Fraud issue lacking in health care debate

reportA couple weeks ago President Obama held a health care reform summit at the White House and brought together experts from a variety of perspectives to discuss key issues. Fraud apparently wasn’t one of them. The summit report was released this morning and fraud scored three brief mentions in the 56-page report. The first was in the President’s introduction:

We can agree that if we want greater accountability and responsibility, we must ensure that people aren’t overcharged for prescription drugs, or discriminated against for pre-existing conditions—and we need to eliminate fraud, waste and abuse in government programs.

The second mention by Sen. Arlen Spector (R-Pa.) related to the need to increase prosecutions for Medicare and Medicaid fraud so the fines the federal government is handing out is not just “a cost of doing business.”

The third mention was by former HHS Secretary Donna Shalala during a discussion on containing health care costs. She said:

“…it may take awhile to drive down costs, but we can go after fraud aggressively right now.”

She has it absolutely right. Fraud takes perhaps $100 billion or so out the pool of money that could go to cover uninsured Americans and lower everybody’s premiums. It’s not the largest cost driver, but a significant one that the Administration and Congress need to fully address in taking on health care reform.

The coalition and others in the fraud-fighting community have sent our wish list to Capitol Hill on anti-fraud elements that should be included in the debate. Let’s hope the policymakers are listening.

You can download a copy of the White House report here.

Update: During Senate hearings today, Kansas Gov. Kathleen Sebelius, secretary-designate of Health & Human Services, called for a crackdown on medical fraud as part of any health care overhaul. That’s a good sign.

Motherhood, apple pie and insurance fraud

Mom and babyThink insurance fraud is a victimless crime? Consider the case involving the son of Elsa Moure in Lawrence, Mass. As a six-year-old, this boy was placed in a car by his parents who then proceeded to intentionally crash the vehicle` for insurance money.

He was injured, but not severely. The real damage likely will be the emotional scars he’ll carry well into adulthood in trying to figure how supposedly loving parents could place his well being in jeopardy.

This is the sickening side of insurance fraud, a trend where scams become more daring and destructive. Moure’s not the first mother to use her kid as a crash-test dummy. Just yesterday, a Virginia woman who packed her car with her kids was convicted of being a serial crasher over a two-year period. She allegedly coached her kids on how to act injured when police arrived on the scene.

Staged crashers think that insurers are more likely to pay a claim if a child is injured. Or in the case of crooked surgeons, they think their claims will get by if they actually cut open a patient for a needless operation rather than just submit a phony bill.

Elsa Moure was sentenced yesterday to three-years’ probation and ordered to pay back the $60,000 she and the boy’s father stole in insurance money.

An argument can be made that she deserved prison. In my book, she forfeited her right to be a mother.

Florida may fire all fraud prosecutors?

Florida signThis is welcome news if you’re a fraud artist in the Sunshine State:

The Florida Senate General Appropriations Committee hears a proposal to eliminate all seven insurance fraud prosecutors. Several departments made presentations to the Florida’s senate appropriations committee Thursday morning. The state agencies were told to show lawmakers what cuts they could make to reduce their budget by 20-percent. They were also supposed to tell them how severely those cuts would affect their department. One of the more severe cuts proposed would eliminate all seven insurance fraud prosecutors.

The Coalition has contacted this committee and strongly urged them to reject this idea. We also issued the following news release today:

WASHINGTON, March 20—A proposal to fire seven insurance fraud prosecutors in Florida is a foolish idea that would hurt consumers and play into the hands of insurance crooks, the Coalition Against Insurance Fraud warned state legislators today.

The coalition is shocked that the Florida Senate General Appropriations Committee is considering eliminating all of the state’s insurance fraud prosecutors.

“Florida—like many other states—faces serious economic problems. But eliminating fraud prosecutors would increase insurance crime and drive up costs for consumers,” said Dennis Jay, executive director of the coalition.

The proposal was among several presentations to the Senate committee this week to show how the state could reduce its budget 20 percent. Eliminating the fraud prosecutors was one of the most-drastic ideas.

The fraud prosecutors were created largely to deal with widespread and costly staged-accident rings and other auto scams. Florida citizens already pay among the nation’s highest auto premiums. Staged crashes also place all motorists at risk of injury, he continued. Consumers can ill-afford higher auto premiums in this recession, nor can the state afford the continued costs that investigating fraud imposes on its resources.

“It is disturbing that an effort to reduce state spending that serious thought is being given to reducing Florida’s commitment to fight insurance fraud,” Jay added.

Walter Dartland of the Consumer Federation of the Southeast also criticized the idea. “It’s beyond belief that legislators would consider such a move when insurance fraud is increasing across the state. It’s tantamount to giving a stimulus package to fraud perpetrators,” Dartland said.

Florida recently expanded the number of fraud prosecutors from two to seven. But the state still lags far behind states such as New Jersey, which has 31 prosecutors; Pennsylvania, which has 22 prosecutors; and Massachusetts, which has 11 prosecutors, he said.

Local prosecutors would handle insurance cases if the fraud prosecutors are eliminated. But the fraud prosecutors were created to ease the burden on the State Attorney’s Office, which doesn’t have the staff or budget to adequately handle insurance-fraud cases, Jay added.

Fraud fighters in Florida should let this legislative committee know eliminating prosecutors is a bad idea. Send an e-mail or call the chairman of the Appropriations Committee. Click on the name below to view contact information.

Appropriations Committee Members:
. Chair: Senator Carey Baker (R)
. Vice Chair: Senator Alfred “Al” Lawson, Jr. (D)
. Senator Dave Aronberg (D)
. Senator Charles S. “Charlie” Dean, Sr. (R)
. Senator Steve Oelrich (R)

Dumping cars is just dumb — and dangerous

Car fireBy almost all measures, car dumping is now a full-blown national trend. Reports from insurers, law enforcement, fire fighters and the media point to a new national pastime of getting rid of your vehicle (car, truck, motorcycle, ATV, whatever) if you’re in financial stress. Vehicles are burned, buried, pushed in lakes and rivers, chopped up and stashed away in a friend’s garage. And a lot of people are getting caught.

A year ago when the Coalition Against Insurance Fraud warned about this potential trend, we were seeing one or two cases a week. Today, it’s one or two each day. Yesterday, it was a volunteer firefighter in Ohio and a Harley owner in Florida. The day before it was a couple in Massachusetts, and the day before that officials in Charlotte, N.C. said they have had 45 suspicious car fires in just the last six months.

Last week, a Pennsylvania car dealer died of a heart attack reportedly while he was burning vehicles in his lot. Also in the keystone state, a body shop owner was charged with hiring someone to burn his Mercedes. Then there’s the cops in Chicago and Louisiana, the school principal in New Jersey and on and on and on.

The New York Alliance Against Insurance Fraud issued a report yesterday saying auto give-ups have increased 35% last year.

Now let’s review for anyone thinking about ditching their car. It’s a bad idea. Consider:

(1) There’s a good chance you’re going to get caught. Insurers and law enforcement are on high alert. And even if you’re not arrested, your insurance company may have enough evidence to deny your claim.

(2) If you are arrested, the penalties can be steep. Just ask Spencer Machek of Twin Falls, Idaho who’s spending the next eight years in state prison for arranging to have his car torched.

(3) If you get caught, you’re still on the hook to pay off the car loan.

(4) And even if you don’t go to jail, you no longer have any wheels — and no money to buy new ones.

Plus, if you burn a car, you’re putting firefighters’ lives in danger (as well as you’re own!). One fire department in Canada is now charging fraudsters for their services in putting out car fires. Great idea. Courts in the U.S. should do the same.

The bottom line is this: If you’re in financial straits or just don’t like the color of your car, don’t take this desperate step. It’s better to just mail the keys back to the lender, take a hit on your credit score and go on with your life.

Unsavory solicitation or needed consumer service?

To all enterprising Texans looking to make $300 for ten minutes work, meet Carlos Campos, entrepreneur and operator of the
Texas Marketing Group. If you can talk an accident victim into talking with Carlos — and that conversation results in at least five treatments at a local client, then you get the 300 bucks.

Carlos is an aggressive, unapologetic marketeer of what he says is a much-needed service of helping innocent accident victims receive medical treatment. He gathers auto accident reports from the local police and uses that information for his telemarketers to contact and convince accidents victims to seek treatment.

He says he never pressures anyone he calls, and that maybe only one out of ten is receptive to the idea. And he’s adamant that he would never encourage anyone to commit insurance fraud, although he admits some of his competitors probably do.

From a phone conversation earlier today, I found Carlos to be a well-spoken and thoughtful person who seems like he genuinely wants to help people — while making a buck. He said he’s a former insurance adjuster and that there wouldn’t be a market for his business if insurers did their jobs better. He says insurance adjusters only role is to save insurers money and that leaves real victims without treatment.

Most of the people Carlos solicits (he prefers ‘markets to’) are low-income folks without health insurance or the means to see a doctor, he says. Some may not know their rights as accident victims. He feels the insurance system is leaving these people out in the cold.

While there’s a lot of room for healthy skepticism here, if low-income people are getting squeezed out of the system, then insurers might have a hard time getting the Texas legislature to enact pending legislation that would put Carlos and his competitors out of business.

Similar laws that prohibit solicitation and restrict access to accident reports appear to have cut down on fraudulent claims involving soft-tissue injuries. Let’s hope that they don’t also unwittingly restrict needed treatment for those who really need it. Insurers and policymakers need to make sure on both counts.

Crooks in it for the long run; are insurers?

tumsCriminals who make a $30 billion industry out of defrauding insurance companies are in it for the long term, Travelers exec Doreen Spadorcia told the audience in her keynote address to the annual Insurance Fraud Management conference on Monday.

So, insurance companies need to maintain a similarly sustained focus on shutting them down.

That was one of many pearls of wisdom from Ms. Spadorcia, who challenged insurers to work smarter to prevent fraud and to adopt longer-term strategies.

She also cautioned companies against letting current pressure to reduce costs sabotage investments in fraud-fighting activities. “As a claim executive, I may have to reduce costs, and the easiest and perhaps the most equitable method would be across-the-board cuts. But that may not be the best strategic decision,” she explained, commenting that “a dollar saved on reducing anti-fraud activities is a poor investment.”

The same longer-term view needs to be taken in dealing with crooked medical providers, Ms. Spadorcia said. Travelers is one of a handful of courageous industry leaders who go after medical providers in civil court. Suing in federal court takes a good dose of fortitude and willingness to spend a bundle on legal fees. “Keep a roll of Tums in your top drawer because you’ll need it” in seeing these civil cases through, she said. “It’s not going to be a nice, comfortable process,” Ms. Spadorcia warned.

But she says Travelers does it, not just to attempt to get back their stolen money, but more importantly to put crooks out of business and to send a signal that insurers will not be allowed to be seen as easy targets.

She ended her talk on a serious note about the need for insurers to improve their public image as a means to convince consumers to become allies in the fight against fraud. “We need to be seen as ‘doers of good,'” she said. “Our next phase together must include a relentless focus on modifying our cultural orientation that tolerates or ignores insurance fraud.”

Great advice.

What price new siding?

I love seeing letters like the one below. Wherever hail seems to hit — mostly in the Midwest — these siding salesmen emerge and try to convince otherwise-honest homeowners to become quiet conspirators in costly fraud schemes. My favorite line in this letter: “I would love to have free siding, but the cost of committing insurance fraud is just too high.” If more homeowners understood that, these dishonest sales people would fade away.

Here’s hoping that insurance investigators follow up on this scam and that the salesman and the homeowners with the shiny new siding are called to account for their frauds.

Former regulator for HHS secretary

SebeliusTo the degree that the next secretary of Health & Human Services helps to set the agenda for healthcare reform, the selection of Kathleen Sebelius could be a good one for the anti-fraud community.

As a former insurance commissioner in Kansas, Gov. Sebelius has an keen understanding of insurance, and has shown she knows what it takes to combat fraud. During her years as a regulator, she served as NAIC president at a time when the NAIC Antifraud Task Force thrived in developing model bills and in helping to enact fraud bureaus in many states.

Then-commissioner Sebelius was a strong proponent of expanding her department’s anti-fraud capabilities, giving insurers civil immunity and requiring reporting of suspected fraud.

If confirmed, Secretary Sebelius could become a strong ally in supporting new anti-fraud measures on the federal level that would not only aid public insurance programs, but could also reinforce efforts by private insurers and state fraud bureaus.

Federal healthcare initiatives represent a solid opportunity to enact needed reforms to combat fraud by medical providers. The anti-fraud community is preparing its list of proposed initiatives, and it should welcome this newest appointment by President Obama.