Category Archives: Insurance Fraud

Fort Lauderdale residents arrested for PIP Fraud

The Florida Department of Financial Services’ Division of Insurance Fraud announced on March 19, 2015 the arrest of two Fort Lauderdale Residents for PIP fraud following a staged accident. Kendrick Callins and Lashaunda Gibbs were arrested for staging auto accident, patient brokering and personal injury protection insurance fraud.

The Division of Insurance Fraud, Federal Bureau of Investigation, Broward County Sheriff’s office and the Fort Lauderdale Police Department investigation revealed that Callins and Gibbs organized and participated in a staged accident on September 22, 2012, in Fort Lauderdale. The staged accident involved participants, recruited by Callins and Gibbs, who intentionally drove a rented U-Haul truck into a passenger vehicle occupied by arrestees. The arrestees submitted fraudulent insurance claims which were paid by the insurers. Callins and Gibbs each face a maximum sentence of 25 years.

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Cape Coral Cracks Down on Drivers without Insurance

Representatives from the National Insurance Crime Bureau (NICB), the local police department, and 17 state and national auto insurance carriers conducted an insurance crackdown in Cape Coral, Fla. on Tuesday, March 17. More than 35 police officers split into three groups, all on the lookout for uninsured motorists and motorists with fraudulent insurance.

The officers pulled over speeders and drivers not wearing their seatbelts, and then checked whether they had valid proof of insurance in hand. Drivers who were stopped for speeding or being unbuckled, but had valid paperwork available, could be let go with a warning. At the end of the day, officers had given out 230 written warnings and 68 uniform traffic citations, 15 of which were for no proof of insurance.

“We try to do an operation like this at least once a year,” Cape Coral Police Department spokesman Sgt. Dana Coston said. While the officers pulled over drivers, the NICB and dozens of insurance representatives were back at the police station, working directly with the officers to verify coverage.

A common scheme, Sgt. Coston explained, is for an individual to apply for auto coverage, get the paperwork, cancel the insurance, and then use the now-invalid insurance card as proof of coverage. Officers usually have to rely on state data, which is often outdated, to verify coverage, but because officers had “real time” access to insurance representatives on Tuesday, they could confirm on the spot if the insurance coverage was valid.

Sgt. Coston was heartened by the results of the day’s work. “Seeing that [only] about 5 percent of the drivers had any type of problem when stopped today is very encouraging. That’s probably one of the highest rates of compliance we’ve seen in years.”

Coston went on to explain that, because it is likely that at least some of those ticketed will show up in court with their missing paperwork, “the rate of compliance is actually even higher than the 95 percent we saw today.”

As for those who continue to drive without insurance or with fraudulent insurance? “They’ll get caught eventually, it’s just kind of rolling the dice,” said Cape Coral Police Sergeant Jon Kulko.

Cape Coral, Fla. is located on the Gulf Coast in Lee County, just south of Fort Myers.

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Miami Health Care Fraud Scheme Results in 14 Arrests

A $13.9 million fraud scheme involving a network of medical clinics resulted in the arrest of 14 Miami-Dade County residents on March 11, according to the U.S. Attorney’s Office for the Southern District of Florida.

As readers of the FLPIPGuide.com know, our coverage of medical clinics typically relates to PIP fraud. In this case, however, the named medical clinics allegedly intended to defraud health care insurers and employer-sponsored plans.

The following individuals were charged with health care fraud and conspiracy to commit health care fraud in the case of United States v. Reyna/do Castillo, et al.:

  • Reynaldo Castillo, 46, Hialeah
  • Hendris Castillo Morales, 33, Miami
  • Lisbet Castillo, 23, Hialeah
  • Maite Garcia, 40, Hialeah
  • Osvaldo Marin Medina, 48, Hialeah
  • Alejandro Biart, 40, Miami
  • Alejandro Jesus Cura, 47, Miami
  • Dania Chavez, 43, Miami
  • Ezequiel Severo Casas, 28, Hialeah
  • Humberto Martinez Rodriguez, 43, Hialeah
  • Jose Gerardo Gonzalez, 23, Miami
  • Julio Suarez, 47, Miami
  • Nelson Ramos, 56, Miami
  • Reinaldo Cinta Gonzalez, 46, Miami
  • Rudy N. Dominguez, 25, Hialeah
  • Diulys Martinez, 39, Miami

As many as 30 medical clinics based in Miami, Hialeah, Hialeah Lakes, and Doral, Fla. were owned or controlled by Reynaldo Castillo, Hendris Castillo Morales, Lisbet Castillo Batista, and Maite Garcia, according to the indictment.

Physician names and licensing information obtained through medical staffing companies was allegedly misappropriated to conceal the actual clinic ownership. Additionally, some of the individuals charged were paid fees in exchange for the use of their names as fronts for corporate ownership, bank accounts, and check cashing privileges.

Insurance companies Cigna, Blue Cross Blue Shield (BCBS), and United Health Care (UHC) were affected by the scam. Several self-insured employers whose insurance plans were managed by the three carriers were also the target of fraud, including:

  • Miami-Dade Public Schools
  • City of Miami
  • Pepsi Co.
  • BJ’s Wholesale Club
  • Macy’s
  • Nextera Energy
  • Radioshack
  • Sodexo

False and fraudulent claims totaling $125.7 million were submitted to the insurance carriers and employer plans, of which $13.85 million was paid. Many of the claims were for treatments that were not ordered by a physician or services that were never delivered.

The indictment also alleges that Reynaldo Castillo, Lisbet Castillo Batista, and Hendris Castillo incorporated an investment company to receive proceeds from the clinics and used those proceeds to purchase real estate properties. Those properties are subject to criminal forfeiture.

In a companion case, United States v. Ernesto Castillo, Osvaldo Marin Medina, Alejandro Biart, Ernesto Castillo, 43, of Hialeah, and Danny Jacomino Bordon, 50, of Miami were charged with health care fraud for causing Amazing Medical Services, Inc., Serenity Rehabilitation Center, Inc., and World of Rehabilitation Therapy, Inc. to submit false claims to Cigna totaling approximately $5.1 million, which resulted in payments to the three companies of approximately $1.1 million.

Jose Gerardo Gonzalez, Reynaldo Castillo, Ezequiel Severo Casas, and Danny Jacomino Bordon remain at large.

Click on the link to read the news release issued by the U.S. Attorney’s Office for the Southern District of Florida.

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Florida Leads the U.S. in Fraud and Related Complaints

Florida sweeps the nation, but not for an enviable title. The Federal Trade Commission (FTC) put the Sunshine State at the top of its list for identity theft, fraud and related complaints.

The agency recently released its annual Consumer Sentinel Network Data Book, which compiled complaints made by consumers to the FTC, state and federal law enforcement agencies, national consumer protection organizations, and non-governmental organizations from January–December 2014. In addition to national statistics, the report also breaks down data by state and metropolitan area.

No matter how you slice it, Florida was the top source of complaints per capita both for identity theft, and fraud and other related complaints out of the 2,582,851 complaints entered into the Consumer Sentinel Network last year. Florida also held the top spot in 2013.

From 50 U.S. metropolitan areas, Florida has 14 identified fraud hotspots, based on the number of complaints per 100,000 people. They include:

  • Homosassa Springs (ranked #2)
  • Jacksonville (ranked #11)
  • Miami-Fort Lauderdale-West Palm Beach (ranked #14)
  • Palm Bay-Melbourne-Titusville (ranked #15)
  • North Port-Sarasota-Bradenton (ranked #17)
  • Tampa-St. Petersburg-Clearwater (ranked #18)
  • Deltona-Daytona Beach-Ormond Beach (ranked #19)
  • Punta Gorda (ranked #22)
  • Gainesville (ranked #24)
  • Sebastian-Vero Beach (ranked #26)
  • Port St. Lucie (ranked #28)
  • Orlando-Kissimmee-Sanford (ranked #30)
  • Pensacola-Ferry Pass-Brent (ranked #37)
  • Ocala (ranked #49)

The report also broke down the 30 worst categories of fraud reported nationwide. Identity theft was number one, followed by debt collection and imposter scams. Auto related fraud also made the top 10 on the list in 2014, coming in seventh.For those who investigate, detect and litigate fraudulent insurance claims, it’s not a big revelation that the lion’s share of fraudulent complaints transpire in Florida. A recent article in the Tampa Bay Times provides insight about factors that make the state so attractive for this type of activity:

  1. More temporary or transient residents having fewer strong connections to their communities.
  2. Resources stretched thin. Federal attention is focused on more critical issues, while state resources to investigate and prosecute fraud are limited to the most egregious cases.
  3. Fewer ways to scrutinize personal incomes due to no state income tax.
  4. A high concentration of seniors who receive Social Security, Medicare, and other retirement payments.

A reputation as a “second chance” state where many settle here to get back on track, but others still lapse into “old ways.” Al Scudieri, who spent 30 years as a special agent of the FBI, points out in the article, “Florida’s not only the third most populated, its population is different. I think we have a more affluent, elderly population. With a heavier concentration of those demographics in this state, they are the most susceptible.”

For an in-depth look at the statistics in Florida and nationwide, click on the link to view the FTC’s 2014 Consumer Sentinel Network Data Book.

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The High Cost of Auto Insurance Fraud

Auto insurance fraud hits drivers’ wallets hard, not only with the apparent increase in premiums, but also indirectly, through higher costs that are eventually passed down to consumers. A recent story on Fox Business reported about the heavy toll this type of fraud takes on many Americans.

According to the National Insurance Crime Bureau’s (NICB) 2013 report, 78,024 suspected cases of auto insurance fraud were reported nationwide in 2012, an increase of 12.7% from 2011 to 2012. Those numbers helped to raise a three-year total—from 2010 through 2012—to more than 209,000 questionable claims (QCs).

Out of all the types of insurance fraud, auto insurance makes up the largest piece of the fraud pie, the NICB says. There were 4.5 times more questionable auto insurance claims than homeowners’ personal property QC’s (17,183), and almost 17.5 times more than the third highest category—workers’ compensation, including employers’ liability.

Industry studies have estimated that almost a quarter of the bodily injury claims related to auto accidents are false.  In addition, there is almost a 10 percent fraud rate for property and casualty claims made against auto insurance.

This adds up to about $200-$300 per year in extra costs on each auto insurance premium.  But, these are just considered the direct costs.  As far as indirect costs, the Texas Department of Insurance estimates that they add up to about $1,000 per family each year.  These costs are the portion of inflated expenses that businesses have to pay to insurers as a result fraudulent crime. This portion translates into increased costs of goods and services that are passed along to consumers.

In addition, hard fraud, or when the insurable event is fabricated outright or a staged accident, appears to be on the rise and feeds into auxiliary hazards of auto insurance fraud.  Because staged car crashes often exploit people who happen to be in the wrong place at the wrong time, these victims unintentionally become involved in the accidents or in the subsequent series of events, which can have severe consequences such as injury or even death.

According to the Fox News story, there have been numerous incidents where staged accidents have spiraled out of control, resulting in critical injuries and fatalities.  Although the instigators of these types of accidents have been prosecuted, it does not end the motivation to engage in auto insurance fraud.

Overall, the Coalition Against Insurance Fraud estimates that the total cost of fraudulent claims is in the range of $80 billion annually. The group has found that claims tend to rise during difficult economic times, which was evident during the recent recession.

The NICB has a toll free hotline to report fraud anonymously for further investigation.  The number is 1-800-835-6422 or 1-800-TEL-NICB.

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

Orlando Clinic Operators Arrested in PIP Fraud Scheme

Dr. Lherisson Domond, a Coconut Creek physician, fronted ownership of the Unity Pain and Injury Center clinic for most of 2012 in exchange for monthly payments of $1,500, according to the Florida Department of Financial Services.

Domond admitted that he agreed to be paid for the use of him name as owner of the unlicensed medical clinic. Further investigation revealed that Nesly Loute of Naples and Pierre Alex Herisse of Orlando actually managed the clinic’s operations.

In investigating Unity Pain and Injury Center, the Division of Insurance Fraud discovered that the clinic illegally provided medical treatment and physical therapy to individuals involved in automobile accidents. The clinic then billed the treatments to various insurance companies under the PIP coverage of patient insurance policies.

The three individuals face felony charges for fraud, operating an unlicensed clinic, and grand theft, all of which carry sentences of up to 30 years.

The Division of Insurance Fraud reports that it has made 249 PIP arrests since July 1, 2014.

Click on the link to read the news announcement about the Unity Pain and Injury Center.

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Filed under Insurance Fraud, Licensing

Hialeah Police Crack Down on Drivers with Fake Insurance Cards

On February 12, 2015, authorities in Hialeah, Hialeah Gardens, and Medley clamped down on drivers carrying fake insurance cards, according to a news report on CBS Miami.

Officers stopped randomly-selected cars and asked drivers for their license, registration, and proof of insurance. Police then contacted the insurance companies to verify coverage. If the card turned out to be fraudulent, the driver was arrested.

Two drivers were arrested for carrying fake insurance cards, while 27 other arrests were made for various traffic violations.

According to the National Insurance Crime Bureau, the use of fake insurance cards has become a national epidemic.  “If you have a printer and you have a computer, you can download a fake insurance card and it looks real,” said Hialeah Police spokesman Carl Zogby.

The use of fake or fraudulent insurance cards affects legal Florida drivers when an uninsured driver is involved in a motor vehicle accident, according to the report. The costs incurred in these accidents are eventually passed on to legal drivers in the form of higher insurance rates.

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