Michigan needs sledgehammers to level crash rings

Fraud units are crucial players taking down rings in Mass. and Fla.

As if we need another reminder that states benefit heavily from fraud bureaus, just look to a lengthy article posted on Mlive this week.

“Lawsuits and legal filings by insurance companies and others describe an insurance fraud network of ‘accident runners,’ who work with lawyers and doctors to find clients involved in auto accidents and milk their (often unnecessary) medical treatments for maximum payouts, through private insurers and under Michigan’s no-fault insurance law,” the article notes.

Organized rings are feeding off of the state’s unlimited no-fault benefits — the most-generous in the U.S. Arguably an entire culture of crime has sprouted around the no-fault feeding trough, with many rings operating in the Detroit area.

Economically hard-pressed Michigan hardly needs another set of troubles, yet the state has no fraud bureau to act as a central coordinating agency for pushback against rings that most observers agree are widespread and contributing to high auto premiums for drivers.

Fraud fighters are gearing for another push to seek a new law creating an auto-fraud prevention authority for next year (see Howard Goldblatt’s FraudBlogs, July 11 and June 23).

If anyone has to ask why Michigan needs a fraud unit, just look to Massachusetts and Florida.

The Massachusetts fraud bureau was a driver in creating task forces that continue rolling back staged-crash rings. The scammers were almost literally out of control in the early 2000s. The task forces intervened with thudding impact. They’ve saved drivers in targeted cities at least $875 million in lower premiums with fewer dirty injury claims to hike auto premiums.

Then comes Operation Sledgehammer in South Florida — another region where staged-crash gangs have spread out like cockroaches. Body shops were wrecking cars with sledgehammers — get it, Operation Sledgehammer? — to inflate insured damage. Chiro and other clinics have lodged hundreds of thousands of dollars in false crash injury claims. It’s a familiar pattern, though involving exceptionally large networks of criminals.

At least 92 suspects have been charged, with numerous convicted.

The takedowns involve a coordinated federal-state-local collaboration. The Division of Insurance Fraud has been a central player in the effort.

Imagine how far behind the investigations would be today if Florida had no fraud unit to bring statewide staffing, strategic thinking and real-time field intelligence to bear.

How many premium dollars could Michigan drivers save if the state had its own Operation Sledgehammers and task forces to apply steady pressure on insurance criminals? How much safer would the roads be with fewer predatory vehicles trying to maneuver innocent drivers into wrecks for insurance payouts? Right now, a much-needed Operation Sledgehammer in Michigan isn’t possible.

Michigan needs an auto authority, and a law to create and fund the unit. Just ask drivers who pay the premiums, and insurers who must pass those increases along to their policyholders.

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

Strong fraud bills stall in N.Y. statehouse — again

Committee staff seeks mere misdemeanors prosecutors will ignore

New York crashesLast week Dennis Jay wrote a blog arguing about the need for stiffer penalties for those who cynically camouflage insurance arsons as hate crimes. Yet sometimes our desire for stronger penalties face other challenges — lack of strong felony laws.

New York is the poster child of a state that has yet to enact stronger auto insurance-fraud laws even though false treatment claims by crash rings have helped make auto premiums for New York drivers among the highest in the U.S.

For years we’ve have spoken about the dysfunction that surrounds how the state legislature is managed and works.

This year is a prime example: The Assembly speaker and Senate leadership were federally indicted, forcing them to resign their leadership positions. So both chambers ended up with new leaders and lost momentum in mid-session. Not a prescription for success.

The Coalition and our fraud-fighting partners were pushing three automobile-fraud bills: Make it a crime to lie about where you garage your vehicle … Make it a crime to recruit for staged-crash rings and medical mills; … Let insurers rescind a policy if premiums are paid from a bogus bank account. None of the bills went to the governor for his signature.

That’s where the dysfunction takes a twist. Take the premium-evasion bill. The committee chair overseeing the bill was supportive; the Assembly majority leader was the sponsor, and the new speaker sounded supportive.

So why did the bill stall?

Committee staff opposed the stiff penalty — a felony that could mean serious jail time. Staff thought the penalty was too strict and insurance fraud shouldn’t be a felony, they figured. Prosecutors also should take cases regardless of the penalty.

These staffers misunderstood how prosecutors and the courts work in New York. Most prosecutors who’d consider fraud charges come from the densely populated areas of New York City and its suburbs. There are plenty of felony cases to try— of all kinds. Few prosecutors would bother with mere misdemeanors.

The courts are similarly jammed with felony cases. What judge would look kindly on further crowding the docket with misdemeanors?

Yes, we need stiffer fraud sentences. Sometimes the problem, however, is less with the prosecutors and judges. Sometimes the problem involves the lack of strong fraud laws — and the vacuum of political will to enact them. New Yorkers deserve better.

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

Kentucky database weeding out doctor-shoppers

Painkiller use falls, showing progress against epidemic addictive meds

pillsKentucky is one of the nation’s most over-medicated states. A seemingly boundless supply of painkillers and other addictive prescription meds are keeping tens of thousands of residents in a medicated fog.

At least 1,000 Kentuckians die each year from overdoses — more than die in traffic accidents.

Sadly, Kentucky for years has been America’s poster state for prescription pills runamuck. Poverty plays a leading role. And insurance fraud from false prescriptions finances much of the drug trouble. Greedy pain clinics, pharmacies, crime rings and desperate addicts are all part of the action.

The state has struggled to halt the epidemic. And now Kentucky may have the makings of a success formula, a new study suggests …

Doses of the popular painkiller hydrocodone have dropped 9.5 percent since 2011. Another heavily abused pain pill oxycodone fell 10.5 percent. All told, that’s about 27 million fewer doses coursing through Kentuckians’ bloodstreams.

So what’s behind the fall-off?

Keeping close tabs on prescription trafficking by pain docs and other medical providers is pushing more crooked docs off the streets.

Look to a database that monitors traffic in opioid and other scripts. The prescription monitoring program is known by its acronym Kasper. A 2011 law requires docs who prescribe painkillers to register with Kasper, which tracks their drug-delivering patterns. State officials can quickly spot and halt over-prescribers who Kasper identifies.

More than 24,000 medical providers have registered, and are being tracked. This compares with 7,545 providers before the law passed.

And only licensed docs can own and run pain clinics under the law. That’s helping weed out sleazy lay profiteers who install puppet docs as stooge clinic owners.

Kentucky has shuttered 20 clinics since the law passed, and four others have received cease-and-desist orders. The state also disciplined 64 docs for prescription violations in the last year, compared to 53 in 2011.

Ten other states also have mandated that prescribers and pharmacists check prescription databases prior to prescribing and dispensing certain addictive drugs.

The Kentucky experience strongly suggests other states should follow this lead to curb a national addiction problem that taking its toll on patients, insurers and society.

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

Chiros fight Kentucky anti-solicitation law

Fraud fighters seek to thwart constitutional challenge

A federal court in Kentucky ruled the state’s anti-solicitation law unconstitutional last year. In response, anti-fraud community helped enact a new solicitation law this year that satisfies the court’s concerns.

The legislature overwhelmingly approved the fix.

Soliciting crash victims for potentially worthless medical treatment thus took a hit. The new law strictly limits soliciting of drivers and passengers for 30 days after the crash. It also blocks insurance payments to providers who violate the law, and protects consumers from making forbidden payments.

The law serves a timely purpose. Fraud rings are moving into Kentucky — some from Florida to escape ramped-up heat by law enforcement. They’re trying to lure often-traumatized crash victims for treatment at shady clinics that lodge inflated insurance billings for useless treatment.

Problem fixed, right? Wrong. Several chiropractors didn’t even wait for the law’s June 24 effective date.

They sued in federal court, saying the new law violates the First Amendment and due process. A hearing on an injunction to stop enforcement of the law is scheduled for late August.

Just hours before the Kentucky suit was filed, the Texas governor signed a new law restricting access to its crash reports. Much like Kentucky, the law aims to prevent insurance criminals from hounding crash victims to get injury treatment at shady clinics.

Only crash victims, their reps (insurers, medical providers, attorneys) and reporters now can obtain the full crash report. Anyone can buy the reports. Except that the personal information is redacted for outsiders, so the reports lose all value to fraudsters.

Kentucky’s new law builds on another initiative in Texas. After surviving court challenges, the state started enforcing a law restricting solicitation of auto crash victims for the first month after a crash. Fraud rings started moving out of Texas when the enforcement heat rose. They’re moving into other states like Kentucky, which the rings perceive as softer enforcement environments.

So fraud fighters must stop the Kentucky lawsuit. Success by the chiros could embolden challenges to anti-soliciting laws in other states such as Texas. 

The Coalition already has sent the Kentucky attorney general info that will help derail the suit. We also plan to team with partners to file friend-of-the-court briefs that provide strong legal support.

The new law keeping criminals from recruiting crash victims is a constitutionally sound idea that limits dishonest activity and protects crash victims from being victimized yet again.

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

Summer is planning time for 2016 legislative initiatives

Must be primed for action when statehouses open

state legislationThe first half of 2015 earned us several new state fraud laws, I recently wrote in this space. Having celebrated those successes, we now should start thinking ahead to next year.

Summer is the perfect season to start that planning. Legislators already are thinking of what issues will fill up the agenda. We need to be part of that action, and ready to go as soon as statehouses open in 2016. Many sessions are short, so it’ll be a race to get our bills docketed and voices heard.

The Coalition and our partners are reviewing what bills to pursue, and in what states. Usually the bills are tagged to defined fraud problems affecting consumers and businesses in a given state.

New Jersey became the first state to make it a crime for drivers to avoid paying high auto premiums by lying that they garage and drive their vehicles in states where premiums are lower. We need to see what other states have similar problems and would be open for legislation like the New Jersey success.

The Coalition also will spend the summer crafting a model law to export to states on this issue. Of course, New Jersey offers us a good starting point.

New Mexico will be prime target for a bill allowing courts to peg a swindler’s penalty to the total dollar amount of convicted frauds. So the total of several scams against multiple insurers would fix the penalty instead of setting a smaller penalty for each scam. That bill stalled in 2015, and we think it stands a strong chance of enactment next year.

And will Michigan finally create the insurance fraud prevention authority that has percolated in the legislature for several years?

Will New York get serious about attacking no-fault schemes and criminalize recruiting for crash rings after years of stonewalling in Albany?

We’ll choose our legislative targets by talking to groups and listening to ideas.

So it’s your time to be heard: Suggest we can best help move the fraud fight forward. What state should we target, what kind of bill is needed, and what fraud problem will it take on?

Reach me at Howard@Insruancefraud.org. Your input will be very helpful as we speed into 2016.

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

States marching ahead with new fraud laws in 2015

Grassroots letter-writing campaigns supported several bills

We’re almost at the halfway mark of 2015, with the summer months upon us. Most state legislatures have shuttered for the year, so this is a good time to evaluate the scorecard.

So far the tally looks pretty good. Several important anti-fraud laws have been booked, and several more are possible.

New Jersey provided a key victory. It’s now an insurance fraud for in-state drivers to deceptively register and insure their vehicles in states with lower premiums. Fraud fighters will seek to export this model to other states.

Minnesota gave the state commerce department power to lodge civil actions against fraudsters. The agency also now can kick fraudsters out of the insurance system — blocking crooks from receiving insurance payouts.  The Coalition urged both ideas a couple of years ago when the state started marching toward strengthening its anti-fraud efforts.

Kentucky limited the soliciting of crash victims for potentially worthless medical treatment. The new law fixes a court decision overturning the previous law as unconstitutional. Fraud fighters banded together to create the needed fix. Fraud rings are moving into Kentucky. They’re trying to lure often-traumatized crash victims for treatment at shady clinics that lodge inflated insurance billings for useless treatment.

Florida also confirmed that unlicensed clinics can’t make insurance claims — they’ll be charged with an insurance crime. This effort tightens clinic licensing standards.

Texas limits the use of auto crash reports by shady medical providers. The state already has made it a crime to solicit crash victims in person. Texas added teeth by restricting access to crash reports that recruiters use to identify target crash victims.

West Virginia added consumer protections against shady contractors. New Mexico and Iowa made it a crime to sell or use counterfeit airbags in vehicle repairs.

Grassroots letter-writing efforts by fraud fighters were a big factor in several states. The Coalition and IASIU jointly championed campaigns. Fraud fighters sent letters to their legislators in New Jersey, Kentucky, Minnesota and New York — urging “yes” votes on bills in their states.

More than two dozen letters were sent each in New Jersey, Kentucky and Minnesota, and a campaign record of more than 130 in New York. This likely is the first time any of these legislators has heard from constituents supporting an anti-fraud bill.

Needed no-fault fraud reforms Michigan are still in motion, while New York has crashed.

Michigan needs a state agency to add firepower against auto cons such as widespread crash rings. Yet a measure creating the agency is caught up by haggling about its larger parent bill. It’s a large package that tries to reduce spiraling medical costs of the state’s auto-insurance system.

New York once again stalled in fortifying its no-fault auto system. An auto rate evasion bill much like New Jersey’s has skidded to a halt. Also iced: clamping down on recruiting for crash rings, and using a phony credit card or bank account to pay for premiums.

We’re already looking at fraud bills to pursue for 2016 — both for Coalition work and the grassroots effort.  Let us know your thoughts.

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

Dishonest drivers avoid auto premiums

Frustrated states make evasion an insurance crime

The Coalition surveyed state laws a couple of years ago to see how states deal with residents who falsely register and insure their vehicles in other states with lower auto premiums. Very few states consider this scheme an act of insurance fraud, we found.

North Carolina is an exception. Drivers must show proof of residence before they can buy auto insurance. North Carolina is trying to head off rate-evasion cons. Drivers in several states falsify North Carolina residence to obtain cheaper auto insurance than in their home states.

Rate evasion is a lose-lose for the victim state where the vehicles are garaged. Honest insurance consumers pay higher premiums to subsidize the smaller pool of drivers. Scofflaws also rob the state and local governments of registration fees or vehicle taxes.

Yet few prosecutors will go after dishonest drivers unless there’s a specific fraud law that makes convictions of violators more likely.

We may be seeing a surge of other frustrated states that have seen enough of dishonest drivers.

New Jersey is about to make life much harder for cheaters by strengthening its law targeting those who use out-of-state addresses to avoid higher New Jersey insurance. The governor signed the bill into law late last week.

New York is on tap tap with companion bills (S 4900/A 7237). The sponsors are well-placed legislators from both parties, suggesting a strong chance of success.

The Coalition is joining with insurer partners to push the legislation into law. Fraud fighters shortly will start a grassroots letter-writing campaign to show legislators in Albany why they should vote “Yes” for passage.

We strongly encourage New York fraud fighters to write their legislators. Let’s push for a surge of legislation that turns this scam into a dead-end street for cheaters.

Yet more states could see bills clamping down on premium evaders. It seems there’s a growing feeling that enough is enough. Let’s turn avoiding auto premiums into a dead-end street.

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

States already inking fraud laws onto books

Partnering, grassroots letters spell success

Spring has barely started yet fraud fighters already have earned a solid slate of new state fraud laws.

Signature wins in Kentucky, New Jersey and New Mexico are on the books, with more fraud laws expected. Fraud fighters are making a clear difference in educating state lawmakers to strengthen insurance fraud laws.

Kentucky was high on our agenda after a federal court struck down the state’s anti-solicitation law. We helped launch push in early 2015 to pass a strong new law that would pass court muster.

A bill was drafted before the legislature opened. That fast start let fraud fighters open the year with a full head of steam. The governor signed the bill Monday.

It’s an insurance crime for medical mills to try and recruit crash victims for useless, inflated and potentially unsafe “medical” treatment within 30 days of the incident. It’s also illegal to encourage crash victims to file phony claims.

Crash rings are moving into Kentucky from Florida to escape ramped-up crackdowns in the Sunshine State. Stiff penalties are important to making fraudsters wish they’d stayed in Florida.

Key to passage was a joint grassroots — should we say bluegrass-roots — letter-writing campaign by the Coalition and Kentucky chapter of IASIU. The effort generated letters from fraud fighters urging their legislators to vote for the bill. That probably was the first time Kentucky legislators had heard from constituents about an anti-fraud bill.

In New Jersey, lawmakers voted to make it an insurance crime for Garden State drivers to lie about where they garage and drive their vehicles to lower their premiums. This success took several years of effort.

We now are pushing for the governor to sign the bill into law. This crime is pervasive in New Jersey. The governor’s  signature will send a strong deterrent message to drivers around the state.

Next comes New Mexico, which last week made it a specific crime to using counterfeit airbags in auto repairs. New Mexico became the seventh state to ink such a law.

Spearheading the push was a partnership between the Coalition and Honda America.

Consumer lives are in jeopardy when dishonest body shops install cheap and unsafe knockoff bags. The airbags likely won’t deploy properly in a crash, leaving drivers and passengers gravely exposed to death or serious injury.

Kentucky, New Jersey and New Mexico have gained more tools to take scammers off the streets, and deter many others.

It’s also clear that partnering is better at passing fraud laws than going it alone. The power of partnering shows that together we can place stronger anti-fraud laws onto the books, and boot more scammers off the streets.

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

Let’s yank licenses of crooked docs

State license is a privilege, not a right

The Coalition has a longstanding position that medical providers who earn most of their income from insurance should have their state license yanked or suspended for committing insurance fraud. That’s a key provision of our model insurance fraud law.

A license is a privilege the state bestows, and not a right.

Why should states act so decisively? Because medical boards rarely act on their own. We surveyed medical boards several years ago and very few actively punished providers who commit insurance fraud. Some only discipline providers for violating their medicine practice, and that insurance fraud isn’t constitute such a violation.

There are enough honest docs practicing ethically that we can afford to get rid of crooks.

Medicare can now impose stiff sanctions. Docs who bilk Medicare can be kicked out of the system. They still can practice but can’t receive Medicare reimbursements. Many cheaters who specialize in fleecing Medicare thus are put out of business.

Minnesota is debating a similar move: Medical providers convicted of insurance fraud can be denied payments by the state’s auto-insurance system under a bill being considered in the statehouse.

The cheaters still can keep their medical license. They’re just out of the no-fault business. And like Medicare swindlers, the no-fault fraud specialists face potential ruin if their main source of income is shut off.

New York started booting dishonest medical providers from the state’s no-fault system several years ago. The state is showing success; more than 18 providers have been removed.

The Coalition holds up New York as a model that other no-fault states should emulate.

Crooked medical providers risk their patients’ health and wellbeing, and steal brazenly from insurers. They shouldn’t be tolerated. No-fault states should follow New York’s lead and weed out crooked docs.

The Coalition strongly believes that dishonest providers who abuse their state license to commit insurance fraud should face strict license review to determine if their license should be suspended or permanently revoked.

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

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.

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