Insurance Claims Investigation News

Wednesday, January 11, 2006
By TRISH GRABER
Staff Writer

SALEM –The Salem County Prosecutor\’s Office arrested and charged 11 people for insurance fraud and recovered $150,000 during a county-wide investigation, authorities announced Monday.

Two detectives from the prosecutor\’s office worked in conjunction with municipal police departments across the county during the initiative, County Prosecutor John T. Lenahan said.

Det. James Gillespie and Det. Matthew Clark, of the prosecutor\’s office, worked with all local police departments while investigating charges ranging from possession of a fake vehicle insurance card to false health care claims.

The detectives positions are funded through a state insurance fraud grant to investigate insurance fraud in Salem County.

The prosecutor\’s office arrested and charged the following people in the county-wide insurance fraud initiative:

Carmela Groszeweski, 35, of Pennsville was charged with theft by deception and prohibited transaction with a food stamp card.

Amanda Lowell, 22, of Pennsville was charged with insurance fraud and conspiracy to commit insurance fraud.

Sandra Beckett, 20, of Pennsville was charged with conspiracy to commit insurance fraud.

Ernest Beckett, 45, of Pennsville was charged with conspiracy to commit insurance fraud.

Frank A. Verna, 28, of Elmer was charged with insurance fraud and conspiracy to commit insurance fraud.

Frank R. Verna, 62, of Woodstown was charged with conspiracy to commit insurance fraud.

Stephen T. Walter, 23, of Atco was charged with production of a false motor vehicle insurance ID card.

Levion Hazelton, 52, of Salem was charged with production of a false motor vehicle insurance ID card.

Letitia Lewis, 23, of Salem was charged with production of a false motor vehicle insurance ID card and tampering with public records.

Deborah Karpinski, 41, of Pennsville was charged with insurance fraud.

Ruth Zane, 51, of Carneys Point was charged with health care claims fraud.

All suspects were released on a summons pending a court appearance.

Anyone with information on any possible insurance fraud should contact Det. James Gillespie at 935-7510 ext. 8521 or Det. Matthew Clarke at 935-7510 ext. 8529.

State Insurance Commissioner Mike Kreidler wants to create an investigative unit in his agency to target fraudulent insurance claims.
The Olympian – Click Here

He’ll ask the 2006 Legislature for $2 million to fund a five-person unit to uncover insurance scams that could be costing the insurance industry, and ultimately law-abiding insurance policy holders, up to $400 million a year in this state.

The District of Columbia and 41 states have such units to go after what often is organized insurance scams that can involve everything from claims stemming from rigged automobile accidents to illegal medical insurance claims.

Kreidler’s proposal has merit and should be taken seriously by lawmakers. If the Legislature has concerns about future funding for the unit, funding of the investigative unit could be tied to its ability to get convictions and save insurance ratepayers money.

Kreidler and some officials in the insurance industry suggest this state is being singled out by scam artists because it doesn’t have investigators assigned directly to go after fraudulent insurance claims.

“We have people here who are operating in organized operations who came from California, came from New York,” said Greg Newell, a Fife-based investigator with the National Insurance Crime Bureau.
“Those states have insurance fraud units.”

If this state is seen as ripe for insurance fraud abuse, it’s a compelling reason for the state to have a unit of its own.

Neither local police departments nor Washington State Patrol have the staffing or resources to make insurance claim investigations a top priority. The cases are difficult and time consuming to investigate and even harder to prosecute.

The National Insurance Crime Bureau estimates that 10 percent of all insurance claims filed are fraudulent.

Fraud of all kinds, from organized crime rings to individual cheaters, add $200 to $300 a year to the typical household’s total insurance cost, the insurance crime bureau estimated.

Kreidler is on the right track when he says the unit needs to start small, develop a track record and try to build on its successes.

For the program to be a success, county prosecuting attorney offices, the state Attorney General’s office, the State Patrol and the Office of the Insurance Commissioner would all have to work together.

The evidence is there to show that the insurance fraud unit would be worthwhile. Now, it’s up to the Legislature to see fit to fund it.

MALVERN, Pa., Jan. 5, 2006 — A recent Insurance Research Council (IRC) study of auto injury insurance claims puts a price tag on the cost of claim abuse in California. In 2002, between $319 and $432 million in bodily injury liability (BI) payments in the state were attributable to claim fraud and buildup, the IRC estimates. Those amounts represent approximately 11 to 15 percent of all California BI payments that year.

The appearance of fraud, or the misrepresentation of key facts of claims, was found in almost one in ten paid California BI claims (9 percent). The appearance of buildup was more common and was found in more than one in five paid California BI claims (22 percent). The term \”buildup\” refers to the inflation of otherwise legitimate auto injury claims. Buildup can occur through the exaggeration of injuries, the application of excessive medical treatment, or the intentional inflation of lost wages.

This report follows the release of a national IRC research publication on fraud and buildup in auto injury insurance claims; selected states were later analyzed as part of this study. While this report shows that claim abuse in California is a significant financial problem, the percentage of claim fraud found among California BI claims was comparable to the percentage found countrywide. The prevalence of BI claim buildup in the state was four percentage points higher than the corresponding national percentage.

Los Angeles demonstrated even higher percentages of BI claim fraud and buildup: increased claim abuse is typical in many large metropolitan areas in the United States. More than one in ten BI claims in Los Angeles (12 percent) contained the appearance of fraud, compared to 8 percent in the rest of the state. Also, nearly three in ten BI claims in Los Angeles (29 percent) contained the appearance of buildup, compared to 19 percent in the rest of the state. The percentage of BI claim buildup in Los Angeles was 7 percentage points higher than the percentage found among all metropolitan areas countrywide.

\”Auto insurance buildup may seem harmless when it is thought of as just a few extra dollars tacked on to individual claims. The reality is that claim padding collectively adds up to significant amounts of money,\” said Elizabeth A. Sprinkel, senior vice president of the IRC. \”Unfortunately, the insured public pays the cost in the form of higher insurance premiums.\”

The recently released IRC study Fraud and Buildup in California Auto Injury Insurance Claims examines detailed claim information from 72,354 claims that closed with payment in 2002. Thirty-two insurers, representing 58 percent of the 2002 private passenger auto insurance market in the U.S., participated in the study. The number of closed California BI claims in the sample totaled 4,034. The study asked the insurers to indicate whether any elements of fraud or buildup appeared to be present in the claims. Because the study did not include claims closed without payment, the results do not reflect claims that were denied payment because of clear evidence of claim abuse.

For more detailed information on the study\’s methodology and findings, contact Elizabeth Sprinkel by phone at (610) 644-2212, ext. 7568; by fax at (610) 640-5388; or by e-mail at irc@cpcuiia.org ; or visit the IRC\’s Web site at http://www.ircweb.org/ . Copies of the study are available for $100 each in the U.S. ($115 elsewhere) postpaid from the Insurance Research Council, 718 Providence Rd., Malvern, Pa. 19355-0725. Phone: (610) 644-2212, ext. 7569. Fax: (610) 640-5388.

NOTE TO EDITORS: The Insurance Research Council is a division of the American Institute for CPCU and the Insurance Institute of America. The Institutes are independent, not-for-profit organizations dedicated to providing educational programs, professional certification, and research for the property-casualty insurance business. The IRC provides timely and reliable research to all parties involved in public policy issues affecting insurers and their customers. The IRC does not lobby or advocate legislative positions. It is supported by leading property-casualty organizations.

12/21/2005

Six people in California have been arrested following a 2-year, multi-agency undercover investigation into an insurance fraud \”mill\” that allegedly swindled insurance companies with false billings, California Insurance Commissioner John Garamendi announced Dec. 13.

The arrests came after a grand jury handed down indictments related to the investigation, called \”Operation Double Helix.\”

Chiropractors and employees at several chiropractic clinics and a law firm are suspected of submitting fraudulent insurance bills, offering excessive treatments and recruiting others to pose as patients, according to Garamendi\’s office.

\”Insurance fraud is anything but a victimless crime,\” Garamendi said. \”Cheating the system eventually hurts us all in the form of higher premiums. We will continue our efforts to root out criminals and prosecute them to the fullest extent of the law.\”

Operation Double Helix began in 2003 as a joint investigation by the California Department of Insurance Fraud Division and the Merced County district attorney\’s office. The Fresno County district attorney\’s office assisted in the investigation, which received cooperation from the California State Automobile Association, GEICO, Liberty Mutual Insurance and Foster Farms.

The investigation began in response to a large number of complaints from insurance carriers regarding suspicious activity by the suspects. Many of the reported incidents allegedly happened at the chiropractic offices of John Aguilar Jr., 45, a Fresno chiropractor who owned Twin Valley Clinic and other clinics in Sacramento, Merced and Fresno, according to Garamendi\’s office.

Authorities said that in May of 2003 the involved enforcement agencies began using undercover operatives to pose as victims of automobile accidents. The undercover operatives went to the clinics owned by Aguilar and reported that they had suffered either very minor injuries or no injuries at all.

Despite that, they were still given excessive chiropractic treatment and offered payments to recruit other individuals to make additional fraudulent insurance claims, according to investigators. In addition, the undercover operatives were referred to a law firm owned by Ngoan Van Dao, 69, of Westminster. Unlicensed employees allegedly would act as attorneys representing the \”victims,\” helping them gain settlements for their claims.

The law firm\’s employees also allegedly offered jobs to undercover operatives that would require them to recruit more people for the scam. Fraudulent and exaggerated billings were made to both workers\’ compensation and automobile insurance carriers.

Others arrested in the case include:

* Juan S. DeLaVara, 35, of Riverbank, a chiropractor formerly employed by Twin Valley Chiropractic in Merced;
* Ngia (aka: Mike) Thao, 24, of Merced, a former assistant manager at Twin Valley;
* Scott F. Saephanh, 41, of Merced, office manager of the Law Office of N. Van Dao in Merced; and
* Toua Thomas Vang, 37, of Merced, assistant office manager at the law firm.

The suspects were charged with a variety of offenses, including insurance fraud, conspiracy to commit insurance fraud, grand theft, conspiracy to practice law without a license and capping.

If convicted, the maximum sentences are: 2 to 5 years in prison on each count of insurance fraud and conspiracy to commit insurance fraud; 16 months to 3 years in prison for capping; 1 year in prison for grand theft; and 16 months to 3 years for conspiracy to practice law without a license.

Each count also carries a maximum fine of $50,000.

December 15, 2005

Calif. Insurance Commissioner John Garamendi has announced the arrests of 17 suspects in connection with an alleged Southern California insurance fraud scheme that netted more than $100,000 through ruse involving a former claims adjuster and 16 co-conspirators.

The arrests followed a year-long investigation by the California Department of Insurance Fraud Division, which was assisted by the Sacramento County District Attorney\’s Office and the California Highway Patrol. The Orange County District Attorney\’s office is prosecuting the case.

The involved enforcement agencies executed 17 arrest warrants at locations in Inglewood, Hawthorne, Downey, Los Angeles, Playa Del Rey, Carson, Cerritos, Compton, La Habra and Moreno Valley, Calif. The former claims adjuster, Sheryl Bobbitt, 34, was arrested at her residence in Downey, and was charged with 47 counts of insurance fraud and 47 counts of grand theft. Her boyfriend, Stanley Walker, 43, of Inglewood, faces the same charges, according to CDI.

According to investigators, Bobbitt was hired approximately four years ago by Western United Insurance as a claims adjuster. The alleged scheme began when Walker solicited family and friends to act as payees for accident claims submitted to Western United. Those payees allegedly received $200 to $800 for cashing the checks issued by Bobbitt. They would then give the remainder of the settlement check to Walker, who would forward that to Bobbitt, according to investigators.

An audit conducted by Western United of 35 Bobbitt claim files allegedly revealed that Bobbitt had fraudulently written 47 separate checks to 26 individuals. When she was subsequently interviewed by Western United Insurance Special Investigation Unit investigators, she reportedly admitted writing the fraudulent checks.

Additional suspects arrested include, Jennifer Yearwood, 39, Compton; Ricardo Lara, 23, Inglewood; Deici Alvarado, 24, Inglewood; Eric Bell, 36, Moreno Valley; Courtney Smith, 20, Inglewood; Mark Smith, 44, Inglewood; Verna Henderson, 46, Inglewood; Susan Gordon, 48, Hawthorne; Michael Walker, 43, Inglewood; Barbara Okonkwo, 59, Los Angeles; Douglas Madison, 63, Playa Del Rey; Rhonda Jones, 38, Carson; Diane Taylor, 48, Cerritos; Rosemary Lopez, 36, La Habra; and Rachel Smith, 28, of Los Angeles. All are charged with at least one count each of insurance fraud and grand theft.

The CDI Fraud Division received assistance in the execution of the arrest warrants from the Orange County Auto Theft Task Force (OCATT) and local law enforcement agencies within each jurisdiction where the warrants were served. If convicted of all offenses Bobbitt and Walker could face up to 82 years in state prison and a fine of over $200,000.

The remaining suspects, if convicted, could receive a sentence of between five and nine years in state prison and a fine of $50,000.

Task Forces Eyes Community With High Injury Rate

RANDOLPH, Mass. — A new crackdown on auto insurance fraud is under way. The taskforce is looking at one community that seems to have a significantly higher injury rate than the rest of the state.

NewsCenter 5\’s David Boeri reported Thursday that the town of Randolph and its drivers are the latest to draw the suspicion of insurance investigators, and now there\’s a sign posting a reward for those who drop a dime.

\”For every 100 accidents, 56 people claim that they\’ve been injured. On a statewide basis, for every 100 accidents, 36 people claim they are injured,\” said Daniel Johnston, of the Insurance Fraud Bureau.

That dramatic difference, as well as higher rates of auto theft and accidents, came as a surprise to the local police.

\”We just do the accident reports, and then that is the end of our involvement. People claim no injuries at them time, and then later claim injuries that we may be totally unaware of,\” Randolph Police Department Chief Paul Porter said.

What\’s suspected is a repeat of widespread fraud alleged and charged in Lawrence, Mass., where lawyers, doctors, chiropractors and others are scheduled for trial after being charged last December. A similar task force in Lawrence found widespread evidence of accidents that never happened.

\”They are fake or they are accidents where people staged an accident or crashed cars together on purpose, and it is those we are looking closely at,\” Johnston said.

The anti-fraud task force will involve the District Attorney and police. Officials said that they\’ve recently put five insurance cases under the scope to check them out for fraud.

November 21, 2005

MIAMI — Two brothers who are accused of being the ringleaders of an insurance fraud ring are under arrest, along with seven others.

Tom Gallagher, Florida\’s chief financial officer, announced the arrests Monday of eight members of an alleged staged crash ring accused of filing more than $100,000 in fraudulent insurance claims from a single faked accident.

Investigators said Jimmy Desir, 27, and Nildo Desir, 29, planned and recruited the participants. Three clinics were involved in the scam, including a chiropractor who was previously arrested for insurance fraud and grand theft, according to investigators.

In addition to the Desir brothers, the others arrested were Benitho Alcide, 24, of North Miami; and Raphael Dieudonne, 31; Patrick Dieudonne, 27; Andy Metellus, 20; Jimmy Prevot, 19; and Baselais Prudent, 24, all of Miami.

All eight are charged with 13 counts each of insurance fraud and grand theft. Patrick Dieudonne is already facing a minimum sentence of two years in prison for a prior staged accident.

Chiropractor Mia Higginbotham was also arrested on Oct. 21, 2004, on insurance fraud and grand theft charges. Those charges are still pending.

Insurance fraud detectives said the Desir brothers organized but did not participate in the staged crash. They said the six men who did participate went to three medical clinics: PR Medical (Sante Medical Services); Biscayne Health Group, 700 NE 90 St, Miami; and Mia Higginbotham, DC.

Gallagher said that in staged accidents, the planners and organizers, usually in connection with clinic owners, target the personal injury protection insurance of drivers, and bill an average of $10,000 per accident \”victim.\”

The Miami office of the Division of Insurance Fraud has made more than 970 arrests with charges in excess of $31 million in personal injury protection insurance fraud, including more than 660 patients, 73 clinic owners, 27 doctors, 66 clinic employees and 135 runners.

\”Insurance fraud is saddling Florida families with hundreds of dollars in additional premium costs,\” Gallagher said. \”We will continue to aggressively pursue and prosecute those who commit fraud and work with the Legislature to develop hard-hitting laws to put these con artists behind bars.\”

Next year, Gallagher said, he will ask the Legislature to require medical clinics to post insurance fraud posters touting the department\’s reward program. He also will ask the Legislature to implement a minimum two-year prison sentence for those who commit phantom and paper accidents. He will also ask to renew and tighten restrictions on the release of police accident reports.

By: JOHN HALL – Staff Writer

RIVERSIDE —- A former Riverside County prosecutor of the year is facing eight felony counts alleging insurance fraud involving a trucking company he owned, authorities said.

Miles Clark III, 41, was placed on paid administrative leave Oct. 26, said Ingrid Wyatt, spokeswoman with the Riverside County district attorney\’s office. She said Clark has been a Riverside County prosecutor for three years.

The office awarded him its 2004 felony prosecutor of the year award and Clark was named 2003 misdemeanor prosecutor of the year.

Earlier this year, Clark successfully prosecuted a Lake Elsinore man for the murder and torture of Tracy Harrison outside Meadowbrook Market in 2003. Alejandro Gomez was convicted at Southwest Justice Center in French Valley and sentenced to two life sentences.

The felony charges against Clark were filed Nov. 17 by the state attorney general\’s office, which conducted the investigation.

Clark\’s attorney, Steve Harmon, declined to comment on the case Tuesday.

Clark owned and operated Miles Clark Trucking, according to court documents. It is unclear whether Clark still owns the business.

In the criminal complaint filed against the prosecutor, the Riverside resident is accused of willfully misrepresenting facts in order to obtain insurance at less than the proper rate for his company.

A state insurance fraud investigator wrote in a document seeking Clark\’s arrest that Clark made \”fraudulent representations regarding the number of employees he had and the company\’s quarterly payroll\” to receive a lower workers\’ compensation insurance premium.

The amount of a monthly premium paid on a workers\’ compensation policy is determined by the amount of payroll an employer paid, the type of work performed and the safety record of the employer, according to court documents.

Audits and other investigations were conducted of Clark\’s company, ultimately leading to the filing of charges against him, court documents state.

Based on Clark\’s representation that he had no employees or payroll from 1996 to April 2002, Clark paid only a minimum premium of less than $1,000 a year, Investigator Brian Schirka wrote.

However, Schirka states he learned that Clark reported to the state Employment Development Department that his company had paid wages of more than $239,000 in 2000; more than $342,000 in 2001; and nearly $271,000 for the first three quarters of 2002.

The EDD collects taxes from employers to provide state benefits. Employers are required by state law to report all wages paid for each employee on a quarterly basis.

Schirka wrote that he interviewed a number of people, based on EDD records, listed as employees of Clark\’s company.

Each of the men told him that they were employees and not independent contractors, the investigator wrote. Each said they worked for Clark\’s company at some point between 1999 and 2002 and that the business withheld taxes from their paychecks and each received W-2 statements from the company, Schirka said.

An audit by the State Compensation Insurance Fund showed that Clark\’s company underpaid its premiums for 1999 and 2000, and owed $34,822 for the first year and $59,429 for 2000, the court document states. No information about alleged underpayments for other years were in documents reviewed Tuesday.

Wyatt said Tuesday there is no internal investigation being done by that office of Clark. She declined to discuss anything further, saying it was a confidential personnel matter.

Clark is scheduled to be arraigned Dec. 8 at the Hall of Justice in Riverside.

Stamping out dodgy claims ought to benefit us all

By silicon.com

Published: Tuesday 22 November 2005

Many people are tempted to top up insurance claims. With the cost of insurance these days they might feel it\’s only fair to add a few CDs or an extra iPod to the claim. After all, they would have got stolen in the burglary – if they\’d ever been bought in the first place.
If insurers can cut out fraud – which can be found in as many as one in five claims – they should be able to reduce their costs.

Grabbing a bit back from the insurer is seen as a bit like cheating the taxman – naughty but not really bad.

In the past, insurers have had to just shrug and accept the claim because proving the customer wrong was pretty hard. Which meant that their costs went up – and premiums rose as well.

Which created a vicious circle – insurers up the costs of a policy, so more people feel the need to top up their claims to recoup a bit of the cost of insurance, forcing another price hike from insurers.

Nobody really benefits from this insurance inflation – especially not the people buying insurance but being lucky enough not to have to claim on it.

There is a bit of a \’Robin Hood\’ factor to getting one over on the insurer – which is why high-tech security is seen by some as giving the insurer an unfair advantage. But it\’s not a game.

If insurers can cut out fraud – which can be found in as many as one in five claims – they should be able to reduce their costs.

And if they can (and yes it\’s a big if) pass that back to the consumers, then anti-fraud technologies may benefit us all.