Tag Archives: PIP fraud

Questionable PIP Claims Decline in Florida, Reports NICB

Tighter legislation, enhanced public awareness, and coordinated law enforcement efforts appear to be having a positive effect on PIP fraud in Florida, according to a recent report by the National Insurance Crime Bureau (NICB).

The new study published by the organization showed Florida’s personal injury protection (PIP) questionable claims (QCs) have dropped 7.6 percent from 2012 to 2013. More striking, however, was the extraordinary decline from 2010 through 2013, when Florida’s staged accident QCs decreased 61.82 percent during that time period.

Compare those statistics to 2009, when Florida not only topped the nation in PIP QCs reported to the NICB, but also had twice as many as the second-highest state, New York. From 2008 through 2010, the total number of QCs in Florida increased by 34 percent.

When NICB delved further into these results, it found that about 62 percent of total PIP costs and about 43 percent of PIP treatment costs came from soft tissue treatments. Massage treatments accounted for 22 percent of those treatments, and massage therapists had the largest increase in charges per patient at 51 percent from 2005 through 2010, after factoring in for medical inflation.

“We are encouraged by the decline in questionable claims that we’ve seen recently, but by no means are we declaring victory in Florida,” said NICB President and CEO Joe Wehrle.  “Florida remains a hotbed for fraudulent activity and we can’t afford to ease up for a moment in our fight against those who would abuse the system and burden Florida consumers.”

In September 2011, the Hillsborough County Commission was one of the first legislative bodies to enact a county ordinance to license PIP clinics and deter suspicious vehicle collisions in the county. Although an injunction against the law remains in effect, it hasn’t stopped other legislation. In February 2012, Miami-Dade County passed a similar ordinance requiring registration of PIP clinics, and the Florida legislature passed House Bill 119 in May 2012.

This two-part legislation institutes stronger penalties for medical providers who commit PIP fraud, including a five-year license suspension and a ten-year restriction from PIP reimbursement. It also imposes a 14-day post-accident window for accident victims to seek medical treatment and reduces specified PIP benefits and treatments. A lawsuit and injunction ensued, but eventually, the law was put into effect in late October 2013.

Although NICB does not receive all QC data in Florida, the data used to produce this report came from the same sources used in previous Florida QC reports. “Combining these legislative and regulatory efforts with a robust public awareness campaign and aggressive law enforcement response, the modest improvement in 2013 PIP QC data does suggest the initial stages of a positive downward trend,” NICB confirmed.

Click on the link to read the NICB Data Analytics ForeCAST Report regarding Florida Personal Injury Protection (PIP).

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

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

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

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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Filed under Insurance Fraud

Leading Forms of Auto Insurance Fraud

In an article titled “6 Shadiest Auto Insurance Fraud Schemes,” financial publisher Bankrate.com identifies the most popular scams behind false claims submitted to auto insurance carriers:

Staged Accidents. The NICB reports that staged accidents grew by 102 percent between 2008 and 2011. As readers of this blog know, staged accidents are one of the leading forms of auto insurance fraud in South Florida.

Insurance Agent Fraud. Some unscrupulous insurance agents steal insurance premiums that insureds think are being applied to the purchase of auto insurance, warns the Coalition Against Insurance Fraud. The best defense here is to work with nationally recognized insurance carriers and their agents.

Auto Premium Evasion. Insureds also try to defraud their auto insurance carriers. Common techniques include giving a false residential address in a lower-cost insurance zone, or failing to identify new drivers in the family.

Counterfeit Air Bags. Cars that are repaired following an accident, as well as used cars being resold, may make false claims about the presence of functioning air bags. Insurers and purchasers think they are paying for safe air bags, but find out too late that this is not the case.

Windshield Replacement. Glass company representatives who approach auto owners on an unsolicited basis and offer to replace a car’s windshield in exchange for insurance information frequently do an inferior job while also planning to use the insurance policy data to submit false claims.

Tow Truck Fraud. Independent tow trucks that cruise streets and highways looking for accident victims may leave the driver with unexpectedly high towing fees while towing cars to lots in dangerous neighborhoods.

U.S. insurance fraud overall is estimated to cost $80 billion annually, according to the Florida Department of Financial Services, ultimately increasing premium costs for insureds and carriers.

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Filed under Insurance Fraud

Three Arrested for Staged Car Crash and False Insurance Claims

West Palm Beach Police arrested and charged three people in connection with a scheme to get insurance money after staging a fake traffic accident.

According to a story on WPTV News Channel 5, the three accused of the alleged crime were Jose Begas, Donicio Ruiz, and Marilu Rodriguez.  On the evening of May 5, 2010, police reported a two-car crash around Roseland Drive and Lake Avenue, in which Rodriguez and Ruiz were driving, and Begas was a passenger in Ruiz’s car.

After the accident, police say that Begas made a false claim with his insurance, Progressive Insurance Company, to receive personal injury protection benefits. His claim was denied because his policy had lapsed when the accident occurred.  Rodriguez and Ruiz later admitted to police that the accident was staged.

The State Division of Insurance Fraud arrested Ruiz and Rodriguez on Dec. 5 and Begas on Dec. 9, all on fraud charges. The three have been released on bond.

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Filed under Insurance Fraud

MGA Insurance Granted Summary Judgment in PIP Staged Accident Case

In an August 15, 2013 decision in Miami-Dade County Court, Defendant MGA Insurance Co. was granted Summary Judgment against Plaintiff Febre’s Medical Center on the grounds that no genuine issue of material fact existed, and Defendant was entitled to Final Judgment as a matter of law.

Plaintiff Febre’s Medical Center received reimbursements from Defendant MGA under the Florida PIP statute for treatment rendered at its clinic. Plaintiff rendered this treatment as part of a scheme to defraud Defendant and other insurance companies through the use of “staged accidents.” On June 28, 2013, the owners of Febre’s Medical, Hernandez and Baceiro, entered into factual proffers with the State Attorney’s Office. The proffers acknowledged that they submitted fraudulent insurance claims and were the true owners of Febre’s Medical.

In order for Febre’s Medical’s bills to be compensable under the PIP statutes, Febre’s must substantially comply with all Florida Statutes. F. S. §627.732(11). Under F.S. §627.736(5)(b)(1), an insurer is not required to pay a claim “for any service or treatment that was not lawful at the time rendered.”

In this case, Plaintiff was issued a clinic exemption. In order to receive an AHCA clinic exemption, the facility must be “wholly owned” by one or more physicians. F.S. § 400.9905(f). It was established, however, pursuant to the proffer, that non-physician individuals, Hernandez and Baceiro, were the true owners of Febre’s Medical. Although all the licensing and corporate materials were in the name of either a physician or a chiropractor, Hernandez and Baceiro handled all aspects of the business and retained the bulk of the proceeds. Thus, they were deemed to be the true owners of the clinic. Because, therefore, Febre’s Medical was not “wholly owned by a physician,” as required by the PIP statute, its services were performed in violation of Florida statutes. For this reason, Defendant is not required to pay Febre’s Medical’s claims. F.S. §627.736(5)(b)(1).

Final judgment was entered in favor of Defendant MGA Insurance Company.

The case is Febre’s Medical Center vs. MGA Insurance Co., No. 09-10008 CC 26 (3) (Fla. Miami-Dade Cty. Ct. 2013).

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Filed under Case Law, Insurance Fraud

Three More Sentenced in Operation Sledgehammer

U.S. District Judge Kenneth A. Marra sentenced three more men involved in cases of staged car accidents to defraud insurance companies as part of Operation Sledgehammer, according to an article in the Sun Sentinel.

  • Luis Ivan Hernandez was handed down a sentence of nine years and ordered to pay $4.2 million in restitution. The 40-year old owned six clinics in Miami-Dade and Palm Beach counties, including one with girlfriend Maria Testa Baceiro. Testa was sentenced to six years, as reported in an October 4 post on FLPIPGuide.com.
  • Daviel Castro, authorities found, participated in the staged crashes, cashed checks and recruited others in the scheme. The 27-year old West Palm Beach man received a sentence of four years and 10 months in jail and will pay $1.3 million in restitution.
  • Aaron Freedlander, 51, a licensed chiropractor in Broward, was sentenced to three years and four months in prison. The Weston resident was ordered to pay a little more than $900,000.

According to federal prosecutors, each of the men had earlier pleaded guilty to conspiring to commit mail fraud. Hernandez and Castro also faced money laundering charges.

Court documents report that between approximately October 2006 and December 2012, those associated in the fraudulent scheme, including Castro, staged automobile accidents by recruiting individuals to take part. Then, clinic owners like Hernandez submitted false insurance claims through chiropractic clinics that were controlled by members of the conspiracy, authorities said.

Undercover agents christened the scheme ‘Operation Sledgehammer’ after they witnessed suspects using a sledgehammer to make vehicles appear like they had been in a car crash

So far, the operation has led to charges against 92 defendants in Broward, Palm Beach and Miami-Dade counties. Fifty-six have been charged federally and 36 by state prosecutors.

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Filed under Insurance Fraud

Six Arrested in Fort Myers and Port Charlotte PIP Fraud Ring

Fort Myers and Port Charlotte Accident Clinics Busted for Fraud

A tip from insurance company investigators and a cooperating witness helped bring down a PIP insurance fraud ring that was operating out of Evans Rehab Center in Fort Myers and Charlotte Wellness and Rehab in Port Charlotte.

According to Lt. Mark Fritz of the Florida Department of Financial Service’s Fraud Division, Nationwide Insurance lost more than $33,000 as a result of the two clinics’ fraudulent practices.

Insurance company investigators, who were suspicious that Evans Rehab was allegedly billing for services that were not provided as well as recruiting patients, alerted authorities who worked with a cooperating witness.

“We had a traffic accident report with their names on it and that’s what got us in the doors,” Lt. Fritz explained in a WINK news update.

That witness was apparently paid to sign documents, but did not get treatment even though the insurance company was still billed for it. That led investigators to Charlotte Wellness and Rehab where illegal insurance billing was also found, in addition to the facility operating without the proper license.

According to Today – Ft. Myers, the following suspects were arrested as a result:

  • Receptionist Gloria Feliz, 31, on seven counts of insurance fraud and one count of fraud
  • Massage therapist Andres Bravo, 52, on a charge of grand theft
  • Facilitator Joe Gevans, 51, on criminal solicitation and patient brokering
  • Clinic owner Gerard Jean Stephen Valere, 51, for patient brokering and attempt to solicit, conspire
  • Chiropractor Ronald Woodley, 63, for filing a false health clinic application
  • Jordany Estimond, 44, on charges of patient brokering and attempt to solicit, conspire

Woodley, Gevans and Valere were booked into the Charlotte County jail, while Feliz, Estimond and Bravo were detained in Lee County. If convicted, each faces up to five years in prison.

Authorities are looking for additional conspirators in this case.

The Department of Financial Services will reward tipsters up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme. The department has already awarded almost $342,000 to more than 50 citizens as part of its Anti-Fraud Reward Program.

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