Straw Owner of Clinic Sentenced in $28 Million Medicare Fraud Scheme

Roberto Fernandez Gonzalez, a Florida man who federal prosecutors say served as the “straw owner” of a physical therapy clinic, was sentenced to 30 months in prison for participating in a Medicare fraud scheme, according to a Department of Justice release.

Fernandez was also ordered to forfeit $446,738 and pay the same amount in restitution. He pleaded guilty in June of 2013 to conspiracy to commit health care fraud.

Prosecutors say Fernandez and his co-conspirators used four physical therapy clinics, including Rehab Dynamics in Venice, FL, to submit a total of $28.3 million in fraudulent reimbursement claims to Medicare. Medicare paid roughly $14.4 million on those claims.

Fernandez’s co-conspirators obtained and controlled Rehab Dynamics, then engaged in a sham sale of the clinic to Fernandez. With no background in health care and no money to buy the business, Fernandez was strictly a front man.

The co-conspirators paid Fernandez $20,000 to operate as the straw owner from January 2008 through March 2008. During that period, Rehab Dynamics submitted $1.6 million in fraudulent Medicare claims, of which Medicare paid $446,738, the amount Fernandez was ordered to pay.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion, according to a Department of Justice report.

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Filed under Insurance Fraud

South Florida Man Accused of Car Insurance Fraud

A Weston man is accused of bilking insurance companies out of hundreds of thousands of dollars by filing claims based on details contained in accident reports from traffic accidents involving unsuspecting drivers and other consumers who never received claims payments, according to a press release issued by the Florida Department of Financial Services.

David M. Glincher has been charged with 25 counts of insurance fraud, 22 counts of grand theft, 19 counts of uttering forged instruments, and 1 count of aggravated white collar crime.

Total theft is estimated at almost $300,000, according to the announcement. The widespread scheme involved 270 victims.

Auto Loss Claim Consultants, LLC, a Florida business owned by Glincher, was used to obtain copies of crash reports. Glincher allegedly then sent fliers to victims, urging them to file “diminished-value” insurance claims. “Diminished-value” claims allow victims to recover the difference between a car’s value before the accident and after repairs have been made.

Even when people did not contact him to complete the claim forms, Glincher used information from the accident reports to file the claims and had the checks sent to him at his business, typically netting a few thousand dollars per claim.

An insurer reported Glincher after it received five suspicious claims, and an investigation revealed that Glincher had forged 19 signatures in order to file “diminished-value” claims for other people’s traffic accidents without them knowing it.

“Insurance fraud drives up costs for all Floridians, and we will not allow it to continue,” said Florida Chief Financial Officer Jeff Atwater.

Glincher is now free on $29,500 bond after being booked into the Broward County Jail. He faces up to 30 years in prison.

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

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

Medical Costs Associated with Auto Accidents Rise Despite Reduced Injury Severity

Medical expenses tied to auto injury insurance claims have outpaced inflation, even though there has been a downturn in the seriousness of those reported injuries, according to a study recently released by the Insurance Research Council (IRC).

According to the report—Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost and Compensation—the average claimed economic losses reached $14,207 per personal injury protection (PIP) claimant in 2012, growing at an annualized rate of 8 percent from 2007.  Economic losses include expenses for medical care, lost wages and other out-of-pocket expenditures. Among bodily injury (BI) claimants, the rate of average claimed losses grew 4 percent to $10,541 in 2012 from 2007.

However, the study found that over the same period, measures such as the “percentage of claimants who had no visible injuries at the accident scene” or who had “fewer than 10 days in which they were unable to perform their usual daily activities” provided evidence of a continuing decline in the severity of injuries.

The study also looked at a variety of factors in the upswing of medical care expenses, including the shift toward more costly treatments and diagnostic alternatives as well as dramatic increases in billed charges for visits to numerous types of medical providers. The use of pain clinics, attorney involvement, and claim abuse were found to exacerbate the increases in medical care expenses, the study found.

“Medical care costs continue to escalate, especially among first-party claimants,” Elizabeth Sprinkel, senior vice president of the IRC, announced. “Looking forward, the industry will need to continue its vigilance in contending with these expanding costs, particularly as it monitors the possible spillover effects from general healthcare reform.”

The 2014 edition of the study is the seventh of its kind conducted by the IRC.  The council collected data on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages. Twelve insurers, representing 52 percent of the private passenger auto insurance market in the United States, participated in the study. For more information, visit IRC’s website at http://www.insurance-research.org.

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Filed under Fla. Stat. 627.736 (2008)

Property-Casualty Insurers Face Cost Shifting Risk from The Affordable Care Act

The Insurance Research Council (IRC) has studied the possible impact of the Affordable Care Act (ACA) on the property-casualty industry. The IRC’s study concludes that there will be significant and long-lasting consequences to the property-casualty industry due to the change in healthcare markets and health insurance systems in the United States. Summarized below are some of the issues raised by the IRC’s research.

The first potential impact, which the IRC predicts will be major, is cost shifting from health insurance systems to property-casualty insurance systems. To offset anticipated reductions in revenues from health insurance providers due to cost containment efforts and initiatives by public and private health insurers, medical providers may seek to increase revenues from other payers, including property-casualty insurers. To do so, medical providers may seek higher reimbursements from other payers and increase the volume and mix of services provided to patients covered by other payers.

The widely varying levels of reimbursement leave some payers, including property-casualty insurers, particularly vulnerable to cost-shifting efforts by hospitals and other providers. While large health insurers are able to negotiate lower prices or significant discounts for medical services, the authority and ability of property-casualty insurers to negotiate reimbursement levels varies from state to state. This leaves the property-casualty insurer vulnerable to cost shifting from medical provider to insurer.

A second potential impact of the ACA is to prompt individuals with injuries to file a claim with a property-casualty insurer instead of a health insurer. The reason for the “claim shift” is that the ACA may have made it more expensive or difficult for the individual to file a health insurance claim. Many people are insured under health insurance plans that have high deductibles and coinsurance provisions that increase out-of-pocket costs for insured individuals. The claimant, therefore, may be motivated to file their claim with a property-casualty insurer, if possible, in order to avoid incurring costs due to high deductibles and cost-sharing requirements.

Additionally, health insurers may become more aggressive under the ACA in refusing to provide coverage for certain procedures. If insureds fear that their desired treatment will be denied by the health insurer, they may contend—legitimately or not—that their claim is covered by property-casualty insurance. Fraudulent or not, either way a claim shift will have occurred.

A third important potential impact of the ACA is a rise in fraudulent claims due to increased fraud-fighting emphasis. The IRC refers to a paper published by the National Insurance Crime Bureau (NICB) in which the NICB concludes: “because property-casualty insurance is not covered by the ACA, career criminals and unscrupulous medical providers will shift their attention to the property-casualty business to avoid increased scrutiny from health insurers.” The NICB did not estimate the magnitude of this potential effect, but did suggest some actions that property-casualty insurers could take to mitigate its potential impact (e.g., market-based fee schedules and bill review authority).

In conclusion, although not specifically targeted by the ACA, property-casualty insurers may nonetheless experience significant and long-lasting effects from the implementation of the ACA. The IRC recommends that property-casualty insurers begin considering and implementing tools to reduce the ACA’s potentially negative impact on the industry.

Click on the link to read the IRC study.

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Filed under Fla. Stat. 627.736 (2008)

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

“Operation On the Run” Results in Five Arrests Related to Miami PIP Insurance Scam

Five people were arrested for their involvement in a Personal Injury Protection (PIP) insurance scam as part of an undercover investigation that began in June 2013, Miami-Dade State Attorney Katherine Fernandez Rundle and City of Miami Police Chief Manuel Orosa jointly announced.  The five involved in the racket worked at Central Therapy Center, 2742 S.W. 8th Street in Miami, which has now been shut down.

The investigation, called Operation on the Run, started with a tip about people who staged car accidents and then perpetrated PIP fraud.  According to the State Attorney’s Office (SAO), an undercover Miami detective used a manufactured crash report to gain access to the fraudulent activity at the clinic and obtained information about how the clinic worked, how much money he could make, and how much additional money he could receive for recruiting new patients.

The detective received a cursory medical examination and superficial medical therapy on site, but also had to sign numerous blank medical forms, which led to insurance being charged for approximately 44 therapy treatment claims submitted for dates between July through September 2013.  Overall, Central Therapy Center billed the insurance company a total of $20,488.00 for injuries that never really happened.

Charged with organizing, planning or participating in a staged accident; false and fraudulent insurance claims; grand theft; organized scheme to defraud; and patient brokering were:  Rodolfo Rodriguez Gallo Blan, Vivian Caridad Garcia and Carlos A. Sanchez.

Yunaisky Machado Madruga and Belkys Hernandez were accused of false and fraudulent insurance claims; grand theft; and organized scheme to defraud.

“These types of clinics are the core elements of any ongoing PIP insurance fraud scam. They exist to steal, not heal,” State Attorney Katherine Fernandez Rundle said. “Those individuals who hope to snatch some cash from the pockets of Dade’s insured motorists should know that the Miami Police Department and my insurance fraud prosecutors are out to get you. Find a new line of business or prepare for jail.”

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Filed under Insurance Fraud