Insurance Claims Investigation News

Thursday June 23, 1:36 pm ET

PHOENIX, June 23 /PRNewswire-FirstCall/ — Republic Western Insurance Company (RepWest), a subsidiary of AMERCO (Nasdaq: UHAL – News), announced today that Robert Longo, investigator for the company\’s Special Investigative Unit (SIU), Georgia Field Claims Office, has been named the 2004/2005 \”Investigator of the Year\” by the Florida Insurance Fraud Education Committee at their annual anti-fraud insurance seminar held June 14-16 in Orlando, Fla.

Longo was chosen from a select group of nominees who have demonstrated exceptional investigative abilities and whose efforts have made a significant impact on furthering Florida\’s fraud-interdiction efforts. Criteria for the award included:

– Impact investigation made in the fight against insurance fraud.
– Positive effect investigation had on the insurance industry and the
community.
– Uniqueness of the investigation.
– Exceptional qualities of the investigator.
– Recognition received from nominee\’s peers.

For the past year, Longo has been the lead investigator on three suspected staged-accident rings. One was a large-scale staged-accident ring dubbed \”The Miami 19\” because of its geographic location and number of individual claim files associated with it. Longo identified the scam and, working with the Florida Division of Financial Services, National Insurance Crime Bureau and Delta Investigative Services, identified the ringleader of the scam, numerous individuals who participated in the staged losses, several crooked medical providers who submitted billing and treatment records for services that were never rendered, and unscrupulous attorneys who used these bogus bills to submit false bodily-injury claims.

As a result of Longo\’s efforts, 39 individuals were arrested and charged with various criminal counts under the Florida insurance-fraud statute.

\”Winning this award is truly a great honor. However, it represents a team effort,\” Longo stated. \”We have a great SIU team. The word is out on the streets that U-Haul and RepWest are not easy targets. We will investigate any suspicious claims.\”

\”My sincerest congratulations to Robert on this significant achievement. Aggressively combating fraud is one of the single most important focuses we have in our field claims offices,\” stated RepWest President Richard Amoroso.

RepWest has been domiciled in Arizona as a property and casualty insurance company since 1973. The company employs 250 professionals and operates eight claims-adjusting offices throughout the United States and Canada. RepWest has been a pioneer in developing innovative products for U-Haul self-move and self-storage customers.

Source: Republic Western Insurance Company

The Texas Committee on Insurance Fraud reported that Gov. Rick Perry has signed legislation making it tougher on criminals who commit insurance fraud in Texas. All three bills were strongly supported by the committee.

Senate Bill 871 by State Sen. Eddie Lucio of Brownsville gives prosecutors a stronger hand in sentencing criminals who intentionally, knowingly or recklessly commit insurance fraud.

House Bill 2388 by State Rep. Senfronia Thompson of Houston will help state officials determine how bad insurance fraud is in Texas. HB 2388 calls for every insurance company in Texas to report their cases of insurance fraud to the Texas Department of Insurance Fraud Unit. For the first time fraud investigators will know how prevalent the crime is, its cost and where it is taking place. This will allow the insurance commissioner to pinpoint his resources in fighting insurance fraud cases.

HB 3376 by State Rep. Larry Taylor of League City extends the statute of limitations in fighting insurance fraud from three to five years, increases penalties, more clearly defines the act of insurance fraud and strengthens the money laundering statute.

The Texas Committee on Insurance Fraud also supported legislation that addressed workers\’ compensation fraud. The insurance fraud language that Committee members had sought can be found in HB 7, which was signed June 1 by Gov. Perry.

Texas Committee on Insurance Fraud Chairman Craig Sparks said the legislation is the committee\’s first step toward reducing what is believed to be a billion dollar crime in Texas.

\”Giving Texas prosecutors the right tools to fight insurance fraud will benefit every Texan,\” Sparks said. \”States that have had success in fighting insurance fraud have seen reduced insurance rates.\”

By JONATHAN D. EPSTEIN
News Business Reporter
6/19/2005
Efforts to fight auto insurance fraud in New York state seem to be working, with fraud reports to the state down 17 percent last year, according to the New York Alliance Against Insurance Fraud.

Citing statistics from the industry-funded Insurance Information Institute, the insurer group said the cost of no-fault personal injury protection claims is down 32 percent since 2000.

It also said the frequency of those claims, while still above the national average, is down 21 percent. Even more, the average cost of such claims in New York, at $5,867, is now below the national average of $7,060.

The improving situation is in contrast to 2000, when no-fault claim costs in the state were growing faster than in any other no-fault state, rising 28.5 percent annually, with losses increasing by 121 percent – twice the national average.

\”The remarkable turnaround is the result of aggressive efforts to combat fraud,\” said Bernard Bourdeau, president of the group and the New York Insurance Association, the trade group for property and casualty insurers. \”. . . But the battle is far from over. Insurance criminals will continue to exploit every loophole in the system unless we act to close them.\”

Auto insurance fraud has been one of the biggest problems hitting both the insurance industry and consumers in New York, as perpetrators have targeted the state\’s no-fault system by overwhelming insurers with paperwork so they can\’t investigate claims.

Coordinated rings of fraudsters, often consisting of doctors, lawyers and \”runners\” who stage accidents, have been causing hundreds of millions of dollars in losses for insurers every year – about $1.2 million a day just in 2003, according to the NICB.

In response, police, prosecutors, and companies have teamed up to crack down on the rings, while regulators adjusted the rules to give insurers more time to investigate claims before paying them. They also launched campaigns to teach consumers how fraud impacts them in higher premiums.

The result has been a dramatic drop. According to the state Insurance Department late last year, just 61 cents of every dollar in premiums went to pay claims as of June 2004, a drop from from 86 cents in 2002. And the average personal injury protection losses per claim fell to $6,229 in June 2004 from $8,489 at the end of 2002.

Consumers have already benefited. Former Insurance Superintendent Gregory V. Serio in November sent letters to the 13 biggest auto insurers in the state, calling on them to lower their rates or justify to him why they shouldn\’t. A second batch of letters went to the next tier of companies shortly afterwards.

So far, Serio and his successor, Howard Mills, have reached agreements with 16 large and small insurers, generally cutting rates by 5 percent and saving consumers at least $349 million. Talks with others are continuing, and Mills said Friday that \”we\’ll have several other significant premium rate cuts to announce shortly.\”

However, both he and the industry are still calling for additional steps to decertify fraudulent doctors and clinics, give insurers even more time to investigate claims, and increase penalties for the \”runners\” who coordinate accidents and solicit people to participate.

\”We\’ve done quite a bit with our regulatory power, but the bottom line on this is that the penalties for insurance fraud in New York state are laughable and are not an effective deterrent,\” Mills said. \”They need to be dramatically toughened.\”

Mills said the state should eliminate the statute of limitations on auto insurance fraud and allow insurers \”proper time for exhaustive investigations.\” But he said there would still have to be guarantees in place to prevent insurers from simply stalling on paying legitimate claims.

The superintendent sent a letter to every state lawmaker recently, urging them to pass the runners\’ bill and other legislation before the session ends.

e-mail: jepstein@buffnews.com

MALVERN, Pa.–(BUSINESS WIRE)–June 16, 2005–Allstate Insurance Company is expanding a 1.1 million dollar insurance fraud case that has already shut down a fraudulent Philadelphia area rehabilitation clinic.

Allstate, along with Encompass Insurance, has filed suit against a Philadelphia area doctor and two of his alleged business partners contending the three marketed computerized medical billing software that was used to create fictitious medical bills – generating more than $400,000 in fraudulent billing for the trio.

This latest suit was filed in U.S District Court in Philadelphia against Physical Medicine & Diagnostics, Ltd., Philmont Rehabilitation Associates, ISY Medical Reports, Inc. and the company\’s three owners — Lawrence Schofer, Kenneth Izzo, M.D. and Alan Young. The suit alleges insurance fraud, conspiracy and intentional misrepresentation of medical services.

This case is the latest chapter in a developing fraud story that began last year.

In August of 2004 the U.S. District Court in Philadelphia awarded Allstate and Encompass $1,100,244 in a case that bankrupted a fraudulent rehab clinic — American Rehabilitation and Physical Therapy Inc. In that case, the court said American Rehabilitation and Physical Therapy and its three owners, Richard Privitera, Steven Moldover, and Dean Parker used unlicensed people to perform medical tests, subjected some patients to testing that was medically unnecessary and further conspired to defraud insurance companies by billing for tests that were never performed and over-billed for legitimate tests.

Allstate says that further investigation by its Special Investigation Unit (SIU) has revealed Schofer, Izzo and Young owned the medical billing service that allegedly provided the means for the fraud – ISY Medical Reports. Court documents filed by Allstate say the three were \”co-conspirators, who agreed, aided, abetted and provided the essential means\” for American Rehab to facilitate fraud.

\”Allstate is serious about fighting insurance fraud. We have no tolerance for this crime. Our policyholders and consumers in general benefit from our aggressive fight against insurance fraud. Allstate\’s Special Investigation Unit will continue to partner with law enforcement officials in Pennsylvania and across the country to identify and fight fraud,\” said Edward J. Moran Assistant Vice President in charge of Allstate\’s Special Investigations Unit.

The Allstate Corporation (NYSE:ALL) is the nation\’s largest publicly held personal lines insurer. Widely known through the \”You\’re In Good Hands With Allstate(R)\” slogan, Allstate helps individuals in approximately 17 million households protect what they have today and better prepare for tomorrow through approximately 13,600 exclusive agencies and financial professionals in the U.S. and Canada. Customers can access Allstate products and services such as auto insurance and homeowners insurance through Allstate agencies, or in select states at allstate.com and 1-800 Allstate(R). Encompass(SM) and Deerbrook(R) Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group provides life and supplemental accident and health insurance, annuity, banking and retirement products designed for individual, institutional and worksite customers that are distributed through Allstate agencies, independent agencies, financial institutions and broker-dealers.

June 8, 2005, 11:25 PM

SOUTHFIELD, Mich. (AP) — The body of an 86-year-old man found in a trash bin behind a Detroit drugstore was dumped there by someone who had stolen it from a hospital morgue with the intention of fraudulently collecting life insurance, police said.

Police arrested two Detroit men, ages 31 and 22, on Wednesday, the same day the body was discovered.

Police said the men, along with another suspect, posed as funeral home workers when they went to Providence Hospital in Southfield about 11:30 p.m. EDT Sunday and later took the body. The elderly man had died at the hospital of natural causes, investigators said.

Southfield Police Sgt. Robert Shelied said the men planned to take the stolen body to a funeral home, claim it was that of a man for whom they had purchased a life insurance policy, obtain a death certificate, then cash in the policy.

\”In my 18 1/2 years as a police officer, I\’ve never seen anything, or heard anything, like this,\” Shelied said. \”It\’s very upsetting.\”

Thursday, June 09 08:55:03

(BizWorld)

Two-thirds of suspected fraudulent insurance claims reported to an industry hotline relate to motor insurance, the Irish Insurance Federation (IIF) said. A total of 2,368 cases of suspected fraud have been reported by the IIF\’s Insurance Confidential number since the phoneline was first set up in February 2003.

Some 67pc of the cases related to injuries and damage sustained in motor accidents. Over a fifth – 22pc- related to other personal injuries, for which compensation was being claimed under employers\’ and public liability insurance policies. Insurance fraud costs the industry an estimated E100m a year.

The IIF recently revealed that over 100 cases of suspected insurance fraud have been referred by insurers to the Garda Bureau of Investigation.

June 08, 2005 11:54 AM US Eastern Timezone

MINNEAPOLIS–(BUSINESS WIRE)–June 8, 2005–Progressive Casualty Insurance Company and other affiliated companies (Progressive) have filed suit in federal court against Alivio Chiropractic Clinic, Inc., located in Robbinsdale, and individuals associated with it, including a chiropractor and an attorney.

The suit alleges that Alivio Chiropractic Clinic, chiropractor Joshua Anderson, St. Paul attorney Mark Karney, massage therapist Andrea Bongart, and office manager Alexis Aguilar conspired to commit fraud by, among other things, charging for medical services never performed and by administering and billing for unnecessary and excessive treatments.

In the suit, which alleges violations of federal racketeering laws, the defendants reportedly target Hispanic individuals who are in the United States illegally, thereby ensuring that the fraud and abuse will go unreported for fear of deportation. The suit alleges that the defendants use \”runners\” to solicit patients and when the individuals are brought to the clinic, the defendants bill for services not rendered or bill for treatments prescribed according to a standardized plan that is not based on the needs of the patients but is designed to maximize billings. The suit also alleges that the defendants assembled and submitted false documents in support of their billings to Progressive.

The lawsuit is the most recent in a series of medical fraud cases in Minnesota. In both 2002 and 2004, groups of national auto insurers filed suits against chiropractors and other medical clinics alleging medical billing fraud in the millions.

The National Insurance Crime Bureau estimates that fraudulent insurance claims cost consumers $200 to $300 a year in increased insurance premiums.

\”Getting people who commit such crimes to pay for their actions goes a long way toward helping insurance companies keep the cost of auto insurance down,\” said Mike Capuzzi, Minnesota state claims manager, Progressive. \”Insurance fraud is far from a victimless crime–we are all victims and the more aggressively we fight it, the better off we will all be.\”

The Progressive Group of Insurance Companies, in business since 1937, ranks third in the nation for auto insurance based on premiums written and provides drivers with competitive rates and 24/7, in-person and online service. The products and services of the Progressive Direct Group of Insurance Companies are marketed directly to consumers by phone at 1-800-PROGRESSIVE and online at progressivedirect.com through the Progressive Direct brand. The Drive Group of Progressive Insurance Companies offers insurance through more than 30,000 independent insurance agencies that market their products and services through the Drive Insurance from Progressive brand. For more information, go to driveinsurance.com. The Common Shares of the Progressive Corporation, the Mayfield Village, Ohio-based holding company, are publicly traded at NYSE:PGR. More information can be found at progressive.com.

Contacts:

Progressive PR
William Perry, 440-395-9353

Boston Herald Reports
By Jessica Fargen

Braulio Cruz and his three kids – a baby among them – showed up in January at a Lawrence hospital to be treated for injuries after a fender-bender.
Problem is, police say, the kids, aged 11, 7 and 3 months, were not in the alleged crackup.
Nonetheless, Cruz claimed they were all hurt, and investigators say he might have been laying the groundwork for insurance fraud.
“This was a case where people were being added into the car and it was embellished to the point where there\’s injuries,\’\’ said Lawrence police Chief John Ramero, who has issued a warrant for Cruz.
If Cruz is charged, he will be one of some 200 people who have been busted in the last 18 months for allegedly staging accidents, lying to insurers and billing for no-show chiropractics. The surge in arrests is part of a crackdown on the fraudulent practices, which lead to millions of dollars a year in unfair costs to consumers.
“Everyone pays for it,\’\’ said Kimberly A. Giardina, assistant deputy chief of investigations with the Insurance Fraud Bureau of Massachusetts. “Auto insurance fraud gets divvied up between every driver whether you live in Andover, Roxbury or Concord.\’\’
The arrests are a stark departure from a few years ago, when only a handful of scammers were cuffed. Police, district attorneys and the attorney general\’s office went on the attack after the death of Altagracia Arias, a grandmother killed in a botched staged accident in Lowell in September 2003.
Lawrence was the first city to form a task force, and insurance claims there have shrunk from $50 million in 2003 to $25 million last year. Nearly 130 people in Lawrence have been charged or indicted for insurance fraud.
Other efforts include:
# An Essex County special grand jury in September 2004 indicted 16 people, including lawyers, chiropractors and “runners\’\’ who recruit people for fraud.

# Brockton, Springfield/Holyoke, Lynn, Lowell and Boston have also formed task forces.

# Under a new law, the state\’s Division of Licensure has an extra $266,000 to fight health-care fraud by chiropractors and physical therapists \”`Although we were catching them they got a slap on the wrist,\’\’ Giardina said. “Now, it\’s a felony. That\’s enough to slap anyone into reality.\’\’
Scams vary widely. Sometimes con artists in two cars crash at a prearranged location and everyone claims injuries. Other scammers buy junk cars for cheap, vandalize them, call police and try to collect insurance money.
Euclides Cardoso of Dorchester was convicted in March of vandalizing his own 1995 Jeep and filing a false report. Police caught onto him when they found out the Jeep didn\’t even run, according to Plymouth County prosecutors. Cardosa received a year of probation and must repay $8,491 he received from his insurance company.
Keven Zegel, a Middleton chiropractor, was arraigned Wednesday in Salem Superior Court for allegedly pocketing $13,000 in insurance money for services prosecutors say he never performed.
The result of the new crackdown could be safer roads and cheaper insurance bills for Bay State drivers, said Glenn Cunha, chief of the insurance and unemployment fraud division in the attorney general\’s office.
“One of the major reasons why our rates are raised or suggested to be raised every year is because of fraud,\’\’ Cunha said.

By Thor Jourgensen
Monday, June 6, 2005

LYNN – Elizabeth Puleo hopes a new state car insurance reform plan will eliminate the territorial driver rating system that the Lynn insurance agent and many of her colleagues and customers hate.
Gov. Mitt Romney acknowledged Puleo\’s concern this week by including a 5 percent rate reduction for drivers with accident-free records in his insurance reform plan.
Those drivers account for 64 percent of the roughly 4 million auto insurance policies in the state.
The territory rating system assigns a number to each community across the state that reflects the accident insurance claim rate in the community. Puleo and other agents do not think residence should be a factor in the cost of insurance coverage.
Romney wants to let insurance companies set their own rates, though the state would maintain some oversight over rate changes.
Rates would rise for drivers with less stellar records, but not by more than 15 percent, Romney said. The proposed rate structure would also not penalize parents for their children\’s poor driving.
The legislation includes a raft of other reforms, including a fee schedule for accident-related medical costs, a cap on the number of non-medical visits, such as visits to chiropractors and acupuncturists, and a consumers\’ \”Bill of Rights.\”
Agents like Puleo and David Zeller have seen insurance reform proposals come ago for more than 30 years. In the last year, insurance firms have advocated for the creation of a high-risk pool that would separate drivers with the worst accident and violation rates from others.
Debate over the plan intensified last fall and the proposed pool was supposed to be in place in January before an industry lawsuit slowed its implementation.
Zeller said Romney\’s proposal and competing arguments by prospective Democratic candidate for governor and Attorney General Thomas Reilly – have turned the insurance debate from one involving agents and company representatives to a discussion dominated by politicians.
Zeller said a high-profile debate could lead to productive change in the insurance industry.
\”Once you stat thinking about improvements, a lot of good ideas become clear that move towards reform,\” he said.
Romney said the system has smothered competition and spawned sky-high prices.
Romney said the state has twice the national rate of accident and injury claims, but the number of auto insurers doing business in the state has dwindled from 53 in 1990 to 19 this year.
His bill would also give police departments $700,000 to fight fraud. The Lynn police department has worked with the state Insurance Fraud Bureau since 2003 to investigate and prosecute fraud.

May 31, 2005

New Jersey\’s award-winning office created to root out insurance fraud is under scrutiny itself, with the state auditor probing allegations the insurance industry was billed about $4 million for employees who never worked on fraud cases.

The probe stems from a letter to a ranking state senator by a retired investigator from the state Division of Criminal Justice who said 43 employees had their salaries paid with insurance industry money but did little or no work on fraud cases.

\”We investigate doctors for submitting false bills to insurance companies, and we put doctors in jail for that. What\’s the difference here?\’\’ Edward Buttimore, the retired investigator, told The Star-Ledger of Newark.

Criminal Justice Director Vaughn McKoy, whose agency oversees the New Jersey Office of Insurance Fraud Prosecutor, denied the office misspent money.

He said Buttimore had filed a notice this week that he may pursue legal action against the division, alleging he was mistreated and discriminated and retaliated against. Such a notice is generally a preliminary step to filing a lawsuit.

Buttimore said his letter earlier this month to Senate Judiciary Committee Chairman John Adler had nothing to do with the notice of a possible lawsuit.

State Auditor Richard Fair began investigating the insurance fraud prosecutor\’s office in January at the behest of McKoy and the state attorney general after an anonymous letter that made claims similar to Buttimore\’s was sent last fall to various government offices. Adler requested the auditor\’s intervention after receiving Buttimore\’s letter.

In his letter to Adler, Buttimore included the names of the 43 employees, a list he said he compiled by cross-checking a criminal justice division roster with a list of names submitted to the insurance industry as working on fraud cases.

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