Fraudulent PIP Billings of $80K Lead to Fort Lauderdale Arrests

Three Fort Lauderdale residents—Claudio Boyett, Leslie Sanchez Martinez and Claudia Hoy—were arrested for participating in a staged accident that resulted in the submission of $80,000 in fraudulent PIP claims, according to Florida Chief Financial Officer Jeff Atwater.

The three participants allegedly staged an accident involving a U-Haul truck, which hit a parked Dodge Caravan carrying eight occupants. Fraudulent claims were then filed with multiple clinics across South Florida. More arrests are expected in the case.

In other PIP fraud news across the state, David Torres was convicted for his work as a recruiter on behalf of the Indian Rehabilitation Center in Jacksonville. He was charged with eight counts involving a staged accident. Torres was ordered to repay $109,000 in restitution to eight insurance companies, and will serve five years in jail.

“PIP fraud schemes drive up auto insurance rates for all Floridians, which is why we are working day and night to prevent it from happening in the future and hold the fraudsters who have broken the law accountable,” said CFO Atwater.

The Florida Department of Financial Services reports that it has made almost 2,000 PIP fraud arrests since early 2011. Convictions are up 17% for the current fiscal year, with a total of 1,225 to date.

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Filed under Insurance Fraud

“Family & Friends” Staged Accident Ring Uncovered in Duval County

A couple faces 20 years in prison as a result of their participation in a PIP insurance fraud scheme which involved staging a car accident, and subsequently collecting money from the false insurance claims they filed.

Jose Alberto Velez, 30, and April Rosita Wynn, 23, were both convicted of knowingly participating in an intentional motor vehicle crash and four counts of false insurance claims, according to a news release issued by the Office of the State Attorney for the Fourth Judicial Circuit of Florida.

Their convictions stem from a staged car crash that happened in May 2012, the same year that the State Attorney’s Office (SAO) and the Division of Insurance Fraud (DIF) began investigating a series of questionable car accidents in Duval County.

Their investigation uncovered a larger Personal Injury Protection (PIP) insurance fraud scheme where nearly 100 individuals have been arrested over the past 18 months.

It was discovered that Velez and Wynn, who are now married, persuaded family and friends to participate in their staged car crashes. After the accidents, Velez, Wynn and their accomplices would go to designated rehabilitation clinics that would provide mock therapy for fictional injuries, and then file PIP claims through those clinics.

One of the ringleaders of the scheme, David Rodriguez Lopez, was sentenced to 15 years on charges of schemes to defraud over $50,000, false insurance claims over $100,000, and knowingly participating in an intentional motor vehicle crash. Other cases resulting from the investigation are currently pending.

Besides their present charges, Velez and Wynn are still awaiting other charges for allegedly staging additional accidents. They will be sentenced the week of July 28.

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Filed under Insurance Fraud

Three Arrests Made in Connection to a Fort Lauderdale Staged Auto Crash

Three people in Fort Lauderdale have been arrested for their involvement in staging an auto accident in a church parking lot in order to collect $80,000 from an insurance company, a June 19 article in the Sun Sentinel said.

According to police records, Claudio Boyett, 44, Leslie Martinez, 45, and Claudia Hoy, 31, all of Fort Lauderdale, are accused of grand theft and insurance fraud. Boyett was arrested earlier this week while the other two were arrested last week.

A report from Florida’s Division of Insurance Fraud showed a U-Haul truck struck a Dodge Caravan in the parking lot of the Pare De Sufrir Church on August 7, 2012. Martinez was driving the Caravan, which had Hoy and six others as passengers. Boyett struck the van with the U-Haul he was driving, the report said.

After the accident, Martinez, Hoy and Boyett allegedly went for medical treatment and filed a personal injury protection claim with United Auto Insurance worth $80,000, according to insurance company investigators.

Officials from the insurance company said investigators found that one witness was offered $1,500 for the use of her Caravan; another acknowledged the accident was staged.

These arrests have come as a result of Operation Sledgehammer, the effort between the FBI and state authorities which launched three years ago to crack down on insurance fraud from staged auto accidents.

According to the story, investigators have found almost $20 million in illegal payouts and have charged almost 100 people in Broward, Palm Beach and Miami-Dade counties. Also, $5 million in restitution has been ordered to be paid back to insurers by some of those convicted.

These types of efforts have been making an impact in Florida, according to a study by the nonprofit National Insurance Crime Bureau. The organization has found fraudulent claims from staged crashes have actually been falling since Florida’s PIP reform has been enacted in the past two years, as our FL-PIP Blog reported in March.

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Filed under Insurance Fraud

Ridesharing Services UberX and Lyft Test the Market in Miami

Miami is one of the latest cities to be targeted by the controversial ride-sharing services of Lyft and UberX. Using smartphone apps, the companies connect drivers with riders via the Internet.

The taxi industry is mounting strong objections to the new services. In Miami, licensed taxi drivers have called on Miami-Dade County Commissioners to jail drivers who have been hired by the rideshare services. The City has already levied fines, conducted undercover sting operations, and impounded vehicles of Lyft drivers, according to a recent Miami Herald article.

Uber has a big war chest to withstand legal challenges. The company recently raised $1.2 billion in new funding, giving it a valuation of $18 billion. Started as a luxury car service in 2009, the company later rolled out the UberX low-cost service featuring non-professional drivers who use their personal cars.

Many questions about insurance coverage cloud the controversy, including the items outlined below.

  • The transporting of people or goods for hire is normally excluded under a personal auto policy.
  • Rideshare drivers who operate a personal auto covered by a consumer auto policy run the risk of being denied coverage in the event of an accident. In a tragic New Year’s Eve accident, for example, an Uber driver struck and killed a 6-year old pedestrian.
  • Passengers and third parties that sustain personal injury or property damage may not have access to full insurance benefits when an accident involves a rideshare driver operating a private auto under a personal auto policy.
  • If the rideshare driver fails to inform the insurance carrier of livery-related usage of their private auto, the carrier may attempt to void the policy for misrepresentation.
  • Private vehicle insurance coverage for a blended use of personal and commercial applications is not a standard industry practice, meaning that states and courts have not had a chance to consider and test all the legal implications.

Uber now operates in 128 cities across 37 countries, according to Reuters. Competitors include Lyft, Sidecar, Flywheel, and Hailo. Some services use mobile apps to hail a licensed taxi, while others rely on private individuals as drivers.

Click on the links to read more about Uber and Lyft.

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Filed under Licensing

Another Staged Accident Story Reminds Drivers to be Alert to Florida Auto Insurance Scams

Florida State Rep. Jim Boyd, R-Bradenton, helped pass legislation in 2012 aimed at reducing the tremendous number of staged accidents and injuries in the state, and deter claims made after accidents in which victims had not even been present.

Once estimated as a billion-dollar industry in Florida due to the ease of receiving PIP payouts from insurance companies, Boyd’s changes helped strengthen requirements for medical evidence and stipulated that police reports list everyone involved, including all of the passengers.

Credited with reducing personal injury insurance costs and premiums, Boyd feels that the updated law put a dent in a serious problem where opportunistic scam artists still turn dents and dings into major injuries.

One such example of heavy-duty suspicions stemming from a marginal accident was featured in a recent Tom Lyons’ column in the Herald-Tribune.

In Lyons’ piece, a Sarasota retiree was supposedly involved in an accident when backing out of an on-street parking spot. This driver felt the accident was so small that he wasn’t even sure it happened. However, the driver of the other car claimed that he caused the collision and filed a police report. The retiree was issued a ticket.

He later found out from his insurance company that the woman driving the other car filed an insurance report claiming she and her passenger suffered trauma and were feeling pain in their neck, legs and back. The retiree says, “his insurance company is about to take a hit, but he’s not at all sure it is a legitimate one.”

Some unscrupulous staged accident rings rely on each other to carry out these scenarios to receive insurance reimbursement, according to the article. Although some parties face charges in the end, it isn’t easy to know when someone is faking an injury. It is even harder, as demonstrated in the retiree’s case, to prove the circumstances surrounding the injury are bogus.

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

Insurance Scammers Target Unsuspecting Drivers in Staged Auto Accidents

It could happen to anyone. A stopped driver waves you on and then slams into your car, causing an accident that looks like it’s your fault and has produced injuries.

A recent story on News4Jax.com revealed how insurance scammers did just that to two victims, both of whom found themselves in the midst of staged accidents either when driving in traffic or pulling out of a parking spot.

One of those victims was one of 80 targeted by a group of schemers, according to postal inspectors.  Total losses in this case came to $130,000.

Drivers who are involved in an accident that seems like it may have been staged are advised to make careful records. Although inspectors say these aren’t easy scams to avoid, they recommend documenting details—both the accident victims and any vehicles at the scene—with photos and video if possible.

The Coalition Against Insurance Fraud provides different scenarios that scammers typically use to stage auto accidents. The organization’s site also provides steps innocent drivers can take to prepare themselves and fight back.

One suggestion is that a driver count how many passengers are in the other car, get their names, phone numbers and driver’s licenses. Accident victims are also advised to get the other car’s license number, and to take cell phone photos of the damage caused to both cars, as well as the passengers in the other car.

 

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Filed under Insurance Fraud

4th District Court of Appeal Denies Rehearing in PIP Benefit Dispute

The Fourth District Court of Appeal has denied motions for rehearing by appellants in a PIP case decided in the insurer’s favor. The case was the consolidation of two separate PIP cases.

Insureds in both cases sought treatment for injuries sustained in separate accidents and assigned their PIP benefits to their treatment providers. One of the insurers, State Farm, reduced the amount paid to Northwood Sports Medicine, and Northwoods subsequently sued. Prior to that filing, the insured’s PIP benefits were exhausted. State Farm moved for summary judgment; Northwoods amended its complaint to allege that State Farm reduced payments in bad faith. The trial court granted the motion for summary judgment on the sole ground of exhaustion of benefits.

Likewise, in the second case, the insured assigned his benefits to Wellness Associates of Florida. USAA Insurance Co. reduced the payments to Wellness, and Wellness filed a complaint for damages. At the time the suit was filed, less than $14 in unpaid PIP benefits remained and, while the lawsuit was pending, PIP benefits were exhausted. USAA moved for summary judgment, Wellness amended its complaint to allege bad faith, and the trial court entered summary judgment based upon exhaustion of benefits.

For jurisdictional reasons, the appellate court transferred the Northwoods case to the circuit court. The question that the appellate court answered in the affirmative in the Wellness case is whether post-suit exhaustion of benefits absolves the insurer from responsibility to pay an otherwise valid claim where the exhaustion occurred after the insurer: (1) paid an amount that the provider claims is less than required by the contract; (2) received a pre-suit demand letter notifying the insurer of the medical provider’s dispute; and (3) was served with the filed complaint.

In its rationale, the court extended its decision in Simon v. Progressive, rejecting the “reserve or hold” theory by which an insurer is to put money in reserve if it denies or reduces a claim until that claim is resolved. The court concluded that “where the reasonableness of the provider’s claim is in dispute, post-suit exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled to under PIP.” The court concluded that post-suit exhaustion of benefits—as was the case in Wellness—should be treated no differently than pre-suit exhaustion of benefits, as long as the amount of PIP benefits to which the provider is entitled has not been established. The court therefore affirmed the final judgment of the trial court in Wellness.

The case in the District Court of Appeal of The State of Florida Fourth District, January Term 2014, is Northwoods Sports Medicine and Physical Rehabilitation, Inc., (A/A/O Suzanne Cabrera), and Wellness Associates of Florida, Inc., (A/A/O Daniel North), Appellants, v. State Farm Mutual Automobile Insurance Company and USAA Casualty Insurance Company, Appellees, Nos. 4d11-1556 and 4d11-3796, [March 5, 2014]. Click on the link to read the June 4, 2014 ruling in the case.

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