Insurance Claims Investigation News

By Mike Cronin
TRIBUNE-REVIEW
Wednesday, January 2, 2008

So Allegheny County police accuse a McKeesport couple of swindling three car insurance companies out of roughly $20,000.

Who cares?

Everyone should, says Ralph Burnham, executive director of the Pennsylvania Insurance Fraud Prevention Authority.

“It’s a crime we all pay for, because the losses incurred by insurance companies eventually are passed on to our premiums,” Burnham said from his Mechanicsburg office. “Fraud jacks up the cost of our insurance. When fraud happens, everyone loses.”

Such fraud increases the average Pennsylvania family’s insurance bill by $300, the authority states.

To keep those costs from rising any higher, Burnham and law enforcement officers throughout the state publicize high-profile insurance fraud cases. Allegheny County police Detective Thomas Capp said he and his colleagues hope to reduce the incidence of insurance fraud by increasing awareness.

From 1996 to 2006, agencies funded by the prevention authority convicted 2,272 people of fraud. Statistics for 2007 won’t be available until later this month, but state authorities convicted 441 individuals last year for insurance fraud.

Two Allegheny cases appear in this year’s “Unlucky 13″ list of Pennsylvania’s most memorable and outrageous cases, which the prevention authority releases annually. In addition to the McKeesport couple, the group cited a case involving seven county residents who were convicted of filling more than $70,000 worth of phony prescriptions for painkillers.

“People are aware of things like homicides and drug cases, while fraud and other white-collar crimes are kind of put aside,” Capp said. “But it’s mind-boggling how much of it is out there.”

Many perpetrators attempt to remain hidden by collecting a few thousand dollars for each scam, Capp said.

McKeesport’s Jason Belyeu, 27, and his wife Cheri McDonnell, 27, face multiple felony charges for claiming up to $2,500 per fabricated accident, Capp said.

Neither Belyeu’s attorney, Alonzo Burney of McKeesport, nor McDonnell’s attorney, Leo C. Harper Jr. of Uptown, could be reached for comment.

Their scheme, Capp said, worked like this: Every three weeks or so, between Sept. 19, 2005, and March 30, 2006, a woman would claim responsibility for hitting a parked, unoccupied car. Each time, Progressive, Nationwide or Safe Auto insurance companies sent a check to pay for damages to Belyeu, Capp said.

Belyeu persuaded a number of women to pretend they hit his car and admit fault, and he would pay them, Capp said.

The scheme raised suspicion when McDonnell bought a policy from Progressive using the name of a female tenant renting one of Belyeu’s properties. That woman called a Progressive agent after receiving some mail and requested an investigation, Capp said.

After hundreds of hours combing records, law enforcement officials arrested Belyeu in March, Capp said. He was charged with five counts of insurance fraud, five counts of conspiracy to commit fraud and three counts of identity theft, Capp said.

McDonnell faces more than 21 years in jail for three counts of insurance fraud, three counts of conspiracy to commit fraud and three counts of identity theft.

Belyeu faces more than 35 years in jail if convicted, Capp said.

They are scheduled to stand trial March 3 before Common Pleas Judge Randal Todd.

“We want to educate folks across Pennsylvania that this is something that happens in their communities,” Burnham said. “We want people to report it.”

Mike Cronin can be reached at mcronin@tribweb.com or 412-320-7884.
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MUNCIE – Kenneth Allen, his sister, Vanessa Allen Hatcher, and others are accused of setting a series of house fires in a large-scale arson-for-insurance scheme.

More than a dozen suspects, including private insurance adjuster Douglas Haynes, have been charged with arson or using arson to commit mail fraud.

The scheme involved dozens of homes in Muncie, Anderson and Indianapolis and millions of dollars in fraudulent insurance settlements. A Nationwide Insurance investigator helped tip local and federal authorities to the scheme in an investigation that took nearly two years.

Allen, who has cocaine-dealing convictions, allegedly conspired with Haynes to defraud insurance companies by burning homes and collecting insurance settlements, according to a federal indictment. Haynes allegedly was involved with about 90 percent of claims.

Hatcher, 47, was identified as the main arsonist in the latest federal indictment this month, which alleged she set or arranged fires for more than 20 homes in Indiana and Ohio.

Muncie Police Lt. Al Williams led the local investigation, which also involved federal Alcohol, Tobacco and Firearms agents.

The Muncie Fire Department responded to every arson-for-insurance fire, but found most to be accidental. That was because the fires were made to look accidental by such means as putting blankets on space heaters, using candles or overloading electrical circuits.

Allen, Hatcher and others indicted by a federal grand jury are expected to cut deals with the U.S. Attorney’s office next month. Others face state charges in Delaware County courts.

The executive director of the North Dakota State Workers’ Compensation agency and an agency investigator were released after their first court appearances last week on felony charges involving questionable spending and possible illegal use of driver’s license photos.
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Workforce Safety and Insurance Executive Director Sandy Blunt is charged with two counts of misapplication of entrusted property, and he and Romi Leingang, WSI fraud investigator, are charged with conspiracy to disclose confidential information.

South Central District Judge Robert Wefald released Blunt and Leingang after their appearances on May 30th, pending future hearings. A preliminary hearing date was not immediately set.

Assistant State’s Attorney Cynthia Feland asked the two be released on a personal recognizance bond, saying she does not see either as a flight risk.

The misapplication charges stem from an audit of Workforce Safety and Insurance that found more than $18,000 in questionable spending on restaurant gift certificates and cards, and expenses for gifts from a shopping mall and lunch for state legislators.

The conspiracy charges involve what auditors said was improper use of state driver’s license photos, which are confidential records under state law. WSI investigators allegedly used photos to try to track down an employee who was e-mailing agency salary information to the press and others. The salary information is public record.

Attorneys for Blunt and Leingang have said they will plead not guilty. Both are on paid administrative leave from the workers’ compensation agency, which provides medical, wage and rehabilitation benefits for employees who are injured on the job.

Leingang’s attorney, Tim Purdon, asked Wefald to set aside an entire day for the preliminary hearing, which will determine if there is enough evidence to take the case to trial.

“Our goal at the preliminary hearing will be to have the charges dismissed,'’ Purdon said.

He objected to media cameras and microphones at the hearing. Wefald overruled the objection, but Purdon said he may raise it again later.

The charges against Blunt, two counts of misapplication of entrusted property and one count of conspiracy to commit disclosure of confidential information, together carry a maximum penalty of 20 years in prison and a $20,000 fine. The charge against Leingang carries a maximum of five years in prison and a $5,000 fine.

VISALIA
California

More than 60 men and women have been swept up in a five-county dragnet across the Central Valley on insurance fraud and related charges.

“Today’s arrests have dealt a death blow to these elaborately organized schemes. By working together, we’ve crippled their ability to continue their concerted rip-off of the system,” says California Insurance Commissioner Steve Poizner.

The arrests were made in Kern, Kings, Tulare, Fresno and Merced counties.

The crimes include:

• Fraudulent insurance claims for aftermarket stereo equipment, custom wheels and tires, and performance parts.

• Organized automobile insurance fraud rings which involved vehicles that were set afire by either the owner or associates in an attempt to destroy the vehicle beyond repair and dispose of any evidence.

• There were six cases involving family members or close friends who conspired to dispose of their vehicles to collect insurance benefits to which they were not entitled, or conceal the identity of an excluded driver to obtain insurance benefits.

• Workers’ compensation insurance premium fraud.

“The large number of suspects arrested is indicative of the magnitude of insurance fraud. It concerns me to see our citizens paying higher premiums and increased consumer prices due to criminals taking advantage of the insurance system,” says Fresno County District Attorney Elizabeth Egan.

Merced County District Attorney Larry Morse II adds, “The scope of this investigation underscores the regional nature of organized insurance fraud activities.”

ALBANY – County Judge Stephen W. Herrick this morning accused the central witness in a mammoth insurance fraud case of lying on the stand and creating a situation where the jury discredited everything he said.

While Herrick said he believed Willie Cook testified “substantially truthfully'’ over the course of the trial, he cited two lies he believes the man told. While tangential to the charges in the case, the lies he said still destroyed the jury’s ability to take his testimony seriously.

“The relevance of this is that the jury believed that you were a liar,'’ Herrick said, adding later, “All twelve of them totally discredited you.'’

The judge’s statements came as Herrick was poised to sentence Cook according to a plea deal he struck months ago, agreeing to testify against several members of the Houghtaling family in exchange for the promise of no additional jail time.

Cook, a close Houghtaling family friend, was one of eight people and the only non-Houghtaling implicated in the scheme, which prosecutors likened to suburban organized crime and said staged more than 20 car wrecks to reap the insurance money.

Cook pleaded guilty in March and ultimately testified against his alleged former confederates in a trial that lasted 11 weeks and ended with one dismissal, three acquittals, two felony convictions and a courthouse suicide bid by one of the alleged ringleaders.

But as Cook, 36, stood before the judge this morning, Herrick cited two instances where he believed other evidence directly contradicted Cook’s testimony.

Ultimately, Herrick allowed Cook to withdraw his guilty plea to felony insurance fraud, as planned in the plea deal. Cook then pleaded guilty to misdemeanor petty larceny. But rather than sentence the man to time served, Herrick sentenced him to a year in the Albany County jail. Herrick said Cook will still get credit for time already served and called the sentence a “modest additional period of incarceration.'’

Cook was handcuffed and lead away in the custody of Albany County Sheriff’s Deputies.

Tuesday, April 24, 2007
THE SAGINAW NEWS

MIDLAND – A Midland County chiropractor is facing fraud charges.

Court authorities on Friday arraigned Frederick Knochel on six counts of insurance fraud, said State Police Trooper Dave Rivard of the Bay City Post.

Post detectives and investigators for Blue Cross Blue Shield of Michigan conducted a six-month investigation into allegations the chiropractor submitted false insurance claims to the health insurance company, Rivard said.

Knochel’s office is at 2525 Washington in Midland.

Rivard said investigators continue to look for “anyone who has ever been a patient of Knochel and noticed a discrepancy in their explanation of benefits.”

Patients with suspicions should call the post at (989) 684-2234

The head of North Dakota’s workers compensation agency and the agency’s top investigator should be suspended from their jobs.

That’s the opinion of Governor John Hoeven after today’s news that the head of what’s called the Workforce Safety and Insurance agency and its top fraud investigator have been charged with felonies.

Director Sandy Blunt and investigator Romi Leingang were to focus of an audit which found improper activities.

Governor Hoeven says until a full investigation has been completed, the two should not be fired.

Brad Feldman has more on today’s developments…

Sandy Blunt is the executive director of Workforce Safety and Insurance. Now, he is listed as the defendant on three criminal complaints. Blunt is charged with two counts of misapplication of entrusted property. The first count, a Class B felony, accuses Blunt of spending WSI money on things outside of the agencies interest.

(Richard Riha, Burleigh County State’s Attorney) “An example would be you know gift certificates to restaurants.”

The second count, a class C felony, deals with bonuses given to WSI employees.

(Riha) “There is a statutory limit on bonuses for employees and our allegation there is that was improperly done.”

In addition, Blunt and co-worker Romi Leingang are charged with conspiracy to commit disclosure of confidential information.

(Riha) “It essentially involves drivers license photos that were released to people that shouldn’t have been and that is confidential information.”

The attorney representing Romi Leingang, Tim Purdon, says they are disappointed with the states attorneys office.

(Tim Purdon, Leingang’s Attorney) “Romi in this case is basically just an employee who is basically following orders from her superiors and I think when the facts come out the decision will be that she actually violated no laws.”

No matter the involvement, the case is now in the courts hands. The legal process will play out and determine who, if anyone is guilty of the charges. Brad Feldman, KX News

If convicted of the charges, Blunt faces up to 20 years in prison and a fine of 20-thousand dollars.

Leingang faces a maximum of five years in prison and a 5-thousand dollar fine.

SAGINAW – A judge ruled Thursday that there is enough evidence for a former mayor charged with arson and insurance fraud in the burning of her 1986 Mercedes-Benz to stand trial in the case.

Wilmer Jones Ham, who serves on the City Council and as mayor pro tem, was bound over for trial in Saginaw County Circuit Court. The date for her next court appearance wasn’t immediately set.

Wilmer Jones Ham is the mother of ex-Detroit Pistons player Darvin Ham. She has pleaded not guilty.

Wilmer Jones Ham is accused of setting the car on fire March 9, 2006, and trying to make a false insurance claim.

She remains free on a $15,000 personal bond.

California’s insurance fraud bureau leads the nation in criminal convictions with more than a third of all convictions generated by those state agencies across the U.S., according to a study released Thursday.

The Coalition Against Insurance Fraud said the study is a barometer of the nation’s annual progress against insurance fraud, which mounts up to $80 million annually.

The results were compiled from official figures reported by the 47 state fraud bureaus, and showed California’s fraud bureau unit logged 1,546 criminal convictions in 2005. Second was Florida with 493 convictions.

California leads the nation with 27,687 case leads the fraud unit received in 2005, the study said, slightly ahead of New York, which received nearly 26,000 leads. Leads come from a variety of sources such as insurance companies, local law enforcement, calls to the fraud hotline, and leads the fraud unit’s own investigators uncover.

California ranks second in cases it presented for potential criminal prosecution. Its 754 cases stand slightly behind Florida with 773 for 2005.

California’s fraud bureau brings more resources to the fraud fight than any other state, the study said. The unit’s top-ranked $36.8 million budget in 2006 was well ahead of New Jersey’s, which came in next with $29.7 million.

The Coalition Against Insurance Fraud is a nonprofit alliance of consumer groups, insurers and government agencies combating all forms of insurance fraud.

San Jose Business Journal

March 27, 2007 - Phoenix, Ariz. - Insurance industry groups have banded together to create eight data initiatives and a central data repository to combat fraud, according to the keynote speaker at an industrywide meeting here of property/casualty claims and special investigations executives.

The initiatives are designed to improve data collection, data sharing and data analytics through the ISO ClaimSearch all-claims database, said Susan Q. Hood, claims vice president for Bloomington, Ill.-based State Farm Insurance Cos. and chairperson of an industry fraud data working group. Her remarks came at the 2007 Insurance Fraud Management Conference.

“Fraud is a huge problem, costing the insurance industry over $30 billion a year, and these initiatives will help the industry to better combat it,” Hood said.

The initiatives have been developed by a fraud data working group with members from insurance companies the Palos Hills, Ill.-based National Insurance Crime Bureau (NICB) and ISO Properties Inc., a Jersey City, N.J., provider of products and services intended to reduce risk. The aim is to make ISO’s all-claims database a central repository for claims and fraud data.

“The specific initiatives will provide more actionable information for special investigations units and NICB investigators to improve their ability to identify fraudulent claims,” Hood told conference attendees.

The eight initiatives include revising reporting formats to and from ISO, adding optional data fields to the ISO database, changing the process for submitting questionable claims through ISO ClaimSearch to the NICB, and creating the ability to extract and sort data.

The initiatives will promote best practices and protocols for insurers’ timely and accurate submission of fraud-related data, says Richard Boehning, senior vice president of ISO.

“A number of the changes will affect the data that companies can submit and the data we can return for claims investigation,” Boehning said. “It will be important for companies to develop internal plans to adapt to the changes in order to capture the value intended.”

ISO and NICB sponsor the annual conference.

Liberty NY – Two police officers have been arrested and charged with having the same person wreck their vehicles to collect insurance money.

In one case, State Police at Liberty allege that William Kloss, III torched a 2005 Dodge Ram 2500 pickup truck for Edward Kowalik, Jr. Kowalik is a police officer with the New York City Department of Environmental Protection Police. Kowalik was having trouble making truck payments. He was charged with arson and insurance fraud.

Kloss was charged with torching the truck on February 26, 2007.

The investigation also revealed that on January 19, Kloss drove a 1999 Jeep Grand Cherokee and staged an accident so the vehicle’s owner, Amanda Cox, would make an insurance claim. Cox is a corporal with the Sullivan County Sheriff’s Office. She was arrested and charged with insurance fraud. She has also been suspended from the sheriff’s office pending further administrative action.

Cox, 25, who is a 3 ½ year member of the sheriff’s office, was recently promoted to the rank of corporal from deputy.

Sheriff Michael Schiff said the alleged incident took place while Cox was off-duty. “The results of this investigation were totally unexpected,” he said.

The investigation into the insurance scam operation could also potentially implicate a member of the Town of Fallsburg Police Department. That case is under investigation as well.

Police also learned that Kloss was allegedly involved in a staged accident March 2004 where he drove a 1994 Toyota pickup truck, owned by Michael Brooks of Jeffersonville, into a tree. Brooks collected insurance money for that.

Kloss was charged with arson with other charges expected, police said.

TORONTO, Feb. 21 /CNW/ - It’s awards season, so to recognize the worst performances by scam artists in 2006, Insurance Bureau of Canada (IBC) presents the first-annual Scam-ademy Awards. There’s no glitz, no glamour and no red carpet. And the winners are, in fact, losers who tried to cheat Canadian insurance companies and their customers - and got caught.
According to Rick Dubin, Vice-President, Investigations, IBC, insurance fraud and auto theft are serious and costly crimes that make victims of us all. “Criminal greed costs honest Canadian policyholders about $3 billion a year,” says Dubin. “But sometimes fraud artists deliver performances that are so brazen and so dumb that they warrant some kind of recognition.”

The Fraudster Award for Worst Picture goes to “Around the World in 80 Cars", an epic scam that stretched from Canada to the Middle East. These audacious fraud artists were not only car thieves, they were identity thieves as well. They created a string of false identities and fake credit reports, and used them to lease over 80 high end cars. The cars were then packed up and shipped to buyers in countries throughout the Middle East. After the cars had
sailed away, the gang tried to report some of them stolen in an attempt to collect on the insurance as well. The trail of fake paperwork led to seven suspects. As the credits rolled, five men were facing charges and arrest warrants had been issued for the other two.

Our next category is for the Worst Performance by Actors in Supporting Roles. And the Fraudster goes to “Same Time Next Week". This cast of characters had a lot in common as they tried to cheat the system. They all appeared to be lousy drivers, they all drove rental cars and, most amazingly, they always crashed at the same time of day and the same day of the week. They did it once and then went on to produce 11 sequels. They all had the same
plot. One car with 2 people in it hit another car with 3 or 4 in it. They all used the same paralegals and went to the same clinics for treatment as they tried to bilk insurers with false claims. But there was no happy ending for this cast. Insurers caught on. Claims denied.

In the Worst Documentary category, the Fraudster goes to “Your Pink Slip Is Showing". It turns out the “documents” in this documentary were forged. It’s the story of a rental car operation that gave forged pink slips to its customers as proof of insurance. The boss was busted but then she changed the company’s name and tried the same thing again. This time she got real pink slips for her fleet only she didn’t pay the premiums, and kept using them even after the policy was cancelled for non-payment. This encore performance had a
similar ending - the company has been shut down and the case is in the hands of police. As for our star, she may soon be trading in pink for orange.

For the Worst Foreign Production, the Fraudster goes to “Lost and Found in Mexico” - the epic journey of a stray SUV. Two men got their hands on a Hummer that was stolen in Ontario, then they high tailed it to Mexico and acquired insurance from a Mexican insurer. One of the men reported to police in Cancun that it was stolen and filed an insurance claim. Meanwhile his partner had the vehicle in Acapulco. The police weren’t fooled and the two men
were busted for possessing stolen property and filing a false insurance claim. They’re now facing charges in Mexico and the Hummer is back home north of the Rio Grande.

The Fraudster for Worst Achievement in Special Effects goes to “Two Places at Once", the eye popping story of a chiropractor with a phantom double. The mystery began when the chiropractor said goodbye to the Ontario clinic where he worked and moved to the U.S. Or did he? Apparently he continued to stay busy at the Ontario clinic. Very busy, in fact, as his name
and credentials continued to appear in many of the clinic’s reports and invoices submitted to insurance companies. The chiropractor was very surprised to hear the news when investigators contacted him in the U.S. It turns out computer generated effects were used to pull off this fraudulent illusion. The case of the double dealing clinic has been turned over to authorities for investigation.

The Fraudster for Worst Director goes to the not quite a genius behind “The Careless Collector” - the story of a man who was in love with vintage sports cars but just couldn’t seem to keep track of them. It began when he filed a claim with his insurance company reporting that his beloved classic Corvette had been stolen. The company noticed that this was the third time in six years that the man was reporting a car theft. The other two were a vintage
Porsche and and a Mercedes. So an investigator decided to pay the man a visit and discovered that his small, residential property was filled with stolen cars and car parts. A search revealed that he had some of the cars he had reported stolen as well as others. In a final twist, one of them was another Corvette that had been stolen from an NFL player 14 years ago in the U.S. The ending of this epic is being written by a U.S. judge.

For further information: or to schedule an interview with Rick Dubin, please contact: Ellen Woodger at (416) 483-2358, (ellen.woodger@sympatico.ca)

By Arkansas Business Staff
2/14/2007 3:54:09 PM

Arkansas State Insurance Commissioner Julie Benafield Bowman said Wednesday that a suspected insurance fraud ringleader, Frederick Watson, has turned himself in to Little Rock Police.

The state Insurance Department said Watson is alleged to have masterminded a car crash ring operation that defrauded insurance companies of hundreds of thousands of dollars over 12 years.

Among his alleged accomplices were his cousin, Mark Watson, and Rebekah Rahn, both of whom were arrested Monday.

Bowman said investigators from the department’s Criminal Investigation Division began looking into the case after an adjuster with an insurance company said she thought one of her clients had been intentionally crashed into while driving.

“A common thread soon began to emerge as the department looked at police accident reports,” Bowman said in a news release. “The investigators began to see the same vehicle involved in more than one accident and similar names for drivers involved.

Watson and others in the ring are alleged to have staged more than 40 accidents during their years of operation, choosing targets as they left driveways or traveled through intersections. Some crashes caused injuries.

PHOENIX Approving a measure aimed at helping to curb insurance fraud, the Senate on Monday voted to require that a person reporting an auto theft also present police with a signed affidavit. The Senate approved the bill on a 30-to-0 vote, sending it to the House.

Under the bill, if an affidavit isn’t submitted within ten days of the reported theft, the law enforcement agency that took the report would be required to remove it from criminal information databases.

The bill was supported by the Arizona Auto Theft Authority, insurance companies and police groups.

According to a legislative briefing memo, a 2004 study by the Arizona Criminal Justice Commission found that between 10 and 20 percent of all reported auto theft cases in Arizona involved insurance fraud.

A 19-year-old Dearborn man is facing at least five years in prison after he pleaded guilty today to hiring someone to torch his family’s business for insurance purposes.

Mouhamad Bazzi pleaded guilty in Ann Arbor before U.S. District Judge John Corbett O’Meara.

On Jan. 13, 2006, arsonists hired by Bazzi burned down The Dollar Store/Smokey Joe’s in the Superior Plaza on Wyoming in Dearborn. The business was owned by Bazzi’s mother and operated by Bazzi and his brother, court was told.

The fire also did significant damage to other shops in the plaza. A sentencing date was not set. Two other men were charged in the case. One awaits sentencing and the other awaits trial.

You can reach Paul Egan at (313) 222-2069 or pegan@detnews.com.

TALLAHASSEE After several months of investigations, dozens of suspects from Pensacola to Miami will be arrested the week of January 22nd for insurance fraud schemes that totaled at least $1 million. Chief Financial Officer Alex Sink announced the three-day operation as it kicked off Tuesday, stating she wants to send a strong message that Florida will not tolerate this costly crime.

In Miami, an early-morning sweep already netted three arrest of suspects accused of bilking the insurance industry on Tuesday.

“Those who commit insurance fraud may think they are only hurting insurance companies, but insurance fraud causes real financial pain and hurts families, businesses and communities,” said Sink, who as CFO oversees the department (DFS). “Anyone found guilty of insurance fraud in Florida will pay for their crime.”

The operation targets nearly 80 individuals wanted on criminal charges ranging from staging automobile accidents to grand theft, and the arrests will continue through Thursday. The division’s operation is being organized through the division’s regional offices. The charges are being prosecuted by state attorney offices in the various jurisdictions. Potential sentences could range from five years to 30 years in prison per count.

The majority of the charges fall largely under workers’ compensation fraud, including both claim fraud and employer fraud. The second-largest category of charges involves auto insurance fraud, from staged accidents to fraudulent Personal Injury Protection (PIP) insurance claims. Some of the cases involve insurance agents accused of defrauding customers and several homeowner claim fraud cases.

Insurance fraud in Florida has been estimated to cost Floridians as much as $1,400 a year. Depending on the estimated loss amount, the department will pay up to $25,000 for information directly leading to an arrest and conviction.

To report insurance fraud, call the department’s Fraud Fighters hotline at 1-800-378-0445 Click here to report incidents of insurance fraud. Complaints can be tracked online.

Florida’s chief financial officer has launched a nationwide search for an experienced and talented law enforcement official to lead the Department of Financial Services’ Division of Insurance Fraud (DIF).

The government said Coalition Against Insurance Fraud numbers show Floridians pay an additional $1,400 in insurance costs each year due to fraud.

“We’re looking for a highly motivated law enforcement official to lead our nationally recognized team of insurance fraud detectives,” CFO Alex Sink said. “We’re going to strengthen our efforts to crack down on this growing crime in our state.”

DIF is one of 40 state anti-fraud bureaus and one of 32 with police powers.

The state said DIF is also directly responsible for annual court-awarded restitution to insurance fraud victims averaging more than $100 million a year.

The fraud division, as the law enforcement arm of the Department of Financial Services, is responsible for investigating crimes associated with insurance claim fraud, insurance premium fraud, workers’ compensation claim fraud, workers’ compensation premium avoidance and diversions, insurer insolvency fraud, unauthorized insurance entity fraud and insurance agent crimes.

The division’s investigators also investigate viatical application fraud, defalcations of escrow funds held in trust by title insurance firms and non-Medicaid-related health care fraud.

Earlier this month, Sink promoted former DIF Director Eric Miller to deputy chief financial officer. John Askins is serving as acting director of DIF.

SAGINAW, Mich. A prosecutor says Saginaw’s mayor pro-tem will be charged for setting her luxury car ablaze last March and trying to cash in with a fraudulent insurance claim.
Wilmer Jones-Ham, the former mayor, faces felony charges of arson of personal property and filing a fraudulent insurance claim. The charges carry five- and four-year sentences.

Jones-Ham in the past has cast suspicion on the city’s former city manager for torching her Mercedes. She also gave the Saginaw News a notarized document she claimed was a confession from her handyman.

Investigators haven’t been able to substantiate either claim.

No date has been set for an arraignment.

(WSGW)

MIAMI (Reuters) - A Florida doctor pleaded guilty on Wednesday to securities fraud in connection with a life insurance scam that cost 28,000 investors nearly $1 billion, prosecutors said.

Clark Mitchell, the former director of a prominent AIDS clinic who was arrested more than five years ago on insurance fraud charges, agreed to be responsible for restitution of $367 million to investors in Mutual Benefits Corp., a Fort Lauderdale company that sought investors in life insurance policies held by elderly or ill people.

U.S. District Judge Paul Huck accepted a plea agreement and set sentencing for March 7, 2007, prosecutors said. It is one of several civil and criminal cases stemming from the company.

Prosecutors said Mutual Benefits directed an international network of agents who conned people into investing in viatical settlements, which are agreements to buy the life insurance death benefit of a terminally ill or elderly person in return for a lump-sum payment.

The investors were led to believe that their investments were safe because doctors would determine the life expectancy of the insured person.

But prosecutors say MBC officials – not doctors – determined the life expectancies which were fraudulently low. Mitchell and other doctors who worked for the company signed affidavits and letters that were sent to investors to make their investments seem less risky.

Prosecutors said Mutual Benefits’ investors lost $956 million.

Mitchell also pleaded guilty to conspiracy to commit health care fraud in connection with his work at a South Florida AIDS clinic. Prosecutors said he inflated Medicare bills by more than $500,000 by claiming AIDS patients received more extensive treatment that they actually did.

Under the terms of the plea agreement, Mitchell faced 10 years in prison and a fine of more than $5 million, in addition to the restitution.

Eagle-Tribune

The fight against auto insurance fraud is finally starting to pay off for drivers in Lawrence and across Massachusetts. But there’s more work that needs to be done to create a truly fair and competitive insurance system in the state.

Last week, Insurance Commissioner Julianne Bowler announced an average 11.7 percent cut in premiums for 2007, the largest decrease since 1978. The rate cut means an average savings of $119.61 per vehicle across Massachusetts, where the average annual premium will be $898.81.

In Lawrence, where insurance rates are among the highest in the state, drivers with good records could see their premiums fall by more than $200. Under an agreement brokered by state Sen. Susan Tucker, D-Andover, Lawrence drivers will see a greater premium reduction that the state average to reward residents for the city’s fight against auto insurance fraud.

The rate cut is welcome and overdue. Lawrence police and the Essex County district attorney’s office launched an auto fraud task force in the city in 2003. Since then, 213 people have been charged with auto insurance fraud and claims have fallen by $30 million. The results from Lawrence has led to the creation of similar efforts in other cities with high rates of fraud.

The rate reduction comes after another welcome change in auto insurance in Massachusetts, one that puts greater pressure on insurers to continue the fraud fight. All drivers in Massachusetts are required to have auto insurance. In the current system, the state assigns high-risk drivers to companies, but then allows them to dump their policies into a pool where costs are shared by all insurers. Under this system, smaller companies end up supporting a greater share of the cost of insuring high-risk drivers. This, critics say, has resulted in a number of companies refusing to do business in Massachusetts.

Bowler has ordered a new system under which high-risk drivers will be randomly assigned to insurers based on their share of the market. Bowler says the system forces insurers to take more aggressive steps to control losses and reduce fraud. A similar system is in place in 43 states.

Lost in all this is Gov. Mitt Romney’s proposal to reform auto insurance through a gradual reintroduction of a free market - moving away from state-mandated rates to premiums set by driver records and competition for customers. Romney’s proposal died in the Legislature this past year.

New Gov. Deval Patrick should pick up the auto insurance reform effort during his first term in office. Reform that allows competition among insurers is the only way to make certain that good, honest drivers will continue to see lower rates for their car insurance.