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Doi Releases 2000-2001 Top 10 Fraud List to Kick off Florida Insurance Fraud Prevention Week

6/11/2001

TALLAHASSEE – Two funeral home operators who stole insurance payments intended to bury homeless men. An unlicensed insurance company that sold policies to thousands of unsuspecting employers. These two schemes battled for the lead spot on the Florida Department of Insurance 2000-2001 Top 10 Fraud List released today by Florida Treasurer and Insurance Commissioner Tom Gallagher.

The release of the annual Top 10 Fraud List kicks off Florida Insurance Fraud Prevention Week, which begins today and culminates with a training conference Wednesday through Friday in Orlando. The conference is expected to draw more than 300 insurance fraud investigators and prosecutors from around the state.

"Insurance fraud robs Florida's economy of billions of dollars every year – through premiums that must cover the losses of fraud and the costs involved in fighting it," Gallagher said. "But it's a fight we can win, and will."

It is estimated that insurance fraud adds as much as $1,400 a year to the average Florida family's premium costs. Fraud occurs in all lines of insurance including auto, life, health and workers' compensation. The Top 10 List includes some of the most expensive or unusual fraud cases department investigators have worked on over the past fiscal year that began last July 1. The 10 cases combined represent losses of nearly $10 million.

Worker's compensation and health insurance fraud tend to be perennial Top 10 winners, while one particular case -- Operation Terminal Illness -- has made the list for two consecutive years because of the sheer number of people involved.

Personal Injury Protection (PIP) insurance fraud, which became the target of hard-hitting new anti-fraud legislation this year, topped the list with the case of the funeral home operators. In releasing the news of their arrests earlier this year, Gallagher called the case a "new PIP fraud low" because the two pocketed insurance payments intended for the burial of four homeless men.

The Department of Insurance, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance. Anyone with information about this case or any possible fraud scheme should call the Department's Fraud Hotline at 1-800-378-0445. A reward of up to $25,000 is offered for information leading to a conviction.

Department of Insurance 2000-2001 Top 10 Fraud List

A New PIP Fraud Low

Two former Orlando funeral home operators were arrested in March on 14 counts of insurance fraud and grand theft for pocketing nearly $15,000 paid by auto insurance companies for the burial of four homeless men struck and killed by automobiles in separate accidents in 1998. Because the men had been struck and killed by insured drivers, the county asked the funeral home operators to pursue the portion of PIP coverage – up to $5,000 – available for death benefits from the drivers' insurance companies. Instead of providing the burials, the two arranged for cremations costing about $140 each. In one case, they didn't even pay the crematory.

Not Such a Deal

Two top executives of Well America Group, Inc., a Miami-based company that sold insurance policies to large employers throughout Florida and Georgia, are facing charges of transacting insurance without a license. Well America sold unregulated major medical health plans to dozens of employers -- including the City of Leesburg, Central Florida Electric Cooperative, Superior Shade & Blind Co., Baer's and Carl's furniture stores, schools, car dealerships and the restaurant chain Pollo Tropical -- and left some $3.7 million in unpaid claims when the company folded. Well America was out of business by August 2000.

Banned from the Business

Gallagher earlier this year banned Accelerated Benefits Corporation, an Orlando viatical company, from purchasing or selling viaticals in Florida after department regulators and investigators determined the company knowingly purchased 11 life insurance policies from policyholders who lied about their HIV status to obtain them. The company was believed to have also helped conceal the fraudulently obtained policies from the insurance companies who issued them. In six of the 11 policies purchased, an Accelerated Benefits employee paid the policy premiums from a personal checking account to hide the sales.

Building a Better Premium

Three South Florida residents associated with four affiliated construction companies were charged in March with defrauding insurance companies out of more than $2.7 million in workers' compensation premiums. First, construction workers were listed as janitorial workers to avoid the higher premiums required for construction workers. Then, workers were shifted to a newly created company, resulting in lower premium charges because the new company had no claims history to factor into its premium cost.

Operation Terminal Illness

Grand theft charges were filed against 12 persons – including 11 present or former employees of Jackson Memorial Hospital – in an ongoing investigation of schemes to bilk hundreds of thousands of dollars from a self-insurance plan for Miami-Dade County employees. The 39-year-old ringleader formed two fake medical-equipment companies and recruited the hospital workers to participate in making fraudulent claims for unneeded and nonexistent medical supplies, investigators said. The lengthy investigation so far has led to charges against 28 individuals, including 16 arrested more than a year ago in a separate but similar scheme that also involved hospital employees and targeted the same self-insurance plan.

No Dipping in the Pool

Three Central Florida women pleaded guilty to the theft of more than $580,000 from the state's homeowners' insurance pool known as the Residential Joint Underwriting Association, or JUA. Each was sentenced to probation and ordered to pay restitution and investigative costs. The women, two of whom held jobs with a company contracted to handle the JUA's claims, launched their scheme in September 1995 when a legitimate claim was filed for a child whose leg was broken when she was run over by a golf cart owned by a JUA policyholder. Even though the original claim was settled for $17,500 in July 1997, the women managed to issue themselves more than 50 checks. The investigation took a twist and led to another arrest when a man tried to negotiate a $250,000 "hush" payment to keep him from informing news organizations about the fraudulent scheme.

It's In the Mail

A Miami man was charged with insurance fraud and grand theft for billing insurance companies for more than $1 million for lab services never rendered, due entirely to the fact that there was no facility, no technician and no patients – only a rented mail drop box. The scheme came to light with complaints from several people that their insurance companies were being billed for lab services they didn't receive. Investigators traced the address from the Explanation of Benefits (EOB) statements the insureds were receiving from their insurance companies.

Have a Heart

Felony charges were brought against 13 suspects in January in an ongoing investigation into a network of fraudulent heart monitoring service and billing companies that lured more than 300 patients into a million-dollar billing scheme. The network included five heart monitoring service companies, three medical companies, a medical billing company, a management company and an unlicensed physician placed in a busy Miami clinic. Investigators said the group billed insurance companies at least $1 million for heart monitoring services never rendered.

No Equipment, But Will Bill

The owner of a New Port Richey clinic was arrested in March on 23 counts of insurance fraud for charging insurance companies thousands of dollars for performing magnetic resonance imaging (MRI) tests he didn't even have the equipment to do. The investigation began in late 1999 when one of the billed insurance companies reported that claims from the clinic appeared to be inflated. The clinic owner was billing $1,050 for the MRI test and $200 for a MRI reading. However, investigators later determined that the tests and readings had actually been performed by an outside MRI service at $400 per MRI test and $45 per MRI reading. Investigators determined that the letterhead on the MRI readings had been changed from that of the original radiologist to that of the clinic.

Getting the Run-Around

A Brandon hospital emergency room clerk and a clinic operator were arrested last week for collaborating to steer at least a dozen auto accident victims into unauthorized soft-tissue injury treatments that did not address their real injuries. The clinic staff included a traveling medical doctor, a chiropractor and a massage therapist. Most of the patients steered to the clinic immediately became suspicious and left without getting any treatment, including a woman with a broken leg who said she was told that the clinic could not help with the swelling inside her cast and a woman whose husband had vomited all night from a head injury that the clinic couldn't diagnose. The clinic owner allegedly used the personal information that the clerk collected in the emergency room to later contact the patients and advise that the hospital had identified injuries that needed treatment at the clinic.