Author Archives: Mark J. Rose, Esq.

Four Essential Ways to Prepare Insurance Data for Successful Fraud Detection

Insurers are overflowing with data, but that is only part of their challenge in being able to effectively detect fraud. In terms of information, their predicament stems more from being able to tighten the amount of data to gain access to the right information sources.

A recent report by the Coalition Against Insurance Fraud indicates that more insurers are using predictive analytics and other fraud detection technology to detect and deter fraud. The survey found that 95 percent of respondents use anti-fraud technology, an increase from 88 percent in 2012. However, difficulties in data integration and poor data quality, like spelling and transposition errors, were identified as major stumbling blocks to successfully implementing these new technologies.

According to a recent article by James Ruotolo that appeared in Information Week: Insurance and Technology, consolidating data can be tricky, but addressing data quality and integration issues up front are imperative to a successful fraud analytics model and will pay significant dividends in improved detection rates.

He recommends four key steps in preparing insurance data for fraud analytics:

  1. Integrate data silos. Core processing systems serve a specific purpose that often have nothing to do with each other or aggregated data analysis. For purposes of fraud analytics, claims, policy, application, billing, and medical data sources originating in different places need to be consolidated. Be sure to include legacy systems and other less formal “systems” like spreadsheets, watch lists, case-management applications, and shared file systems. Document the integration efforts and ensure that they are repeatable and auditable. This is critical when you enable fraud analytics scoring in production.
  2. Manage missing and erroneous data. If your systems contain Social Security numbers like 999-99-9999 or claim files with missing telephone numbers, for example, then you need to fix this information. Ignoring these errors can have a negative impact on fraud analytic results. Leading data quality tools can help identify, repair, and replace missing or erroneous data. In some cases, missing data is found in another system or can be inferred based on a combination of other sources. Also, standardizing formats for common fields like addresses will be helpful in the future.
  3. Resolve entities. Once data is aggregated from multiple systems, identify whether the same individuals, companies, or other entities exist in multiple places; for example, if one system uses name and Social Security number, while another captures name and date of birth. Entity resolution techniques can link these two records and identify them as the same individual. Best results involve more advanced analytical techniques to determine the likelihood of matching, especially if social network analytics or link analysis will be used in the fraud analytics solution. The ability to link one individual—who could have roles as an insured, claimant, witness, driver, vendor, and employee across multiple claims—is a powerful tool in detecting suspicious activity.
  4. Process unstructured text. It is estimated that up to 80 percent of insurer data is kept in text format with some of the best information captured in the loss description or claim notes fields. Managing this data can be complicated because abbreviations, acronyms, industry jargon, and misspellings are common. However, a text analytics solution containing a library of terminology specially designed for insurance data can address this issue. During this analysis, additional model variables can also be created expanding the scope of fraud analytics without having to include external data sources. Machine learning and natural-language processing techniques should be used to find and create useful variables for fraud analytic modeling.

Click on the link to read the article.

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Filed under Insurance Fraud

Third DCA Rules for Insurer in GEICO v. Gables Insurance Recovery

In an opinion issued December 10, 2014 in the case of GEICO v. Gables Insurance Recovery (a/a/o Rita M. Lauzan), the Third District Court of Appeal quashed a Circuit Court Appellate Division’s decision affirming final judgment in favor of Gables Insurance.

Lauzan, who was insured by GEICO, was injured in an automobile accident in 2008. After obtaining medical treatment, she assigned her GEICO policy benefits to All X-Ray Diagnostic Services, which subsequently assigned the benefits to Gables Insurance.

GEICO paid less than the amount it had been billed, and Gables Insurance filed a breach of contract action against GEICO. GEICO argued that Lauzan’s $10,000 PIP benefits had been exhausted and that it therefore had no further liability to Gables.

Deciding in GEICO’s favor, the Third District Court of Appeal held that the PIP statute does not require an insurer to pay more than the $10,000 limit in PIP coverage. Further, it does not require an insurer to “set aside” funds in anticipation of litigation. The Court noted that two other District Courts of Appeal have addressed the issue, holding that a showing of bad faith or impropriety on the part of the insurer is required before it can be held liable for benefits above the statutory limit.

Quoting a recent Fourth District Court of Appeal case, Northwoods v. State Farm, the Court concluded that once PIP benefits are exhausted, “an insurer has no further liability on unresolved, pending claims, absent bad faith in the handling of the claim by the insurance company.”

The case is GEICO Indemnity Co. v. Gables Insurance Recovery (a/a/o Rita M. Lauzan), Case No. 3D13-2264 (Fla. 3rd DCA, December 10, 2014). Click on the link to read the court opinion.

The case cited is Northwoods Sports Medicine v. State Farm, 137 So. 3d 1049 (Fla. 4th DCA 2014).

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Filed under Case Law, Fla. Stat. 627.736 (2008)

Broward Staged Accident Results in Five PIP Fraud Arrests

Five individuals were recently arrested for their involvement in an alleged staged accident that took place in Broward in July 2012, according to an announcement by Florida Chief Financial Officer Jeff Atwater.

The five, who were arrested on grand theft and insurance fraud charges, carried out the alleged scam which resulted in fraudulent Personal Injury Protection (PIP) claims costing almost $40,000. Officials say a sixth individual is associated with the crime as well but has yet to be apprehended.

Investigators with the Department of Financial Services’ Division of Insurance Fraud (DIF) said that the five participated in the alleged crash as vehicle passengers. Shortly after the accident, they sought medical treatment at several South Florida clinics for bogus injuries. GEICO, Ocean Harbor and Gainsco insurance companies received fraudulent PIP claims as a result of the scam.

Those arrested include: Alfredo Romero, 66, of Hollywood; Alice Martinez, 27, of Pembroke Pines; and Jose Rodas, 33, Whitney Lopez, 25, and Mirna Madrid, 37, all of Fort Lauderdale. Alfredo Romero was also arrested in July 2014 for his role in another Broward County staged accident.

The cases will be prosecuted by the Broward State Attorney’s Office.

Mario Ruiz, 32, of Fort Lauderdale is the sixth individual currently wanted in connection with this crime. Anyone with information regarding his whereabouts is asked to contact DIF at 1-800-378-0445 or the Broward County Sheriff’s Office. Citizens may remain anonymous.

The Department of Financial Services to date has awarded almost $349,000 to nearly 60 citizens as part of its Anti-Fraud Reward Program. The program rewards individuals up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme.

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

State Farm Survey Finds Drivers Admit to Cell Phone Use Behind-the-Wheel

Although most drivers support laws that prohibit cell phone use while driving, they don’t necessarily practice what they preach. That’s what State Farm Insurance Company found when they surveyed drivers about their cell phone habits behind the wheel.

According to the Sixth Annual State Farm Distracted Driving Survey—which dug deeper into consumers’ cell phone usage in vehicles—situations arose where drivers were “more likely” and “less likely” to use their cell phones. Among respondents who admitted to using their cell phones while driving, State Farm found:

Drivers are more likely to use their cell phone when they are:

  • Stopped at a red light – 63 percent
  • On an open highway – 30 percent

Drivers are less likely to use their cell phone under these conditions:

  • Dark outside – 75 percent
  • Fog – 91 percent
  • Snow – 92 percent
  • Icy – 93 percent
  • Heavy traffic – 78 percent
  • Construction zone – 87 percent
  • Rain – 88 percent
  • School zone – 83 percent

Even though most drivers say they avoid using their cell phones while in school and construction zones, the survey found that at least 10 percent reported those zones have no impact on their cell phone use while driving.

In the six years that State Farm has been conducting these surveys, trends have emerged:

  • There has been a steady reduction in the number of drivers talking on hand-held cell phones.
  • The number of people who report texting while driving has remained stable over six years.
  • Smartphone ownership is growing. By 2014, drivers who reported owning a smartphone grew to 80 percent. The greatest increases are among adults age 40 and older.
  • Smartphones create new distractions. There is a significant increase over six years in drivers using their phones for: accessing the Internet, reading email, responding to email, programming and listening to a navigation system and reading social media.
  • Drivers are more likely to talk on a hand-held phone than they are to text message while driving. Both activities are the greatest among drivers ages 18-29. They decreased as the age of drivers increased.
  • There has been an increase in the percentage of drivers who say they talk on hands-free cell phones while driving. This can possibly be attributed to advances in technology and laws restricting hand-held use.

“These six-year trends make it apparent that smartphones have created many new distractions for drivers to juggle,” Chris Mullen, Director of Technology Research at State Farm said. “While much attention is paid to the dangers of talking and texting while driving, it’s critical that we also address the increasing use of other smartphone features and other sources of distraction.”

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Filed under Uncategorized

Feds Hoping Latest Charges Against PIP Fraudster Turned ‘Alligator Whisperer’ Have Teeth

Hal Mark Kreitman’s role as the ‘Alligator Whisperer’ may land him in even hotter water if federal prosecutors have their way. Authorities were hoping the latest charges against the 51-year old, allegedly for alligator endangerment, were enough to revoke his bond on recent PIP fraud convictions and send him directly to jail.

The former Miami chiropractor was sentenced just a few weeks ago, as we reported on our FL-PIP Guide on October 15, for his role in a larger staged automobile accident fraud ring that involved Personal Injury Protection (PIP) payments to defraud insurance companies through mail fraud and money laundering. Kreitman was sentenced to eight years, ordered to pay more than $1.63 million in restitution, and scheduled to start his prison term on January 5.

According to an article in the Sun Sentinel, Kreitman was hardly out on bond before he was arrested in the Everglades by officers with the Florida Fish and Wildlife Conservation Commission. He was accused of allegedly enticing alligators to offer customers the “Alligator Experience”—face-to-face encounters with the reptiles—if they were willing to pay $250.

Authorities say Kreitman’s interactions with the alligators violate state and federal laws. As a result, the alligators involved may have to be killed because they’ve lost their natural fear of humans, making them dangerous.

After prosecutors argued that Kreitman violated the terms of his release, U.S. District Judge Kenneth Marra decided to delay his ruling, giving him the chance to carefully re-read all relevant laws. For now, the “Alligator Whisperer” remains free.

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Filed under Insurance Fraud

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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Filed under Insurance Fraud

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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Filed under Insurance Fraud