Fraud News Weekly

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Get the latest insider insurance fraud news, developments and analyses each Friday by e-mail. Concisely written by top professionals, each issue contains the latest information about:

• Legislative and regulatory developments

• State and federal court decisions

• Public outreach and media coverage

• The week's fraud arrests

• The latest convictions for insurance fraud

• Civil cases

• Administrative actions

• Upcoming meetings, seminars and conferences


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Friday, July 8, 2016

LEGISLATION & REGULATION

* North Carolina has amended its auto-rate evasion law to clearly define the proof of state residence drivers must provide insurers when applying for auto coverage. Any of these items are proof: utility bills, property tax receipts, valid state vehicle registration or federal tax return with a North Carolina address. Goal is to stop drivers from states with higher auto premiums from falsely registering their vehicles in North Carolina. Insurers also can deny coverage to rate scammers, though must pay claims to innocent 3rd parties. Drivers also must reimburse insurers for claims paid out.

* The Rhode Island governor has created a task force to probe widespread disability scheming in the state. It includes the heads of 5 state agencies. They’ll jointly investigate and prosecute schemes. They’ll also develop model best practices for government agencies and private insurers. The task force was included in a new budget law the governor signed.  

* A Rhode Island bill covering repairs of rented autos could lead to inflated repair claims, some insurers believe. Seems body shops in Rhode Island rent autos and file damage claims for the cars. They inflate claims for loss of use until the auto is repaired. Lo and behold, the repairs take longer than expected — no matter how many other vehicles are available to rent. Insurers are challenging HB 7412. The bill would allow actions for unfair claims practices even if an insurer refuses to pay fraudulently inflated lost-rental claims. Several large, politically influential repair shops pushed the bill through the legislature, Coalition sources say. The governor is deciding whether to sign the bill into law.

* Utah’s law requiring insurers to have fraud plans has taken effect. The law is similar to fraud-plan requirements in more than 20 states. Utah takes it a step farther: Insurers would have to detect, investigate and prevent data breaches. Utah-domiciled insurers will provide fraud plans during normal audits by the insurance department. All other insurers have to maintain a plan, though not file with the department.

* The Coalition is reviewing which states to target next year. If you have ideas for issues and states, contact Howard Goldblatt.

Note: Texts of anti-fraud bills are available on the Coalition’s website here.

PUBLIC OUTREACH

* Sitting in the subway ... between flights at the airport ... got a few minutes in the hallway between meetings? Great chance to check out updated fraud news and other timely Coalition material using a new mobile app for smartphone and iPad users. The app FraudWire allows convenient viewing of daily and weekly fraud news … weekly blogs … podcasts ... videos … trend articles by noted experts, and other fresh insurance-fraud info. They’re formatted for easy viewing on mobile screens. FraudWire is available in the Apple store for iPhone and iPad users, and from Google Play for Android users. FraudWire is the first app of its kind.

* “Errant birds, blood-sucking insects, multiple-personality disorder and too dumb. These are just some of the daffy defenses fraudsters peddle when cornered and trying — with a straight face — to explain unexplainable insurance cons that lurched out of control,” goes the latest Fraud of the Month. “Investigators quickly see through paper-thin excuses. Claim denied, scam busted.” Like the guy who claimed a pelican caused him to swerve his $1 million Bugatti into a swamp. Andy House actually barreled the car into the glop for an inflated $2.2-million claim.

* “Zero tolerance is a popular catchphrase for insurers to bandy around. It implies a blanket boycott of dubious claims, the marshaling of an insurer’s full resources at every turn,” goes this week’s FraudBlog. “In practice, zero tolerance is a moving target. Few insurers can assert they contest every dubious claim. Even the most principled insurers decide which claims to challenge, and which to let slide through.”

Visit www.InsuranceFraud.org to read articles in which the Coalition is quoted.

CRIMINAL CONVICTIONS

* Fake passengers in a crash ring were slashed with razor blades, punched in the face, hit with poles and had their foreheads scoured with wire brushes to appear injured in setup car wrecks. Michael Burris headed a local crime family in the Evansville, Ind. area. He bought cars and insured them just weeks before the phony wrecks. Drivers rammed the vehicles into trees or other fixed objects in remote areas. The drivers left the scene, and nearby cohorts jumped into the badly damaged vehicles. They waited until emergency personnel responded. The bloodied passengers made false police reports, then went to the hospital and rang up large bills. Vehicles often were loaded with 3-4 people. Some were minors and pregnant women. Burris coached the passengers to act injured by waiting for emergency responders to extract them from the vehicles. His gang set up at least 12 crashes that stole $600,000 or more. Burris was handed 9½ years in federal prison. 

* The bungled attempt to murder a pregnant Norfolk, Va. woman for life insurance has earned a would-be killer 5 years in prison. Anthony Johnson wanted Navy seaman Elizabeth Shelton out of the way. He promised 3 cronies a healthy share of the expected $400,000 in life money. High school dropouts Robert Burnette and Tristan Reeder crept into the home through a door that Johnson left unlocked. They pretended to choke Johnson until he pretended to pass out. Then they attacked Elizabeth. The pair stabbed her several times and stomped on her head. The duo then fled, thinking she was dead. Meanwhile, Elizabeth survived. Reeder is the latest to plead guilty, receiving 5 years in federal prison. Johnson likely will receive 35 years when sentenced in August. Burnette has received 12 years.

* Carlins Calixte was a lead member of a gang that staged about 50 car crashes in southeastern Connecticut. Most were single-vehicle crashes on remote roads. The only witnesses were vehicle occupants. Ring members filed false damage and injury claims. Insurance payouts usually ranged from about $10,000 to $30,000 per crash. Calixte was involved in at least 7 incidents, and assisted with others. He faces up to 20 years in federal prison when sentenced Sept. 30.

* Kristina Russell runs 2 Ohio firms that provide vocational rehab and job placement for injured workers. She consistently billed the maximum mileage (130 miles) and time allowed per claim for the vocational- rehab program of the state Bureau of Workers’ Compensation. Russell also billed BWC for mileage, travel time and wait time she either didn’t incur or incurred for non-BWC clients. And she submitted forged bills and treatment notes. Russell received 5 years of community control and must repay BWC $20,869.

CRIMINAL CHARGES

* The dance. That’s the suspected code word for staged crashes allegedly managed by former Kansas City Chiefs wide receiver Jeff Webb. His suspected Riverside, Calif.-based gang stole $139,000 by crashing cars into poles and curbs to lodge expensive injury claims from minor crash damage. Another $70,000 in claims was pending. They used rental and privately owned vehicles. The alleged 9-member gang ended up in court when a suspect admitted a crash was a setup. Webb called the crash “the dance.” He played football for San Diego State before ending up with the Chiefs for 3 seasons.  

* David Arnold Cook is on a collision course with fraud charges — and other vehicles. The Tacoma, Wash. man and nephew Anthony Jamal Scott collided with another vehicle in an apartment complex parking lot. They filed injury claims with Cook’s insurer, Geico. Scott sought money to pay for unspecified future medical treatment. The at-fault driver’s insurer Farmers paid Cook for his injuries and car damage. Yet the at-fault driver and a witness say Cook was alone in his car during the collision. They saw Scott only when he came out of his apartment as the cars collided, they say. Cook also collided with a plumbing truck that ran a red light. He claimed lost wages with the plumber’s insurer, allegedly using false documents and info, the Washington insurance department says. Cook was charged but failed to show for his court date, and was branded a fraud fugitive. Police caught up with him earlier this week in Seattle and took him into custody. 

* Brotherly love didn’t get them very far. Neal Moriarty hit a deer while driving, damaging his uninsured car. The Morro Bay, Calif. fire captain called his brother Ross, who’s an insurance agent. Ross falsely renewed Neal’s auto insurance. Both faked the crash timeline and filed a bogus $13,709 repair claim. Investigators were suspicious and asked for phone records. But Neal wouldn’t produce them and withdrew his claim a month later. Both received a year of informal probation. Ross also lost his agent’s license. Fraud runs in the family: Their father Al was convicted of a $10.2-million Ponzi scheme in 2014.

* Nairi Kirakosyan drove his car into a palm tree in the Sacramento area. His crony Artak Aghajanyan was lookout, and climbed into the front passenger seat after the crash. A hit-and-run vehicle sideswiped their car, the pair said. They received chiro treatment for claimed injuries. They also hired an attorney and sued Bristol West, Kirakosyan’s auto insurer. They demanded $50,000. Bristol paid Kirakosyan at least $7,000 for car damages, though refused to pay for the so-called injuries. The scheme fell apart when a witness said he saw the crash, and spotted Aghajanyan getting into the car afterward. Kirakosyn received 150 days in prison. Aghajanyan fled the U.S. and is at large. 

* Geico has sued 5 Florida glass firms and 6 persons for allegedly billing for hundreds of fraudulent auto-glass repairs. Geico seeks to recover damages under the federal RICO and state consumer-protection laws. The insurer says the defendants used customer info to create invoices for phantom glass repairs. 

* One of America’s highest-paid docs was bounced from Medicare for 3 years for doing useless heart procedures and overbilling. Dr. Asad Qamar lured patients by illegally waiving Medicare’s 20-percent copayment — violating federal kickback laws. The South Florida doc also overbilled, several times charging for more than 24 hours in a day. Despite the high payouts, he also had a suspiciously high claim denial rate of nearly 60 percent. Qatar was Medicare’s 2nd-highest-paid doc in 2012, pulling down $18.3 million. Qamar made $16 million in 2013. That was more than 7 times the next highest-earning Florida heart doc. The average Florida heart doc earned $269,199 that year.

* The Coalition is surveying insurers on how they are using technology in their anti-fraud operations. If you receive an email request to complete the survey, please do so. The study will provide the anti-fraud community useful info about how well insurers use technology, and how well technology is helping anti-fraud efforts. The study has been conducted every other year since 2012.

* Steve Wright has been promoted to lead Maryland’s fraud bureau after a long investigative career with the unit. Officially, Steve is Associate Commissioner, Fraud Division. The unit is housed in the Maryland Insurance Administration. Steve has been with the fraud unit since 2007. Most recently he was Chief Investigator. Prior, he had a 28-year career with the state police, and spent a year investigating fraud for Liberty Mutual. We welcome Steve to his new position and wish him much success.

* Scams move across industries, investigators say in a study by LexisNexis. Nearly 9 of 10 fraud-mitigation pros (84 percent) say some cases they review are tied to another industry. Mitigation professionals in the insurance sector (68 percent) believe sharing fraud data within those industries would help combat schemes. Sharing info outside of their own industry could be very valuable 42 percent of the time, and moderately valuable 33 percent of the time. Most respondents (89 percent) agree that developing universal fraud descriptors would be very helpful, especially insurance respondents (63 percent). Most (81 percent) say they’d consider contributing their fraud outcomes to a shared database if they’d receive fraud info from other industries.

QUOTE OF THE WEEK

“It would be nice if they learned from their past mistakes, but it appears they’ve just become more sophisticated in their schemes.”

— Evansville, Ind. Police Chief Billy Bolin on a local staged-crash gang masterminded by Michael Burris.

OTHER HEADLINES

Heather Bordack
Cambria County, PA
False auto claim
(arrested)
Michael Burris Sr
Evansville, IN
Staged crashes
(convicted)
Joshua Zabel
Kitsap County, WA
False auto claims
(convicted)
Jeffrey Leon Webb
Riverside, CA
Staged crashes
(arrested)
Nancy Ramirez Montelongo
Las Vegas, NV
False auto claims
(pending sentence)

For more information, click on image.

OTHER HEADLINES

Doctor in Florida gets 4 years in prison for $2.1M Medicare scam
Health insurer in New Jersey says it saved $42M fighting fraud
Church secretary from Ohio convicted of workers comp fraud

OTHER HEADLINES

August 3 — 16th Annual Insurance Fraud Conference
Lincoln, NE (Nebraska Dept. of Insurance - Fraud Prevention Division)

August 7-12 — 64th Annual IAATI Vehicle Investigation Seminar
Murfreesboro, TN (International Association of Auto Theft Investigators)

September 11-14 — IASIU 2016 Seminar
Red Rock, NV (IASIU)

October 4-6 — Worker's Compensation Fraud Investigation Conference
Helena, MT (Montana State Fund)

November 6 — Complex Fire Investigation for the Insurance Industry
Huntsville, AL (IASIU)

November 14-15 — 2016 Advanced Insurance Fraud Seminar
Bloomingdale, IL (IAAI)

For more info, visit online events.