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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Filed under Insurance Fraud

CFO Jeff Atwater Supports Fighting Fraud During 2015 Legislative Session

CFO Jeff Atwater supports the Health Care Clinic Proposed Legislation House Bill 1127 and Senate Bill 1306 that strengthen the Agency for Health Care Administration’s (“AHCA”) Health Care Clinic Act (“HCCA”). The proposed legislation:

  • Creates new certificate of exemption mandates for clinics exempted from mandatory licensure in HB 119 and criminal penalties for certain AHCA clinic violations;
  • Increases the number of crimes that may be investigated by the Division of Insurance Fraud;
  • Requires insurers to have SIU departments with specific requirements and establishes state oversight to help fight insurance fraud;
  • Creates additional criminal penalties for unlawful claims, whether paid or not.

Please click here to review the full summary.

For additional information you may visit http://www.flhouse.gov.

If you have any questions concerning this topic, please contact any member of the Roig Lawyers Insurance Services Group.

Contributing Authors:

MICHAEL A. ROSENBERG

MARK J. ROSE

MIGUEL R. ROURA

DENNIS LAROSA

 

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Filed under Fla. Stat. 627.736 (2008)

Google Compare Auto Insurance Launches in California

As reported earlier in FLPIPGuide.com, recent rumors about Google entering the U.S. auto insurance market have proven to be true as the tech giant recently announced its launch of Google Compare Auto Insurance in California. A roll-out in more states is planned.

According to a recent article in Insurance Journal, Google calls its online price-comparison service a “seamless, intuitive experience for connecting with your customers online.”

A company-issued news release said, “Whether you’re a national insurance provider or one local to California, people searching for car insurance on their phone or computer can find you along with an apples-to-apples comparison of other providers all in as little as 5 minutes.”

The Mountain View, Calif.-based company indicates that participation in Google Compare is based on a flexible cost-per-acquisition model.  Payment is not a factor in ranking or eligibility, according to Google.

The Google Compare Auto Insurance portal is user-friendly, and lists a variety of carriers, including Mercury and MetLife, who are partners in the project. Californians simply enter their zip code to bring up a form that asks for basic information such as name and date of birth. There is also a “speed things up” autofill feature, especially convenient to those on Google’s Chrome browser. Visitors to the site are self-directed through screens, eventually resulting in quotes for auto insurance.

Google Compare Auto Insurance Services Inc. has been licensed to sell insurance in at least 26 states and could reportedly be working with CoverHound, which currently offers online quotes for multiple insurers including Hartford, esurance, 21st Century, Travelers, Safeco, National General, Progressive, Foremost, Plymouth Rock and others, Insurance Journal said.

The company intends to introduce ratings and reviews, as well as local agent support for providers with agent networks.

Google’s entry into the insurance market, along with its role in building autonomous vehicles, could make it a dominant player in the field. William R. Berkley, CEO of W.R. Berkley Corp., revealed in a management seminar presentation to independent agents in January that “Google has the capacity to change auto insurance” because of the competitive advantage it gained when the company invested a significant amount of money to “actively build a rule-road map of America.”

An article in TechCrunch reported that several major insurance carriers may be taking a wait-and-see approach, however.

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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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Filed under Insurance Fraud

Auto Insurers Warn that Driverless Cars May Affect Profitability

While driverless cars could be hitting the roads in as little as five years from now, many auto insurers are worried about the far-reaching implications this autonomous technology could have on their industry’s bottom line. According to the Insurance Information Institute (III), the industry brought in $107.4 billion in passenger-car auto insurance premiums in 2013, the latest year for which figures are available.

In a March 3rd Wall Street Journal article, “The Driverless Car, Officially, Is a Risk,” it was reported that three insurance suppliers as well as an auto parts manufacturer have already cautioned investors in their most recent annual reports that the dawn of the self-driving vehicle and its technology may greatly affect their business model in the future.

Companies usually regard their annual report’s risk-factor disclosures as a place to point out potential difficulties and disruptions and to protect against their liability—not as a prediction of what’s to come. But the fact that driverless cars have been mentioned in several annual reports is telling.

According to the WSJ article, Cincinnati Financial Corp., which produces about a quarter of its premiums from commercial and consumer auto policies, warned its forecasts could be flawed due to “Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products.”

In addition, Mercury General Corp. said that “the advent of driverless cars and usage-based insurance could materially alter the way that automobile insurance is marketed, priced, and underwritten.” The company provides most of its auto coverage in California.

Industry analysts believe a variety of consequences could result by taking the driver out of the equation:

  • Insurers may sell fewer individual policies
  • Insurers may have to cover fewer accidents
  • Technologically-advanced cars may cost more to repair
  • Some of the expense from consumer auto insurance may shift to commercial liability policies as more automakers and software firms face litigation for accidents
  • Larger policyholders could have more bargaining power than many small ones, potentially putting more pressure on premium revenue

The Insurance Information Institute also addressed this topic on its website. According to the III’s recently-updated report, driverless cars are viewed by the organization as one natural outgrowth from a multitude of advances in safety technology.

Numerous developers of driverless cars are concerned that regulatory matters and costs could delay their launches to market, but in any event, these technologies are still moving forward.

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Filed under Fla. Stat. 627.736 (2012)

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

Dangerous Driving Habits Revealed in AAA Study

Even though most drivers support safe driving habits, many do not put them into practice, a recent study by the AAA Foundation for Traffic Safety found. The Foundation’s research points to a “culture of indifference” among drivers who place a high value on safe travel, but also admit to engaging in behaviors they consider unsafe, such as speeding and impaired driving.

The 2014 Traffic Safety Culture Index reports the results of a study in which drivers were surveyed about their drinking and driving habits, texting and cell phone usage, speeding and driving through red lights, and drowsy driving. The following is an overview of the results.

Drinking, Drugs and Driving

The message about the dangers of drinking and driving has been sinking in, as 66 percent of those drivers surveyed view the practice as a very serious threat to personal safety. In addition:

  • 97% consider it unacceptable to drive when someone has had too much to drink
  • 80% believe that anyone convicted of driving while intoxicated more than once should have an alcohol interlock ignition device to prevent them from starting the car if they have been drinking
  • 73% think alcohol interlock ignition devices should be installed in all new cars
  • 63% favored lowering the blood alcohol level from .08 to .05 g/dl

Even so, one in eight drivers still reported driving in the past 12 months while their blood alcohol level might have been at or over the legal limit, and 19 percent said they did so in the past month.

As far as drug use, almost half of those surveyed believe it is a much larger problem than it was three years ago.

  • 56% view using illegal drugs as a serious threat
  • 28% see prescription drug use an issue
  • Over 90% agreed that it was unacceptable for a driver to “drive one hour after using marijuana”
  • 85% supported laws that would make it “illegal to drive with a certain amount of marijuana in one’s system”

Texting and Cell Phone Usage

When it comes to cell phone use, drivers rate certain behaviors more risky than others. The study found:

  • 69% reported talking on a cell phone while driving in the past 30 days
  • 33% said they “talk on their cell phone while driving fairly often or regularly”
  • Over 50% say the habit is dangerous
  • 66% say the habit is unacceptable

However, 65% of drivers consider it acceptable to use hands-free phones, while only 33% view it as unacceptable.

In terms of texting, 78% of drivers believe that texting and emailing while driving are dangerous.

  • 89% of drivers support laws against texting, typing and emailing while driving
  • 68% strongly support such a law

However:

  • 36% admit to reading a text message or email while driving in the last 30 days
  • 9% admit that they do it fairly regularly
  • 27% like to multi-task and admit to driving and typing a text or email at the same time over the past 30 days
  • Less than 50% support the federal government regulating “non-driving-related in-vehicle technologies” for being considered a distraction.

Age definitely has an impact on how distracted driving is perceived. Drivers over the age of 60 are the least likely to engage in these types of activities, while drivers aged 25-39 are most likely to talk on the phone, text and email, and view these activities as acceptable. Younger drivers, ages 16-18, also believe it’s acceptable to text, email and use the internet while driving.

Speeding, Red Lights and Drowsy Driving

A behind-the-wheel feeling of apathy toward speeding, running red lights and drowsy driving is also apparent in drivers, according to results from the study.

While 76% consider it unacceptable to drive more than 15 mph over the speed limit and 30% view speeding on the highway as a serious threat to their safety, 46% said they have driven 15 mph or more over the speed limit in the past 30 days and 14% said they do it fairly regularly. In addition, 95% consider driving 10 mph over the speed limit in a school zone unacceptable, but only 44% view speeding on residential streets as a very serious threat.

In terms of how drivers handle red lights, 94% consider it unacceptable to drive through a red light in cases where they could have stopped, but 33% admit to running a red in the past 30 days and 2% do it regularly.

As far as driving while sleep deprived, 96% consider it unacceptable to drive when they are so tired that they have trouble keeping their eyes open, but 29% reported that they had driven while struggling to stay awake in the past 30 days, 20% said they had done this more than once, and 2% do it on a regular basis.

Click on the link to read more about the AAA 2014 Traffic Safety Culture Index.

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Filed under Uncategorized