Volume 2 Number 32 August 8, 2005

In June, Allstate Floridian announced that they planned to send notices of premium increases to their policyholders without approval from the Office of Insurance Regulation and without a public hearing.  The Office of Insurance Regulation reports to the Governor and Cabinet.  At that time, I directed the Consumer Advocate to do an independent review of Allstate Floridian’s request for higher rates.  That independent review has revealed deficiencies in Allstate Floridian’s request and raises troubling questions about the company's motives in seeking rate increases. The numbers just do not add up. In fact, it appears that this Florida-only company is attempting to justify its rates based on losses from other states. In addition, Allstate Floridian did not adequately document how non-renewing 95,000 Floridians – a substantial reduction in exposure – impacts their rate request.   Finally, the report revealed that the companies are asking for an increase for reinsurance that is out of proportion with their previous rate requests. This unjustified rate request should be denied.  Night falls over the 1908 Lafayette County courthouse in Mayo, the county seat.  The two-story frame building across the street was an earlier courthouse. The county was formed in 1856 and named after the French marquis who assisted the colonies during the Revolutionary War.

TRG OPERATORS HANDED SENTENCES, ORDERED TO REPORT TO PRISON IN OCTOBER More than three years after Florida’s Chief Financial Officer Tom Gallagher ordered TRG Marketing, LLC., to stop selling its bogus health plans here and directed the Department of Financial Services’ insurance fraud detectives to pursue criminal charges against the operators, Floridians left with millions of dollars in unpaid claims have won their day in court. Carmelo Zanfei and William Paul Crouse, who operated the Indiana-based company, were sentenced to two and four year prison terms respectively, for a scheme that left more than 7,200 people with unpaid medical claims in one of the most extensive and costliest insurance fraud schemes in Florida.  The investigation by the department’s Division of Insurance Fraud led to today’s sentences.  They are ordered to report to the Orange County Jail on Oct. 12. A restitution hearing is scheduled for Dec. 9.  “Many Floridians suffered physical and mental anguish because of these two individuals,” said Gallagher, who oversees the department.  “I am relieved to see these scam operators will serve time behind bars and that restitution is pending.”  CONTINUED

LOOK BEFORE YOU LEAP INTO VIATICAL AND LIFE SETTLEMENT INVESTMENTS This year, Florida's Legislature put into place important consumer protections requiring full disclosure of the risks involved in viatical or life settlement transactions. Disclosures include the identity of the party responsible for payment of premiums; the amount of fees, commissions, deductions or other expenses, if any, that you are charged; certain risk factors associated with group policies; and what kind of policy you are being sold an interest in, such as whole life, term, universal or a group certificate. A viatical or life settlement transaction is an agreement in which viatical settlement providers match those who want to sell their life insurance policies at a discount to investors willing to buy the rights to those policies. Fraud in this industry has potentially cost investors up to $2 billion in losses since 1996. The average age of the investor defrauded is 70 years old and the average loss is $40,000.  CONTINUED

GALLAGHER ANNOUNCES UNCLAIMED PROPERTY AUCTION RESULTS Florida’s Chief Financial Officer Tom Gallagher said that nearly 320 bidders from 10 states registered for the Department of Financial Services’ unclaimed property auction in Ft. Lauderdale last Saturday and paid more than $570,000 on a variety of treasures.  They left with some great finds, and Florida’s school children will benefit from the money raised. The department’s Bureau of Unclaimed Property has transferred more than $1.25 billion to the Florida Education Trust Fund since its inception in 1961, said Gallagher, who also noted that this has been another record-setting year in the amount of unclaimed cash and property reported to the state and the value of property returned to owners.  Each of the past two years, the bureau has received more than $200 million in unclaimed property and returned almost half of it to the owners. The bidders last Saturday were generous, bidding an average of 61 percent over the collective reserve price, which was just a little over $350,000. Of the 780 lots and nearly 40,000 items that were put on the auction block, a leaf-design necklace with 30 carats of sapphires and about four carats of diamonds went for the highest price, at $20,000, bringing in about $13,000 more than the starting bid price. The items that go to auction have been unclaimed for at least three years after being found in abandoned safe deposit boxes.  Claiming money or property turned over to the state is free, and at any time owners or their heirs can claim the money the items earn at auction.  The department also has a website, www.FLtreasurehunt.org, which owners or heirs can regularly check to see if the state is holding unclaimed property for them.  They can also check by calling 1-88-VALUABLE.

TOM GALLAGHER ANNOUNCES ARRESTS IN $100,000 INSURANCE FRAUD CASE Florida’s Chief Financial Officer Tom Gallagher announced the arrest of a Jacksonville acupuncturist and two of his patients on charges of insurance fraud. The announcement came after an investigation by the Department of Financial Services’ Division of Insurance Fraud (DIF), which CFO Gallagher oversees, and the National Insurance Crime Bureau (NICB) uncovered a fraudulent billing scheme that stuck at least seven insurance companies for more than $100,000.  Dr. Jia Qi Wu, 71, of Jacksonville; Frank Wodrazka, 60, of Weston; and Runsong Jiang, 34, of Orlando, allegedly participated in a scheme that included pre-billing, billing for services not rendered and over-billing.  Wu, who operates Dr. Wu Acupuncture Center at 3948 Sunbeam Road, Suite 4, Jacksonville, is charged with insurance fraud, organized fraud and two counts of money laundering.  Wodrazka is charged with money laundering, and Jiang is charged with organized fraud and insurance fraud.  The charges are being prosecuted by the Office of Statewide Prosecution.    “Insurance fraud hits every Floridian in the pocketbook,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the department.  “We will continue to follow every lead regarding possible fraud and send a strong message that such abuse of our citizens will not be tolerated.”   CONTINUED

Florida ID Theft

IDENTITY THEFT Identity theft is the unauthorized use of personal information for the purposes of obtaining financial gain.  The unlawful use of another person’s personal data to open new credit card accounts, take out loans, or set up unauthorized financial accounts would be examples.  While the information is being used illegally by the perpetrator for economic benefit, the unsuspecting consumer is the one left impacted by the financial fallout.  The Identify Theft Data Clearinghouse reported that the state of Florida received 16,062 complaints in 2004 regarding identity theft. The Department of Financial Services cautions consumers to take extra care with the documents that have their personal identifying information such as social security numbers on them.    Today, many health insurance companies use a consumer's social security number as the member identification number.  This information is printed on insurance cards that are commonly kept in purses or wallets. The Department of Financial Services encourages consumers to contact their insurance company to request that their social security number not be included on the insurance card as a form of member identification.  It can be requested that the membership number be changed to protect personal data.

TWO BROWARD WOMEN CHARGED FOR FALSELY REPRESENTING MARRIAGE DOCUMENTS TO COLLECT ON DEATH BENEFITS Florida’s Chief Financial Officer Tom Gallagher announced that two Broward women are facing felony changes for falsifying marriage documents to collect more than $100,000 in insurance death benefits. Deanna L. Brown, 39, who attempted to collect on the estate of her deceased live-in boyfriend, is charged with two counts of perjury and one count each of insurance fraud and third-degree grand theft.  The deceased’s sister Christal Caruso-Hansen, 33, is charged with one count of perjury.  The arrests were made earlier this week. Detectives with the Department of Financial Service, Division of Insurance Fraud, said that Brown and Caruso-Hansen conspired to falsely represent that Brown was married to Michael A. Caruso, Jr. at the time of his death on May 6, 2004. “The proceeds should go to Mr. Caruso’s rightful heirs,” Gallagher said. Caruso had an ex-wife and two children. CONTINUED

FORMER INSURANCE AGENT CHARGED WITH SWINDLING ELDERS Florida’s Chief Financial Officer Tom Gallagher announced the arrest of a man accused of defrauding at least nine South Florida senior citizens by offering them a quote for one level of long-term care insurance but selling them another. Ronald S. Rogart, 60, was arrested Sunday in Gilchrist County but lived in Miami Beach during the investigation by the Department of Financial Services’ Division of Agent and Agency Services, Bureau of Investigation, and the Division of Insurance Fraud.  The alleged fraud occurred between 2002 and 2004. The department revoked Rogart’s agent licenses in December.  “This man targeted victims between the ages of 72 and 86 and fed on their fears and anxieties about aging,” said Gallagher, who oversees the department.  “One of our highest priorities is protecting our most vulnerable citizens, and we will continue to aggressively pursue those who try to take advantage of them.”  CONTINUED