Fla. OKs Funds to Fight PIP Fraud

Florida’s Chief Financial Officer Tom Gallagher thanked legislators for approving his request for funding to add more law enforcement investigators to fight PIP fraud and workers’ compensation fraud, and a dedicated prosecutor to take on the expected increase in arrests.

The request for the funding was in the department’s budget request and included funding for six PIP fraud investigators, a lieutenant, a crime intelligence analyst, and a secretary to allow the Department of Financial Services, Division of Insurance Fraud, to create a dedicated squad in South Florida where most of the arrests occur. Legislators also approved funding for a dedicated prosecutor to prosecute PIP fraud and funding to add three new workers’ compensation fraud investigators throughout the state.

“Increasing our investigative force sends a strong message that we’re serious about stamping out this costly crime,” Gallagher said. “We’re now making more than 200 PIP fraud arrests a year, and we have aggressive sentencing guidelines that include a minimum two-year prison sentence for participating in a staged accident or soliciting an accident victim with the intent to commit insurance fraud.”

The fraud division’s Bureau of Workers’ Compensation Fraud has already presented more than 195 cases for prosecution and made over 160 arrests this fiscal year. This includes employers who fail to carry coverage for their workers, employers who fraudulently avoid paying the proper insurance premiums, and claimants who lie about the extent of their injuries.

Fla. Initiates Fradulent Claim Fast-Tracking

Florida drivers who participate in a staged crash, regardless of whether they file a fraudulent insurance claim, now will not only face a minimum of two years in prison but will also lose their driving privileges if convicted.

Florida’s Chief Financial Officer Tom Gallagher recently delivered to Fred Dickinson, executive director of the Department of Highway Safety and Motor Vehicles, investigative files listing 22 individuals whose licenses will be revoked under a fast-track process arranged by the two departments. The individuals named in the files have been convicted of participating in staged crashes that defrauded insurers of more than $200,000.

By law, anyone who uses a vehicle in Florida in the commission of a felony- whether as a driver or a passenger-can have their driver’s license revoked. A 2003 law made organizing or participating in a staged crash a second-degree felony punishable by a minimum mandatory two-year sentence. So far, more than 70 people have been charged under that law.

With this new fast-track process, the DHSMV will administratively suspend the driving privileges of anyone charged with a qualifying offense. The department’s fraud division expects to make more than 200 auto insurance fraud arrests this year.

In the last five years, the Department of Financial Services’ Division of Insurance Fraud has arrested more than 900 people in connection with at least $25 million in auto insurance fraud. Estimates show auto insurance fraud costs the average Florida family as much as $250 a year in higher premiums and higher costs for goods and services.

Florida drivers are required to carry a minimum of $10,000 in Personal Injury Protection (PIP) insurance coverage and $10,000 in property damage coverage. By staging crashes, the planners and participants-usually in connection with unscrupulous medical clinic owners-fraudulently bill auto insurance companies for medical
treatments that never happened or were unnecessary.

Dalton Agent Arrested in Fraud Case

Georgia Insurance Commissioner John Oxendine announced that a Dalton, Ga., insurance agent was arrested for allegedly defrauding his clients, mostly local business owners.

As a result of a grand jury indictment, Joseph Mann Ford IV, 41, was arrested and charged with 14 counts of insurance fraud. His agency, Insurance Services Inc. of Dalton, is located at 221 West Crawford Street, Dalton.

The investigation into Ford’s agency and business practices had been conducted over the past year, according to Oxendine. Ford is alleged to have defrauded at least $200,000 from his clients. The investigation is continuing.

Ala. Motel Settles Complaint

A Budget Inn motel owner in Crestview, Ala. has agreed to pay $10,000, plus restitution, to settle a complaint filed by Florida Attorney General Charlie Crist, claiming that it doubled its rates for victims fleeing Hurricane Frances.

Don Anchors, the lawyer representing Budget Inns insisted that the higher rates charged by the hotel, were unrelated to the evacuation. He said the rates were increased, as usual, for the Labor Day weekend which happened to coincide with the evacuation.

Anchors said his client settled because he felt it would not be “cost effective” to fight a lawsuit filed by the Florida Attorney General’s Office.

N.C. Chiropractor Receives 28 Months

A chiropractor who operated clinics in Greenville and Raleigh, N.C., has been sentenced to 28 months in prison and ordered to pay $372,000 to insurance companies he defrauded in a billing scam. Steven Ira Cohen, 52, was handcuffed by federal marshals and taken into custody after a two-day sentencing hearing in federal court in Greenville.

Federal indictments said Cohen billed $1.5 million. Prosecutor Yvonne V. Watford-McKinney told Judge Malcom Howard that Cohen submitted false bills to insurance companies.

Cohen’s attorney, Larry C. Economos of Greenville, argued that poor record-keeping in the chiropractor’s office and unclear billing codes used by insurance companies resulted in inaccurate billing.

Andrew Gratzmiller, 32, of Lower Burrell, Pa., a chiropractor who had been associated with Cohen for six years, pleaded guilty to making false statements to a grand jury investigating their billing in 2003. He was sentenced to three years of probation.

Guilty Pleas Entered for Fake Claims

Three of 14 Miami-Dade County, Fla., residents have pled guilty to mail fraud, wire fraud and filing a false claim of damage done by Hurricane Frances. They claimed to the Federal Emergency Management Agency that $156,354 worth of personal property had been destroyed.

U.S. Attorney’s Office spokesman Carlos B. Castillo said Equilla Smith, 29, Rena Henderson, 23, and Lesley Johnson, 33, pleaded guilty to mail fraud, wire fraud and filing a false claim.

Smith called FEMA about three weeks after Frances to file a claim for damaged property and not long after an inspector surveyed the alleged damage, a check arrived for $18,323.64. Prosecutors claim Smith’s “misstatements and omissions” led the agency to issue the check in error.

The government leveled the same accusation against Henderson, who was visited by a FEMA inspector before she received her check for $4,590.61.

Johnson received two visits from inspectors before she received a wire transfer and two checks worth $6,203.46 from FEMA. She, too, is accused of making misstatements and omissions during the application process.

As part of the reimbursement process, applicants show FEMA inspectors the property they claimed was damaged in a disaster; the inspectors determine how much the property is worth and how much to reimburse them for the claim.

FEMA has asked 7,300 people – about 1 percent of the more than 600,000 people who received aid – to repay some of the money, according to a report by the Associated Press.

N.C. Agents Halt Fraud Ring

Six Chatham and Randolph County, N.C., residents suspected of masterminding an extensive auto insurance fraud ring, which staged an estimated 480 auto crashes and defrauded more than $2 million have been arrested as the result of an investigation launched by Commissioner Jim Long and the North Carolina Department of Insurance.

More than 100 officers participated in the raid, including investigators at the Department of Insurance working with the Siler City Police Department, the Randolph County Sheriff’s Office, United States Postal Inspector Service and the National Insurance Crime Bureau.

Charges included obtaining property using false pretenses, being a habitual felon and conspiracy to obtain property based on false pretenses. Investigators allege the fraud ring may have been part of a larger illegal drug operation. These arrests are only the first in what is expected to be an ongoing investigation.

Investigators Find Psychotherapist

Bilks Patients, Providers

Florida insurance fraud investigators have arrested an unlicensed psychotherapist a second time for practicing without a license and billing insurance companies for unprovided services. Lubomir Lacho, of Pompano Beach, Fla., was arrested at New Hope Counseling Center, 3500 N.E. Fifth Ave. with a full schedule of patients for the day.

Investigators with the Department of Financial Services, Division of Insurance Fraud, arrested and charged Lacho on three counts of insurance fraud, six counts of third-degree grand theft, three counts of second-degree grand theft, six counts of unlicensed practice of mental health counseling/psychotherapy and one count of first-degree organized scheme to defraud.

The charges reflect billings of more than $111,000 to insurance companies and patients. The National Health Care

Anti-Fraud Association assisted in the investigation.

One patient told investigators that she had been seeing Lacho since her release from a psychiatric hospital. One of the conditions of her release was to see a licensed psychotherapist.

Lacho was arrested on similar charges in February 2004, and the Department of Health issued him a Cease and Desist order in 1994. The latest investigation was based on information from Aetna, Cigna, and Great West Life & Annuity Insurance Company indicating Lacho misrepresented information on health insurance claims for patients treated.