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.

Court to rule on medical data transparency

Data transparency might help providers think twice about committing fraud

Medicaldata

Medical fraud investigators could have hundreds of new allies — and a powerful new anti-fraud tool — after an upcoming federal court ruling in Florida. The court is weighing whether to lift a 1979 exemption of Medicare data from the Freedom of Information Act.

If the ban is lifted, journalists would have access to data about physician treatments, tests ordered and a whole host of medical services. The news media would represent another powerful entity crunching medical data and potentially uncovering fraud and abuse by medical providers.

If nothing else, the transparency of data might help medical providers think twice about committing fraud.

The ban was put in place 33 years ago at the urging of provider groups. They said that permitting access would violate their privacy and could hurt the doctor-patient relationship — even though no patient identity ever would be disclosed.

The Wall Street Journal and the Center for Public Integrity filed the lawsuit to lift the ban. A decision by Federal Judge Marcia Morales Howard is expected soon.

Journalists, by the way, wouldn’t be the only ones with access to this medical data. Medical fraud investigators could file FOIA requests as well.

Let’s hope Judge Howard rules for data transparency.

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

Set the prisoners free…and then what?

Prisoners

Fraud fighters funnel tremendous amounts of time and effort into detecting, investigating and helping to prosecute people who commit insurance crimes. That last step of the process — punishing people who defraud — is running up against a trend sweeping the nation: prison depopulation.

Grappling with crumbling budgets, state after state is facing the reality that they can no longer afford to incarcerate growing numbers of criminals, especially non-violent ones.

The number of prisoners in the U.S. is at an all-time high. The U.S. imprisons more people than even China, which has four times the number of citizens. Sooner or later, something has to give. That something, in part, is pressure to resist handing out prison sentences for white-collar crime, including insurance fraud.

Not only is there pressure on judges to resist incarcerating white-collar criminals, but sentences are becoming shorter. At least 19 states have taken action to cut their prison population by reducing sentences. Mississippi began allowing non-violent prisoners to be considered for parole 60% earlier than usual. New York, Rhode Island, Minnesota, Michigan, and New Jersey enacted similar sentence-cutting measures for low-risk inmates.

Budgets aren’t the only reason states are taking action. Overcrowding is another factor. California — under a Supreme Court order — will soon release at least 30,000 convicts to ease inhumane conditions. How many fraudsters currently locked up in California prisons will be let out to continue plying their trade?

This trend not only will put more white-collar criminals back on the streets, but likely will create a disincentive for prosecutors to take these cases in the first place. Plus, deterrence for committing fraud will diminish.

Michigan prosecutor Kym Worthy recently expressed her disappointment in Michigan’s prison system, pointing out that arsonists are keenly aware of the state’s lenient policies, and knowingly perpetrate these crimes because they “know they can get away with it.”

Fraud fighters and prosecutors need to meet this trend head on and come up with creative ideas as alternatives to long prison terms.

Out of necessity, some jurisdictions already are employing such measures. In Texas, one district attorney has cut plea bargains with auto giveup scammers to require them to appear in video PSAs talking about how dumb their crimes are and the impact on their lives. A prosecutor in Florida recently cut a deal with convicted clinic owners to fund a public outreach campaign about the cost of such crime and to alert citizens to report shady clinics.

Public service spots and public speaking mandates by remorseful fraudsters would further put a face on this crime, creating a lasting impression in the consumers’ experience, in a more direct way than reading about a conviction.

Public embarrassment is good, but much more thought needs to go into alternative sentencing. Increased fines on professionals who defraud would be a good start. Perhaps medical professionals who defraud should be sent to third-world countries for a couple years to provide free care. Convicted lawyers might be sentenced to long-term jobs at nonprofit legal centers providing services to the poor. Whatever alternatives, they must be sure, swift and somewhat painful to serve as deterrents.

If our criminal justice system fails to hand out effective punishment, deterrence will continue to diminish and fraud will continue to flourish.

No jail, no restitution for arsonist?

House fireI’m not one to second-guess judges’ decisions on sentencing. There can be extenuating circumstances in any case that warrant seemingly lenient or severe sentencing decisions.

But still, I wish someone could enlighten me on how a person could set fire to a building, jeopardize the safety of others and get off with just probation — and not even be required to provide restitution to the insurer:

A Bowmansville man who has renovated several dozen East Side properties was spared jail Tuesday for trying to burn down a home he bought on Dartmouth Avenue. He told the judge that he is “not a violent person or a threat to society.”

Erie County Judge Sheila A. DiTullio sentenced Jeffrey Helenbrook, 46, of Genesee Street, to five years’ probation and ordered him to submit to random drug and alcohol testing and any professional counseling the county Probation Department feels he might need.

The judge also fined Helenbrook $270 on his March 10 guilty plea to a reduced felony charge of attempted arson and to reckless endangerment for the Nov. 14, 2005, fire that destroyed the vacant house at 346 Dartmouth, which he purchased for $17,500 in December 2000. However, the judge rejected an insurance company’s demands for restitution, noting Helenbrook was not prosecuted on insurance fraud charges.

Not sure why the prosecutor didn’t file fraud charges, especially since a claim was made by the defendant. This should serve as a lesson to insurers to encourage prosecutors to use fraud statutes, since many of them allow for or automatically require restitution.

A great place or what!

Doctor in jail
Read the news story below and ask yourself:

1 – Why no jail time?
2 – Why is he allowed to stay in this country?
3 – What kind of message does this send to criminals around the world?
Russian immigrant stages crashes, steals $439K, but gets no jail time

A Russian immigrant who recruited people to take part in an insurance fraud scam focused on phony automobile accidents was sentenced today in federal court.

Radislav Lankin, 31, of Brooklyn, identified by a prosecutor as the third-ranking organizer of the Buffalo-based fraud ring, was sentenced by U.S. District Judge William M. Skretny.

After pleading guilty to fraud charges, Lankin was sentenced to five years on probation and ordered to repay $439,000 to insurance companies that were cheated. Skretny ordered him to spend three months of the probation period in home confinement and three months in a halfway house.

Lankin is the latest of 29 people convicted in connection with a fraud ring that has been investigated by the Western New York Health Care Fraud Task Force, Assistant U.S. Attorney John Rogowski said. Authorities have been investigating the group for about four years.

Lankin admitted that he would recruit people in the Buffalo area who agreed to falsely claim they were injured in car crashes. Members of the ring ran a fraudulent medical clinic, sold them unneeded crutches and other medical equipment and helped them file paperwork for false insurance claims.

A Russian immigrant who is now an American citizen, Lankin told Skretny he now works as a consultant for small businesses.