Volume 8 Number 9 March 4, 2011
Dear Fellow Floridians:
At a press conference Wednesday in Miami, I was honored to join Miami-Dade State Attorney Katherine Fernandez Rundle to announce the results of Operation Dark Horizon, the largest Personal Injury Protection (PIP) bust since I took office in January.
Our Division of Insurance Fraud detectives, in partnership with State Attorney Rundle’s office, charged 25 individuals responsible for nearly $100,000 in fraudulent billings, including a clinic owner, doctors, staged accident recruiters and we are still looking for more. These scammers were recruiting participants to stage accidents, fake injuries and bill insurance companies for treatments that never occurred. This is just one example of the hundreds of similar fraud schemes run daily by accident clinics operating throughout Florida.
Miami is one of the “hot spots” in the country for Personal Injury Protection fraud, only behind Tampa. These crimes may seem insignificant to the average Floridian, but the truth is we all pay for fraud in increased insurance premiums. According to the Insurance Information Institute, on average Floridians pay an additional $100 for two cars in the driveway to cover auto insurance fraud. If you multiply that by the 11 million cars in our state it amounts to a nearly billion dollar fraud tax. The crooks who commit PIP fraud know they have a captive audience, and I am determined to put the brakes on this costly crime.
I have been your CFO for 55 days now, and in those 55 days, our detectives have arrested 75 individuals across the state for PIP fraud. That’s more than one a day. We are committed to putting these crooks behind bars. I am also proposing we combat this problem with more effective laws. We must addresses billing practices so only appropriate services rendered are covered, curtail the incentive for kickbacks and improper referrals, and create civil penalties for those convicted of auto insurance fraud and use the proceeds to fund additional anti-fraud efforts. In partnership with law enforcement, we can work on developing a better system for documenting passengers in accident reports. Most importantly, we must ensure that the individuals who are thinking about committing auto insurance fraud know that they will face hefty penalties, including ending up behind bars.
The 25 individuals charged on Wednesday now face more than 142 various charges including staging an accident, insurance fraud, grand theft, racketeering and organized scheme to defraud. They collectively face up to 1,115 years in prison if convicted on all the charges. With the partnership of State Attorney Rundle, I believe we can work together to ensure that these criminals end up behind bars, where they belong and Floridians get the relief they deserve on their auto insurance premiums.
Chief Financial Officer
State of Florida
On Monday, CFO and State Fire Marshal Jeff Atwater was recognized by volunteer firefighters and county commissioners for his support of an alternative training method for volunteer firefighters to achieve part one of the Florida Firefighter Minimum Standards Course. The new alternative training method uses a blended learning approach that combines online and practical skill components.
The primary goal of the initiative is to expand the number of volunteer firefighters that are trained to the minimum standards as required in law. The initiative also aims to identify best practices in volunteer and combination fire departments in managing limited personnel resources while supporting the need for emergency response.
In partnership with the State Fire Marshal, the Florida Association of Counties Trust will provide reimbursement for training costs for FACT member counties. Reimbursement eligibility is determined by FACT and a representative of the Florida Fire Chief Association’s Volunteer Fire Officers Section.
As part of his commitment to crackdown on insurance fraud, Florida CFO Jeff Atwater announced on Tuesday the arrest and sentencing of a former public adjuster, Abraham M. Blumberg of Miami, on one charge of first-degree organized scheme to defraud for pocketing more than $360,000 in funds from 82 clients and using the money to pay personal debts.
“Insurance fraud has a direct impact on the pocketbooks of hardworking Floridians,” said CFO Atwater. “I am committed to exposing and deterring these crimes and those who commit them, and keeping money in Floridians’ pockets where it belongs.”
Upon his arrest, Blumberg, 35, was taken directly to Miami-Dade Circuit Court where he pleaded guilty to the charge. Judge Darrin Gayles handed down the sentence of 364 days in Miami-Dade County Jail and 30 years probation with the first two years to be on community control. Judge Gayles also ordered full restitution and $10,000 in costs to be paid to the Department of Financial Services and $5,000 in costs to the Miami-Dade State Attorney’s Office. Conditions of the jail sentence, to begin in one year, and the probation will be modified if Blumberg repays the remainder of the restitution ahead of schedule.
The investigation was led by the Department of Financial Services’ Division of Insurance Fraud with assistance from the Division of Agent and Agency Services’ Bureau of Investigation and the Division of State Fire Marshal’s Bureau of Fire and Arson Investigations. The Miami-Dade State Attorney’s Office filed the charge.
Detectives determined that from May 2009 through June 2010 Blumberg, as CEO and primary adjuster for National Loss Consultants, LLC, located at 633 NE 167th St. in North Miami Beach, took $363,617 in clients’ funds that were to be held in trust and instead used them to cover internal thefts from the business and illegal gambling and drug debts for employees and a family member. Detectives obtained statements from 82 victims and analyzed insurance claim files and records from a series of bank accounts before presenting their findings.
The Department of Financial Services revoked Blumberg’s public adjuster’s license on Nov. 3, 2010.
If you or someone you know has been a victim of fraud, call toll-free 1-800-378-0445 or visit www.MyFloridaCFO.com and click on “Report Fraud.”
This week CFO Atwater was featured on A.M. Best’s Best Week regarding PIP fraud. Please check out the interview at the link below. http://www3.ambest.com/ambv/displaycontent/MediaArchive.aspx?RC=183894
Following the first meeting of Medicaid and Public Assistance Fraud Strike Force last week, Chief Financial Officer Jeff Atwater announced the appointment of Robin Westcott as the Executive Director of the newly-formed Strike Force. The Strike Force was created during the 2010 Legislative Session to increase the effectiveness of programs and initiatives that work to prevent, detect and prosecute Medicaid and public assistance fraud. CFO Atwater serves as Chair and Attorney General Bondi serves as Vice Chair of the 11-member Strike Force.
“Robin has a proven track record of providing exceptional leadership and vision to new initiatives,” said CFO Jeff Atwater. “The first meeting of the Strike Force set the groundwork for creating a streamlined, fraud-resistant Medicaid and public assistance system that ensures a high quality of care and service at the lowest price for taxpayers, and Robin will play an integral role in reaching that goal.”
Ms. Westcott began her legal career in 1993 with the Florida Department of Insurance, Division of Rehabilitation and Liquidation. Robin served with the department until 2001 when she entered private practice. Robin returned to the public sector in 2002 with the Florida Agency for Workforce Innovation where she served as Assistant General Counsel and Counsel to the Florida Partnership for School Readiness. In 2004, Robin returned to the Office of Insurance Regulation where she is currently serving as the Acting Deputy Commissioner of Property and Casualty.
For more information about the Medicaid and Public Assistance Fraud Strike Force or to report fraud, please visit www.myfloridacfo.com/StrikeForce.
This column will regularly highlight the work of the department’s enforcement divisions. This week’s column features the Bureau of Forensic Fire and Explosive Analysis, which operates the fire and arson laboratory and supports the investigative efforts of the Office of State Fire Marshal as well as state and local fire and law enforcement agencies. The State Fire Marshal of Florida is one of only three in the United States to have their own dedicated laboratory. The Bureau received the August Vollmer Award for Excellence in Forensic Science by the International Association of Chiefs of Police in 2010.
Elizabeth Kamerick, a certified property and evidence specialist in the Bureau of Forensic Fire and Explosive Analysis for six years, was recognized as the Chapter 8 Member of the Year by the Property and Evidence Association of Florida. Chapter Eight consists of Dixie, Franklin, Gadsden, Hamilton, Jefferson, Lafayette, Leon, Liberty, Madison, Suwannee, Taylor, and Wakulla counties. Clyde Wiggins, president of Chapter 8, presented Elizabeth with the award on February 16 at the association’s annual conference in Orlando.
In 2010, Elizabeth managed the intake of over 4,000 new items of evidence. As the Bureau prepared for accreditation last year, she wrote, reviewed, and edited procedures for evidence receipt, transfer, and handling. Elizabeth was responsible for transferring over 5,000 cases containing approximately 10,000 pieces of evidence to the Bureau of Fire and Arson Investigations for storage.
Ms. Kamerick has a Bachelor of Science in Anthropology from Florida State University, and is pursuing an Associate of Science in Crime Scene Investigation at Tallahassee Community College.
The National Association of Insurance Agents recently released its annual list of the most common complaints consumers have with their insurance providers. Of all complaints received, accident and health insurance disputes had the most complaints with homeowners then life and annuities issues next on the list.
Some tips to keep in mind when dealing with insurance claims issues:
A very important step for any consumer to take when looking for a new agent or insurance company is to verify license and complaint history. Do this by calling our Consumer Helpline at (850) 413-3089 or toll-free at 1-877-MY-FL-CFO (1-877-693-5236), or on our website at www.MyFloridaCFO.com.
A great way to start thinking about saving and reaching your goals is to start small. What do you do with your leftover change at the end of every day? Rather than let it keep jingling in your pocket, start saving your loose change in a jar. Every 6 months take the change that you’ve accumulated to the bank and put it in a savings account for an emergency fund, vacation, or whatever goal you choose. You might be surprised at how quickly it builds up and how it starts to change your mind set about saving.
At a press conference on Wednesday in Miami, Florida’s Chief Financial Officer Jeff Atwater joined Miami-Dade County State Attorney Katherine Fernandez Rundle to announce the results of Operation Dark Horizon, the largest Personal Injury Protection (PIP) bust since the CFO took office. The Miami-based investigation by Atwater’s Division of Insurance Fraud resulted in the arrests of 17 individuals including a clinic owner, doctors, clinic employees and staged accident recruiters. Eight additional individuals have been charged and are being sought by investigators.
“This case is just one example of the hundreds of similar fraud schemes run daily by accident clinics operating throughout Florida,” said CFO Atwater. “The fraud schemers bill insurance companies for procedures that never happen, and we all get stuck with the bill through increased auto insurance premiums.”
According to the Insurance Information Institute, on average Floridians pay an additional $100 for two cars in the driveway to cover auto insurance fraud. According to CFO Atwater, “If you multiply that by the 11 million cars in our state it amounts to a nearly billion dollar fraud tax.”
“When professional healers become professional criminals in order to make some easy cash, all of us lose, and this insurance fraud scheme could not have worked without medical professionals claiming serious injuries where none existed,” said Miami-Dade State Attorney Katherine Fernandez Rundle. “Lies upon lies upon lies led to dollars upon dollars upon dollars for all the parties charged today. I applaud the work of the Division of Insurance Fraud investigators, who put the evidence pieces together to allow my prosecutors to properly charge these individuals. This is far from the end of our efforts to fight such frauds.”
The 25 individuals charged so far in Operation Dark Horizon face 142 various charges including racketeering, staging an accident, insurance fraud, grand theft and organized scheme to defraud, and now collectively face up to 1,115 years in jail. Those charged with staging an accident face a minimum mandatory sentence of two years in prison, if convicted on the charge, and up to 30 years in prison if convicted of organized scheme to defraud. Additional arrests are anticipated.
The arrests stem from fraudulent billings filed by five clinics, including New Horizon Practice in Miami, Medico de la Familia in Hialeah, Coral Way Rehabilitation Services, Therapium Health Corp. and AB Diagnostic.
Fraud detectives’ investigation uncovered that New Horizon Practice owner, Elsa Terrero, allegedly solicited the staging of accidents and directed the participants where to go for treatment, and Dr. Gerald Amado signed documents for follow-up visits that never occurred and treatments that patients never received.
At Medico de la Familia, employees recruited and paid patients to come to the clinic, and coached patients on how to commit fraud by advising they go through at least one treatment so they know what is involved should the insurance company ask questions. Dr. Gustavo Acosta signed documents for examinations he allegedly never provided. Employees at all of the clinics involved obtained or created fraudulent documentation that was then submitted to insurance companies for payment.
The special investigation units of each of the insurance companies targeted in this fraud scheme, Gainsco, Imperial Fire & Casualty, Mercury Insurance, Geico, and State Farm, provided substantial assistance in the operation, along with the U.S. Secret Service Miami Electronic Crimes Task Force and the National Insurance Crime Bureau (NICB).
According to the NICB, Florida has three of the top five cities nationally for questionable medical claims associated with staged accidents—Tampa, Miami and Orlando. During the upcoming legislative session, CFO Atwater is recommending several policy solutions to strengthen billing practices, create civil penalties and tighten requirements for clinic ownership to help bolster the fight against PIP fraud.
This case is part of a continuing crackdown by CFO Atwater’s Division of Insurance Fraud and the National Insurance Crime Bureau in the fight against auto insurance fraud in Florida.