Top fraud fighter may leave post in Florida

CFO Jeff Atwater in line for university presidency

People in public service come and go as a routine, but it was still a surprise to learn that Florida CFO Jeff Atwater may soon be departing to take a job as president of Florida Atlantic University.

As CFO, Jeff is the state’s top fraud fighter. The Florida Department of Insurance Fraud reports to him and he’s been a strong supporter of a wide range of anti-fraud efforts over the years.

As a former legislative leader, he wielded a good deal of influence during legislative battles in 2011 and 2012 to get fraud provisions included in PIP reform bills.

And under his command, the state saw record numbers of insurance fraud arrests and convictions. He’s also fought to give state investigators more tools to combat fraud.

His surprise announcement comes while he was planning his re-election campaign and amid speculation that he likely will be a candidate for governor some day.

It’s not certain whether he’ll get the university job. But whether he stays or goes, we wish him the best. He’s earned it.

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

Penny-wise and fraud foolish

Congress puts momentum of fighting medical fraud at risk

blogCrooked medical providers across America have much to celebrate this July 4th — and it has nothing to do with Independence Day.

News came this week that more than 1,200 medical fraud referrals are laying dormant at the Department of Health & Human Services. They will not be investigated because HHS says it doesn’t have enough resources — auditors, attorneys and investigators — to pursue the fraud allegations. And the problem soon will get worse.

HHS is set to lose 400 fraud fighters over the next two years due to impending budget cuts. Existing investigations and even cases already developed will be dropped, HHS says.

At stake is not only the billions of dollars in savings for the taxpayers and the treasury, but also the momentum that this federal agency and the Justice Department have created in gaining ground on widespread medical crooks.

Even if budgets are restored in the future, it will take years to rebuild the anti-fraud infrastructure, relationships and investigative acumen that are reaping the federal government $8 for every $1 spent on fraud fighting.

And in the meantime, the next generation of organized medical rings will have time to ramp up and get a foothold on becoming competent in avoiding detection while plundering Medicare money

The cuts are “a penny-wise, pound foolish approach that will end up costing our country in the long run,”  U.S. Sen. Tom Carper (D-Del.) called the cuts after a recent hearing on Capitol Hill.

Fraud fighters, taxpayers and deficit hawks everywhere should be outraged. The Coaltiion certainly is.

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

Is awareness reducing consumer tolerance?

New study suggests tolerance is falling, but still high among Americans

blogAre fraud awareness programs finally convincing some consumers that it’s not OK to scam insurers?

You might reach that conclusion from a 2012 study just released by the Insurance Research Council. The percentage of Americans who don’t see a problem with padding claims has fallen to its lowest level in more than 30 years, the study finds.

That’s encouraging news. Studies by the Coalition and several others had shown growing tolerance of  fraud, and sometimes dramatically, from 2000 to 2010. We hope more research this year will confirm the good news from the IRC study.

There’s still a large slice of Americans — perhaps as much as a quarter of the adult population — that tolerate fraud. So the fraud awareness efforts by the Coalition, NICB, Pennsylvania Insurance Fraud Prevention Authority, New York Alliance Against Insurance Fraud and many others should continue in a robust manner.

If these mostly meager efforts  are proven to help reduce tolerance, the fraud-fighting community should come together  and fund an all-out effort to reach consumers with a scaled-up campaign that would build on this momentum.

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

Mobs seem to still rule in NYC

Every state should have an organization like NYAAIF

facial recognitionRussian gangsters increasingly are teaming up with their Italian counterparts in New York City to form bogus clinics and bilk auto insurers, says a veteran FBI agent who supervises undercover operations in the Big Apple. That’s not good news for the fraud-fighting community in the state — and even worse for the policyholders who are footing the bill.

Supervisory Special Agent John Campanella briefed members of the New York Alliance Against Insurance Fraud (NYAAIF) yesterday on the litany of organized mobsters working healthcare fraud in New York. They include Russians, Armenians, Georgians, Ukrainians and a couple of Eurasian groups I learned about for the first time.

Agent Campanella walked through the organized structure of Russian and Italian syndicates, how they differ, how they are alike and how the FBI penetrates them during undercover operations. With the growing heat on no-fault auto fault, many gangs are now turning to Medicare and Medicaid to ply their trade, Campanella said.

His was one of two insightful presentations during the NYAAIF annual meeting held in downtown New York City. The chief of the state’s DMV investigations unit discussed how new facial recognition technology is catching thousands of people with duplicate licenses. Fraudsters range from ordinary people whose driving privileges were revoked to suspected international terrorists. In one case, Russian mobsters transported vans full of people from New York to DC to get fake licenses by bribing a DC licensing official. With the new DC licenses, they obtained new licenses in New York and used them to bill insurers for bogus treatment from staged crashes and Medicaid schemes.

New York continues to be a hotbed for all kinds of fraud schemes, whether initiated by organized gangs or everyday people. The NYAAIF has helped to keep the focus on fraud for more than 10 years with an aggressive TV, radio and billboard advertising program. Members who attended yesterday’s event got a preview of next year’s campaign and heard about many successes so far in 2012. That included a record year for media outreach and social media penetration, with which the Coalition assists NYAAIF.

Every state should have an organization like NYAAIF.

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

Discouraging anti-fraud investment?

HCRCould health care reform passed earlier this year unwittingly discourage insurers from tackling fraud? That’s a question that crossed our minds recently when we saw regulations being crafted that will dictate the percentage of premiums insurers must pay out for medical care.

Under a section of the new law, health insurers must pay out at least 80 to 85 percent of premiums on “reimbursement for clinical services” and “activities that improve health care quality.”

The remainder can be used for such things as overhead, administrative costs, marketing — and combating fraud. For some insurers, the margin of that 20 to 25 percent of the premium dollar is rather slim. Costs will be shaved, and you can bet that anti-fraud activities won’t be spared

We argue that combating fraud speaks to health care quality because it helps to keep insurance affordable, thus more people receive coverage. And just as important, It is through fraud investigations that it is often found that medical providers are cutting corners on health services, including performing treatment and services that are medically unnecessary and harmful to the patient. Anti-fraud efforts often are efficient ways to quickly identify and remove bad doctors and clinics from providing health services, whereas regulatory and licensing remedies sometimes take years.

The National Association of Insurance Commissioners (NAIC) is working with the federal government to draft the regulations for this provision. The Coalition and the National Insurance Crime Bureau has recommended that anti-fraud programs should be included in the definition of activities that improve health care quality. This way, health insurers won’t be pressured in cutting back on their anti-fraud programs — activities that address some of the core issues of health care reform.

Fraud Interdiction Program ends in Calif.

alBudget cuts in California have claimed one of the most effective and innovative anti-fraud programs targeting dishonest medical providers. On Feb. 26, longtime prosecutor Al MacKenzie ended his tenure with the Los Angeles County DA’s office. With Al’s departure, his creation — the Fraud Interdiction Program — also closed up shop.

Al created this program in 2004 to find a quicker and easier way to convict medical providers who were milking workers compensation insurance. His program was designed simply: once he zeroed in on a suspect, he contacted insurers and self-insureds to obtain data on claims paid to the suspect and then compared the amounts to state tax records.

Al reasoned that providers who defrauded insurers likely also cheated in paying taxes. More times than not, he was right. Armed with such hard evidence, suspects pled out quickly. The record of convictions Al’s team wracked up was impressive. His work earned him the 2008 “Prosecutor of the Year” award from the Coalition.

Success isn’t always rewarded, and there are plenty of examples of “penny-wise” decision-making that make little sense. This is surely one of them.

Turn out the lights in Arizona

Fraud bureauIf you do fraud for a living and are looking for a nice warm locale to ply your trade, have I got a deal with you! Pretty soon, if things go a certain way, you can move to Arizona and have little worry about the state investigating you for scamming an insurance company. That’s because budget cutters there have their eye on closing down the fraud bureau in the insurance department to save a few bucks.

It’s bad enough that they reduced full-time employees from 14 to 4 a few months back, but now they may chuck the whole unit altogether.

The proposal is only preliminary, and might not be acted upon. But at a time when almost every indicator says fraud is on the rise — and in a state that already has a severe problem — the idea of wiping a fraud bureau off the map is distressing.

The crazy aspect about this move is that the state assesses insurers for the cost of the fraud bureau at the end of each year, so the savings would be minimal. But the damage in building a culture of fraud — not to speak of the increased insurance costs consumers will bear — would be permanent and harmful. The proposal also would eliminate investigations of suspected fraud by insurance agents, adjusters and others licensed by the insurance department. In essence, the state would devolve its regulatory scheme to third-world status.

The National Insurance Crime Bureau, the International Association of SIUs and the coalition have written to Arizona Gov. Jan Brewer urging her to resist this cutback. A joint news release also was issued today. Fraud fighters in Arizona are urged to contact the state’s insurance director and governor to let them know this is an unwise move.

Deterrence, Brazilian style

The SunNewspapers are atwitter in the U.K. about two British students on vacation who have been jailed in Brazil for allegedly faking a robbery so they can file a bogus insurance claim. The two 23-year-old law school students are being held in a reportedly nasty third-world jail on charges of making a false report of losing $2,500 in cell phones and iPods. Police in Rio de Janerio say a search of the women’s room at a local youth hostel turned up the ‘stolen’ items.

The pair faces one to five years in prison, a stiff sentence that police in Brazil say is needed because of the growing number of fake claims being made by vacationers from the U.K.

Fake claims against travel policies in Europe is big business. Nearly 50 percent of people surveyed a few years ago in the U.K. said such fraud was acceptable for helping to pay for their “holidays.”

But it’s not only insurers in the U.K. that are taking the hit for these losses. A few years ago, NYPD got so fed up taking the time to issue police reports on obviously bogus claims, they started warning European vacationers that they would prosecute these scams. Scarce law enforcement resources should not be dedicated to help facilitate scams for unethical visitors to New York or any other city in the U.S.

Don’t know if the NYPD warning carried much weight, but thanks to tough treatment by the Brazilian justice system, vacationers from U.K. and elsewhere likely will think twice about pulling off this scam.

Solid appointment by the FBI

fbiIt’s nice to see a familiar name advance at the FBI. The agency announced today that Kevin Perkins will be the new head of the criminal investigations division. Kevin has more than 20 years of experience in combating white-collar crime and formerly managed the insurance fraud program in the days when that area was just starting to ramp up.

His history in the fraud area — combined with renewed efforts by federal law enforcement for more public/private cooperation — gives us hope that greater priority will be given to fraud cases.

We wish him continued success with his new assignment.

Insurance fraud as a gateway crime

PushiaKevin Pushia, a 37-year-old pastor in Baltimore, was charged on Friday with buying six life insurance policies on a disabled man and then having him killed. Pushia, who freely confessed when confronted, stood to gain up to $1 million in insurance proceeds.

One aspect of this story that is troubling, aside from the obvious, is that this murder may have been prevented had an earlier fraud scheme been investigated more thoroughly.

Police think Pushia may have used the proceeds from a church fire to pay the hit man. While the fire claim may have been legitimate, though doubtful, anecdotal evidence suggests that with every successful scam fraudsters become more brazen.

Does one scam lead to the next? Seems so.

This trend appears to start when people get away with filing small bogus claims that are paid quickly and, though suspect, are not investigated thoroughly. Confidence builds and, perhaps aided by pressures of a troubled economy, people move on to bigger and bolder insurance scams.

We’ve seen it time and again with medical providers who upcode a bit here and there, and before long, get greedy (and sloppy) and become major fraud artists.

A fire investigator in Nevada last year told me most of the vehicle arsonists he interviews are surprised that an investigator shows up at their doorstep. Many have filed previous suspect claims, he surmises, and most of these claims have been paid quickly — no questions asked.

Such an observation begs the question: Are some insurers unwittingly encouraging more fraud by not investigating small, suspect claims?

Now, many insurers, especially the ones listed here, will investigate any claim deemed suspicious. They’ll spend $2,000 to investigate a $1,000 claim because they understand the value of creating deterrence and understand the next bad claim might be for $10,000 or $100,000 — and likely will be much more expensive to investigate.

The number of bad claims never filed because of aggressive action by insurers will never be known. It’s too late for Kevin Pushia’s victim. But for future victims — be they individuals, insurers or all of us who pay the higher costs of insurance fraud — let’s hope that more insurers adopt a zero-tolerance policy and send a strong signal that committing fraud nevers pays.