New fraud laws start with open dialogue

Md. public meeting helped focus on needed reforms

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

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

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

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

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

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

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

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

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

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

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

Slip and falls: The big waste

Scams suddenly real when guy fakes tumble during bus ride

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

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

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

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

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

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

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

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

Some consumers even joke about it on social media.

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

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

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

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

Let’s warn about crooked contractors before storms

Early notice gives consumers more chance to guard against scammers

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

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

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

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

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

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

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

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

Anti-fraud efforts removed from MLR

Keeping in MLR improves healthcare for everyone

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

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

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

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

This decision has impact well beyond state-federal Medicaid.

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

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

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

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

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

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

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

But too close a relationship could harm public interest

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

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

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

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

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

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

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

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

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

Insurance fraud … violent crime

Mob-style hits sought in name of insurance money

If police are right … foot doc Ira Bernstein tried to use Mafia-style head-knocking to beat up two insurance-fraud investigators and throw them off the track.

Bernstein and his girlfriend allegedly met with someone they thought was a hitman to kill his wife Susan — and rough up the investigators. The investigators were looking into whether he’d bilked health insurers.

The supposed hitman was a snitch who spilled the suspected plot to police.

Cleverly … police applied makeup so the investigators would look mugged. The snitch then showed Bernstein and his girlfriend the seemingly grisly photos to string the suspects along.

They could be innocent; that’ll come out in court.

Yet the case shines a light on something that should challenge many people’s belief that insurance fraud is a tame, white-collar prank.

Violence …

Against investigators … judges … witnesses … and other hardworking folks just trying to do fair justice.

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

Insurance regulators around the U.S. beefed up procedures for how investigators can stay safer in vulnerable situations such as when visiting a suspect’s office or home.

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

Tyesha Towanda Roberts offered to hired someone to shoot a witness involving insurance torchings of a home and two vehicles. The Baltimore woman wanted $10,000 to set up the murder. A cohort decided that her proposed hitman couldn’t be trusted. He offered to help shoot the witness himself. Except that Roberts and her cohort were spilling the plot to an undercover officer. Roberts will be sentenced in August 2016.

Nightclub insurer mogul Jeffrey Cohen plotted to rub out the judge overseeing the insurer’s liquidation.

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

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

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

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

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

Pay me now or …

Police are responding less and less to minor auto accidents

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

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

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

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

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

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

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

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

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

Partnering to combat workers-comp schemes

Joint efforts magnify impact and boost efforts against premium cons

Dollar for dollar, workers-compensation premium scams may be larger than bogus work injury claims. At least that’s what many expert say. And the problem seem to be getting worse, especially in urban centers with deep underground economies.

The Coalition met recently with an unlikely ally in this effort: the United Brotherhood of Carpenters. It represents organized labor in the building trades. The union believes premium-avoidance schemes harm workers and cost governments mightily in lost revenue.

Why lost revenues?

Shady businesses lowball how many workers they have, and their payroll size. They often pay workers in cash, under the table. All of this helps dishonest employers avoid paying full workers-comp premiums, plus a bevy of federal, state and local taxes.

So, governments lose tax revenues. Workers are cheated out of workers- comp protection, wages, overtime, unemployment benefits and Social Security. Honest employers lose business and income because cheaters use the illicit savings to underbid them for contracts. And, workers comp insurers lose premiums.

Our recent meeting with the carpenters union revealed disturbing examples of prominent building jobs that included premium-avoidance schemes: A building at the University of Connecticut, a Florida hospital, construction at the Atlanta airport, and a building at the Walter Reed military hospital complex in suburban Washington, D.C.

The latter hits close to home — I drive by the hospital complex almost daily.

The carpenters’ proposals for comp insurers are a primer on why partnerships could be a great resource to move an anti-fraud agenda forward more decisively:

  • Work together on best practices for conducting audits and investigations into premium-avoidance schemes;
  • Adopt procedures to red-flag potential premium fraud; and
  • Cooperate with stakeholders on investigations.

Workers-comp insurers already appear to be doing much of this. Yet it  needs repeating that expanding everyone’s knowledge of schemes is a force multiplier. This will help identify more plots schemes, and boost the entire anti-fraud effort.

Fraud fighters must work with allies to educate state policymakers to better stop costly comp scams — premium avoidance and bogus injury claims.

We can make greater progress by including non-traditional allies such as the carpenters union. The more influential allies that are brought together, the stronger the efforts against comp scams will become.

The carpenters union is a clarion call that effective partnerships will help everyone better combat workers-comp schemes of every kind.

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

 

$1 billion (in savings) or bust

The Healthcare Fraud Prevention Partnership aims high

When the ground-breaking anti-fraud partnership between the federal government and the private sector was launched in 2012, there were grand expectations that they could jointly combat fraud much more forcefully that going it alone.

More than 60 organizations have teamed up to share strategy and exchange data. They include federal and state agencies, health plans and p-c insurers. Billions of bits of information have been pooled through a trusted third party.The results are encouraging.More than $260 million has been been saved in recoveries and fraudulent claims not paid.

The HFPP executive board met two weeks ago. It set a goal to expand savings to $1 billion by this time next year. It’s an ambitious goal, yet achievable given the early success of this collaborative effort.

The potential success in future years could far surpass $1 billion as more data is shared and more partners sign up., And it should, seeing that healthcare fraud totals tens of billions of stolen dollars each year in the U.S..

The ultimate goal is to get so effective in combating healthcare scams that fraudsters will view the risks too high to even try. We’re a long way from that day, but collaborative efforts and advanced technology offer the best chance of getting us there.

About the author: Dennis is executive director of the Coalition Against Insurance Fraud and serves as co-chair of the Healthcare Fraud Prevention Partnership. 

Getting riled up for fraud in Twittersphere

Useful for egging on scams, teaching about dumb choices

Fraud braggadocio is alive and kicking on the Twittersphere, as we recently reported in FraudBlog. Now for another frontline dispatch …

Easy money … fun … risk-free. Like a video game — only for stealing real insurance dollars. That’s a frequent voice vote by consumers in our daily Twitter and Facebook convos.

Tweeter riled up folks about slipping and falling his way to illicit payoffs in a recent thread using the hash tag #BoutToSlip. He said:

“I prayed and asked God to increase my finances and BEHOLD I found a wet floor with no sign in sight. #BoutToSlip”

Others used the same #BoutToSlip hash tag and chimed in:

“A wet floor with no sign at work? I prayed for this come up #BoutToSlip” 

“God is good. I asked the Lord to finance my college and I see this unsalted and not shoveled pavement. #BoutToSlip”

We don’t know if these people made illegal claims. Yet mere braggadocio might click on a crime lightbulb and convince other Twitter followers to try an insurance scam. The thread above was retweeted 17,000 times. Fraud looks like so much fun. Why wouldn’t others wet their lips and try a seemingly easy grab for insurance payouts?

Until the real world steps in. Make dumb choices, make time for a permanent criminal record. That’s a big deterrent message we share on Twitter.

Doses of dumbness showed up in our recent live Twitter chat. Workers-comp investigators advised how to thwart fake injury claims.

The nub — bilk your employer at your peril. Surveillance videos posted and retweeted during the live chat drove home the point. Like the rocker who did a Beatles tribute concert while “injured.” … Or the guy who said he couldn’t turn his head yet had a sweet swing on the golf course.

A worker stomped a hole in the floor and claimed he fell in it.

Twitter is a great forum for bragging and egging people to try an insurance scam. It’s an equally useful way to show people that dumb choices can earn a permanent price. Is a criminal conviction really worth it?

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