Cross-state sales could open scams

Regional pacts better suited to protect consumers from con artists

The idea of allowing consumers to buy health coverage from any insurer in any state has been floated in Congress for several years. It would be an alternative to a consumer’s state or regional exchange. Someone in the Northeast thus could buy coverage from an insurer in the Southwest.

It’s a bad idea that persists. Any proposals should be voted down.

The idea would open the door for rampant fraud and undermine consumer protections. How would the system be regulated?

Let’s say a scammer in State A peddles fake health coverage to consumers in State B. Would the insurance department in State A have the resources or will to remedy those victims — non-residents who may live hundreds of miles away? That state has enough challenges just protecting its own residents.

Luckily the idea remains in the concept stage in Congress. But now it’s surfacing in state legislatures.

The Affordable Care Act lets states create regional exchanges that offer coverage to consumers within the compact. These are partnerships among like-minded states. They’re designed for closely knitted oversight that protects consumers in all states of the region.

But a well-intended New Hampshire lawmaker has introduced a bill allowing residents to buy health insurance from any other state. It would jeopardize the health and wellbeing of New Hampshire residents.

A scammer in another state could sell phony coverage to New Hampshire residents, and skirt New Hampshire’s licensing and oversight.

Who ensures out-of-state health entities are properly licensed and vetted for sale in the state? Or better, who creates and enforces regulations to prevent predators from selling across state lines?

We applaud New Hampshire’s insurance department for opposing the measure at a recent legislative hearing.

Hundreds of new state legislators took office last fall. Many barely grasp state insurance-fraud laws — and especially how they protect consumers.

These cross-border insurance proposals may seem good for the lawmaker’s state residents … at first glance. But they open the door wide for scammers. It’s the school of unintended consequences at work.

The anti-fraud community needs to educate legislators about being vigilant against fraud. That’s an important part of the Coalition’s mission. We’ll steadfastly work to make sure legislative proposals minimize unintended consequences and maximize protection of consumers throughout the nation.

Eight worst cons reveal fraud’s true costs

People remember true-life crime stories better than stats

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A driver rockets his $1-million Bugatti into a salty lagoon … Two kids perish in a home arson fire their own mother set … A cancer doctor pumps healthy patients with toxic chemotherapy in a $125-million insurance plot.

These masters of disaster are among the eight worst insurance criminals of 2014. The extreme schemers were chosen by the Coalition. Their names and crimes were released today as the newest members of the Insurance Fraud Hall of Shame. 

The No-Class of 2014 reveals the year’s most brazen, bungling or vicious convicted insurance swindlers. All commanders in thief were convicted or had other legal closure last year.

One of America’s largest financial crimes, insurance fraud steals at least $80 billion annually. The Hall of Shame serves a useful anti-crime purpose. Sharing true-life crimes is a form of story-telling. Science shows that people retain more details and understand stories far better than raw data alone.

So it’s nice to say fraud is an $80-billion annual crime — the Coalition’s conservative estimate.

But people sit up when they hear how Andy House blasted that rare Bugatti Veyron into the lagoon for a $1-million insurance score. It’s also worth a chuckle or two. Same with punk rocker Christopher Inserra’s wild fist-pumping on stage while telling his comp insurer the arm was hurt and useless.

Then get more serious and learn how how Angela Garcia left her infant girls to die in a house fire she set for insurance money.

Or see how Suzanne Basso tortured her retarded husband Buddy Musso for weeks to steal a life-insurance payout, and you’ll never view insurance fraud the same way again.

Putting a human face on insurance crime moves fraud from a stat to a crime against all of us. That’s why we can all rally to fight insurance fraud simply by staying honest, being alert to scams and reporting crimes in action. Together, we can turn the corner on this crime.

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

Adding insult to (alleged) disability injury

Fraud estimates become a casualty of ideological wars

Kentucky Senator Rand Paul created a bit of controversy this week when he suggested that half of Social Security disability recipients don’t deserve their money. He essentially said the program’s fraud rate is 50 percent.

Liberals and disability-rights advocates immediately jumped on Paul’s remarks They contended that Republicans in Congress plan to slash funding for the disability program because fraud is rampant. Lefties contend fraud is rare, accounting for less than one percent.

The “less than one percent” estimate is attributed to a comment on a TV talk show last year by a former Social Security commissioner. Our research has found no scientific basis for this estimate.

Wild-eyed fraud estimates are routine in our business, allowing people to believe what they want to believe. Nobody knows for sure how much fraud the Social Security disability program is saddled with because it’s never been researched properly.

I suspect neither side wants to know the truth because it likely would shoot down their ideological talking points.

But Rand Paul and his colleagues have the wherewithal to shed light on the true fraud level. Fund an objective and robust closed-claim study to determine accurate estimates. The study would be tedious and expensive, but would give policymakers vital information they need before making changes in an important program.

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

Stymying opioid abuse driving users to heroin

Policymakers must dry up drug sources and heal addicts

A new metric is helping measure progress in America’s efforts to blunt abuse of painkillers and other addictive prescription drugs.

Heroin users.

Ongoing law-enforcement efforts to shut down pill mills are putting a dent in availability. And restrictions imposed on doctors are discouraging more from pushing pills.

One of the most-abused painkillers — OxyContin — also was reformulated to resist abuse. It’s harder to crush or snort. Abuse of the once hyper-addictive pill has dropped dramatically, says a study in the New England Journal of Medicine.

Prescription overdose deaths plummeted 23 percent in Florida between 2010 and 2012, notes a CNN story this week.

Insurers also benefit, because their payouts finance billions of dollars worth of opioid prescriptions a year.

All good, except the lockdown of opioids is driving addicts to heroin. Overdoses are spiking, which is canceling out many of the gains in clamping down on prescription abuse.

Squeezing drug sources — whether doctors, pill mills or heroin dealers — is a worthy though incomplete strategy. If one drug dries up, another will take its place as long as addictive demand remains intact.

Vermont is going after prescription opiate demand. The state has opened five regional drug treatment centers around the state. After addicts “graduate” from a center, they’re treated by doctors and therapists in the addicts’ community.

The centers are overwhelmed by addicts seeking a way out. Convincing local doctors to treat addicts also is difficult. Still, Vermont’s model bears a close look as it evolves.

Policymakers are trying many creative solutions around the U.S. Quashing this scourge requires us to keep looking two ways at once: block the drug sources, and stymie the addictive urge.

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

Time for pursue fraud-busting resolve for 2015

Stronger laws, better funding will move fraud fight to next level

New YearsIt’s that time again. Millions peer ahead to the new year with great expectations. That includes the anti-fraud community.

So here are several of the Coalition’s resolutions for 2015:

• We will diligently strengthen the anti-fraud effort. Getting lagging states with weak fraud laws to enact strong new ones is a big emphasis.

• We will keep up the drum beat so fraud stays a high-profile news item around the U.S. This will alert consumers to protect against being duped by shady operators, and deter fence-sitters from committing this crime.

And some resolutions we’d like others to make:

New York legislators: We finally will strengthen the state’s no-fault auto laws to lower the expensive “fraud tax” honest drivers pay in higher premiums.

New Jersey legislators: We will pass laws that chase down drivers who illicitly use out-of-state addresses to avoid paying higher New Jersey auto premiums. We also will expand the state’s immunity law to allow more sharing of case information among anti-fraud groups.

Michigan legislators: We will fulfill the aspirations of the anti-fraud community by creating an auto-fraud authority to help combat widespread no-fault scamming in the state.

Minnesota legislators: We will pass leftover anti-fraud measures that were removed from the larger fraud bill enacted in 2014.

U.S. Congress: We will properly fund the Healthcare Fraud Prevention Partnership so it can uncover health schemes that target both private and public health insurers.

The new year will be rife with promise and opportunities to move the fraud fight to the next level. Rest assured that Coalition will be front and center, helping transform that raw promise into great progress.

Happy fraud-busting New Year!

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

Latest wave of painkiller addiction may be worst

Silver bullet is development of less-addictive med

“History shows both that it’s possible to overprescribe and misuse powerful narcotics, and that it’s possible to undertreat pain and addiction to them. Balancing the competing needs and risks is a continuing struggle.”

drug imageWhile a bit of simplification, this quote by health economist Austin Frakt nicely sums up the challenge the U.S. faces in curbing mass addiction to prescription painkillers. On one side are pain sufferers and drugmakers. On the other side are insurers, regulators and law enforcement. In the middle are tens of thousands of addicts, black marketeers, fraudsters, and the physicians and pharmacists who enable this crime wave.

Frakt provides a historical snapshot of opioid addiction in a recent column in the New York Times. [link] There have been three major waves of addiction in the US. since opium became the drug of choice in the 1900s. Each time a major public-policy initiative served as a catalyst to end the epidemic.

It likely will take more than a single initiative to end the current wave, considering Americans consume:

• 99 percent of the world’s hydrocodone, the opioid in Vicodin;
• 80 percent of the world’s oxycodone (OxyContin and Percocet); and
• 65 percent of hydromorphone (Dilaudid), Frakt writes.

These three painkillers are killing more Americans than any other drug.

The current wave of drug addiction was spurred in part by naive doctors in the 1980s who touted drugmaker propaganda that these drugs were harmless.

Yet there’s some hope, after thousands of deaths and a price tag in the billions. State drug-monitoring systems and better education of patients and doctors are helping ease drug diversion, as are tougher laws and better treatment and rehab.

Reducing drugmakers’ influence on physicians and policymakers also will help. The magic bullet, though, would be development of an effective non-addictive painkiller.

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

Michigan needs an auto-fraud authority

Push as stand-alone bill to tackle widespread staged-crash rings

Over a year ago I wrote that there’s no such thing as a “no-brainer” when it comes to passing legislation. Issues are harder to move forward when observers think they’re a “no-brainer.” I wrote that blog with Michigan in mind.

Michigan is one of the two most populous states without an infrastructure to tackle insurance fraud. There’s no fraud bureau, fraud authority or dedicated prosecutors. There’s no state agency to investigate and prosecute suspected frauds.

Several years ago the Coalition worked with anti-fraud partners to help craft a bill creating a fraud authority to target widespread auto-fraud schemes in Michigan. Staged-crash rings were among the offenders needing stifling.

The authority would have a statewide board funded by an assessment on auto insurers. The funds would be distributed as grants to law enforcement statewide, local prosecutors and others to chase down auto scammers. Michigan’s legislation was modeled after the Pennsylvania Insurance Fraud Authority, which is a successful statewide anti-fraud effort.

In advocating legislation for a fraud authority, legislators had difficulty understanding that auto insurance fraud is a statewide concern instead of a local issue. Then the state police pushed back, fearing they might lose funding for their own auto-theft authority. Those concerns eventually were resolved.

The fraud authority was a stand-alone bill. But that changed a couple of years ago when the governor, many legislators, opinion leaders and insurers decided Michigan’s entire no-fault auto insurance system needed an overhaul. So the fraud authority was rolled into the current comprehensive no-fault reform package. That has tied up efforts to pass an auto-fraud authority.

Several versions of large scale no-fault reform have fizzled, and the auto fraud authority went down with the doomed bills each time.

Michigan’s statehouse is about to close for the year, with a new legislature and leadership coming in 2015.

It’s time to rethink the issue. The auto-fraud authority should stay free of large reform bills, which often collapse from their own weight and complexity. The agency should be introduced as a stand-alone bill. It has wide support, and stands a far better chance of passing that way. Michigan drivers and fraud fighters deserve nothing less.

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

Time for states to crack down on auto-rate cheating

Mass. court suggests underwriting fraud not taken seriously

Helen ChenThe scam started with a small, classified ad in a Chinese newspaper circulated in New York, offering cheap auto insurance.

Forty Chinese Nationals jumped at the sales pitch, prosecutors say. The drivers traveled to Massachusetts and met with Lefen “Helen” Chen, who helped them apply for auto coverage. All drivers lied that they lived in the Bay State.

Xin Han Chen, Ting Zhang and Huai Dong Gu saved an average of more than $1,100 over similar auto coverage in New York. It was well worth the short hop to Massachusetts.

adProsecutors and the court yesterday freed the trio after they agreed to pay the difference owed in premiums between the two states.

Requiring fraudsters only to pay back what they stole sends the signal that this is not a serious crime. Might as well say “better luck next time.”

Jail time isn’t necessarily called for here, but how about requiring the three to go back to the Chinese community and give presentations about why they shouldn’t defraud the insurance system?

Sadly, the fact that they were even charged is an anomaly. Most courts don’t prosecute auto premium evasion, and most states don’t even have laws against it.

Only about 50 premium-evasion cases were prosecuted in the U.S. during the last two years, reveals the Coalition’s criminal conviction database. And most involved drivers who illegally bought coverage after being involved in a crash.

Auto rate evasion defrauds honest consumers and both jurisdictions. In this case, Massachusetts drivers will subsidize accidents of the New York drivers. New York loses both the premiums that would’ve broadened the insurance pool in the state, and the registration fees the drivers are diverting.

Fairness is a key concept in insurance. When consumers sense the system works against them, more likely will cheat. In slippery-slope style, cheating begets more cheating. Insurers, regulators and lawmakers need to quash rate evasion schemes with strict laws and enforcement now, while they still can manage this growing crime.

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

No-fault repeal could harm lower-income drivers

Quashing system could delay medical treatment for injuries

The no-fault PIP auto insurance system was created in the 1970s with noble intentions: Resolving crash claims in a timely manner, regardless of who’s at fault. The concept still works to a degree. But the unintended consequence has been the large growth of fraud schemes.

Few policymakers thought PIP would become a cash cow for scammers when the system was enacted in Florida, New York, Michigan and other states. But adaptive fraudsters quickly learned the loopholes to exploit the system to steal hundreds of millions of insurance dollars or more in false crash-related claims.

Florida, New York and Michigan have tried to reform PIP and strengthen the anti-fraud provisions in the last few years. Policymakers in those states believe no-fault still is viable. Yet there are rumblings in Florida about repealing PIP and installing a system similar to Colorado’s after that state repealed no-fault in 2004. Rampant no-fault fraud is the main factor driving calls for repeal in Florida, most recently by the editorial writers of the Palm Beach Post.

Who does repeal benefit and harm the most?

PIP clearly helps low-income drivers, especially those who cannot afford private health insurance. Their auto crash injuries are quickly taken care of under PIP. What would happen if PIP is repealed?

One of the intents of the Affordable Care Act is to expand the availability of health insurance to all — especially low-income Americans. Much of this would be achieved by expanding Medicaid eligibility, which lets states insure more poor residents.

But not every state expanded Medicaid, including Florida. Without expansion, no-fault repeal could leave the working poor — those not eligible for existing Medicaid coverage — with few options for affordable medical treatment. Yes, they would be compensated for their injuries if the other driver is at fault, but in situations where fault may be in question, the wait can be long, causing lapses in treating injuries.

The Coalition has no position on whether states should repeal PIP. But policymakers considering such a tumultuous change, especially in Florida, first should remember why their state enacted no-fault in the first place. Without no-fault, they also may have figure out how assist more lower-income residents.

If expanding Medicaid is the tradeoff for dumping no-fault, then perhaps those who advocate repeal ought to lobby the governor in Florida to expand Medicaid.

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

Will Republican surge affect anti-fraud efforts?

Fraud fighters must be well-mobilized no matter who’s in power

The impact of yesterday’s elections on anti-fraud efforts around the U.S. will become clearer once the results are analyzed in more detail.

Certainly the Republican sirocco that swept through the elections is shaking up an order that has opposed and supported state anti-fraud efforts.

For the most part, however, state anti-fraud legislation and budget funding are driven less by party lines and more by the priorities of the men and women who hold office.

Also look to powerful gate-keeping committees that decide which bills reach the floor. Complex insider agendas, alliances and political tradeoffs frequently affect bills far more than broad party affiliation. Politically powerful special-interest groups also can stall or push measures regardless of which party holds sway.

Still, the election results hint generally at things to come in several hot-button states.

Republicans gained control of the state House in Minnesota. That rattles a power structure that worked against fraud fighters this year. The chair of the House Commerce committee gives up his position. His committee gutted a promising bill that would’ve added civil penalties for fraudsters, tightened rules against bogus medical billing and treatments, and allowed dishonest medical providers to be booted from the insurance system.

This power shift may open the door for a fresh revisit of the bill.

Florida’s CFO was reelected. Jeff Atwater has taken strong anti-fraud stands in a state wracked by debilitating crash rings and medical fraud. Atwater’s continued presence could ensure a continued department-level priority on rolling up scams. Legislation to tighten the noose is murkier. Larger agendas involving reforming or even dumping the state’s no-fault auto system could surface. The future of fraud reforms could hinge on the outcome of those larger issues.

Oregon re-elected a governor who vetoed a bill making insurance fraud a crime a decade ago. That creates a political environment that looks ill-suited for passing a bill in 2015.

Kansas insurance commissioner Sandy Praeger is retiring. She was a stalwart supporter of anti-fraud efforts. Will her successor show the same commitment?

Closely watch Pennsylvania, Illinois, Massachusetts and Maryland. Those states elected governors of the opposite party. They’ll likely install new insurance commissioners. Their anti-fraud priorities will merit close scrutiny.

New York’s statehouse has consistently stalled much-needed legislation clamping down on staged-crash rings. Nothing in yesterday’s voting seems likely to change that. Only the governor’s active backing can break a logjam that has lasted for several years.

Bills expanding the ability of insurers and regulators to share case information may be the one issue that benefits from the Republican surge. Giving insurers more leeway could be something that corporate-friendly legislators and regulators would support.

Special-interest politics has been a larger factor throughout the years than Red vs. Blue.

The well-funded and politically mobilized trial bar was a big factor in derailing the Minnesota bill and a Michigan measure creating an automobile-fraud prevention authority — both this year. The trial bar also reared up against no-fault fraud reforms in Florida in 2011 and 2012.

The bottom-line takeaway: On balance, fighting fraud crosses party lines. Putting a big dent in crime is a universal goal. Democrats and Republicans have fought hard for anti-fraud bills, and helped thwart them. Fraud fighters must be well-mobilized regardless or who’s in power. They must be prepared to build strong cases that anti-fraud bills are pro-consumer. Just as important, they must build close relationships with committees, and with members of the broader legislature.

This is closer to the universal roadmap for influence and impact. For fraud fighters, the issue is less Red or Blue, and more Red, White and Blue.

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