Zalma's Insurance Fraud Letter The Essential Resource For the Insurance Fraud Professional ===== A ClaimSchool Publication, Written by Barry Zalma, Esq., CFE 2010 by ClaimSchool, Inc. & Barry Zalma ===== Go to Zalma On Insurance E-Books and Articles by Barry Zalma Prices Reduced -- http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm ===== Volume 14, No. 6 March 1, 2010 ===== Subscribe to Text Version, it's Free! http://www.zalma.com ===== Quote of the Month "Don't count the days, make the days count."-- Muhammad Ali ===== A New Method to Burn A Car This information was received from Southern California Fraud Investigators Association Lifetime Member Miguel Padilla, Fire Cause Analysis and is reprinted with permission from the SCFIA. FYI, this is from an Insurance Investigator. I am currently investigating an auto arson claim. I noted a very small white substance melted into the debris on the console at the passenger seat area. This area was the point of origin of the fire. Prying the melted debris loose revealed a small clear bottle of auto air freshener, with a white wick. These are very common, can be purchased just about anywhere, and generally are attached to the vehicle air vents. The evidence was placed in a clean metal paint can and when opened several days later smelled like a scented air freshener. It was originally dismissed by myself (arson investigator) and a company hired forensic arson expert as just an air freshener, with no evidentiary value. I subsequently purchased several different brands of these air freshener bottles and conducted several tests, which I photographed. They are very flammable and burn readily, like a small torch, even in very windy conditions. They are very unique, in that the white wicks do not change color even after burning for a significant time. At best, the wicks just get smaller and when extinguished; have a smooth top slightly melted appearance. They do not significantly distort. Only one wick exhibited a very small but insignificant amount of a very light browning, in a very small area, after burning. When laid on their sides, the air freshener bottles will readily leak the air freshener fluid from the bottles. The fluid is flammable and most of the items are marked as such in their original packages. I spoke to a confidential informant, who advised me that word on the street is that this is a new trend. According to him, they are easy to purchase and use, the items deflect suspicion from any insured and even if found are usually overlooked. Our outside arson expert is currently creating a video disk, created in the lab, with these items under test, along with the item I discovered in the vehicle, test bottles and photos of the vehicle showing where I discovered the air freshener melted into the debris in the vehicle. I believe this is something to be keenly aware of in your auto fire investigations. When dealing with an auto arson this report teaches to not ignore as possible accellerants items that generally belong in the auto like the deodorizer noted in this article, bags of potato chips, a bottle of rum or other flammable but not necessarily suspicious products. ===== New From Barry Zalma ===== Insurance Fraud An E- Book ===== If you are serious about reducing the effect of insurance fraud, the most lucrative crime practiced in the Americas and Europe, other than tax fraud, you need to educate every person involved in the business of insurance to recognize and begin the efforts to defeat insurance fraud. Insurance fraud should do some thing to stop it. I wrote Insurance Fraud An E- Book, to act as a resource to teach everyone involved in the business of insurance about insurance fraud and how to defeat it. The table of contents and Introduction to Insurance Fraud are available, free, at http://www.zalma.com/introduction.pdf. Insurance Fraud can be purchased on line at http://www.zalma.com/Insurance%20Fraud.htm. Readers of ZIFL should find the e-book to be useful in their practice. Since the effort to reduce insurance fraud requires the assistance of courts both civil and criminal the prudent fraud investigator, insurance adjuster, insurance attorney, insurance Special Investigation Unit, or insurance management need the information to deal with state investigators and prosecutors. Insurance Fraud includes the full text of appellate decisions to allow the reader to fully understand the facts gathered by the investigators and prosecutors so that those involved in trying to defeat fraudulent claims can be aware of what courts look at after a suspected fraudulent claim is denied. The extent of insurance fraud is unknown. Because most frauds succeed without the insurer even suspecting that it is being defrauded, insurance fraud is often ignored. Insurers and government-backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. An exact number on the amount lost to insurance fraud will remain no more than an estimate. However, everyone who has looked at the issue knows in their mind, heart and gut that the number is enormous. When insurers and governments increase their effort to reduce the amount of insurance fraud the total number of claims presented to insurers and the pseudo-insurers drops logarithmically. One of the reasons insurance fraud succeeds is that those in the insurance industry, and those who represent them, are inadequately educated or trained to recognize fraud and to use the weapons available to defeat a fraudulent insurance claim. Before insurance fraud can be understood, it is important to understand what insurance is and how it works. The new E-Book, Insurance Fraud, is published by ClaimSchool, Inc. as an inexpensive E-Book in pdf format that can be carried easily on any laptop or book reader that uses the pdf format. Using the search function provided with a pdf reader it is easy to find material in the book. In addition Mr. Zalma's e-books, Insurance: Cases and Materials on Coverage, Claims; California Claims Regulations; and Litigation; The Truth, The Whole Truth & Nothing But the Truth II ; and Heads I Win, Tails You Lose, are available at Zalma on Insurance at http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm. ===== Man Bites Dog Insurance Frauds Must Pay Insurer Insureds & Their Public Adjuster Nephew Punished for Adding to Damage After Legitimate Loss No insured should be allowed to profit from insurance fraud. When the fraud committed is stupid the insured attempting insurance fraud should be punished both civilly and criminally. In New Jersey not only did the persons insured add to their damages by beating on their building with broken pieces of a fallen tree, they added to their crime by allowing their conduct to be videotaped. Liberty Mutual found the tape and proved that their insured inflated the claim and recovered all of its investigative costs and attorneys fees which were then trebled. This case proves that not only does crime not pay, if caught committing fraud in New Jersey, you will find that you must pay three times the damages your insurer incurred. After ten years of fighting the insurer who had the courage of its conviction and a willingness to refuse to pay off an insurance fraud perpetrator was honored with a judgment recovering all of its costs and a bonus by the court trebling the damages. In Liberty Mutual Insurance Co. v. Land, No. A-6126-06T2 (N.J.Super.App.Div. 01/14/2010) the court of appeal in New Jersey affirmed a trial court judgment in a second trial between an insurer and its insureds. In the New Jersey case Liberty Mutual established that its insured, Rose Land and Frank Land (collectively, the Lands) engaged in statutory insurance fraud. The jury's verdict not only destroyed the Lands' entitlement to collect insurance proceeds for their putative property losses, but additionally exposed them to a judgment in favor of plaintiff Liberty Mutual Insurance Company (Liberty Mutual). The trial court ultimately determined the Lands' total monetary obligation to Liberty Mutual was $175,302.88. The litigation arose after a seemingly innocuous property loss. After a neighbor's tree toppled onto the roof of the Lands' cabin in Highland Lakes in December 2000, defendants filed a property damage claim with plaintiff, their homeowners' insurance carrier. During its investigation of the Lands' claim, plaintiff uncovered a videotape that depicted Budge [who is the Lands' nephew and a public adjuster. He has since been stripped of his license to be a public adjuster and as a consequence of the events of this case was indicted by a grand jury in February 2003 and charged with theft by deception] and several others working on the cabin's roof shortly after the tree fell onto the cabin. The videotape showed three men taking a heavy portion of the fallen tree estimated to be 600 pounds and slamming it against the roof, in an effort to create further damage and shatter a skylight. Although adamantly denied by defendants, they had apparently gone onto the roof after the tree fell and attempted to increase the physical damage to the Lands' cabin. Among other things, defendants argue that it was logically impossible to increase the physical damage to the cabin because it already was a total loss. Similarly stated, defendants claim that they could not do further damage or injury to a structure that was already damaged beyond repair, and which would need to be totally replaced. In furtherance of their claim of property damage, the Lands submitted a "Sworn Statement In Proof of Loss," which was on Budge's letterhead. Their losses were claimed to total $69,338. As an additional part of the claims process, defendants appeared for an oral examination several months later, at which they testified under oath about the circumstances of the tree-falling incident without disclosing the damage-enhancement activities. The matter was initially tried to a jury in 2002. That trial resulted in a jury verdict in plaintiff's favor against the Lands and Budge, finding that each defendant had violated the Insurance Frauds Prevention Act (IFPA). The trial court then issued a consequential judgment awarding compensatory damages. On the ensuing appeal, this court set aside the initial judgment on three distinct grounds: 1) the appropriate standard of proof was by a heightened "clear and convincing" evidence, not the preponderance standard that had been charged to the jury; 2) plaintiff's counsel made improper comments in his summation that had the capacity to unduly influence the jurors; and 3) Budge, who represented himself, should have been permitted to testify at trial in narrative form. The court of appeal sent the case back to the trial court for a new trial. The matter was tried anew before a second jury in November and December 2006. Budge again appeared pro se, as his own lawyer, but this time was permitted to testify in narrative form. This jury also returned a verdict in Liberty Mutual's favor, again finding that all defendants had violated the IFPA. The jury was neither presented with direct evidence of precise losses or damages suffered by plaintiff, nor did it render a verdict as to the exact amount of plaintiff's compensatory damages. As a result, the trial court entered an order for final judgment on April 19, 2007, in which it determined the amount of compensatory damages suffered by plaintiff, applied the trebling pursuant to the IFPA, and dismissed the Lands' counterclaim that had sought payment for their property losses in accordance with Liberty Mutual's policy. The order first awarded Liberty Mutual $5,157.41 in investigative costs, plus $52,576.78 in counsel fees. The court then trebled those amounts, yielding a total of $173,202.57. Thereafter, the court further specified that Lands and Budge were responsible for reimbursing Liberty Mutual for an additional $2,100.31 in expenses. The total monetary judgment, on which Lands and Budge are jointly and severally liable, amounts to $175,302.88. Because of the close connection between the facts that Liberty Mutual alleged as grounds for a rescission of insurance coverage and a determination of insurance fraud, it was entirely appropriate to join all of the claims into a single complaint. An insurance company's proof of resultant damages from insurance fraud pursuant to the IFPA is not an element of the cause of action that is required to be submitted to a jury. The penalties permitted by the IFPA are not designed to remedy direct monetary damage to the insurer. In this case, the court was convinced that the trial judge's findings were supported by "competent, relevant or reasonably credible evidence." Judge Dumont reviewed the wealth of evidence presented at trial, in addition to the affidavits and other submissions of the parties in determining the amount of Liberty Mutual's statutory compensatory damages. In a written opinion, he concluded that Liberty Mutual's statements of fees and costs should be truncated to include only those "for the work done prior to the first trial and in connection with the second trial," and not including fees and costs attributable to the appeals. His ultimate determination of the compensatory damages as amounting to $57,734.19 is readily supportable by the credible evidence that was presented to him. The judge further determined that the Lands engaged in a distinct pattern of violating the act by committing at least five or more related violations of the IFPA. The trial court's written opinion carefully explained the specific instances of the Lands' multiple statutory violations, including submission of proofs of loss that contained false or misleading information and their false testimony given during oral examination. Accordingly, the trebling effect that increased the compensatory damages to $173,202.57 was also supported by the evidence. ===== WISDOM "Amplification is the vice of modern oratory." -- Thomas Jefferson "When you know what you are willing to die for, then you will know what to live for." -- Jewish saying "I think all the world would gain by setting commerce at perfect liberty." -- Thomas Jefferson "A kind word is better than a handout." -- Talmud "Whatever you tax, you get less of." -- Alan Greenspan "Whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force." -- Thomas Jefferson "To avoid criticism, do nothing, say nothing, be nothing." -- Elbert Hubbard "Enlightened statesmen will not always be at the helm." -- James Madison "The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions." -- Peter Drucker ===== Good News Reports of Convictions From the Coalition Against Insurance Fraud http://www.InsuranceFraud.org: * Insurance agent Melody Gunn used her position to over insure her 1968 Chevy Camaro then tried to have a crony "steal" it for insurance money. But the crony turned out to be an undercover cop. An informant had tipped off police about the Idaho Falls woman and her husband Ben. The unsuspecting couple then met with an undercover cop, who had them call a "friend" who could unload the Camaro. The Gunns met with yet another undercover cop in a restaurant parking lot. Ben paid the cop $100 and placed another $100 on the Camaro's center console. Ben then told the cop he didn't want to see the car again. The cop drove off with the vehicle, thus completing the sting. The Gunns then told their insurer that someone stole the vehicle. Melody had over-insured the Camaro for $22,500 after they'd tried to sell it for $15,000. Ben received a year in jail, and Melody six years of probation. She'd previously lost her agent license. * Rodents chewed through vehicle engine wiring and caused expensive damage, a San Mateo (Calif.) body shop routinely told customers and insurers. But the shop's owners planted dead mice and their droppings into the engines to bilk insurers out of $1.2 million in fraudulent repairs. Mehran Baranriz received four years and ex-wife Bita Imani six months Wednesday. The shop catered to Mercedes and Beamers. Baranriz and Imani kept a supply of dead rodents plus droppings on-site, even painting the mice black so they'd look like rats. The pair then showed owners and adjusters the mice lying in the engine compartments. State Farm uncovered the con after its audit determined that Group Specialist's rodent-related billings averaged more than $10,000 per claim, compared to the statewide average of $1,900. * Michael Richards invented a hit-and-run crash to escape payments by having his car declared a total loss. The Baraboo, Wisc. man said an SUV or truck had hit his car, causing it to strike a guardrail on the passenger side. The mysterious vehicle then continued on without stopping, Richards told his insurer. American Family paid $16,000 to the lien holder for a total loss. But Richards actually veered into the guardrail in a real one-car crash. Then realizing the insurance-fraud potential, he rammed the guardrail again to total the car because he was having problems making payments. But the damage was inconsistent with his version of the crash. Richards received probation Monday, and must repay his insurer. * The owners of three Orange County, Calif. roofing companies skirted $38 million in workers comp premiums by under-reporting the number of employees and discouraging employees from filing injury claims. Michael Vincent Petronella and Devon Lynn Kile lived a lavish lifestyle while allegedly failing to pay for their employees' comp coverage, taxes and other costs. It was the largest known comp con in California history. The couple reported only one tenth of the $29-million payroll for three companies, Petronella Corp., Western Cleanoff and The Roofing Specialists. They also fraudulently filed 42 claims for uninsured injured workers totaling $253,000. The scam surfaced when an employee fell off a roof and was injured. The employee was assigned to a shell firm to save comp money illegally. Petronella and Kile owned two Ferraris, a Bentley and Range Rover. They had a stone-lined swimming pool, and closets stuffed with designer shoes. Investigators found wads of cash stuffed in a safe. Kile also had applied to appear on the reality TV show, The Real Housewives of Orange County. Petronella faces up to nearly 50 years when sentenced in April. Kile faces mental competency hearings. ===== Zalma on Insurance Without Insurance the economy of the world would collapse. No entrepreneur would dare invest money in a business if he could not spread the risk of loss of his property by insurance. No business would dare manufacture a product without the ability to spread the risk of suit from people injured by the product through insurance. Zalma on Insurance (http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm) exists to provide information on current developments in the law of insurance for people in the business of insurance and those who are insured. It will provide practical information for the use of insurers and insureds faced with claims. Insurance is not supposed to be an adversarial relationship. That it has become so is obvious from the volume of suits filed by and against insurers faced with claims. It is the purpose of Zalma on Insurance to help reduce the amount of litigation and allow the amicable resolution of claim situations. Because of the time required to keep up Zalma on Insurance I ask that you pay small fees for the ability to download the articles. The fees range from $1.00 TO $12.95 for my e-book The Truth, The Whole Truth & Nothing But The Truth II. ===== Convictions ===== More Health Insurance Fraud 14 Months in Prison for Health Insurance Fraud William R. Fry and Dr. Geronimo Rubio were sentenced to prison in February 2010 in a San Diego federal courtroom for convictions related to health care fraud and tax law violations, according to the U.S. Attorney's Office. Fry and Dr. Rubio were sentenced by Judge John A. Houston to serve 14 months and 12 months, respectively. Both admitted guilt to health care fraud and federal income tax felonies in June 2007. The health care fraud convictions also include a court order that the men pay $63,237 in restitution to insurance providers. In addition, Fry must pay the IRS $314,159 in back taxes plus interest and penalties for the tax years 1997 through 2003. Rubio must pay the federal tax collector $356,311 in back taxes plus interest and penalties for tax years 1998 through 2003. The convictions stem from the men's joint ownership of American Metabolic Institute in Bonita, prosecutors said, citing court records. They also operated the Hospital San Martin health clinic in Tijuana, Mexico. Dr. Rubio prescribed "alternative medicines and treatments" to patients, many of them diagnosed with cancer. The men admitted to submitting false bills to U.S. insurance companies. Both also "substantially under-reported" their income to the IRS. As an aside, it's disappointing to review the American Metabolic Institute web site and learn that Rubio presents himself as a "pioneer" in the use of shark cartilage as a supposed cancer treatment. The American Cancer Society reported on a 2005 study that found no scientific basis for such claims. Additional studies cited in 1999 also showed no proof that using shark cartilage was helpful ===== Health Care Fraud Eleanor J. Murphy must repay more than $100,000 to a health insurance company. She claims she will do so by making $100 monthly payments. Without interest the restitution will not be paid until she is 142 years old. Murphy, 49, of Follansbee, W.Va., was sentenced to seven years' probation; she pleaded guilty last month to a single count of insurance fraud. Murphy admitted that she lied on her medical benefits forms that her boyfriend, Michael LaSavage, was actually her husband so that he had health insurance. According to the state attorney general's office, Murphy was hired at the former Aliquippa Community Hospital in September 2006 and filled out forms stating that Murphy was her husband. According to court records, employees at Aliquippa Community told investigators they never checked to see whether Murphy was telling the truth. Murphy told investigators during a May 2009 interview that LaSavage had retired from Weirton Steel, but lost his health benefits when the steelmaker went bankrupt in May 2003. The two had lived together since 2001, after Murphy was estranged, but not divorced, from her husband. Investigators wrote that between September 2006 and May 2008, Coventry Health Care paid about $112,000 in medical treatment costs for LaSavage. LaSavage was diagnosed with cancer in March 2008, according to court documents, and died May 26, 2008. Investigators wrote that Coventry said they wouldn't have paid any of the claims if they knew that Murphy and LaSavage weren't married. Murphy is currently unemployed. Judge Kim Tesla's court order Tuesday said that she has to pay $100 a month for restitution; prosecutors said that amount could increase if she finds work. Tesla also ordered Murphy must report to her probation officer weekly to say how her job search is going. ===== Convicted in Texas of Billing Medicare of Unlicensed Orthotics Jeanette Garcia, 43, and her husband, Eleazar Garcia, 53, a Corpus Christi, Texas couple who owned an orthopedic practice were convicted In February 2010 on several charges of submitting false reports to Medicare. The Garcias were convicted of conspiring to commit health care fraud after a two-week trial. Mrs. Garcia was convicted of 13 counts of submitting false and fraudulent claims to Medicare. Mr. Garcia was only convicted of five counts of submitting false or fraudulent claims. Witnesses testified that Jeanette Garcia hired her husband to provide orthotic and prosthetic goods and services on behalf of her business, but Eleazar Garcia did not have a license to practice orthotics in Texas, according to a news release. The couple continued to submit bills to Medicare and Medicaid for services provided by him, and the U.S. attorney's office believes the couple received more than $294,000 from Medicare and Medicaid. Both are free on bond awaiting sentencing April 26, officials said. The fraud convictions carry a penalty of as many as 10 years in prison and as much as a $250,000 fine. ===== Kansas Stops Sale Of Unauthorized Health Insurance Kansas Commissioner of Insurance Sandy Praeger has issued a cease and desist order to Real Benefits Association, Serve America Assurance LTD, American Trade Association LTD and Smart Data Solutions LLC. and Bart Posey, Richard H. Bachman, John Miller and Dave Clark for selling unauthorized health insurance and distributing deceptive advertising. All are headquartered in other states. The department said Serve America Assurance, American Trade Association and Smart Data Solutions have been the subject of consumer protection orders, warnings and fines in other states, including Oklahoma, North Carolina, Indiana, Connecticut, Arkansas and Michigan. Also under the cease and desist order are individuals Posey, Bachman, Miller and Clark. All live outside Kansas, and all are officers with one or more of the banned companies. Praeger said consumer complaints led to the investigation and subsequent C&D order. The sales of the insurance products in question occurred through Internet and fax solicitations. One of the fax solicitations offered "complete health care plans" but did not list an insurance agency, agent or company, only a phone number. Real Benefits Association was also cited for statute violations regarding prompt claims payments for two Kansans who were RBA members. Last year, Ohio Insurance Director Mary Jo Hudson issued a consumer alert regarding health insurance products purchased through Real Benefits Association and Clark, its owner. Serve America Assurance's Web site, currently down but cached, identifies it as "a wholly owned offshore captive insurance company of Beema Insurance Co. - Pakistan." Ohio's July 2009 enforcement action included a cease and desist order against Beema, which the department said was selling insurance products in the state without a license. ===== Four Years In Prison For Creating Fraudulent Medical Records Eric Zaffer, owner of Medical Consultants Inc., a business consultant in Elyria, Ohio altered the medical reports of state workers' compensation claimants pleaded guilty to fraud, forgery and tampering with records. Zaffer was sentenced to four years in prison by a Franklin County court for embellishing medical records that led to higher compensation awards for workers who suffered permanent partial disability in work-related accidents. Mr. Zaffer's firm compiled medical reports for law firms representing injured workers. The Ohio Bureau of Workers' Compensation said the law firms were not involved in the fraudulent activity. Rather Zaffer sold his services to law firms based on his ability to compile accurate and persuasive medical reports that would boost a claimant's percentage of permanent disability. However, the BWC detected unusual reporting practices and began an audit. It found evidence of altered medical records, the bureau said in a news release. The bureau turned the case over to the health care fraud section of the Ohio Attorney General's office, which prosecuted the case. Mr. Zaffer was found guilty of one count of workers' compensation fraud, a fourth-degree felony; two counts of tampering with records, a third-degree felony; and 10 counts of forgery, a fifth-degree felony. He also was ordered to pay $139,558 in restitution and $56,340 in investigative costs. ===== Restitution for Fraud and Three Years in Prison Arthur Copes was convicted in July 2008 and the former owner of a Baton Rouge, La., scoliosis treatment clinic was ordered to pay more than $160,000 in restitution to the victims of his fraud. Copes was convicted on eight counts of insurance fraud and sentenced to three years in prison in January 2009. Copes was convicted following testimony from former patients who flew in from all over the country to testify against him. State District Judge Tony Marabella also ordered Copes to pay $30,000 in fines and to make full restitution to several former patients and to Blue Cross and Blue Shield of Louisiana. Marabella set the restitution amount at $162,279. Copes objected to some of the figures that made up the final amount and asked for more time to review the figures. The Advocate reports the judge denied that request. Copes was originally arrested on 117 counts by the Attorney General's office. At trial he Copes faced nine counts of insurance fraud and was found not guilty on count number two because of a question concerning the date on the indictment and the date on the billing paperwork presented at trial. ===== 42 Months in Jail for Tennessee Eye Doctor Dr. Seth Yoser was sentenced by U.S. District Judge S. Thomas Anderson to 42 months for mail fraud, wire fraud and selling drugs without a license. Yoser, an ophthalmologist who specialized in the treatment of wet macular degeneration, pleaded guilty last summer to 35 counts of federal fraud charges for stealing an expensive medicine from his practice, double-billing Medicare for the medicine and then selling it back to ophthalmology practices, including the clinic where he was a partner, the Eye Specialty Group in East Memphis The judge cleared the courtroom and called in a nurse after the doctor fainted after sentence was passed. Federal sentencing guidelines for the crimes recommended punishment between 51 months and 64 months. The judge also ordered Yoser to pay restitution of $400,000 to the Eye Specialty Group to help the practice over the cost of reimbursing the Centers for Medicare & Medicaid Services. Even though Yoser's partners turned him into authorities, the practice is still being held liable for a portion of the government's losses. Yoser had already agreed to repay the federal agency $1.6 million as part of a civil settlement with the Centers for Medicare & Medicaid Services. Yoser's character witnesses included Dr. David Meyer, a Memphis ophthalmologist with whom Yoser has been practicing since his indictment; Nicole Germain, an assistant Shelby County district attorney; and his wife, Marisa Yoser. Seth Yoser, who cooperated with authorities after being turned in, took the stand and said his family was the biggest victim. "I'm completely asking for the judge's mercy and society's mercy," he said. Yoser told the judge he was stressed with financial hardships, including supporting a family of nine children for two years. But Yoser and his wife have two children. "On top of that, there was some greed involved too," the doctor said. U.S. Attorney Timothy DiScenza noted the court has to make sentencing decisions every day that cause people to suffer. Anderson did trim some time off of Yoser's sentence for agreeing to wear a wire as part of a separate drug fraud investigation in New Jersey. No other details about that investigation were explained in court. Before he delivered the sentence, Anderson noted that Yoser had received about 95 percent of the profit from the fraud scheme, which resulted in an estimated loss of $3.7 million to the government. Yoser has surrendered his license to practice in Arkansas and Mississippi, but he is still licensed in Tennessee. ===== Illinois Doc Gets Probation Dr. James Durham, a Franklin County, Illinois doctor and his practice were sentenced to probation on federal health care fraud charges. According to U.S. Attorney A. Courtney Cox, 72-year-old Dr. Durham doing business as the Franklin Rural Health Care Clinic in Christopher, was sentenced Thursday in federal court for making false statements to a federal health care program. Court documents say Durham and the clinic defrauded Medicare and Medicaid for nearly $190,000 between January 2003 and May 2006. ===== 92 Months in Prison for Miami Doctor Walter Proano was sentenced to 92 months in prison according to Jeffrey H. Sloman, United States Attorney for the Southern District of Florida. Proano, a Miami doctor, was sentenced February 17, 2010, following his conviction for Medicare and Medicaid HIV-infusion fraud. In addition, Proano was ordered to pay $3,790,874.33 in restitution. Proano's conviction resulted from his involvement in a scheme to defraud the Medicare and Medicaid programs through his work at Diagnostic Medical Choice, a Southwest Miami clinic that billed these health care programs for expensive infusion medications intended to treat a rare illness suffered by a small portion of those afflicted with HIV/AIDS. To execute the scheme, Proano fabricated patient medical records and wrote prescriptions for large quantities of these medications. He then sought federal and state reimbursement for the medications, which had not been provided as claimed. This case was prosecuted by Special Assistant Attorney General Stephen A. LeClair. ===== Fraudulent Health Plan Ordered to Cease Business The California state Department of Managed Health Care ordered Healthcare One LLC and its four affiliates - Elite Healthcare, Easy Life Healthcare, Republic Healthcare and Global Healthcare - to stop doing business in California or face a court challenge. Monday's complaint marked the 18th action the department has taken against discount health plans, which are non-insurance products that offer health care services to members at lower rates in exchange for an enrollment and a monthly fee. While some of these plans are legitimate, fraudulent programs offer few benefits and make claims such as falsely advertising relationships with doctors when in fact they have none. The complaint listed Michael Jay Ellman of Orange County as the sole manager of the Arizona companies. Discount health plans have generated large numbers of consumer complaints, including continuing to deduct charges from people's accounts after they canceled their memberships and failing to provide the services they promised. These plans largely went unregulated until recent years, when the state stepped in to provide oversight, a process that has yet to be completed. The department has licensed five discount health plans, but held a hearing in Oakland on Monday to mark the final day of public comment before finalizing the regulations to oversee these plans. Officials from the California Medical Association said the state hasn't gone far enough and contends all these plans should be outlawed. Discount health cards are often marketed online, or via direct mail, or phone solicitation. For an initial fee and monthly payment, the enrollee is entitled to discounted services at approved providers. The ads often target those whose current insurance does not cover certain services like dental or chiropractic, and people who have no health insurance at all. Currently, there are six million Californians enrolled in such programs. Of the 1,000 consumers who have contacted the state, most report they were led to believe they were purchasing health insurance coverage when in fact they were not. The state has ordered 18 companies to cease and desist operating in California, pending an investigation. ===== AIDS Doctor in Prison for 15 Months Dr. George Steven Kooshian, 59, of La Quinta, California, a well-known AIDS doctor who operated clinics in Orange County, California was sentenced Monday to 15 months in federal prison after pleading guilty last year to "subdosing" patients, or administering doses of medicine that contained less than the prescribed amount patients were supposed to receive, federal prosecutors said. Dr. Kooshian operated Valley View Internal Medicine Group at two locations in Garden Grove, and Ocean View Internal Medicine Group in Laguna Beach and Long Beach. Kooshian pleaded guilty in February 2009 to two counts of health care fraud and two counts of making false statements relating to health-care matters according to prosecutors. Kooshian was sentenced by U.S. District Judge Alicemarie Stotler of Santa Ana, who also ordered him to pay $660,955 in restitution to 18 insurance companies for 21 patients who were subdosed. Virgil Opinion, 50, of Anaheim, who was Kooshian's assistant for more than 10 years, also pleaded guilty to participating in the scheme and was sentenced in September to three years probation and ordered to pay the restitution jointly with Kooshian. In 2005, when prosecutors announced the indictments of Kooshian and Opinion, they said the investigation began when Opinion terminated his employment with Kooshian and came forward to the press, claiming "his conscience was killing him." Opinion, as well as a former patient of Kooshian's who was subdosed, subsequently sued Kooshian civilly. The civil suit was settled pursuant to a confidential settlement agreement, prosecutors said. ===== 37 Months in Federal Prison and $4.1 Million in Restitution for Medicare Fraud Robert Bourseau, 75, the former owner of a Los Angeles, California hospital, was sentenced to 37 months in prison and ordered to pay $4.1 million in restitution for his role in a scheme to defraud Medicare and Medi-Cal. Bourseau pleaded guilty in June to paying a recruiter to deliver homeless patients to his hospital for unnecessary medical services. The scheme was uncovered after an investigation into alleged patient dumping in skid row. Bourseau and a medical center co-owner, Dr. Rudra Sabaratnam, allegedly paid several hundred thousand dollars between 2004 and 2007 to recruiter Estill Mitts and others for patients. Sabaratnam and Bourseau have already agreed to pay $10 million to the government to settle civil litigation. Mitts, 64, who ran a downtown center recruiting homeless patients, pleaded guilty in September 2008 to conspiracy to commit healthcare fraud, money laundering and tax evasion. Prosecutors allege he earned $20,000 a month in kickbacks. A third City of Angels executive, Dante Nicholson, is awaiting sentencing in June. Last year he pleaded guilty to paying kickbacks for patient referrals. In a related case stemming from an alleged patient recruiting scheme, a former Tustin Hospital and Medical Center executive, Vincent Rubio, 49, has also agreed to plead guilty to paying illegal kickbacks. ===== Zalma's Insurance Fraud Letter Zalma's Insurance Fraud Letter (ZIFL) continues its thirteenth year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool. It is provided free to clients, friends of the Law Offices of Barry Zalma, Inc., clients of Zalma Insurance Consultants and anyone who provides an e-mail address in the space provided on my web site. The comments made are for information only and are not intended as legal advice. If you need legal advice, Barry Zalma practices law as the Law Offices of Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY, CA 90230 or at 310-390-4455, fax at 310-391-5614, Cell Phone: 310-738-6818 or E-Mail at zalma@zalma.com. Zalma's Insurance Fraud Letter can also be read on the web at http://www.zalma.com. Mr. Zalma serves as an expert witness or consultant in insurance coverage, claims handling, insurance bad faith and fraud. Mr. Zalma's law practice is limited to the representation of insurers and those in the business of insurance. He is available to provide advice and counsel concerning insurance fraud, first and third party insurance coverage issues, bad faith and first party insurance appraisals. Recipients of Zalma's Insurance Fraud Letter are authorized by ClaimSchool and Barry Zalma to make as many copies as needed to pass to your friends and staff as long as you do not copy for resale. If this has been forwarded to you and you want to be on the FREE mailing list as a subscriber to ZIFL please go to http://www.zalma.com and insert your e-mail address in the box indicated and you will be automatically subscribed to the text version of ZIFL. If you want to be removed from the list click on the link at the end of the ZIFL and your subscription will be deleted. ZIFL will be posted for a full month in pdf and full color at http://www.zalma.com. ===== More Convictions Ex-Prison Guard Must Pay More Restitution for Fraud Plus Seven Years In Prison June Ann Lucena, a former Folsom State Prison guard was ordered to pay more than $400,000 to reimburse state agencies after she was convicted of insurance fraud. June Ann Lucena was ordered to repay more than $170,000 to the State Compensation Insurance Fund, Sacramento County prosecutors said in February. The $17,000 is in addition to the $244,000 ordered in December for the state's public employees' retirement system. Lucena was sentenced to seven years in prison in August after her 2007 conviction. She received disability pay and workers' compensation after surgery for a work-related fall in 2000. Lucena said the fall limited her physical activities. But investigators filmed her in 2002 riding a Jet Ski at Folsom Lake and riding the water slides at a Manteca water park. ===== Workers' Comp Fraud Pleads No Contest Probation Only Richard Lewis Johnson, 49, of City of Commerce pled no contest Feb. 4 to one count of grand theft of workers' compensation payments and was placed on three years probation and ordered to pay $20,714 in restitution to Avizent Risk Management. Detectives from the California Department of Insurance (CDI) were alerted to the alleged fraud by Avizent's Special Investigations Unit in April 2009. Avizent reported that Johnson advised them that on May 28, 2008 he sustained an injury to his right shoulder while working at California United Terminals as a class B longshoreman. At the time of the reported injury Johnson was employed by Pacific Maritime Association. The day after the reported injury, Johnson saw a chiropractor who then sent him to another doctor where Johnson allegedly lied about the severity of his injury. Avizent processed the claim in accordance with the Longshoreman and Harbor Workers' Compensation Act. During an internal Avizent investigation, it was alleged that Johnson lied to Avizent's claims adjusters. Avizent set up surveillance on Johnson and witnessed him using his right shoulder with no apparent difficulty despite telling several doctors that his arm was to badly injured and was too painful to use. Avizent turned its investigation over to CDI, which confirmed Avizent's allegations. CDI turned over its criminal investigation to the Los Angeles County District Attorney's Healthcare Fraud Division and on Nov. 12, 2009 the L.A. District Attorney's Office issued a warrant for Johnson's arrest on four counts of workers' compensation insurance fraud. In addition to the fine and probation, Johnson was ordered to pay court fees and perform 200 hours of community service. Two Years & Restitution to Crooked Insurance Company Employee Danyele Grothen, a former AFLAC associate was sentenced February 17, 2010 to more than two years in prison on a wire fraud charge. Grothen pleaded guilty in September to one count of wire fraud. Her indictment states that between September 2004 and August 2006, she sent faxes from Washington to Aflac's Columbus office. Grothen used false pretenses about insurance claims for medical procedures that didn't happen or weren't necessary, which led to AFLAC issuing close to $300,000 in claims it did not owe. Grothen initially faced 15 counts of wire fraud. She pleaded guilty to one count, and the other charges were dismissed, court records show. U.S. District Court Judge Clay Land sentenced Grothen to two years, three months in prison, followed by three years' probation on Tuesday. She was also ordered to pay $293,025 in restitution, court records show. ===== 180 Days - Suspended for Agent Fraud Mary Donna Doyle, 60, of Boulevard, Calif., plead guilty to one felony count of grand theft for stealing insurance premiums and was sentenced in San Diego Superior Court February 10, 2010 to 180 days in San Diego County Jail. Her sentence was suspended and she was granted three years probation and 160 hours of community service. Doyle also was ordered to pay $1,247 in fines and fees. A California Department of Insurance (CDI) investigation alleged that Doyle collected more than $7,000 in premiums and undisclosed broker fees from a small business in Oct. 2006 for a workers' compensation policy. Although Doyle collected the full premium from the business owner, she made periodic payments to the insurance company and changed the client's mailing address to her own post office box. Doyle forwarded only $2,812 to the insurance company, resulting in a cancellation of the policy. The business owner was unaware that the policy was cancelled because the notice was sent to Doyle's P.O. Box. The trailer dealership operated without workers' compensation coverage for two months. Upon learning of the cancellation and lack of coverage, the business owner was forced to close his doors and send his employees home until a new insurance policy could be purchased. Doyle collected more than $3,500 from a non-profit organization in 2007 for two liability policies, but failed to send the premiums to the insurance companies resulting in a cancellation of both policies. Doyle also submitted forged documents to the insurance companies. Both victims eventually received a full refund of their premium losses by filing claims against Doyle's insurance broker bond. The San Diego County District Attorney's office filed a felony complaint against Doyle in Nov. 2009. Doyle was originally charged with five felony counts of grand theft of personal property and forgery and she entered a guilty plea to one felony count of grand theft on Jan. 11, 2010. Doyle was licensed by CDI as a fire and casualty broker-agent in 1986. Her insurance license lapsed in 2009 when she failed to renew it. A CDI order revoking Doyle's licensing rights will be effective March 3, 2010. The next hearing is scheduled for March 10, 2010 to determine victim restitution. ===== Four Years in Prison for False Disability Claim Da'Lynn White, 31, A Mays Landing, New Jersey woman was sentenced in February to five years for collecting more than $4,000 in false disability insurance claims. White admitted in August that she collected $4,357 from the New Jersey Department of Labor and Workforce Development between March 15 and June 19, 2005, by submitting forms that she and a co-worker were disabled. An investigation found that White forged the doctors' signatures on the forms. White falsely claimed that she was pregnant, and that her co-worker who was not named was injured in an accident on his way to work. She also admitted to illegally getting bank information of at least seven people, then using that information to obtain ATM and other bank cards in those names. She then used those cards to get cash and make purchases at various Atlantic County retail stores. ===== Ten & Four Years In Federal Prison Donna Jean Rowe, 59 of Lodi, California was sentenced this week to four years in federal prison for her part in a fraudulent insurance scheme. Rowe was sentenced in February by U.S. District Judge Lawrence K. Karlton. She was convicted June 11 by a federal jury of conspiracy, mail fraud and money laundering in connection with the scheme. Also convicted at the time was James S. Kalfsbeek, 72, of Arbuckle. He was sentenced Tuesday to 10 years in prison. Both were ordered to pay restitution in a still undetermined amount. The FBI and the California Department of Insurance worked together on the case. Kalfsbeek was the founder, president and chairman of the board of Puget's Sound Agricultural Society, Limited, which operated from 1994 to 2002. The company sold a product "that for all intents and purposes was automobile insurance," according to the U.S. Attorney's Office. The organization was operated "outside of state insurance regulatory authorities." Kalfsbeek and Rowe said they were self-avowed "sovereign citizens" and they claimed therefore they were not subject to state or federal governments. Evidence at their trial, according to the U.S. Attorney, showed that the company collected millions of dollars in fees (a $500 lifetime membership) and issued insurance identification cards. But it paid only smaller claims and ignored larger insurance claims. Mouse Fraud Four Years in Prison Mehran Baranriz, the owner of a Redwood City, California, auto repair shop has been sentenced to four years in prison for insurance fraud for planting dead mice in cars and claiming the rodents had caused damage. San Mateo County prosecutors say 47-year-old Baranriz was sentenced in February after pleading no contest last year to 10 counts of insurance fraud. Chief Deputy District Attorney Steve Wagstaffe says through his Group Specialists Inc., Baranriz billed insurance companies for more than $1.2 million for work that was never done. Wagstaffe says Baranriz and his now ex-wife, Bita Imani, planted the mice in cars and told customers the rodents had damaged the vehicles. Baranriz will receive credit for the more than three years he has already served. His ex-wife was sentenced to six months after pleading no contest to one count of tax evasion ===== License Revoked for $4 Million Fraud on Insured James William Riley, 46, of Murrieta, California has been prohibited from working in the insurance industry in any manner pending the outcome of his trial on multiple counts of grand theft, money laundering and commercial bribery. He is scheduled to be arraigned March 15, 2010 in the Riverside County Hall of Justice. Ryan Jay Robinson, 39, of Temecula also was charged with multiple counts of grand theft and commercial bribery after a California Department of Insurance (CDI) investigation alleged he and Riley stole approximately $4 million from the Pechanga Resort & Casino in an insurance scam. Both were arrested February 2,2010. Riley is an insurance broker for Riley, Garrison & Associates and Robinson is a former chief financial officer for the casino. In June 2007, CDI received a complaint from the casino and the Pechanga Development Corporation alleging that there was a discrepancy of approximately $6 million in the amount of insurance premiums paid to Riley, Garrison & Associates for insurance coverage and the actual cost of the premiums. The CDI investigation alleged that Riley fraudulently disguised the funds as fees and premiums. Robinson allegedly authorized the insurance transactions and received more than $100,000 in kickbacks from Riley. The money that Riley gave Robinson was allegedly moved through multiple accounts before being withdrawn in the form of cashier's checks. The Riverside County District Attorney's Office is prosecuting the case. Riley was freed February 9, 2010 on $1,002,500 bail, while Robinson is still in jail with a bail amount set at $1,252,500. Riley's license will be revoked if he is found guilty. The ability to make bail seems to indicate the success of the defendants in obtaining funds by fraud and seems to support the suspending of Riley's license. ===== Another Agent Pleads Guilty to Fraud Thomas Cipriano, a Waterbury, Connecticut businessman faces sentencing for unlawfully taking more than $1.3 million from his clients, which he used to gamble at Connecticut's casinos. Cipriano pleaded guilty to mail fraud and money laundering. The 54-year-old is scheduled to be sentenced in federal court in New Haven. Cipriano operated an insurance and financial services agency. Authorities say he lost his clients' money at the casinos and also used some of it to pay personal expenses or to make "lulling'' payments to other clients. Prosecutors say many of his victims were at or near retirement age and lost life savings. Cipriano says his conduct was wrong. He says he intended to repay everyone who loaned him money, but he borrowed too much and was unable to keep up with his payments. ===== More Probation & Weekends Lakisha Cribb, 32, a Rochester, New York woman who pleaded guilty to burning her 2005 car for insurance money was sentenced to five years probation, 10 work weekends in jail and to pay $500 in restitution. Cribb pleaded guilty to third degree insurance fraud. Cribb was arrested as the result of an investigation by the NYS Insurance Department's Frauds Bureau and the RPD. She admitted reporting to police that her Dodge Stratus had been stolen after she burned the car so she could file a $12,700 insurance claim. She was never paid for the claim. ====== Guilty of Workers' Compensation Fraud -- Four Years in Prison Eric Zaffer, an Elyria, Ohio business owner was sentenced to four years in prison for workers' compensation fraud. Eric Zaffer, owner of Elyria-based Medical Consultants, was sentenced yesterday by Franklin County Common Pleas Court Judge Richard Sheward. Medical Consultants compiles medical reports for law firms representing injured workers. The case is the result of an investigation by the Ohio Bureau of Workers' Compensation Special Investigation Department, with prosecution led by Ohio Attorney General Richard Cordray. The SID searched Zaffer's business in March 2009, finding evidence he altered medical reports used by the BWC and the Ohio Industrial Commission to determine percent of permanent partial awards to workers with permanent injuries due to a work-related accident or occupational disease, the release stated. Zaffer was inflating percentages submitted by medical providers and embellishing medical conditions within the final report in an attempt to raise permanent partial numbers and increase his business. Zaffer pleaded guilty to one count of workers' compensation fraud, two counts of tampering with evidence and 10 counts of forgery. He was also ordered to pay $139,558 in restitution and $56,340 in investigative costs to the BWC. BWC Administrator Marsha Ryan said accurate medical reports are critical in determining benefits to injured workers and Zaffer's actions will not be tolerated. In October, the BWC Board of Directors adopted a rule to decertify providers who submit inaccurate information as part of the permanent partial award process and have implemented a random review process with a set of guidelines established to address review outcomes. The new controls are expected to minimize the risk of similar mistakes, the release stated. ===== Guilty Agents -- Two to Five Years in Jail Bobby L. Hoeft and David H. Andersen, two insurance agents from Nebraska were sentenced for unlawful conduct according to the Nebraska Department of Insurance. A previously licensed insurance agent, Hoeft was sentenced by District Court Judge Vicky Johnson in Fillmore County District Court to a prison term of two to four years and ordered restitution in the amount of $136,345 to the Fairmont Insurance Agency. Hoeft, who initially was charged with insurance fraud, subsequently pled guilty to an amended charge of misappropriation of property, a Class III felony. Hoeft admitted he misappropriated at least $136,345 as a result of his actions while operating Fairmont Insurance Agency. Hoeft has reimbursed Fairmont Insurance Agency $108,918.88 and still owes $27,426.12. Andersen, an ex-insurance agent, was sentenced for theft by unlawful taking by Judge John A. Colborn in Lancaster County District Court. Andersen was ordered to reimburse the court for the costs of prosecution and was remanded to the custody of the Nebraska Department of Corrections to serve a three to five-year sentence. Andersen pled guilty to theft after gaining the trust of an elderly client and defrauding her of nearly $300,000. Ten Years One Year Fixed For Auto Give Up Scheme Benjamin A. Gunn and Melody J. Gunn of Idaho were sentenced for insurance fraud. Seventh District Judge Jon Shindurling sentenced Ben Gunn to ten years in prison with one year fixed. The Court suspended the prison sentence but ordered Mr. Gunn to pay a $5,000 fine, serve eight years of probation and perform 100 hours of community service. Melody Gunn was ordered to pay a $1,000 fine, placed on probation for six years and ordered to perform 100 hours of community service. The Court instructed Mrs. Gunn that she could not seek future employment in the insurance industry. The Gunns pleaded guilty on December 17, 2009, to conspiracy to commit insurance fraud. They were sentenced on February 11, 2010. A confidential informant contacted the Idaho State Police with information that the Gunns intended to hire someone to dispose of their 1968 Chevrolet Camaro so they could claim the vehicle had been stolen and collect the insurance money. After meeting with an Idaho State Police tective, the informant told Ben Gunn that if he was serious about disposing of the car, that he had a friend who could take care of the matter. Gunn told the informant to have his friend call him on a cell phone number Gunn had supplied to the informant. Mr. Gunn contacted the undercover detective in July of 2009. After several phone calls with the detective, the Gunns met him in a parking lot of a restaurant in Ammon, Idaho, on August 11, 2009. Ben Gunn paid the detective $100 and placed another $100 in the center console of the Camaro. Ben Gunn told the detective that he didn't want to see the vehicle again and allowed the detective to leave with the car. The Gunns had offered the vehicle for sale in the preceding months for $15,000. Melody Gunn, a licensed insurance agent employed at the time by Alpine Insurance, wrote the policy over-insuring the car in the amount of $22,500. After giving the car to the undercover detective, the Gunns filed a stolen vehicle report with the Bonneville County Sheriff's Office stating the vehicle's value at $25,000. Several days later, the Gunns submitted false statements and claims to Alpine Insurance. Melody Gunn's insurance agent license had previously been revoked by the Idaho Department of Insurance. The case was investigated by the Idaho State Police and the Idaho Department of Insurance, Special Investigations Unit. The Special Prosecutions Unit of the Attorney General's Criminal Law Division prosecuted the case. Deputy Attorney General Kenneth Robins prosecuted the case. ===== 30 Days For Fake Hit-And-Run Michael Richards, 26, a Baraboo, Wisconsin man will be paying more than $14,000 to his insurance company and spending a month in the Sauk County Jail after pleading "no contest" February 15, 2010 to charges that he faked a hit-and-run accident in order to avoid making further payments on his vehicle. On Monday morning, Sauk County Circuit Court Judge Patrick Taggert charged Richards with one count of making fraudulent insurance claims greater than $2,500, a felony. According to the criminal complaint, Richards reported a traffic accident on Sept. 16, 2008, and told the Sauk County Sheriff's Department deputy, Mark Schauff, who responded to the scene that an SUV or truck had hit his car, and then caused it to strike the guardrail on the passenger's side. Richards had said the vehicle then continued without stopping. American Family Insurance employee Adam Reed said the company had paid more than $16,000 to the lien holder for the total loss of the vehicle. Sheriff's department deputy Perry Schleichert, in following up on the accident on December 13, said he believed photographs of the damage were inconsistent with the events Richards described. Upon interviewing Richards, Schleichert said in the complaint, he admitted there had been no hit-and-run, and that in truth he had been involved in a one-car accident, striking the guard rail. He said he realized he could smash the vehicle again, causing more damage, so the insurance company would consider the vehicle a loss, and drove it again into the guardrail. According to the criminal complaint, Richards said he was having difficulty paying for the vehicle, and damaged it so he would no longer have to make payments on the car. Richards faces up to three years in prison or $10,000 in fines for the charge, but the sentence will be withheld as long as he complies with a 36-month probation period and any counseling recommended by the court, as well as paying back approximately $14,900 in restitution to American Family Insurance. Guilty of Taking Federal Workers' Compensation While Working for Others Sherrie D. Wood, 60, of Leesville, La., was convicted by a federal jury in Lake Charles, Louisiana for making false statements in order to obtain federal employees' compensation benefits, according to the United States Attorney's office. Wood improperly received more than $95,000 in benefits. Wood was named in a four-count indictment in April of 2007 for submitting false information to the U. S. Department of Labor, Office of Workers' Compensation Program, to obtain benefits through the Federal Employees' Compensation Act. According to court testimony, Wood, a former dental assistant with the Bayne-Jones Army Community Hospital at Fort Polk, La., made false representations from 2003 through 2006 on claims for compensation by concealing the fact that she was working during the reporting periods in which she was claiming disability. In fact, Wood was working during the reporting periods in various capacities for the Four Winds Tribe, Neutral Zone Cherokee Choctaw Corporation, American Indians of the Four Winds, Central Louisiana Intertribal Vocational Rehabilitation Program (CLIVR), and the West Louisiana Forestry Festival Board. Wood also became a licensed retail florist, artist, and a licensed private investigator during the time she was receiving benefits. Wood compensated herself as the vice chief, secretary/treasurer and chief financial officer of the Four Winds Tribe and did not report her ability to work as required under the Federal Employees' Compensation Act, resulting in Wood improperly receiving benefits totaling over $95,000.00. Wood is scheduled for sentencing on May 27, 2010. She faces a maximum sentence of five years in prison, a $250,000.00 fine, or both. Sentencing in federal court is determined by the discretion of federal judges and the governing statute. Parole has been abolished in the federal system. This case was investigated by the U. S. Department of Labor, Office of Inspector General, and the Criminal Investigation Division, Fort Polk, La. The case was prosecuted by Assistant United States Attorney Stephanie A. Finley. ===== Ex-deputy Gets Probation for Insurance Fraud Antonio Jimenez, 30, a former Lehigh County, Pennsylvania corrections officer and part-time deputy sheriff won't have to serve time in the same jail he patrolled. Jimenez was sentenced to three years' probation in February by Lehigh County Judge James T. Anthony for having his car burned in 2006 in an attempt to collect insurance money. Police say flames shot 30 feet into the air and left burn marks on the underside of a bridge in Whitehall Township, just below a natural gas main, after Jimenez or his co-defendant, Angel Perez of Allentown, burned his 2001 Cadillac Catera in hopes of collecting insurance money. ''I made a dumb decision that cost me my career,'' Jimenez told the judge. Jimenez was also ordered to pay a $1,000 fine or perform 80 hours of community service. He was also ordered to pay State Farm insurance more than $7,000 in restitution. Emergency personnel found the car burning about 8:20 p.m. Dec. 18, 2006, under the township's Race Street bridge. Investigators found containers of lighter fluid and kerosene near the car, helping officials rule the fire an arson. Police say Jimenez falsely reported the car stolen to his insurance company and to police and the pair agreed to burn the car, hoping that Jimenez's insurance company would pay off his car loan. Jimenez had been a deputy for about a year, but was fired following his arrest in August 2007 after a county grand jury approved the charges. Prior to being a deputy, Jimenez worked as a corrections officer at Lehigh County Prison, according to Senior Deputy District Attorney David Mussel. Jimenez said he had also worked as a security guard at Dorney Park in South Whitehall Township. Waldron said Jimenez wants to re-enter the Pennsylvania National Guard, but said the military is being especially selective now because the poor economy has spawned more applicants. ===== Guilty of Capping Workers' Compensation -- Probation Only David Wayne Fish, 47, of San Diego and Birger Greg Bacino, 50, of Rancho Santa Fe, pleaded no contest to felony charges of compensation or inducement for referring clients for profit in a workers' compensation scheme and agreed to release $60 million in medical liens and bills prior to entering their plea. They will serve three years of probation. Fish and Bacino are the principal owners of Premier Medical Management Systems Inc. The business was charged with making false and fraudulent workers' compensation claims and filing false tax returns. At its peak, Premier Medical owned and operated five clinics in the greater Los Angeles area and contracted with more than 100 medical providers. More than $60 million in liens and bills created by Premier Medical Management Systems Inc. were pending before the Workers' Compensation Appeals Board (WCAB) and as part of the negotiated disposition, Fish and Bacino agreed to drop those claims. A California Department of Insurance (CDI) Fraud Division investigation alleged that Fish and Bacino purchased large blocks of workers' compensation client referrals from a prominent attorney television advertising service. CDI investigators reviewed more than 100,000 financial records in tracing the flow of money. The investigation found that when a referral was received for a prospective workers' compensation case, the client was sent to doctors and other health care providers that had a business relationship with Premier. Premier would do the billing and collection work in return for a 50 percent or more fee of what they collected. More than 16,000 patient referrals were purchased through the attorney advertising service. After the client had been sent to the doctors and other healthcare providers, the client would then be sent to various workers' compensation attorneys that had a financial relationship with Fish and Bacino. As part of the negotiated plea, CDI received $900,000 as reimbursement for investigative costs ==== Pennsylvania Convictions The following reports came from the Tom Corbett, the Attorney General of the State of Pennsylvania. * Following a trial on November 6, 2009, Sylvia Boronski was found guilty of one count of Insurance Fraud (F3) and one count of Theft by Deception (F3) in Berks County. On January 7, 2010, Sylvia Boronski was sentenced to serve 1 to 7 years in state prison, a consecutive 2 years of probation and was ordered to pay a fine of $100, restitution of $23,678.62 and all court costs. Boronski, after being injured in a car accident in June of 2006, filed a lost wages claim with the Progressive Insurance Company for purported income that, because of her injuries, she would be unable to earn from her job at "The Dispatchery". Boronski caused numerous fraudulent "Verification of Lost Wage" forms to be faxed to Progressive in support of her claim. Our investigation revealed that "The Dispatchery" does not exist and Boronski fraudulently collected $23,678.62 in lost wage benefits from Progressive between June, 2006 and November, 2007. * Donald Smallwood, Jr. pled guilty to one count of Insurance Fraud (F3) in Allegheny County. Smallwood was employed as a registered representative of Aviva USA in December 2006. Smallwood received $53,000 from a client under the guise of procuring an annuity contract from Aviva. Smallwood deposited the money in his personal bank account and utilized the money to pay personal expenses, including mortgage payments, vehicle expenses and credit card debt. On January 25, 2010, Donald Smallwood, Jr. was sentenced to serve 7 years probation and was ordered to pay restitution of $53,000 and all court costs. * David Strickler and Ricky David pled guilty to one count of Insurance Fraud (F3) in Fayette County. David Strickler reported his 2007 Dodge Ram truck stolen and filed an insurance claim with the Infinity Insurance Company. The State Police recovered the truck burned. Strickler still owed $29,783.90 to Chrysler Financial. According to Ricky David, Strickler asked him to get rid of the truck as the payments were too high. Strickler gave David the keys to the vehicle and David then drove the vehicle to a remote location and used gasoline to set the vehicle on fire. Strickler agreed to pay David a couple hundred dollars from the insurance money. On January 14, 2010, David Strickler was sentenced to serve 4 years probation, ordered to perform 100 hours of community service and to pay restitution of $29,000 and all court costs. Ricky David was sentenced to serve 23 months restrictive intermediate punishment, the first 2 months on house arrest, ordered to perform 100 hours of community service and to pay the all court costs. * Walter Williams pled guilty to two counts of Insurance Fraud (F3) in Lackawanna County. Ann Williams obtained an automobile insurance policy from the Progressive Insurance Company for her 1988 Chevy truck. Walter Williams, her husband, was listed as an excluded driver under the policy as a result of a DUI conviction. In February of 2009, the truck was involved in a two vehicle accident in the parking lot of a Turkey Hill convenience store in Wilkes-Barre. A fraudulent statement was made to Progressive representing that Ann Williams was the driver of the vehicle at the time of the accident when in fact, Walter Williams was driving the truck at the time of the accident. On January 27, 2010, Walter Williams was sentenced to serve 4 years probation, 90 days home monitoring, ordered to perform 50 hours of community service, pay restitution of $250 and all court costs. * Phillip Harris pled guilty to two counts of Insurance Fraud (F3) in Montgomery County. Harris, claiming total disability from injuries suffered in a fall, received benefits from both the Aflac Insurance Company and the American Fidelity Insurance Company from December 30, 2007 through October 10, 2008. Harris claimed his injuries prevented him from working as a service technician. Our investigation revealed that from April 7, 2008 through July 18, 2008, Harris worked as a service technician and shortly thereafter opened his own repair shop. Additionally, Harris submitted continuation of benefits forms to both Aflac and American Fidelity misrepresenting that he was still disabled and not working. On January 19, 2010, Phillip Harris was sentenced to serve 3 years probation concurrently on each count and was ordered to perform 200 hours of community service, pay a fine of $5,000, restitution of $33,183.26 by May 1st and all court costs. * William Maguire pled guilty to one count of Theft by Failure to Make Required Disposition of Funds Received (F3) in Bucks County. Maguire, a licensed insurance producer, received in excess of $15,000 from eight clients, so that he would pay their insurance premiums to an insurance company or a broker. Maguire failed to make the payments to the Century Surety Insurance Company, the St. Paul Surplus Lines Insurance Company, the Nautilus Insurance Company and the Tri-State General Insurance Company. On January 5, 2010, William Maguire was sentenced to serve 3 years probation and was ordered to perform 200 hours of community service and to pay restitution of $13,754.90 and all court costs. * Burns Wholesale and Jay Stern plead guilty to one count of Insurance Fraud (F3) and Louis Stern pled guilty to one count of Theft by Deception (M1) and one count of Tampering with Public Records or Information (M1) in Fayette County. Burns Wholesale Drug Corporation is owned and operated by the Stern family. Between October 2003 and March 2006, pharmacists at Burns Drug submitted billings to the Highmark Insurance Company for prescription medications that were not authorized by physicians. Our investigation revealed that approximately 300 fraudulent prescriptions were submitted to acquire revenue for the pharmacy. On January 14, 2010, Burns Wholesale, Jay Stern and Louis Stern were sentenced to serve 3 years probation and ordered to pay joint and several restitution of $70,038.25 and all court costs. Burns Wholesale was also ordered to pay a fine of $5,000. * Nicole Angelo pled guilty to one count of Theft by Deception (M1) in Allegheny County. Angelo was injured on April 23, 2008, and received long-term disability through the Standard Insurance Company between July 23, 2008 and November 22, 2008. Our investigation revealed that Angelo began working full- time at FedEx on July 28, 2008, and that on August 21, 2008, Angelo informed a representative of Standard that she was unable to work full-time due to her injuries and had not worked since April 23, 2008. On January 25, 2010, Nicole Angelo was sentenced to serve 3 years probation and ordered to pay restitution of $6,934.92 and all court costs. * Lynn Yanders pled guilty to one count of Insurance Fraud (F3) in Montgomery County. Yanders filed for bankruptcy and in July of 2006, the court entered an order discharging most of her debts. Yanders immediately purchased a 2001 Mercedes for $31,000 with no money down and added the vehicle to her existing policy with the Allstate Insurance Company. Yanders listed her address as Macungie, Pa. A short time later, Yanders removed the vehicle from her policy until October 4, 2006, when she again added it to her policy and lowered the deductible from $1,000 to $500. Five days later, Yanders made a claim alleging that the vehicle was stolen. Our investigation revealed that Yanders made no payments on the vehicle and had provided numerous inconsistent and false statements to Allstate, including her whereabouts prior to the date of the alleged theft. Furthermore, Yanders misrepresented living in Macungie. On January 7, 2010, Lynn Yanders was sentenced to serve 3 years probation and ordered to pay all court costs. * Adam Cupak pled guilty to one count of Insurance Fraud (F3) in Berks County. Cupak obtained renter's insurance from the Travelers Insurance Company on January 10, 2009. On February 3, 2009, Cupak submitted a claim alleging that his work tools were stolen from his truck on January 26th. In support of his claim, Cupak submitted a tool vendor's summary reflecting that he had purchased $5,340.59 worth of tools, all of which Cupak claimed were stolen. Our investigation established that the tools had actually been stolen before he obtained his policy from Travelers and that he altered the date on the vendor's summary to conceal the date of the actual theft. On January 12, 2010, Adam Cupak was sentenced to serve 2 years probation and ordered to perform 100 hours of community service, pay a fine of $500 and all court costs. * Charles Thierry pled guilty to one count of Insurance Fraud (F3) in Bucks County. Thierry was in an automobile accident in September 2007, with his uninsured vehicle. On February 22, 2008, Thierry added the vehicle to his insurance policy with the Unitrin Auto Insurance Company. On May 6, 2008, Unitrin was contacted and an insurance claim was made on that vehicle for an incident that purportedly occurred on May 3rd. Our investigation revealed that the vehicle was inoperable after the September accident and sat at the auto repair shop until February 21, 2008, until it was towed back to the Thierry residence where it sat until the claim was made in May. On January 6, 2010, Charles Thierry was sentenced to serve 2 years probation, ordered to perform 50 hours of community service and to pay all court costs. * Dean Wonsick, 50, of Wormleysburg, Pennsylvania will spend time in prison for working while he was also collecting disability insurance. Wonsick pleaded no contest to insurance fraud and theft charges today before county Judge Albert H. Masland. The state attorney general's office said Wonsick defrauded the Unum Group insurance company by secretly taking a job while the insurer was paying him for a disability from an auto accident that supposedly left him unable to work. Under a plea deal, Masland sentenced Wonsick to 6 to 24 months in state prison and ordered him to pay nearly $13,600 in restitution. ===== Insurance Agent Falsely Pockets Half Million Dollars in Premiums -- 2 Years in Prison Anthony Marino pleaded guilty to eight counts of larceny on December 9, 2009 in Middlesex Superior Court. On January 8, 2010 he was sentenced to two years in the House of Correction with five years of probation. He was also ordered to pay a total of $456,994 in restitution. Marino, while employed by Amity Insurance Agency as a licensed Massachusetts insurance agent, defrauded numerous victims by issuing false certificates of insurance and falsely billing customers for non-existent policies. Marino sold umbrella and excess insurance policies to fourteen owners and property managers for residential housing units who were existing customers of the Amity Insurance Agency. Amity collected more than $547,000 in premiums from the customers. However, unbeknownst to Amity, Marino had secured a mail box under the name Delaware Valley Underwriting Agency (DVUA) and utilized DVUA to pocket premiums for non-existent policies by causing DVUA to invoice Amity for the premium alleged to be owed. Amity then paid DVUA. Money paid to DVUA went into a bank account which had been opened by and for Marino doing business as DVUA. Marino created fictitious certificates of insurance and pocketed premiums totaling approximately one half million dollars. Assistant District Attorney Elisha Willis of Middlesex District Attorney Gerry Leone's Office prosecuted the case. ===== Same Broken Tooth Claim Over and Over Again On December 22, 2009, Tod Schaffer pleaded guilty in Suffolk, Massachusetts Superior Court in connection with submitting false dental injury reports to insurance companies in order to receive cash settlements. Schaffer pleaded guilty to 19 counts of insurance fraud, 10 counts of larceny and 11 counts of attempted larceny. He was sentenced to serve one year in the House of Correction, with the sentence suspended for a probationary period of three years on the larceny charges. On the attempted larceny charges, Schaffer was ordered to serve three years of probation and perform 100 hours of community service. He was also ordered to pay $36,399 in restitution and to stay away from the restaurants he defrauded. In October 2002, Schaffer legitimately injured a tooth by biting into a piece of plastic in his salad at a local restaurant. Schaffer received treatment for the injury from his dentist, and received an estimate for the cost of treating the injury. Schaffer then submitted the dental estimate to the restaurant where the injury occurred, and ultimately received full payment for his injury a week later. Investigators subsequently discovered that on various dates between November 2002 and May 2006, Schaffer submitted nineteen false injury claims to insurance companies, and two additional claims to a self insured entity. These false claims contained the same information from Schaffer's legitimate tooth injury claim from October 2002. Investigators discovered that Schaffer altered the manner in which the injury occurred on these false claims by reporting that he injured his tooth by biting into a rock, a stone, or plastic, while eating at numerous Boston area restaurants. Of the false claims submitted by Schaffer, ten of them were paid out, resulting in over $36,000 in false payments to Schaffer. Investigators also discovered that Schaffer withdrew his claims at nine restaurants, and that an additional two restaurants denied his claim. The case was prosecuted by Assistant Attorney General Jennifer Cotter of the AG's Insurance and Unemployment Fraud Division. ===== Fake Auto Accident Two Years Probation in Massachusetts Jean Dossous was found guilty of motor vehicle insurance fraud and larceny on January 5, 2010. He was sentenced to two years probation and ordered to pay $4,110 restitution. Dossous reported to Sentry Mutual Insurance Company that his 1990 BMW was rear-ended by a Volvo on April 2, 2003 in a mall parking lot. No police were called to the scene. The operator of the Volvo made no claims for either damage or injury to her insurance carrier, Travelers of MA. Dossous reported to Sentry alleged injuries sustained from the collision and the BMW was declared a total loss. A subsequent vehicle analysis of both vehicles determined that the majority of the damage to the rear of the BMW was not caused by a collision with the Volvo but was consistent with being struck by a large circular object such as from another vehicle with a spare tire mounted on it. ===== Suspended Sentence for Adjuster Stealing from Insurer Chae Hyong Chu, a former claims adjuster for Progressive in Maryland was sentenced for stealing more than $39,000 from the insurer, according to the state's attorney general. Chu was sentenced on a single count of felony theft. Montgomery County Circuit Court Judge Nelson W. Rupp, Jr. imposed a five year suspended sentence, two years probation, and 50 hours of community service. From May 2005 through September 2007, Chu, a licensed insurance agent working as a claims adjuster for Progressive, issued six checks from Progressive to himself or his wife and deposited the checks into his personal bank accounts. Over the two year period, Chu stole a total of $39,113 from Progressive. Chu has since made full restitution. He also admitted that he issued and endorsed all six checks and that his wife was unaware that any of the checks had been issued in her name. he conviction follows a joint investigation by the Insurance Fraud Division of the Maryland Insurance Administration, the Maryland State Police and the Office of the Attorney General. ====== IBS News Direct.Com I am pleased to pass on this information about a service with which I will participate. You can see a sample with two of my fraud programs from the old television network on the site at http://www.IBSNewsDirect.com. Late breaking global video news network specializing in insurance and finance-related video content set to launch in Fall 2009. The Insurance Broadcast System, Inc., announced that it will resume broadcasting its business-to-business insurance and financial services video news network on the world wide web as www.IBSNewsDirect.com. The company will launch its live news network in the fall of 2009 and will specialize in news serving the more than 3.5 million people in the United States, Canada and the United Kingdom who make up the property & casualty, financial services and health insurance industries. IBSNewsDirect.com will offer late-breaking news reported by a global team of insurance correspondents. The newscasts will initially stream on a weekly basis and then grow to five days per week. In addition to late-breaking news, regular programming will feature forward-thinking round-table industry issue discussions and interviews. Dennis N. Richard, Chairman & CEO of Insurance Broadcast System, Inc. said: "We are pleased to bring back live video news and high- quality insurance programming at a time when technology facilitates a more immediate and comprehensive service to a wider audience." The global newscast will include segments integrated from London, New York, Washington, D.C. and soon from Asia. "We have put in place a global team of correspondents and journalists to report on world wide news that affects the healthcare, commercial insurance and financial services industries" says Richard. The Insurance Broadcast System began in 1995 as a direct satellite television network offering insurance focused video programming. With more than 75% of the total U.S. Internet audience viewing online video (comscore), the new IBSNewsDirect.com is positioned to become the preferred source for video insurance industry news and information. The Insurance Broadcast System, Inc. announced that Richard L. Hall, will join the company as President and will also serve as Director of World-Wide News for its business-to-business insurance and financial services video news network on the Worldwide Web at www.IBSNewsDirect.com. Mr. Hall has a long and distinguished career in the insurance industry and general corporate news, having begun his career in communications at Western Electric Co. (AT&T). He spent a number of years with both the New York Life Insurance Company and the insurance rating firm A. M. Best Co. In 1997, he joined the Rough Notes Co. as president and CEO and later worked with the company's flagship publication Rough Notes Magazine. Hall spent the last few years as publisher of Leader's Edge Magazine produced by the Council of Insurance Agents and Brokers. Dennis Richard, Chairman & CEO of Insurance Broadcast System, Inc., said, "Nobody has the range and depth of experience in the insurance industry and insurance news like Dick Hall. His contact base is deep and his understanding of how global insurance news works and how it must be collected and reported is of enormous value to our network. We look forward to working with him as we put in motion a world-wide team of journalists, correspondents and analysts to build the most comprehensive and meaningful video insurance and financial services news team possible." Mr. Hall said, "The opportunity to lead a global team of experienced industry veterans in the new era of mass communications has captured my interest -particularly in light of the unparalleled changes expected in financial services practices and regulatory oversight. Even with recent global economic set backs, the United States will remain the preeminent locale for global financial service companies. It will be our mission and challenge to offer the financial services industry in general, and the insurance industry in particular, a highly focused global news and information destination on the Internet to keep our audience informed of relevant, on-going, late-breaking video news." For sponsorship opportunities and to become an industry alliance partner with IBSNewsDirect.com contact Sandra L. Masters, Director of Marketing and Communications, Insurance Broadcast System, Inc., 16000 Ventura Blvd., Suite 1102, Encino, CA 91436, Sandy@ibsnewsdirect.com For more information: Dennis N. Richard, CEO, Insurance Broadcast System, Inc., 16000 Ventura Blvd., Suite 1102, Encino, CA 91436, dennis@ibsnewsdirect.com. ===== Zalma's Insurance Fraud Letter 2010 by Barry Zalma , & ClaimSchool, Inc. 4441 Sepulveda Blvd, CULVER CITY CA 90230-4847 http://www.zalma.com þ zalma@zalma.com * http://www.claimschool.com =====