Five Arrested, Two Wanted in Organized South Florida PIP Fraud Scheme

Attorneys, chiropractors and clinic employees in Martin, Miami-Dade and Palm Beach Counties were swept up this morning in the culmination of a year-long undercover investigation led by the Florida Department of Financial Services’ Division of Insurance Fraud.

Two Boca Raton attorneys are among the five individuals arrested today:

• Brian Greenspoon (attorney), Boca Raton
• Cory Meltzer (attorney), Boca Raton
• Roger Hughes Bell (chiropractor), Hobe Sound
• Alejandro Marin, Homestead
• Douglas Santiago, Boynton Beach

Lake Worth chiropractor Ray Grand and Stuart resident Christina Savoye have warrants out for their arrest.

A brokering agreement among participants governed the payment of fees to a patient broker who recruited patients illegally for treatment at unnamed South Florida medical clinics. Unbeknownst to the crime ring organizers, the broker was in reality an undercover agent. Other law enforcement personnel, also working under cover, infiltrated the clinics involved to document the allegedly criminal activities.

Principals in the fraud scheme acknowledged on several occasions that it was illegal to pay for patients, so all referrals were paid under the guise of marketing services, according to a press release issued by Florida Chief Financial Officer Jeff Atwater.

Apparently, insurance carriers and others were billed by participating clinics for medical and chiropractic services that were not rendered. Patients were also being taught how to fake injuries, according to the release.

While exact dollar amounts are not available, the crime ring is believed to be responsible for hundreds of thousands of dollars in fraudulent billings.

The defendants will be prosecuted by the 15th and 19th Judicial Circuit State Attorney’s offices, according to the release.

Click on the link to read the full news release.

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South Florida Chiropractor Tied to 2013 PIP Fraud Investigation Surrenders License

On our FL-PIP Guide in September 2013, we reported that chiropractor David Hirschenson was arrested and charged with 19 counts of obtaining illegal crash reports and one count of solicitation.

An update in the case is now being reported. According to the Florida Department of Insurance Fraud (DIF), the 56-year old chiropractor was sentenced in a Miami-Dade County Court this September as a result of the charges made against him a year ago. He received five years probation and also surrendered his chiropractor’s license to the Department of Health.

Details in the case revealed that Hirschenson actually worked with two others in the scheme. The first was a runner who solicited accident victims. In an interesting development in that case, the victims were not referred to Hirschenson’s clinic, but instead to another clinic in North Miami Beach—Advanced Chiropractic and Medical Center.

The second co-conspirator was a local radio station staffer who used the media exception status at the station to request accident reports from a variety of police departments. Hirschenson then used this information illegally to solicit accident victims. DIF arrested both co-conspirators, who cooperated in the investigation against Hirschenson.

Hirschenson, who originally received his chiropractor license in Florida in 1982, also had a prior arrest in the late 1980s as part of an investigation involving solicitation and insurance fraud in Broward County. He was placed on probation for two years by the Board of Chiropractic, but retained his state license for cooperating with the State Attorney’s Office. Hirschenson worked at and operated several clinics, including Pines Total Health Center in Pembroke Pines and Body and Mind Wellness Center in Coral Gables.

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Staged Accidents and Insurance Fraud Lead to Miami and Orlando Arrests

September was a busy month for the Florida Division of Insurance Fraud (DIF). The agency arrested a massage therapist for fabricating medical forms, as well as four other individuals who organized and recruited participants to be involved in staged accidents.

According to DIF, one arrest occurred in Orlando while the remainder took place in Miami. Those arrested in the five unrelated cases include:

Madelein Marin Aroche. The 41-year old massage therapist worked at New Life Medical Center in Miami. She was charged with insurance fraud after submitting false therapy forms for treatment she never provided to two patients who participated in staged accidents. Her scheme resulted in almost $30,000 in fraudulent billing to GEICO Insurance Co.

Renfroe Lorenz Tyson. The 46-year old recruiter and participant was arrested in Orlando for his role in a 2013 staged accident that resulted in more than $6,600 in fraudulent billings to Allstate and GEICO.

Victor Manuel Hernandez. The 32-year old from Miami conspired with William Tejeda Mayobanex, who was arrested by DIF in August. Hernandez helped recruit participants for a staged accident in 2011. The participants were then referred to A & J Rehabilitation Center and D & J Rehabilitation Center, where more than $64,000 in fraudulent billings were submitted to United Auto and York Services.

Vladimir Caro. The 38-year old organizer staged an accident in 2011. The six participants in the crash were also referred to A & J Rehabilitation Center and D & J Rehabilitation Center. More than $117,000 in fraudulent billings were submitted to Allstate, State Farm, United Auto and Windhaven.

Sandy Morales Castro, 33, was identified as a recruiter and the eighth subject arrested in a staged accident that occurred in 2010. This fake crash resulted in more than $46,000 in fraudulent billings submitted to GEICO, MGA and Progressive.

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Two More Join Class Action Suit Alleging Excessive Billing in PIP Claims at Florida Hospitals

In September, we reported on our FL-PIP Guide about two women injured in unrelated car accidents filing suit against a holding company that operates several hospitals in Florida. Marisela Herrera and Luz Sanchez alleged that HCA Holdings grossly overcharged for their emergency room radiological services.

Now two more Florida residents have joined the lawsuit in an amended class action that alleges Memorial Hospital Jacksonville, North Florida Regional Medical Center of Gainesville, JFK Medical Center, and parent company HCA have violated Florida’s Deceptive and Unfair Practices Act, according to a GlobeNewswire story.

Nicholas Acosta and Penny Wollmen, the new plaintiffs, also claim they were excessively billed and charged unreasonable fees for emergency radiological services covered in part by the plaintiffs’ Florida Personal Injury Protection (PIP) insurance. Florida’s PIP statute mandates that insurers pay 80 percent of all reasonable expenses.

However, Acosta was charged $6,965 for a CT scan of his spine and $6,277 for a CT scan of his brain after he was treated in the ER of Memorial Hospital in October 2013 following a car accident. After Wollmen’s accident in February 2014, she was billed $6,853 for the CT scan of her cervical spine, $6,140 for the CT scan of her brain, and $1,454 for a thoracic spine X-ray by North Florida Regional Medical Center.

Because of the allegedly inflated expenses, the complaint claims that each of the plaintiff’s $10,000 PIP coverage was prematurely depleted and that they were billed thousands of dollars for radiological services not paid for by their PIP insurers.

As a result, plaintiff Wollmen, for example, has been paying out-of-pocket expenses for additional chiropractic treatment that normally would have been at least partially covered by her PIP insurance if it had not been used up by hospital bills.

The complaint also charges breach of contract. All four plaintiffs technically entered into a “Condition of Admission” contract that stipulates patients must pay their accounts at the rates stated in the hospital’s price list.  None of the plaintiffs were given a price list at the time of their medical treatment.

The amended class action lawsuit was filed October 15, 2014, in U.S. District Court Middle District of Florida, Tampa Division.

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One of Florida’s Most Wanted for Insurance Fraud is Arrested in Maryland

James William Lloyd, Jr., who was part of an organized insurance fraud ring that carried out multiple staged vehicle accidents on Florida’s east coast, was recently arrested in Maryland. Before his arrest, the 42-year old held the dubious distinction of being on Florida’s “Top 10 Most Wanted for the Division of Insurance Fraud.”

According to a recent news story in the Naples Daily News, Lloyd’s elaborate scheme involved having crash participants report the accidents to their insurance companies and then attend treatment sessions at a local medical clinic. An employee at that clinic, who knew Lloyd, would then help process fraudulent bills for phony treatments. Investigators found that participants would pass along the phony bills for reimbursement by their insurance companies—collecting the insurance money, giving Lloyd a cut and pocketing the rest.

Maryland authorities wanted Lloyd in connection to a separate theft ring case and discovered that he was also wanted for crimes in Florida.

According to Maj. Glenn Hughes of the Florida Department of Financial Services, Lloyd often scoped out bars, clubs and restaurants to find participants. Targets were often out of work or down on their luck and needed some extra cash. “He promised if they participated in one of these staged crashes, which are usually very minor, they’d make some money.”

Hughes believes that although some legislative changes have made a dent in insurance fraud in recent years, they do not eliminate fraud. One such law on personal injury protection (“PIP”), which went into effect in 2013, gives a shorter time limit and a smaller coverage limit for those in crashes.

However, “Staged crashes aren’t identifiable to the insurance carriers,” Hughes said. “They look like any other crash really, they’ll have a police report, they’ll have billings from a chiropractic or physicians clinic, so from an insurance company standpoint they’re very hard to detect.”

“It’s a problem that’s not going away,” he said.

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Operation Sledgehammer Finds Three Chiropractors Guilty of PIP Fraud

A federal jury has convicted one West Palm Beach chiropractor and two Miami chiropractors for their roles in a massive staged automobile accident scheme, following a seven-week trial in U.S. District Court for the Southern District of Florida.

Using the U.S. mail in a scheme involving Personal Injury Protection (PIP) payments, defendants were found guilty of defrauding insurance companies through mail fraud and money laundering.

Kenneth Karow, 54, of West Palm Beach, Hermann J. Diehl, 44, of Miami, and Hal Mark Kreitman, 50, of Miami Beach were all convicted on multiple counts. Karow was sentenced to 11 years in prison, Diehl to nine years, and Kreitman to eight years for the fraud scheme that ran from October 2006 through December 2012.

The fraud was perpetuated in several ways across 21 chiropractic clinics, according to a release issued by the U.S. Attorneys’ Office for the Southern District of Florida. Key elements of the scheme are outlined below.

  1. Licensed chiropractors were recruited to serve as the “named owners” of chiropractic clinics, in circumvention of Florida licensing requirements, with others actually in financial control of the business.
  2. Recruiters were used to attract real or fake auto accident victims who were fraudulently treated at the chiropractic clinics for injuries.
  3. False chiropractic treatment claims where then billed to insurance carriers.
  4. No co-pays or deductibles were collected from the “patients,” and this fact was not disclosed to the insurance companies.
  5. The money received from this scheme was then used to pay recruiters and participants and to enrich members of the conspiracy.

The prosecution is the latest in a series of charges that have been part of a four year investigation into the massive conspiracy. The joint federal and state investigation, known as Operation Sledgehammer, has resulted in charges against 93 defendants for their roles in the organization. Of these 93 defendants, 57 have been charged by the U.S. Attorney’s Office, resulting in court-ordered restitution of more than $11 million to defrauded insurance companies.

Click on the link to read the full release.

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Filed under Fla. Stat. 627.736 (2012), Insurance Fraud

Crooks Use Stolen IDs to Take Vehicles, Reports NICB

The National Insurance Crime Bureau (NICB) has noticed an uptick in the use of more sophisticated schemes to steal cars as new vehicle technology makes methods like hot-wiring almost obsolete. These findings highlight a growing trend in “financial fraud” auto theft.

Even though these vehicles are technically stolen by crooks, the methods they use for the theft—in legal terms—constitute financial fraud, the NICB explained in a news release. Consequently, these stolen vehicles are not counted as auto thefts, partially explaining a continual decline in auto theft crime statistics over the past two decades.

One such ploy involves the use of stolen forms of identification, such as fake drivers’ licenses and personal information stolen from identity theft victims. Stolen IDs are used to fraudulently lease or obtain loans to procure new vehicles. Once the crooks drive the vehicle off the lot, they never make scheduled payments. Often instead, these cars are re-sold to unsuspecting buyers after the scammers switch the Vehicle Identification Numbers (VINs).

Unfortunately for investigators, there is currently no central database that quantifies these crimes.

“Trying to put a number on these kinds of thefts is a challenge,” said NICB President and CEO Joe Wehrle. “It’s comparable to a hacker stealing IDs—you don’t know you’re a victim until it’s too late. Most of these thefts don’t show up in traditional crime reporting numbers and become financial losses for lenders, car rental companies and others. The result is millions of dollars added to the cost of doing business which is ultimately passed on to consumers.”

NICB advises consumers to frequently check their credit reports for signs that someone else is using their identity to take out new loans.

Because these types of “white collar” crimes have become more widespread, the NICB has launched a new series to draw attention to the growing trend in order to raise public awareness and thwart these types of auto thefts. Over the next few months, NICB will expose other new schemes that criminals are using to steal cars besides using stolen IDs.

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