Category Archives: Insurance Fraud

Nine Arrested in Miami PIP Fraud Schemes

There has been no shortage of auto insurance fraud in Miami of late as Chief Financial Officer Jeff Atwater announced the arrests of nine individuals who have been charged in connection with eight separate cases of personal injury protection (PIP) fraud schemes.

According to Atwater’s announcement, the Division of Insurance Fraud (DIF) uncovered seven staged vehicle accidents in which the scammers collectively filed more than $242,000 in fraudulent billings to 11 different insurance carriers. Staged accident participants were referred to at least 13 different South Florida medical clinics.

The nine were arrested for acting in one or more of these capacities:

  • The organizer or staged accident recruiter;
  • The patient broker who encouraged participants to seek post-accident medical treatment for bogus injuries;
  • The licensed medical provider who agreed to sign off on falsified medical documents in exchange for payment billed under PIP insurance benefits.

The investigation into these cases remains ongoing and additional arrests are expected, DIF said.

“While their injuries may have been fake, PIP fraud is real and it is not a victimless crime,” CFO Atwater commented. “When insurance carriers absorb such high-dollar losses to fraud, we all pay in the form of higher insurance premiums. I’m thankful to our dedicated investigative team for shutting down this fraud ring.”

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Filed under Insurance Fraud

Driving in Florida May Be Hazardous to Your Wallet, New Study Finds

You don’t want to have a car accident in Florida, according to a new study released by WalletHub last week. Their numbers ranked states on how ‘safe’ it is for drivers’ finances after an accident. The study placed Florida dead last among 50 states and the District of Columbia—which means driving in the Sunshine State can be risky to your wallet.

In producing the rankings, WalletHub looked at whether drivers had insurance and whether that insurance would be enough to cover the damages in the event of a car accident. They found significant differences between states. Specifically, the study took into account available car liability insurance to protect others, other forms of required insurance to protect drivers, and the percentage of uninsured drivers in each state.

When those three factors come together, Florida holds the dubious distinction of being the “worst state to get into a car crash,” WalletHub says. Here’s why:

  1. Insurance requirements in Florida are lower than in most other states. Florida drivers are only required to carry minimum liability coverage of $10,000 per person. The amount goes up to a $20,000 minimum for accidents involving multiple parties. By comparison, Maine and Alaska—the states ranked highest—both require $50,000 in coverage up to two people and $25,000 in property damage insurance, according to WalletHub.
  2. A high percentage of Florida drivers are uninsured. According to the study, 23.8 percent of drivers carry no auto insurance. Florida is only surpassed by Oklahoma, which has 25.9 percent uninsured drivers on the road. The best state where drivers have coverage is Massachusetts—only 3.9 percent of their drivers are uninsured
  3. Florida does not require additional forms of insurance coverage to protect drivers. Although Florida does require personal injury protection (PIP) coverage, the state does not require medical payment coverage or uninsured motorist coverage for bodily injuries or personal damage.

What can Florida drivers do? Experts recommend spending a few extra dollars to add uninsured/underinsured motorist coverage to your auto insurance policy to offer protection.

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Cuban Crime Rings behind Florida Staged Accident Fraud

Originally intended to provide refuge to those fleeing Cuba’s Castro regime, the Cuban Adjustment Act of 1966 has enabled a thriving Cuban criminal network to expand from South Florida throughout the country and take hold without legal recourse. A recent three-part series by the Sun Sentinel, which examines the prevalence of this illegal activity, reveals that the cost to American businesses and taxpayers exceeds $2 billion over the past 20 years.

The story found Cuban criminals often work in rings that specialize in non-violent economic crimes such as credit card fraud, cargo theft, Medicare fraud, and insurance fraud through staged auto accidents. Frequently, they make their money, move it to Cuba, and return to the U.S. when more money needs to be made.

One massive auto insurance fraud ring with more than 100 participants—most of whom were Cuban—exemplifies just how easy it is for these groups to pull off the crime and get away with it because of their special immigration status.

In this particular case, 21 clinics in Palm Beach and Miami-Dade counties were involved in $18 million worth of fraud. Recruits found participants to smash cars with sledgehammers and stage vehicle accidents. Participants were then sent to the identified clinics that billed injury claims to auto insurance companies for treatment of their fake maladies.

It was discovered that the accused ringleaders were Cuban immigrants who were returning to Cuba on a weekly basis. Millions of dollars stayed in Cuba, apparently used to purchase properties and support family there, as IRS agent Pamela Martin testified at a court hearing last year.

After the FBI started to bust the fraud ring and make arrests, five main organizers fled back to Cuba, evading capture.

According to Fred Burkhardt, who is a South Florida auto-insurance industry fraud investigator from the National Insurance Crime Bureau (NICB), the small-scale outfits of a decade ago have evolved and become very sophisticated and organized.

“Someone is sitting back with a strategy, figuring out where the clinics will be, where the patients will come from,” he said. “There’s a structure involved. There are specific duties that people have.”

Staging auto accidents to defraud insurance companies basically started in Miami in the late 1990s, the Sun Sentinel reported. By 2007, the crime has progressed to other Florida cities like Fort Myers, Tampa, Orlando and Jacksonville, Burkhardt said.

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Dunedin Man Arrested for Fabricating Vehicle Thefts and Defrauding Insurance Company

A 26-year-old Dunedin man was arrested by Pinellas County Sheriff’s Detectives on January 14 for auto insurance fraud.

Joseph Harris allegedly lied about three incidents of vehicle theft, and then falsely reported the burglaries to his insurance company to collect money.  Harris reported that the thefts took place at his home on February 28, 2014, June 12, 2014, and September 30, 2014.

According to a recent news story on TBN Weekly.com, Harris claimed that parts were stolen off his truck, which was parked in his driveway.   However, during a January 14 interview with detectives, the suspect supposedly admitted that he took the parts and buried them in his back yard in order to report them stolen.

Harris said he lied about the thefts because he needed the money.  He was able to collect over $10,000 from his insurance company as a result of his fraudulent activity.

Detectives charged Harris with two counts of false report of a crime, and two counts of defrauding an insurance company.  He was booked into county jail, and released on $4,300 bond on January 15.

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Legislators Unlikely to Change Florida’s No-Fault Auto Insurance Law Right Now

Chief Financial Officer Jeff Atwater wants Florida’s legislators to continue to be patient before considering any rash actions that would change personal injury protection (PIP) coverage in the state. That’s because a recent report released by the state Office of Insurance Regulation (OIR) shows that increases in fraudulent PIP claims have basically been stopped.

The Florida Department of Financial Services is attributing these results to the passage HB 119, effective January 1, 2013, which created some exclusions for coverage under PIP insurance and limited for non-emergency conditions. The amended No-Fault Law excluded PIP reimbursements to massage therapists and acupuncturists, and also required individuals involved in car crashes to seek treatment within 14 days of a motor vehicle accident. PIP allows up to $10,000 in benefits for emergency medical conditions, but places a $2,500 cap on non-emergency conditions. It is mandatory for all Florida drivers to carry PIP.

According to a story in the Sun-Sentinel on January 7, the law set benchmarks for insurance carriers to lower rates. The OIR report showed that from 2011 through September 2014, the average medical cost paid through PIP claims dropped 14 percent statewide.  In South Florida, a hotspot of fraudulent PIP activity, the average payment decreased 28.7 percent, the article reported.

However, it is thought that these numbers are too preliminary and do not show the full impact of the law, yet.

House Insurance & Banking Chairman John Wood, R-Winter Haven, noted in the article that he would be “surprised if there was ‘major’ PIP legislation before the issue is settled in court.”

Senate Banking and Insurance Chairwoman Lizbeth Benacquisto, R-Fort Myers, said that she is still reviewing the OIR report, and likes to ensure that if changes are made, they have “a very positive effect on policyholders and our constituents.”

The annual legislative session begins in March.

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

Staged Accident Organizer Arrested in Orlando

A 41-year old from Orlando, who was at the center of an alleged staged vehicle accident which occurred in 2013, was recently apprehended by the Florida Division of Insurance Fraud (DIF).

Jean Severe was arrested in November for organizing the fake crash.  According to DIF, participants were sent to Florida Chiro & Rehab Center for unnecessary medical treatment of their bogus injuries.  The scheme resulted in more than $6,000 in false claims filed with insurers Allstate and GEICO.

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Separate PIP Fraud Cases Lead to Three Jacksonville Arrests

Three individuals from the Jacksonville area, who have allegedly been involved in personal injury protection (PIP) fraud schemes, have recently been arrested by the Division of Insurance Fraud (DIF) in separate cases.

The first individual apprehended was Walter Juarez Lopez, who owned and operated Therapy Diagnostic Tech Medical.  According to DIF, the 42-year old helped organize staged accidents in 2011, in which participants were sent to his clinic as well as Arlington Rehabilitation Services. His role in the scheme resulted in more than $32,000 in fraudulent claims, DIF said.

Also arrested in November was Jose Burgos who organized a fake crash for insurance money in 2012.  The 40-year old, who sent participants to One Touch Therapy Center, was tied to more than $31,000 in false claims, DIF reported.

Last but not least, Edwin Edgardo Martinez-Rodriguez, 46, was also nabbed for his role as a staged accident organizer.  In 2012, he organized a fake accident that resulted in more than $16,000 in false claims made by Gate Parkway Diagnostic Center and Wellness Rehab Services, LLC, according to DIF.

Fraudulent claims were submitted to several insurance companies including Direct General, Esurance, GEICO, Infinity, Progressive, State Farm and Travelers.

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Filed under Insurance Fraud