Insurance Fraud NEWS
Insurance cards being photographed, used for Michigan cons
May 14, 2019, Detroit, MI
Attorney John Hohmeier has 130 pending lawsuits sitting on his desk pertaining to various medical claims for coverage under Michigan's unlimited auto insurance benefits for injured motorists.
Hohmeier, one of 17 lawyers at Scarfone & Geen P.C., a Madison Heights firm that represents auto insurance companies, says half of the lawsuits have some element of fraud in which the injured driver or their doctors seek to game the no-fault system for services and payments.
Many of the claims, Hohmeier said, include staged accidents and motorists lying about their physical capabilities.
One emerging form of fraud involves stealing or photographing the auto insurance card from a vehicle and filing an immediate accident claim with a carrier so the thief can obtain a claim number and start seeing doctors the next day, Hohmeier said.
"We call it paper claims," Hohmeier said in an interview for the Crain's "Detroit Rising" podcast. "So if you go, for example, to dinner with your wife and you valet your car, the valet or somebody in the parking garage will take a picture of your insurance policy, get two or three friends together, call up the insurance company, make a claim, get a claim number (and) take that claim number to any of the dozens of no-fault doctors in the metro Detroit area.
"They'll get four different sets of prescriptions off the bat — because that's standard operating procedure for a lot of the doctors who are willing to treat no-fault patients without insurance or prior payments."
Reining in the cost of medical claims for injured motorists is at the center of a legislative effort in Lansing to reform Michigan's unique auto insurance law — the only one of its kind in the country with mandate Personal Injury Protection (PIP) coverage for all motorists.
Hohmeier contends the limitless PIP medical benefits under Michigan's 45-year-old insurance law encourages overutilization of medical procedures and outright fraud.
He spends his days trying to combat perceived fraud and litigating over bills for clients such as State Farm Mutual Auto Insurance Co. and AAA of Michigan.
Often times, Hohmeier said, the paper claims occur so fast that the insurance company doesn't catch them until after the thief or thieves have already sought medical treatment or prescription drugs from unwitting doctors.
"I'm not at all blaming the doctors — they don't know it any more than the insurance company knows it when the people call in," he said.
When auto insurance carriers flag suspicious claims activity, they attempt to contact the motorist by phone to verify they were, in fact, in an auto accident, Hohmeier said.
"The insurance company may not even know it's fraudulent for a couple of days," he said. "And by then, the person has already gone to the doctor, they've got their prescriptions and they're off."
Michigan's no-fault auto insurance law has become awash in litigation surrounding medical bills as auto insurance companies question and deny claims and medical providers leapfrog over patients to sue insurers for not paying.
Between 2008 and 2018, the number of first-party no-fault lawsuits nearly doubled from 6,035 to 11,764. Seven out of 10 of the 2018 lawsuits were filed in Macomb, Oakland and Wayne counties.
Crain's reported last month there was a 295 percent increase in first-party lawsuits filed in Oakland County between 2016 and 2018 as Wayne County judges tossed out lawsuits from medical providers — and judges north of 8 Mile Road allowed them.
Court-appointed case evaluators are starting to more closely scrutinize lawsuits brought by medical providers seeking judgments against no-fault carriers, Hohmeier said.
"I think the case evaluation panels are starting to question why a lot of these cases are being filed in Oakland (County) when the providers are in Wayne, the accident was in Wayne, the underlining claimant is in Wayne," he said.
Source: Crain's Detroit Business