FRAUD CONVICTIONS. Friday, October 11, 2013 Issue #35

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1 *+ W E E K L Y F R A U D N E W S & R E V I E W Friday, October 11, 2013 Issue #35 FRAUD CONVICTIONS * Gary Anusavice drilled his way into a jail cell for the next eight years. The Hartford, Connecticut, dentist put his patients through painful and unnecessary drillings to mine himself millions in Medicaid cash. He used the $21 million loot to buy a Mercedes-Benz, an 8,500 square foot villa, a 33-foot cabin cruiser and more. When he was stripped of his medical license in Massachusetts and Rhode Island for healthcare fraud, he moved his operations to Connecticut where he hired dentists and offered commissions for performing expensive procedures. He also hired runners to recruit low-income patients with fliers and shuttle bus services. His sentence also includes $3.3 million in restitution and forfeiture of his properties. Anusavice tried to worm his way out of a lengthy prison sentence by offering to join an alcohol abuse treatment program in jail, but the judge noted there was no record of a drinking problem, and denied the request. David Rodriguez Lopez was hiding in a fish farm outside Tampa, Florida, when his hooked for staging auto crashes. Rodriguez Lopez owned a licensed massage clinic in Jacksonville where fake crash victims were sent for treatment. He received an additional $35,000 for being a passenger in one of his staged crashes. He is among 30 people prosecuted for the $228,000 scheme, according to the Florida Division of Insurance Fraud. The clinic was shut down, and Lopez was convicted by a jury this week. No mulligans allowed here. After putting around through 11 different states running hole-in-one schemes, Kevin Kolenda may be swinging straight into jail. Kolenda set up shop under business names like Golf Marketing Worldwide and Hole-in-Won.com Worldwide. He pitched golf tournaments with prizes like a Mercedes-Benz or $40,000 in cash, offering to act as insurer in case a participant won. When David Labriola scored a hole-in-one during a 2009 Naugatuck Mayor s Cup Golf tournament, he had to wait until the following year to realize Kolenda had not paid Mercedes-Benz the money that was due for the $43,585 vehicle. In other cases where he failed to pay, charities had to come up with the funds on their own, or ask prize winners to abandon their expected winnings. Kolenda pleaded guilty to two counts of selling insurance without a license and one count of first-degree theft. Each count has a maximum penalty of 10 years in prison and a $20,000 fine. Donna Jones scheme went up in flames with her house. Authorities discovered she started a fire in her Iowa home to cash in on insurance money. The Davenport, Iowa woman lied to police

2 about what happened in an effort to hide her role in the fire. Witnesses placed her at her home just prior to the fire. She also submitted rental receipts to her insurer after the fire, but investigators found her living in a small camper in an RV park at the edge of town. She pleaded guilty and now faces up to 20 years in prison when she is sentenced in November. FRAUD CHARGES It must have been awfully difficult for Hugh Coogan to use a chainsaw while on ladder and carrying tools at multiple construction sites all the while on total disability. Yet that is exactly what New York s Nassau County prosecutors claim. While working as a carpenter, Coogan reportedly claimed to have injured his back while installing a door. Just hours after telling his physician that he was not working and that he still had chronic back and leg pain, surveillance video shows Coogan carrying tools and equipment at a construction site. He collected $23,200 in workers comp money while allegedly performing strenuous physical labor. After his arrest, Coogan said that disability does not exclude him from working on his yard, adding, Clearly, this is not a fraud. If proven otherwise, Coogan could spend seven years in jail. Timmica Morton may go from using one state-owned entity to living in one. The Detroit, Michigan woman accessed car insurance policy applications from her job at Wayne State University and used the information to sell more than 300 bogus auto policies to unsuspecting motorists. Victims paid cash for the counterfeit insurance certificates, authorities say. Morton has been arraigned and will be seeing a lot more state-owned facilities if found guilty. Michigan Secretary of State Ruth Johnson last month announced a crackdown on drivers trying to register their cars with fake insurance IDs. With the high cost of auto insurance in Detroit, fake IDs are in high demand. Getting revenge on an ex-boyfriend may send Philadelphia Assistant DA Lynn Nichols to jail. In 2012, the prosecutor allegedly aided her boyfriend in an auto give-up scam, helping to hide the car in a garage in New Jersey. She is accused of using her position to remove the car's information from a national database of stolen vehicles. But when the romance faded this year, she posed as the sister of the car's owner and claimed it was just stolen from her driveway. She then allegedly called police in New Jersey and told them where the car was located, apparently hoping it would lead to the arrest of her ex. Instead, investigators looked at the condition of the car and determined it was stored long ago. Nichols was charged with filing a false police report and obstruction of justice. The case is being prosecuted by the AG's office. A Jacksonville Jaguar the car kind, not the football player turned up during a routine inspection of an auto salvage yard recently. When investigators asked the yard owner about the

3 vehicle, they were told it was being stored for a customer who was living overseas. The investigators' interest was piqued since the car was reportedly stolen a year earlier in a carjacking. Owner Orlando Robles-Santana, 41, reported that two men in a pickup truck had forced him to give up his 2004 luxury sports car. Robles-Santana was reimbursed by his insurance company, and now faces charges of filing a false report and insurance fraud. He also faces five years in state prison if convicted. RELATED NEWS Scams involving the rollout of Obamacare likely "will get worse before they get better," the Coalition predicted in a television interview conducted by the CBS affiliate in Albany, New York. The news program cautioned consumers to know the red flags of ongoing scams, avoid handing over sensitive personal information and make sure they are buying coverage through official websites and not fake ones. This latest television appearance is one of several on which the Coalition has appeared recently to help insurance consumers avoid becoming victims. A federal court has ordered a South Carolina medical center to pay a whopping $277 million for setting up a system where physicians it hired referred business to the hospital. A federal jury earlier this year concurred with a whistleblower that agreements that Tuomey Healthcare System entered into with 19 doctors constituted self-referring, which is illegal under federal law. New Jersey s appellate court has ruled that providers accused of medical fraud in civil cases do not have a right to a jury trial. In a case that favored Allstate and other insurers, the court upheld a previous decision that the state s insurance fraud law does not include language clearly stating a right to a jury trial. We conclude there is no statutorily implied right to a jury trial in an insurer s action under (the insurance fraud law) where none is expressly provided the court concluded. The court based its decision on the legislative history and intent of the insurance fraud law. Other laws in New Jersey's code do include the implied right to a jury thus without it being in the fraud law, the court decided the law did not imply such a right. The underlying case involves a successful suit by Allstate against providers who had defrauded the insurer by more than $8 million in fraudulent auto no-fault claims. (Superior Court of New Jersey Appellate Division Docket No. A T4) Taking the lead from their counterparts in the U.S., property/casualty carriers in Canada have set up a joint organization to pool claims data and conduct state-of-the-art analytics to detect fraud schemes. The Canadian National Insurance Crime Services (Canatics) will operate as a not-for-

4 profit entity and focus on uncovering organized rings that have be plaguing Canadian insurers for several years. High-profile arrests and prosecutions can make an impact. A year after federal prosecutors launched a widespread investigation into retirement disability fraud by employees of the Long Island Rail road (LIRR), disability claims dropped nearly in half, according to LIRR officials. "Guys are terrified," said one LIRR union leader. "When they started seeing guys go to prison, they said, 'It's not worth it.' " Social Security disability fraud has become a political hot potato this week. 60 Minutes aired a scathing segment on Sunday, followed by a Congressional hearing and report by conservatives contending the insurance program is rife with fraud. Liberal columnists fired back saying fraud is not that bad. LEGISLATION Events are beginning to gel in Minnesota for anti-fraud legislation for next year. A working group impaneled by legislators will meet several times in the next three months to discuss broad anti-fraud proposals targeting fraud against all lines of insurance. A key agenda item for next week s meeting is auto underwriting fraud, specifically garaging issues. The Coalition raised the issue with the working group recently, recommending that the state needs to clarify that underwriting fraud violates the state s insurance fraud statute. The Coalition also recommended that Minnesota consider following Maryland in allowing for civil penalties to punish fraudsters. Future meetings of the working group will consider expanding immunity protection to broaden the exchange of anti-fraud information among insurers, law enforcement and NICB. New York added teeth to its drug diversion laws when a key provision of the 2012 law strengthening the state s prescription drug abuse laws went into effect recently. A major component of the law expanding the state s prescription monitoring program was a section requiring physicians to check the database before prescribing powerful painkillers. The law requires the use of an internet portal to access the state s monitoring program prior to writing or filling opioid prescriptions. New York is only the second state to require real-time reporting of drug prescriptions by pharmacies. An e-prescription for controlled substances requirement begins in December A bi-partisan bill will be introduced soon in the U.S. House of Representatives to help protect of seniors from health insurance scams. The proposed bill is intended to educate seniors about common health schemes and how to avoid being victimized. The proposal would require HHS and the Department of Justice to issue a report on the ten most prevalent schemes targeting

5 seniors. HHS also would be required to send seniors the list of schemes. This list would have to be updated quarterly. The bill was scheduled to be introduced this week, but was delayed by the ongoing government shutdown.