurers, says Kevin Hilyard, claims vp for Nationwide.

• The Affordable Care Act includes 39 anti-fraud provisions that have helped the federal government recoup $8 for every $1 spent in combating fraud, says Marc Smolonsky, a former senior official with Health & Human Services. Yet the added resources aren’t nearly enough to counter the potential increase in fraud. The planned data-sharing project between private insurers and the federal government to detect medical fraud may be in jeopardy because of lack of funding, Smolonsky added.

• Lastly, there was concern that some states may no longer require businesses to buy workers compensation insurance since most workers now will be covered for illnesses and injuries under Obamacare. Some dishonest employers already are demanding that their workers claim injuries under health policies.

Changes are afoot, and it would serve insurers and the fraud-fighting community to be well-prepared as the impact of the Affordable Care Act becomes clearer.

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

Statehouses already shuttering for 2014

Summer slowdown buys time to pivot to 2015

June 1 is the start of meteorological summer and hurricane season. It’s also when government affairs folks start pivoting from the current legislative sessions to planning for 2015.

Most state legislatures open only briefly, and that’s during the first half of the year. We’re still nearing the 2014 midpoint yet few legislatures remain in session. Nearly all will be shuttered for the year by the end of June.

Let’s step back and review this year’s legislative results to date, then talk about pivoting in more detail.

We predicted a robust year for anti-fraud bills and laws in 2014. The stronger economy freed up more time for legislators to deal with issues like fraud, instead of single-mindedly balancing cash-strapped state budgets. To a large degree, we were right. Dozens of bills were introduced, and many became law.

In a large respect, the year has been a healthy success. Our bill tally is down from last year’s record totals. The downtick points to a phenomenon that affects statehouses every state election cycle …

This is an election year. Many states will elect governors and state legislators this fall. The rule of thumb is “Do no harm.” Make as few ripples or controversy with voters as possible — quietly slide through and get reelected. Many politicians in both parties thus backed away from serious lawmaking this year.

Still, the year has produced numerous useful fraud laws. Among them: Three states enacted counterfeit airbag laws, and seven states considered stronger contractor laws.

Colorado enacted a felony insurance-fraud law. Maryland booked a venue law helping define where to best try fraud prosecutions. Louisiana expanded its insurance-fraud law: Impersonating an insurer to steer crash victims to crooked medical providers or repair shops became a crime of insurance fraud. Minnesota enacted a wider immunity law allowing more exchange of valuable case leads and other information.

With a healthy year on record, the 2015 pivot already is underway. The Coalition’s government affairs committee soon will look at at potential target states for much of the summer. Then we’ll create a roadmap of fraud bills to pursue in key states next year.

We encourage your insights. You may have grassroots knowledge of fraud issues in certain states. Send us your ideas for issues and states the Coalition might target for 2015. Contact me at

You know the Coalition’s lengthy background, and you know the Coalition can help move and anti-fraud initiative in your state. So don’t hesitate to reach out.

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

Home-grown scammers causing plenty of trouble

Mobster’s reputed auto cons show America can create its own defrauders

“I live my life to cheat insurance companies — my high every day is to cheat insurance companies.”

That’s the motto of reputed Philly mobster Ronald Galati, say accomplices arrested in a widespread sweep yesterday. A grand jury in the city of Brotherly Love indicted 41 yesterday for allegedly staging auto crashes and faking damage to previously banged-up cars. Galati and his body shop collected millions from insurers in the scam, prosecutors say.

Investigators say Galati even had shop employees gather and store deer blood, hair and carcasses as props in photos later submitted with claims to insurers.

Participants in the long-running scam include body-shop employees, tow- truck operators, a city cop and two insurer adjusters — plus Galati’s wife, son and daughter.

Galati, an auto mechanic at American Collision, Inc., had strong mob ties and was out on bail for allegedly masterminding a triple murder-for-hire plot against men he believed had testified against him involving the insurance plot?

Much of organized crime involving insurance in America focuses on immigrant groups — Russians in New York City, Armenians in Los Angeles,  Dominicans and Cubans in Miami, and Nigerians and Somalians in Houston.

This case reminds us that we still have home-grown gangsters likely defrauding insurers and their policyholders in every major city. Our work in exposing their crimes must remain vigilant — wherever they hail from.

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

More eyeballs can probe for Medicare Plan D cheaters

Drug prescribers face scrutiny as Medicare transparency keeps growing

Feel the fresh breeze? That’s from the Medicare database opening up and being exposed to public scrutiny.

A digital dumpster dive is in fast motion. We’re seeing a rush to dig into the federal government’s massive repository of medical provider data ever since Medicare announced it would make its provider database publicly available earlier this month.

A new era of transparency and accountability, the likes of which may have never been seen, is being opened up with surprising speed. Two more events happened this week to notch up the heat on suspect medical provides yet another notch.

First, CMS says it’s opening up non-encrypted Plan D data for easier outside scrutiny. That’s the prescription-drug arm of Medicare. CMS will expand access of unencrypted prescriber, plan and pharmacy identifiers to “researchers and other external entities.” Just who falls into these categories need clarifying, but the rub is that more people will gain more insights on docs who are spooning out suspiciously large quantities of prescriptions.

The latest move affects a large medical enterprise. Part D covers 37.5 million seniors and disabled patients. It pays for roughly 1 of every four prescriptions dolled out in the U.S., and costs taxpayers $62 billion in 2012, the journalist watchdog ProPublica says.

Then a second event happened just a week ago. ProPublica announced a new dive of its own into Medicare’s main database. More than 1,800 docs and other providers billed Medicare for the most expensive types of office visits at least 90 percent of the time in 2012, says ProPublica.

A Michigan doc allegedly charged the most complex and expensive office visits for virtually all of his 201 Medicare patients that year. He billed for an average of eight visits per patient.

Reporters around the U.S. have been prying open the database and writing about high-billing providers nationally or their regional circulation areas ever since Medicare’s original rule went public in early April. We welcome the added scrutiny that the Plan D database opening will bring.

The almost-giddy rush of exposing possible wrongdoing is all well and good. It’s a fresh news story, a new chance to make headlines. Let’s hope this is more than just another news cycle that disappears as soon as the next big news story rumbles into town.

Journalists and watchdogs will be challenged to keep the story alive, to keep mining Medicare for fresh insights that can expose and help weed out the dishonest actors who are gouging taxpayers. Consumers also need to know how their tax dollars are being spent.

And as I wrote in this space earlier, auto and homeowner insurers should dig into the data, including Plan D prescriptions. The same docs who are bilking Medicare may be milking these insurers as well. Insurers of all stripes might find useful fraud-related insights about specific docs and larger fraud trends that affect them.

So let’s work to keep this story alive and visible for a long time to come. And encourage insurers from public and private sectors to share findings that will increase the squeeze on cheating providers.

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

Enforcement can have unintended consequences

Do better fraud-busting reveal uncontrolled crime or solid enforcement?

Social scientists call it the “Law of Unintended Consequences.” That’s when an action creates results that aren’t expected when the action was contemplated.

Strengthening insurance fraud laws or increasing enforcement of existing laws can have its own unintended consequence: Fraud might appear to be spiking. Yet that could be an illusion. Better enforcement may simply be uncovering crime that already exists.

The Coalition worked with legislators and the insurance department to enact a strong anti-fraud law in a Great Plains state several years ago. A year or so later, I ran into one of the legislators we worked on the bill and asked him how it was going. “We didn’t have any fraud until you guys showed up,” he kidded me.

Fraud wasn’t being investigated or reported to law enforcement before the law took effect. Insurers began investigating and reporting the crime to law enforcement after the measure took effect.

Fraud seemed to be spiking. But maybe the opposite was taking place: Stepped-up enforcement could’ve started diminishing this crime.

Oregon is the only state without a specific insurance-fraud law or fraud bureau. That means few investigations or prosecutions happen. It creates a false sense of security, that insurance fraud barely exists in the state. Yet, we in the anti-fraud community know otherwise.

If Oregon enacts a needed fraud law, the welcome boost in enforcement could suggest a seeming crime spike. The populace would need to be carefully educated that fraud isn’t necessarily running out of control. Instead, fraud fighters may be just doing a really good job.

Incidence of suspected fraud spike and fade for all kinds of reasons. A state may start to enforce its mandatory fraud reporting requirement and all of a sudden, the number of cases skyrocket. Or as we’ve seen during the 2009/10 recession, fraud bureau budgets can cut, and the number of cases dwindle.

I was reminded of unintended consequences last week when the Social Security Administration released a video last week that noted “Social Security’s zero-tolerance approach has resulted in a fraud incidence rate that is a fraction of one percent.”

Just goes to show that you don’t really have a fraud problem if you don’t bother looking for it.

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

Should marijuana replace addictive opioids?

Studies still needed, but insurers must solve prescription-drug pandemic

Could marijuana replace OxyContin as the painkiller of choice?

As legal pot spreads across America, insurers might want to consider this alternative.

I had the honor last Friday of serving as keynote speaker for the annual conference of the Rocky Mountain chapter of IASIU held just outside of Denver. It was a well-attended meeting with good speakers and interesting topics — including one on the impact of legal marijuana on insurance.

With a few hours to kill before my plane departed, I decided to check out Colorado’s latest burgeoning industry and visit a marijuana dispensary to satisfy my curiosity (and impress my hip friends back home).

The dispensary in Boulder is called The Farm. It was a medical marijuana retailer before the state legalized recreational pot for adults on January 1. Entering the store, ID was required and scanned for validation.

“You wouldn’t believe how many underage kids try to use fake IDs to get in here,” the young woman behind the counter told me. After validation, she handed me a plastic chip with a number on it. She encouraged me to look around while waiting for my number to be called.

The store’s main section looked like a traditional jewelry store with several showcases of shiny merchandise. Instead of diamonds, glass bongs were featured. It was certainly more upscale — and expensive — than the head shops I recall from the 1960s and 70s.

A locked side room contained the featured merchandise on display. Only perhaps a half-dozen customers at a time were allowed in the room, where marijuana products were displayed along the walls and underneath glass display cabinets.

If more studies conclude marijuana is effective and relatively safe for pain relief, then insurers and government programs should consider getting out front to replace the widely destructive — and expensive — use of opiods.

I told the clerk I wasn’t buying but wanted to see what was available and just look around. He was accommodating and knowledgable of the many products available, from dozens of varieties of marijuana to edibles to oils.

As I wandered around, I noticed the clientele wasn’t anything like I imagined. One guy looked like a corporate middle manager. Another could’ve been a truck driver, and a middle-class, middle-aged woman also perused. None looked like the potheads I’d expected. Overhearing their conversations, I learned that all sought relief for some ache or pain. One had back problems and another customer had arthritis.The corporate guy was picking up a package I surmised was for a family member, perhaps wife or parent, who had cancer.

Different types and strains of marijuana are suggested for different ailments, the clerk told me. Some marijuana even is sold without the key ingredient that gets users high — and his clients attest that it’s still effective.

I’d always thought that medical marijuana was more of an excuse for stoners to get high legally, but new evidence out this week challenges that assumption.

If more studies conclude marijuana is effective and relatively safe for pain relief, then insurers and government programs should consider getting out front to replace the widely destructive — and expensive — use of opiods. Prescription abuse kills Americans by the thousands, and is creating the largest generation of heroin users this country has seen. Prescription drug diversion also imposes a huge dollar drain on insurers and government health programs.

Twenty-one states and DC now allow marijuana for medical use. I’d love to see a group of insurers or a state Medicaid program conduct a pilot program in one state to test pot vs. opiods such as the painkiller oxycodone..

I’m still not sold on the idea of legal recreational marijuana, but medical marijuana might help curb one of our nation’s most pressing problems of prescription drug abuse.

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

New Medicare data a boon to fraud fighters

May reveal crimes that Medicare missed, and show how taxpayer dollars spent

Reporters have had a grand time sifting through data that Medicare recently released on its payments to docs for 2012. Intrepid news stories poured out, and continue being posted.

Medicare also is expected to release a trove of 2012 payments to hospitals and clinics very shortly.

Thousands of docs received $1 million each from Medicare and several dozen hauled down at least $10 million. Just 344 docs out of more than 825,000 received more than $3 million each, the Associated Press breathlessly reported. State and local news outlets are digging up data on docs in their backyards.

The high-earners typically make the biggest headlines. The unspoken implication of so many stories is that they may have milked Medicare.

A Google search of “database Medicare doctors released” shows about 1.7 million hits — an imperfect measurement but of some value in understanding how big a story the release is.

The medical lobby pushed hard to keep the data hidden away, fearing just this kind of reaction. The raw data can be misleading. Some docs may see a disproportionately high number of seniors or other patients, or have special expertise in a certain area. Some specialists may use expensive meds or treatments that are necessary.

Michael McGinnis received $12.6 million from Medicare in 2012. He was the third-highest beneficiary in the database. He says his Medicare ID code is used to bill for about 27 docs at Plus Diagnostics in Union, N.J., where he’s the medical director.

There may be some truth to such contentions, but Medicare still has done a valuable service. We’ll gain a much better understanding of how Medicare money is being spent.

Certainly fraud fighters have far more data to mine for leads. Auto and workers comp insurers would be wise to jump into the numbers. The same docs or crime rings that defraud Medicare may be going after private auto, comp and health insurers. Many of the ensuing investigations also could uncover criminals who Medicare didn’t catch.

Docs also owe an explanation of where our taxpayer money goes, because it’s our money. And Medicare outliers should be subject to closer scrutiny. Investigations repeatedly show that many outliers got that way for a reason.

Honest providers have nothing to fear if their outlier numbers have a clear and convincing reasoning. An accurate explanation to reasonable questions is part of the responsibility that comes with pocketing our money.

The public and editorial writers also owe every doc a duty not to rush to judgement until the facts come out. So let the facts step forward. We’re a better and more-informed society when we allow truth to surface than sitting on it and hoping there’s nothing to hide.

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