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Miami Beach Doctor Charged with Viatical Fraud

5/24/2001

TALLAHASSEE – A Miami Beach doctor working for Fort Lauderdale-based Mutual Benefits Corporation, one of the country's largest viatical settlement providers, has been charged with fraud for allegedly lying about conferring with the personal physicians of terminally ill policyholders before assessing their life expectancies, a key component in the viatical investment business. As a result, two dozen elderly investors may have been misled in their decisions to invest a total of $350,000.

Insurance Commissioner Tom Gallagher and Statewide Prosecutor Melanie Ann Hines announced the arrest today, and said more arrests are expected.

"Estimation of life expectancy is key in an investor's rate of return in a viatical investment," Gallagher said. "An improper calculation can be devastating to an investor."

Dr. Clark Carlton Mitchell, 43, of 208 Jefferson Ave., was arrested late Wednesday afternoon by Department of Insurance fraud investigators on 25 counts of organized scheme to defraud and communications fraud. If convicted, he faces up to 150 years in prison and as much as a $130,000 fine. The Office of Statewide Prosecution is handling the prosecution.

Mitchell was paid by Mutual Benefits to perform life expectancy evaluations for individuals who were selling their life insurance policies through the company. Insurance department investigators said Mitchell falsely stated in life expectancy letters mailed by Mutual Benefits to investors that he had spoken with the insureds' personal physicians as part of his assessment. However, investigators said several of the doctors have said Mitchell never spoke with them regarding their patients.

Four of the investors in these policies for which Mitchell provided assessments are senior citizens living in Ft. Lauderdale, Tampa, North Ft. Myers, and Leesburg. Many of the investors purchased the viatical settlements as part of a retirement plan.

Mutual Benefits was linked to the arrests a year ago of eight men on charges of submitting false information on 11 life insurance applications to get more than $1.1 million worth of coverage from various insurers. Most of these policies were sold to Mutual Benefits. All told, the eight were linked by investigators to the purchase of a total of 47 policies worth $4.9 million from 32 different insurance companies.

As a result of dispositions in those cases, the department already has recovered more than $715,000.

Viatical settlement providers buy insurance policies from the terminally ill or the elderly and resell them to investors. By selling a policy for a percentage of its face value, the insured can get cash for medical expenses, travel, investments or gifts to family prior to their death. The tradeoff is that the policyholder relinquishes the full payoff that would otherwise be due to heirs at death. Instead, the investors become the beneficiaries.

Consumers who are considering investing in a viatical product or are seeking information about selling a life insurance policy can obtain a free consumer guide on viatical settlements by calling the Department of Insurance's toll-free Consumer Helpline at 1-800-342-2762.

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.