Author Archives: Fernando L. Roig, Esq.

Panhandle Auto Body Shop Owners Charged with Insurance Fraud

The Wreck-O-Mended auto body shop in Quincy, Fla. was the setting for an insurance fraud scam, according to a report by WTXL TV. Quincy is a small town of approximately 7,000 residents located northwest of Tallahassee in the Panhandle.

Owner Russell D. Owens and his wife Cassandra Owens received almost $2,000 in payment from Progressive Insurance Company for the replacement of a bumper, trunk lid and side panel on an insured’s damaged vehicle. The work was allegedly not done properly, and yet the body shop owners kept the insurance money. The insured must now pursue legal action against the shop in order to collect any money owed to complete the repairs, according to the report.

Russell Owens is accused of overcharging for repairs, a felony, and grand auto theft. Cassandra Owens is charged with criminal conspiracy for her role in the scam. Both parties were arrested this week by the Florida Department of Insurance Fraud.

Click on the link to read the full report.

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Filed under Insurance Fraud

Uninsured Drivers Caught by Broward Sheriff’s Fraudulent Insurance Verification Operation

Recently, some uninsured motorists driving in Broward County were in for a real revelation. On September 17, law enforcement officers worked traffic stops and were able to verify insurance coverage on-the-spot that day, much to the surprise of drivers.

The operation, known as the Fraudulent Insurance Verification Operation or FIVO, was conducted by the Broward Sheriff’s Office in conjunction with 30 insurance investigators who had instant access to their client databases. Setting up command central at the Tamarac BSO, the investigators provided real-time insurance information to police officers throughout the county for the day, according to a story in Tamarac Talk.

As a result of using this proactive strategy against insurance fraud, a total of 460 vehicle stops were conducted resulting in 563 citations and seven arrests, the Florida Department of Insurance Fraud reported.

Participating in FIVO were: Allstate, Assurant, Bristol West, Direct General, Esurance, Farmers, Gainsco, Geico, Imperial Fire, Infinity, Mapfre, Mercury, MetLife, National General, Nationwide, Security General, Sentry, State Farm, Travelers, USAA and Windhaven.

The Coalition Against Insurance Fraud says that Florida ranks fifth highest in the nation for uninsured motorists, which is estimated to cost each family about $950 a year. Under Florida law, anyone presenting a fraudulent proof of motor vehicle insurance has committed a third-degree felony.

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Filed under Fla. Stat. 627.736 (2008)

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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Filed under 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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Text Mining an Emerging Tool in Anti-Fraud Technology

Insurer use of anti-fraud technology is rising, according to a report released this month by the Coalition Against Insurance Fraud. The study reports that as of 2014 nearly all insurers (95 percent) said they use anti-fraud technology, compared to 88 percent in 2012.

Evidence that fraudulent activity is increasing bolsters the growing business need for technology-based solutions. More than half the insurers surveyed said that suspicious activity has risen over the last three years and that it flows through the entire claims cycle.

Fraud schemes today have not only increased in number, but shifted away from auto theft and more towards bodily injury and suspicious medical provider activity, according to the study. Insurers, needing to adapt to these tactical changes, are increasingly adopting advanced analytics to combat the evolving nature of fraudulent activity.

Advanced technological tools may help limit the rise in fraudulent activity, according to the report. The survey found that while 81 percent of insurers use basic technology tools, far fewer employ more advanced technology, such as link analysis (50 percent), predictive modeling (43 percent), or text mining (43 percent).

The most common challenge faced by 53 percent of insurers when considering implementing advanced anti-fraud technology is the lack of IT resources. Among other obstacles, SIU’s inability to process the large volume of potentially fraudulent claims was cited by 6 percent of insurers.

The increased presence of organized crime rings is a noteworthy development in the evolution of fraudulent activity. Text mining is one anti-fraud tool that can be utilized to expose these crime rings at the beginning of the claims process.

Text mining can connect information that is otherwise unstructured data buried in multiple, separate places, i.e., adjuster field notes, email, medical records, and police reports. By using text mining, insurers can explore this data to discover previously unknown concepts and patterns. For example, insurers use text mining to discover scripted comments in claims notes and call center logs, allowing them to notice incidences where multiple, allegedly unrelated, claimants say the same thing.

The study concludes that an anti-fraud strategy incorporating advanced technology and tools will result in a much higher fraud detection rate, thus ultimately cutting overall costs for insurers.

The report, titled “The State of Insurance Fraud Technology,” is published jointly by the Coalition Against Insurance Fraud and SAS. Click on the link to read more.

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Bodily Injury Claims Costs Drop when Data Analytics Increases, Study Finds

A recent study by LexisNexis concludes that insurance companies incorporating more data into the claims process at an earlier stage can realize considerable benefits. According to the study, carriers incorporating third-party data and analytics into their initial claims process, preferably at first notice of loss, can realize greater efficiency, reduced costs, and increased customer satisfaction.

LexisNexis completed a study of more than 10 million features from A.M. Best’s top 20 personal auto carriers. The dataset utilized in the study included 400,000 third-party bodily injury features.

These features were separated by the availability of certain data elements immediately after completion of the claim reporting process and before assignment. “Less Data” features included a telephone number and only one additional data element or had no telephone number but all the other elements; “More Data” features included a telephone number and two or more other data elements.

Comparing bodily injury settlements between the Less Data and the More Data groups, it became clear that having multiple data fields earlier in the claims process resulted in lower average severity payments, expense levels, and cycle time.

For example, in the Less Data category, the average bodily injury loss was $7,359; having More Data reduced the average loss by 15%, to $6,255. Furthermore, the average duration of the claims process went down from 116 days to 110 days.

As insurance carriers face increasing pressures to reduce expenses, they will look closely at the efficiency and effectiveness of their claims function. Based on the results found in the study, the authors conclude that the solution is to incorporate real-time data and analytics throughout the claims process.

Click on the link for more information about the survey, titled “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling.”

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Jeff Atwater, Facing Re-Election, Notes Success in Shutting PIP Clinics

Jeff Atwater has served as Florida’s Chief Financial Officer since January 4, 2011, and is up for re-election in November. He recently spoke with the editorial board at The News-Press in Naples about his accomplishments and priorities.

In a wide-ranging interview, Mr. Atwater emphasized Florida’s fight against fraud as an area of success. Some highlights from the interview follow.

“We have worked with sheriffs, the state attorney’s office, the FBI and locally with law enforcement, under the umbrella of financial literacy,” notes Mr. Atwater. “We are beginning to neutralize this. We are shutting PIP clinics and under-the-table transactions.”

Key accomplishments in the state’s continuing battle against fraud over the past three years include:

  • 5,000 insurance fraud arrests
  • 2,000 arrests in PIP fraud cases
  • $129 million in public assistance fraud uncovered

Atwater may run for governor or the U.S. Senate in four years, according to the article. He has served in public office since 1993, when he was elected Vice Mayor of North Palm Beach. He was elected to the House of Representatives in 2000 and the Florida Senate in 2002. In 2008 he was selected to serve as Senate President.

Click on the link to read the full article.

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Filed under Insurance Fraud