Texas Defendants Must Pay $26 Million for Defrauding State Farm

In Houston, U.S. District Judge Melinda Harmon ordered four defendants accused of defrauding State Farm Insurance by making false claims in hundreds of staged auto accidents to pay damages to the tune of $26 million.

According to the Houston Chronicle, Judge Harmon said the defendants, Stanley Stein, Michael Giventer, Tracy Anderson, and Steven Price, “intended to cause substantial injury to State Farm and were more than willing to put the safety and welfare of innocent drivers at risk to facilitate their fraud scheme.” She issued her judgement Dec. 7, after the defendants made no attempt to defend themselves. Stein and Giventer, apparent leaders of the fraud ring, also pleaded guilty to criminal charges stemming from the fraudulent activities.

The fraud scheme allegedly took place from late 1992 to 1997, directed out of Stein’s law offices in Houston and Los Angeles. Prosecutors asserted that bogus medical claims were filed with the insurer after consultations at Giventer’s chiropractic clinics in Houston and Galveston.

State Farm charged that the defendants committed fraud and violated the federal Racketeer Influenced and Corrupt Organizations Act, which allows plaintiffs to collect three times actual damages.

The judgement held all four defendants collectively liable for $5.8 million, and ordered punitive damages of $11 million against Stein, $8.6 million against Giventer, $500,000 against Price, and $100,000 against Anderson. State Farm brought the suit based on 140 false claims that cost it, the largest insurance company in Texas, more than $2 million.

State Farm attorney Philip H. Hilder exclaimed, “State Farm is elated we were able to prevail…This sends a loud, clear message that the insurance company intends to pursue fraudulent activity through the courts when appropriate.”

An unlicensed attorney, Stein pleaded guilty last month on two counts of money laundering conspiracy, for which he will be sentenced in February. Giventer, a licensed chiropractor, received five years’ probation in October after pleading guilty to filing fraudulent tax returns. Assistant U.S. Attorney Ed Gallagher did not say whether Price or Anderson would be charged, but did note that insurance scams present a serious problem, and ultimately raise premiums for the rest of the public.

Stein and Giventer allegedly hired drivers to stop suddenly in front of newer-model cars driven by single or elderly women. Passengers for the cars were employed so that medical claims for both them and the drivers could be filed. According to Hilder, most of the purported injuries were soft tissue, not broken bones or fractures.

It is further alleged that over the course of the fraud scheme, Stein referred claimants to Giventer, who paid him 50 percent in kickbacks. To avoid leaving money trails after the checks from State Farm were cashed, check-cashing businesses were set up. Giventer hired Price, a doctor, to perform consultations, prescribe medications, and prepare reports to State Farm and other insurers, inflating the value of the personal injury claims.

There were similarities found in most of Price’s examinations; every patient examined was found to be in moderate distress, and was given the same “straight leg-raising test,” as well as the same treatment plan. The claims were processed by Anderson for the law firms in Houston and Los Angeles.

Estimates from the National Insurance Crime Bureau indicate that fraud costs average U.S. households $200 to $300 annually in additional premiums.