Tag Archives: Insurance Fraud

Chiropractors in $2.3 Million PIP Insurance Fraud Scheme will Face RICO Charges

A federal judge ruled that the chiropractors who were allegedly behind a $2.3 million ploy to defraud an insurance company must face charges for violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and Florida’s Deceptive and Unfair Trade Practices.

In July 2012, GEICO Insurance Company filed a lawsuit against two Orlando-based clinics—KJ Chiropractic Center LLC and Wellness Pain & Rehab Inc.—in addition to their two founders and a number of co-conspirators, known as “runners.” These runners helped perpetrate the suspected scam by exploiting willing third-party participants who faked accidents and injuries.

According to an article in Courthouse News Service, U.S. District Judge Charlene Edwards Honeywell said in her order that the fraudulent PIP claims resulted in more than $2.3 million in unwarranted insurance benefits and emerged from:

  • Staged accidents;
  • Real accidents in which claimants received treatment at clinics even though they were not truly injured; and
  • Real accidents in which claimants incurred some injuries, but received treatments that were pre-programmed, unnecessary, excessive and unlawful.

GEICO charged that the defendants advanced their unlawful plot by paying “anyone who referred accident victims to the clinics, offering cash directly to patients who agreed to accept unnecessary chiropractic treatment.” The insurance company also claimed the clinics provided treatment that was not in the best interest of patients because its sole intent was to maximize profits, the article said.

The U.S. District Court for Florida’s Middle District, Orlando Division, adopted Judge David Baker’s full recommendations made in October 2013 to deny the defendants’ motion to dismiss a second amended complaint on all but one count.

Judge Honeywell Edwards said she felt that GEICO adequately supported its argument with “factual allegations to state plausible claims for relief. As such, the court agrees with the Magistrate Judge that GEICO’s claims are sufficiently pled.”

The case is GEICO v. KJ Chiropractic Center LLC et. al., U.S. District Court for the Middle District of Florida, Case No. 6:12-CV-1138-ORL-36-DAB. Click on the link to read the complaint.

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Filed under Case Law, Insurance Fraud

Jacksonville Chiropractor Arrested for Fraudulent Billing Scheme

Chiropractor Steven Rhodes faces a maximum of five years in prison after being arrested for a fraudulent billing scheme targeting multiple insurance companies.

Jeff Atwater, Florida’s Chief Financial Officer, announced the arrest earlier this week.

Ocean View Health, Inc., a Jacksonville Beach medical clinic owned by Rhodes, was used to generate fraudulent or inflated invoices. Allegations include charges for treatments never provided to clients, the submission of inflated numbers of treatments when medical treatment was provided, and the use of unlicensed staff in performing medical services.

“This kind of fraudulent activity places honest, hard-working Floridians at risk not only financially, but also physically,” said CFO Atwater. “I am proud of our investigative team for uncovering this scam and holding this fraudster accountable for his misdeeds.”

Insurance carriers affected by the scam include Kemper, State Farm, Nationwide, Esurance, Progressive, United Health, and Blue Cross Blue Shield.

Rhodes was booked into the Duval County Jail and released on bail.

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Cash-Only Medical Clinics Target of Florida Senate Legislative Proposal

Drastic changes in how cash-only medical clinics operate in Florida may be on the way. State Sen. Eleanor Sobel, D-Hollywood has proposed legislation (SB746) that would subject cash-only clinics to the same regulations and licensing that traditional clinics undergo, consequently closing a loophole that enables some of these clinics to illegally dispense drugs such as steroids and human growth hormones. Cash-only clinics don’t accept Medicare or other insurance coverage.

According to an Insurance Journal story on March 26, the proposed bill aims to bring transparency to cash-only clinics and hold them accountable. The measure would require these clinics to be licensed and inspected by the state Agency for Health Care Administration (AHCA). Legislation would also make possible the application of pertinent criminal liability and penalties to all clinics that allow doctors with suspended or revoked licenses to practice.

The bill is especially directed at storefront clinics that open with the help of a crooked doctor, dispense drugs illegally, and then shut their doors before law enforcement can prosecute, the article reported. Under current law, a person opening a cash clinic can fill out an application and pay a $100 exemption fee which does not expire nor require renewal.

The AHCA says that it uses the same database as the public to verify the license of medical professionals and will extend the verification process to doctors heading cash-only clinics if the bill becomes law.

Sen. Sobel also noted that many suspected clinics thrive in South Florida and often operate as anti-aging facilities, such as Biogenesis of America. In 2013, Major League Baseball charged that clinic purportedly supplied performance-enhancing drugs to some of its players, but the lawsuit was dropped last month.

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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

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

States Propose Bills in 2014 to Combat Insurance Fraud

It’s no secret there’s a constant battle to find and prosecute people trying to get away with insurance fraud, which costs billions of dollars each year and drives up premiums for consumers.

As a result, there has been a concerted effort by several state legislatures and governing bodies to help thwart fraudsters and their crimes, according to a news release issued by auto insurance provider GEICO.

Nancy Pierce, GEICO regional vice president and vice chair of the National Insurance Crime Bureau’s (NICB) Board of Governors, said, “GEICO puts a lot of resources into investigating and stopping staged accidents, exaggerated injuries, inflated medical bills and other acts of insurance fraud that inflate costs for consumers.”

The company detects, deters and defeats insurance fraud and theft through its Special Investigation Unit.

“That said, there’s a lot that must happen in the fight against fraud at the legislative level, so it’s encouraging to see positive momentum in that direction this year,” she explained.

The Coalition Against Insurance Fraud said that six states in particular have proposed vital pieces of legislation in 2014 that would have a significant impact on deterring insurance fraud:

  • Colorado: Increasing fraud penalties to a higher-level felony is the subject of proposed legislation.
  • Maryland: Giving prosecutors greater flexibility in trial venues for fraud suspects is being supported by the state insurance administration.
  • Michigan: The creation of a state auto-fraud agency is proposed to strengthen the state’s no-fault law, identify questionable clinics and improve the fight against fraud.
  • Minnesota: A variety of new anti-fraud bills are under review by an anti-fraud task force, including greater sharing of fraud-related information between insurers and law enforcement. The imposition of civil fines in addition to criminal charges is also being considered.
  • New Jersey: Three new bills that will restrict outsider access to crash reports, expand fraud-fighters information exchange, and make it a crime for drivers to lie about where a vehicle is garaged are all under review.
  • New York: A multi-faceted anti-fraud agenda targets dishonest clinics, staged-crash networks, and fraudulent medical-equipment providers.

“While these proposals wouldn’t eliminate fraud entirely in these states, they would be significant steps in the right direction,” said Ryan West, vice president of GEICO’s claims home office. “We’re pleased that state bodies across the country are putting the fight against insurance fraud on the agenda and trying to implement changes that would result in lower premiums for consumers.”

Additional information and resources on theft and fraud awareness are available through the NICB.

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Two Arrested for Related PIP Insurance Fraud

Leonardo F. Marquez Garcia of Miami and Dayleann Marie Vallejo-Ruiz of Orlando were recently arrested on charges of PIP insurance fraud.

More arrests are expected in the ongoing investigation by the Florida Department of Financial Services’ Division of Insurance Fraud, CFO Jeff Atwater announced.

Investigators found that Garcia would allegedly perform ‘initial examinations’ on victims of vehicle crashes, and then refer his patients to the Injury Rehabilitation Center, a clinic owned and operated by Vallejo-Ruiz.

Vallejo-Ruiz, a licensed massage therapist, would then have patients sign blank treatment forms which were later submitted to the insurance company to pay for treatment that was never provided. Allstate Insurance Company was billed for the alleged medical treatments supposedly provided between February 3 and March 16, 2012, on two crash victims.

Garcia also submitted his requests for payment for his initial examinations on behalf of Global Rehabilitation Center, Inc., in Miami Lakes. However, it was discovered that Garcia—an Area of Critical Needs Doctor—was not licensed to practice medicine at that facility because it was not an Area of Critical Needs clinic. Garcia was subsequently charged with the unlicensed practice of medicine for operating outside the scope of his license.

The Orange County State Attorney’s Office is prosecuting the case.  Each defendant stands to face up to 15-20 years in prison if convicted.

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Woman Busted for Insurance Fraud After Collecting Claim Money on a Stolen Car that She Pawned

A Greenacres woman was arrested for insurance fraud involving her car that she reported stolen in 2012.

Palm Beach County court records show that Lindela Edmonds faces charges of insurance fraud and making a false report of a non-existent crime.  She was arrested on January 15.

According to West Palm Beach police, the 44-year old Edmonds pawned her 2007 Toyota Camry at the pawn shop, Queen of Pawns, on February 17, 2012 and received $5,500 for the transaction. The next day, she went to the police and reported her car stolen from a parking lot in the 3100 block of N. Jog Road.

After filing the police report, she filed a loss of vehicle claim with GEICO and collected $12,326 from the insurance company.  But that isn’t the end of the story.

The Queen of Pawns wanted to sell the car because Edmonds had not returned for it a year later.  It was then that police discovered the vehicle was listed as stolen. The pawn transaction receipt is dated the day before Edmonds reported her car stolen, along with a copy of her driver’s license and thumb print.

In addition, the notarized insurance claim is signed by Edmonds. Ironically, her signature appears beneath a warning: “anybody who knowingly defrauds an insurer by using false information is guilty of a felony in the third degree,” the Sun-Sentinel reported.

Edmonds was booked at the Palm Beach County Jail on January 16 and released on $3,000 bond.

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Filed under Insurance Fraud

Miami Clinic Owner Pleads Guilty in $20 Million Health Care Fraud

Isabel Medina, the owner and operator of Merfi Corp., pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge Ursula Ungaro of the Southern District of Florida. The 49-year old Miami resident was tied to several fraud schemes that totaled more than $20 million.

Merfi was a medical clinic that employed physicians, physician assistants and other medical professionals who were authorized to write prescriptions for home health care services. According to court documents, Medina and her co-conspirators channeled those prescriptions and other pertinent medical documentation to area home health agencies, including Flores Home Health Care, and patient recruiters in return for kickbacks and bribes.

As previously reported in our blog on December 4, it was discovered that Flores Home Health actually operated for the sole purpose of billing the Medicare program for expensive physical therapy and home health care services that were not medically necessary or were not provided, similar to what was found with the other home health care agencies’ operations.

Medina has acknowledged her involvement in the fraudulent schemes. She could receive a maximum penalty of 10 years in prison. Sentencing has been scheduled for March 14, 2014.

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Filed under Insurance Fraud