Author Archives: Fernando L. Roig, Esq.

Three Chiropractors Found Guilty of Federal Fraud Charges

Three Florida chiropractors involved in a plan to fraudulently obtain money from insurance agencies have been found guilty on federal money laundering and mail fraud charges.

The chiropractors—Hermann Diehl of Miami, Kenneth Karow of West Palm Beach, and Hal Mark Kreitman of Miami Beach—helped set up staged automobile accidents and then filed fake claims for “victims” of the crashes. They also billed insurance agencies for procedures that were not actually performed.

The verdict was rendered on April 22 by a jury in the U.S. District Court for the Southern District of Florida. A fourth defendant, Joel Antonio Simon Ramirez of West Palm Beach, was found guilty of helping to stage the accidents.

All four of the defendants were found guilty of money laundering and mail fraud, with sentencing set for July. They each face a maximum sentence of 20 years in prison.

Readers of may recall that we wrote about Dr. Karow in a May 17, 2013 post titled, “92 Accused in Staged Accident Fraud Ring, $20 million in Fraudulent Claims.” At that time, an Operation Sledgehammer investigation revealed that chiropractors Lazaro Rodriguez, then 58, of Doral, and Kenneth Karow, then 53, were recruited to serve as owners of clinics involved in the ring.


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Filed under Case Law, Insurance Fraud

Chiropractors in $2.3 Million PIP Insurance Fraud Scheme will Face RICO Charges

A federal judge ruled that the chiropractors who were allegedly behind a $2.3 million ploy to defraud an insurance company must face charges for violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and Florida’s Deceptive and Unfair Trade Practices.

In July 2012, GEICO Insurance Company filed a lawsuit against two Orlando-based clinics—KJ Chiropractic Center LLC and Wellness Pain & Rehab Inc.—in addition to their two founders and a number of co-conspirators, known as “runners.” These runners helped perpetrate the suspected scam by exploiting willing third-party participants who faked accidents and injuries.

According to an article in Courthouse News Service, U.S. District Judge Charlene Edwards Honeywell said in her order that the fraudulent PIP claims resulted in more than $2.3 million in unwarranted insurance benefits and emerged from:

  • Staged accidents;
  • Real accidents in which claimants received treatment at clinics even though they were not truly injured; and
  • Real accidents in which claimants incurred some injuries, but received treatments that were pre-programmed, unnecessary, excessive and unlawful.

GEICO charged that the defendants advanced their unlawful plot by paying “anyone who referred accident victims to the clinics, offering cash directly to patients who agreed to accept unnecessary chiropractic treatment.” The insurance company also claimed the clinics provided treatment that was not in the best interest of patients because its sole intent was to maximize profits, the article said.

The U.S. District Court for Florida’s Middle District, Orlando Division, adopted Judge David Baker’s full recommendations made in October 2013 to deny the defendants’ motion to dismiss a second amended complaint on all but one count.

Judge Honeywell Edwards said she felt that GEICO adequately supported its argument with “factual allegations to state plausible claims for relief. As such, the court agrees with the Magistrate Judge that GEICO’s claims are sufficiently pled.”

The case is GEICO v. KJ Chiropractic Center LLC et. al., U.S. District Court for the Middle District of Florida, Case No. 6:12-CV-1138-ORL-36-DAB. Click on the link to read the complaint.

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Filed under Case Law, Insurance Fraud

Florida Speed Limits May Rise to 75 MPH

Posted speed limits on I-95 and other Florida interstate highways could increase from 65 to 75, if legislation introduced in the Florida legislature by Florida Senator Jeff Clemens (D-Lake Worth) passes.

Senate Bill 392 would allow the Department of Transportation to raise the maximum allowable speed limit on certain highways like Interstate 95 that are part of the National System of Interstate and Defense Highways and have at least four lanes.

There are critics on both sides of the proposed speed limit changes.

Senator Clemens claims that drivers are already traveling at speeds in excess of the posted speed limits, and does not anticipate any increase in the number of accidents. Others fear that any increase in speed limits will result in increased accidents.

Speeding is the third leading contributing factor in traffic crashes, according to the National Highway Traffic Safety Administration.

The Insurance Institute for Highway Safety reports that the likelihood of being severely injured or killed in a crash increases with vehicle speeds.

The reported in a December 27post that Florida Ranks #6 in Worst Drivers Nationally. As mentioned in that article, auto insurance premiums tend to increase as safe driving habits decline in a state. Florida ranks among the top 10 most expensive states for car insurance, at #10, according to a 2012 article in the Palm Beach Post.

SB 392 is scheduled for at least one more vote in the Florida Senate before moving on to the House. If passed, the law would take effect on July 1, 2014.

Click on the link to read the proposed bill on Florida speed limits.

Click on the link to read a fact sheet on speed and safety published by the National Safety Council.

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Filed under Fla. Stat. 627.736 (2008)

Insurance Coverage Questions Put the Brakes on Miami Rideshare Programs

Plans to introduce Uber and other rideshare programs utilizing technology-based apps in Miami are on hold for now, according to a recent article in the Miami Herald.

Two key members of the Miami-Dade Board of County Commissioner’s transportation and aviation committee blocked a ride-sharing proposal that would have then gone before the full committee for a vote.

Popular rideshare services, like Uber X, Lyft and Sidecar, have seen accelerated growth in major U.S. cities. Using technology that the taxi industry finds highly disruptive, people with regular driver’s licenses can use their personal vehicles to transport riders for a fee. These drivers register for dispatch services. Accepted drivers are then able to connect to customers and collect fares via credit cards by using smartphone apps.

Critics, however, have accused these providers of working outside the constraints set for taxi and other commercial transit services, for questionable business practices, and for having inadequate insurance coverage for drivers and their vehicles.

San Francisco-based Uber recently announced that it has new insurance to cover the gap “during the time that ridesharing drivers are not providing transportation services for hire, but have the Uber app open and are available to receive a trip request,” according to an article in Insurance Journal.

Uber appears to be the first company, the article notes, to have a policy that extends insurance of ridesharing drivers to cover the potential insurance gap. This liability coverage kicks in only if a driver’s personal insurance fails to cover an incident and provides up to $50,000/individual/incident for bodily injury; $100,000 total/incident for bodily injury; and $25,000/incident for property damage.

A tragic accident over New Year’s Eve in which an Uber driver struck and killed a 6-year old girl when he was logged on to Uber’s app brought national attention to the nascent rideshare industry. Uber has been hit with a wrongful death lawsuit as a result, according to a March 14 Verge article.

Chicago’s City Council has also stepped up efforts to further investigate the insurance gap of the three companies operating in the city and recently subpoenaed their insurance records. The Council is still working to get the necessary evidence of still-undisclosed policies, according to a March 14 article in the Chicago Tribune.

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Filed under Fla. Stat. 627.736 (2008)

Fraudulent Rental Car Schemes an Emerging Trend in Auto-Related Crime

Auto insurance claims adjusters and special investigative units (SIU) have been put on notice about a proliferation of fraudulent auto schemes involving rental cars. This type of criminal activity will impact states with top hospitality industries, like Florida, where tourism was ranked number one and was responsible for welcoming 91.5 million visitors in 2012.

According to a recent Claims Journal article, Kraig Palmer, an investigator with the California Highway Patrol, warned that he has seen rental car schemes “rise faster than any other auto fraud trend” in the past 12 months.

Perpetrators are often found to be opportunistic drug addicts and knowledgeable street gangs, the article revealed. The crux of the fraud targets car rental companies and involves renting multiple cars. Then, the rented cars are used to commit crimes. They eventually are recovered, but often burned out or with significant collision damage.

It is a difficult crime to nail down because it can occur on many different levels—using multiple fraudulent or stolen identities. Also, incentive programs at the car rental companies make it easy to rent a car, often with online registration and no face-to-face interaction.

It’s not surprising, then, that insurers will see more claims involving fraudulently rented cars. The criminals and gangs have access to money, and will use that money to educate themselves on companies’ processes. All it takes is paying one disgruntled employee to gain knowledge of the claims process, Palmer added.

He recommends that insurance companies thoroughly examine auto property damage or auto bodily injury claims involving rental cars, searching for patterns such as: how long the vehicle was rented, how many vehicles were rented by the same individual, and if there were more vehicles rented by the same individual that experienced damage.

If there are red flags, Palmer suggests going to the regional security manager instead of the car rental agency. That manager will have access to the complete contract and credit amount. Due to privacy regulations, law enforcement will likely need to be involved, he concluded.

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Filed under Fla. Stat. 627.736 (2008), Insurance Fraud

Jacksonville Woman Faces Insurance Fraud Charges in North Carolina

A Jacksonville, Florida, woman was arrested in connection with an auto insurance fraud scheme that occurred in North Carolina—her place of residence at the time.  Stacy Lasondo Jackson, 39, was charged with 10 counts each of insurance fraud and obtaining property by false pretense, according to a newscast on WRAL TV.

Investigators with North Carolina’s Department of Insurance found that Jackson was paid several thousand dollars from a variety of insurance companies after filing fraudulent insurance claims.  The claims were made for damage to her automobile and motorcycle between January and May of 2013.  Authorities believe the damage never happened or was reported more than once.

This past December, Jackson was arrested on similar charges in Florida, investigators said.  She has been extradited to North Carolina and placed in the Cumberland County jail under a $10,000 bond.

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Filed under Fla. Stat. 627.736 (2008), Insurance Fraud

States Propose Bills in 2014 to Combat Insurance Fraud

It’s no secret there’s a constant battle to find and prosecute people trying to get away with insurance fraud, which costs billions of dollars each year and drives up premiums for consumers.

As a result, there has been a concerted effort by several state legislatures and governing bodies to help thwart fraudsters and their crimes, according to a news release issued by auto insurance provider GEICO.

Nancy Pierce, GEICO regional vice president and vice chair of the National Insurance Crime Bureau’s (NICB) Board of Governors, said, “GEICO puts a lot of resources into investigating and stopping staged accidents, exaggerated injuries, inflated medical bills and other acts of insurance fraud that inflate costs for consumers.”

The company detects, deters and defeats insurance fraud and theft through its Special Investigation Unit.

“That said, there’s a lot that must happen in the fight against fraud at the legislative level, so it’s encouraging to see positive momentum in that direction this year,” she explained.

The Coalition Against Insurance Fraud said that six states in particular have proposed vital pieces of legislation in 2014 that would have a significant impact on deterring insurance fraud:

  • Colorado: Increasing fraud penalties to a higher-level felony is the subject of proposed legislation.
  • Maryland: Giving prosecutors greater flexibility in trial venues for fraud suspects is being supported by the state insurance administration.
  • Michigan: The creation of a state auto-fraud agency is proposed to strengthen the state’s no-fault law, identify questionable clinics and improve the fight against fraud.
  • Minnesota: A variety of new anti-fraud bills are under review by an anti-fraud task force, including greater sharing of fraud-related information between insurers and law enforcement. The imposition of civil fines in addition to criminal charges is also being considered.
  • New Jersey: Three new bills that will restrict outsider access to crash reports, expand fraud-fighters information exchange, and make it a crime for drivers to lie about where a vehicle is garaged are all under review.
  • New York: A multi-faceted anti-fraud agenda targets dishonest clinics, staged-crash networks, and fraudulent medical-equipment providers.

“While these proposals wouldn’t eliminate fraud entirely in these states, they would be significant steps in the right direction,” said Ryan West, vice president of GEICO’s claims home office. “We’re pleased that state bodies across the country are putting the fight against insurance fraud on the agenda and trying to implement changes that would result in lower premiums for consumers.”

Additional information and resources on theft and fraud awareness are available through the NICB.

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Filed under Insurance Fraud

Operation Sledgehammer I-VI Arrests Climb to 92

Six participants in a staged automobile accident ring that operated between October 2006 and December 2012 were sentenced this week by U.S. District Judge Kenneth A. Marra, according to the U.S. Attorney’s Office for the Southern District of Florida.

Almost $10 million in restitution is sought from the six leading defendants, along with jail time followed by three years of supervised release.  The individuals sentenced include:

Elias Sebastian Munguia, 41, Miami clinic owner
- $3,491,516.93 in restitution and 102 months in prison

Yenisleydi Ramos, 26, West Palm Beach secretary
- $1,666,028.08 in restitution and 50 months in prison

Oscar Montiel Martinez, 34, Lake Worth staged-accident participant, recruiter and check casher
- $1,359,208.73 in restitution and 76 months in prison

Teresita Mena, 52, West Palm Beach staged-accident participant, recruiter and check casher
- $1,321,459.87 in restitution and 66 months in prison

Aleida Capdevila, 62, West Palm Beach clinic office worker
- $1,039,928.19 in restitution and 53 months in prison

Juan Francisco Avon, 62, Miami licensed massage therapist
- $866,801.60 in restitution and 38 months in prison

Amaury Tomas Contino, 30, a Lake Worth staged-accident recruiter, filed a guilty plea in the matter. He faces up to 20 years in prison for each of multiple counts, including mail fraud.

The elaborate automobile insurance fraud scheme involved staged accidents, followed by unnecessary or fraudulent medical treatments at clinics run by participating owners, including defendant Munguia. False insurance claims for medical services not needed or never provided were submitted for payment.

The scheme grew as the “true owners” of chiropractic clinics recruited individuals with the medical or chiropractic licenses required by the state of Florida to establish new clinics and act as “nominee owners.”  Ultimately the network grew to include 21 clinics.

The scheme worked so well for a while that additional participants were hired to launder the stream of cash generated from the false claims.

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Filed under Insurance Fraud

South Florida Mother/Son Team Charged with Auto Insurance Fraud

A mother and son were recently booked into the Palm Beach County Jail on insurance fraud charges.

Marianela Cedeno and her son, Yonuel Cedeno, were arrested in connection to a staged car crash that took place for the purpose of filing a fraudulent insurance claim, according to a January 23 WPTV News Channel 5 report.

Investigators from the West Palm Beach Division of Insurance Fraud found that Marianela recruited two individuals to participate in a car crash that occurred on November 17, 2009, at 10:10 pm in Palm Springs.

According to investigators, the plan also instructed people in both cars to seek medical treatment at NY Medical after the accident.

The arrest report revealed that Marianela and Yonuel Cedeno were in one vehicle at the time of the accident.  The co-defendants were in the other.

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Filed under Insurance Fraud

State Farm v. MR Services I, Inc.

In accordance with Florida’s PIP Statute, Plaintiff State Farm informally requested discovery from Defendant MR Services pursuant to Fla. St. § 627.736(6)(b). MR Services informally responded, but only in part, and the responses were deemed inadequate and incomplete. State Farm petitioned the Court for an order permitting discovery.

MR Services argued that it need not fully respond to the discovery requests because State Farm could obtain the discovery it wanted from other cases pending in Broward County. The Court held that, while this may be true, it does not preclude discovery under the provisions of the PIP Statute.

The Court therefore granted the Motion to Allow Discovery and required that MR Services produce all documents and information requested by State Farm.

State Farm is thus entitled to:

  • Take the depositions of Dr. Mark Gans, Gary Howle, and Stacy Howle
  • Issue a third-party subpoena to LinkedIn for account information on subscriber Gary Howle
  • Receive from MR Services complete income tax returns, financial statements, and balance sheets from 2008 through 2012

Click on the link to view the Order in State Farm Mutual Automobile Insurance Co. vs. MR Services, Inc., No. 16-2013-CA-1731-XXXX-MA (Fla. 4th Cir. Ct. 2014).

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Filed under Case Law