IFB Home Page http://www.ifb.org

dterry@ifb.org

The New England Association of Insurance Fraud Investigators welcomes you to visit its website at www.NEAIFI.org for more information on membership and upcoming events.

Mark O. Huard
President

Robert J. Bodoni
Vice-President

Gail Novack
Secretary/Treasurer

WORCESTER- Two Massachusetts men allegedly provided false information in order to obtain workers’ compensation insurance for a Worcester temporary service company in 1996 and 1997. Client companies who agreed to hire the temporary workers to perform manual labor required proof of workers’ compensation insurance. Additionally, while clients allegedly paid the temporary service company by check for employees’ hourly wages, the temporary service allegedly paid almost all of the temporary workers in cash, at an hourly rate that was significantly less than the wages paid by clients. The temp service also allegedly failed to withhold or deduct federal or state income taxes, unemployment taxes, or Social Security.

BRAINTREE- A South Shore limousine company and its president allegedly defrauded two insurance companies and the state unemployment fund of approximately $212,000. From 1994-96, Hartford Insurance Company provided the limousine company with workers’ compensation insurance. Investigators found that during 1995 and 1996, the company president allegedly provided Hartford auditors with incomplete accounting data in an alleged effort to avoid additional insurance premiums of approximately $93,000. The president allegedly concealed that the company funneled $1.2 million in payments to its limousine drivers through a “shell” company that the president had established. Massachusetts Bay Insurance Company (a unit of Hanover Insurance) supplied the company with workers’ compensation coverage from 1996-97. After a routine audit it was discovered that the president allegedly failed to disclose that the company made more than $978,000 in payments to limousine drivers through the “shell” company. In concealing the payments to the “shell” company, the limousine company avoided premiums of approximately $61,000. Furthermore, the payments made by the limousine company to its drivers through the “shell” entity during 1995-96 allegedly were not reported to the Department of Employment and Training. As a result, the company avoided payment of approximately $58,000 in unemployment tax contributions.

SAUGUS- Between 1994 and 1998, the president of Malden iron works and steel fabricators companies, misrepresented to Cigna Property and Casualty Insurance Company the nature of the work being conducted at his companies and underreported the amounts he paid to workers in his employ. The misrepresentations substantially and fraudulently lowered his annual workers’ compensation bill. The company president defrauded Cigna of approximately $175,000. In addition, he acquired no workers’ compensation insurance for the iron works company in 1996.

BROCKTON- A Brockton drywall installation company operated as a subcontractor on a number of public and private building projects across Massachusetts. The president of the company allegedly failed to pay the state minimum prevailing wage to eleven of his employees who performed various tasks in drywall construction, including framing, hanging and taping drywall. Additionally, on four separate occasions, the president allegedly provided CNA Insurance Company auditors with incomplete accounting data in an alleged effort to avoid additional insurance premiums that would have resulted from reporting a larger payroll. The president allegedly concealed approximately $1.5 million in payments over four years by excluding certain employees from the company’s payroll register. As a result, he allegedly avoided additional workers’ compensation insurance premiums of approximately $268,000. The company also allegedly failed to disclose its complete payroll in quarterly reports to the Department of Employment and Training and as a result evaded unemployment taxes of more than $37,000.

WESTFIELD- A former Westfield trucking company owner obtained a workers’ compensation policy through Travelers Insurance Company. However, he allegedly underreported his company’s payroll to insurance auditors by approximately $1.2 million. This resulted in more than $140,000 of lost premium for the insurance carrier.

STOUGHTON- About 70 personal chefs who were members of two national chef associations were sold more than $30,000 in fraudulent liability policies by a former Stoughton insurance agent. When the former agent started selling the chefs’ policies in March 1998, he was only authorized by the insurer, Granite State Insurance Company, to solicit the policies, accept applications and accept premiums. Granite State required him to use another broker to finalize all chef policies. When the insurance company discontinued underwriting policies for the chefs’ associations in October 1998, the former agent was directed to inform his clients. Instead, he continued to sell insurance policies and collect premium payments, and led new clients to believe that they had coverage.

FALL RIVER- From October 1995 until May 1998, a former insurance broker allegedly wrote approximately 149 bogus policies totaling nearly $56 million in fictitious liability coverage, thus collecting $154,500 in fraudulent premiums. The former broker, who operated a Belmont insurance agency, wrote special liability policies called “Surplus Lines Insurance” under contract with the Hermitage Insurance Company until his contract was terminated in May 1997. Allegedly while under contract with Hermitage, the former broker failed to inform the carrier of numerous policies he issued and that he retained the premiums owed to the company. After Hermitage terminated its relationship with the former broker, he allegedly issued 89 additional policies and also pocketed those premiums.

mgray@ifb.org

WAREHAM- A former central artery/tunnel employee claimed that he hurt his lower back while doing excavation and digging work on the project. He collected benefits from May 2000 to September 2000 from the AIG Group at which time investigators observed the man working for a landscape company while continuing to collect disability benefits.

WEST ROXBURY- A former employee claimed that he had sustained a shoulder injury while working as a carpenter for the Central Artery Tunnel project. He collected about $700 per week from the AIG Group. Investigators discovered the man working as a carpenter and renovating a house in April 2001 while he continued to receive disability benefits.

HYDE PARK- A Hyde Park man reported to his employer that he slipped in his truck and dislocated his shoulder. He filed a disability workers’ compensation claim with Reliance National Insurance Company and began collecting weekly benefits. An investigation revealed, however, that the subject never stopped working at a second job as a driver, despite his injury. Furthermore, the subject reported to his doctors that he was unable to work because of his injury. He also filed an Employee Earnings Report with the insurer and the Department of Industrial Accidents and reported no income although he was being paid for the second job.

“Quick Recovery” Case Update

TAUNTON- While employed as a residential counselor at a treatment facility, a Taunton man suffered a low back injury after a resident pushed him against a wall. He began receiving temporary total workers’ compensation benefits from Arbella Insurance Company. Seven days after the subject’s injury, he accepted a position as a relief worker but failed to disclose his employment at the treatment facility. In addition, the subject submitted a false earnings report by indicating that he was receiving no other earnings and denied having a second job during a physical examination. The subject used two different names, social security numbers and dates of birth to further disguise the fact that he had a second job.

CHELSEA- A Chelsea man claimed he injured his lower back when he slipped and fell in a work-related incident. He filed a total disability claim and began collecting weekly benefits from the AIG Group. He continued to claim he was disabled, telling doctors he was unable to work and filing an earnings report with the Department of Industrial Accidents in which he claimed he had no income from employment. However, private investigators observed the subject going to work on several days during the time he claimed disability. The subject collected more than $8,000 in benefits after he returned to work at a second employer. When the evidence of his employment was brought to the attention of a DIA judge, the subject’s claim was terminated and he was ordered to repay the benefits he obtained improperly.

SPRINGFIELD- A Springfield woman was injured in 1986 while working for Baystate Medical Center. While collecting workers’ compensation benefits for that injury, the subject failed to report that she was working full-time for Hampshire Eye and Ear in Northampton. She fraudulently collected about $11,849 in benefits from May 1995 through September 1995.

RANDOLPH- A Randolph man allegedly injured his lower back while working on the Central Artery and Tunnel Project. He filed a workers’ compensation claim alleging total disability and began collecting benefits. However, the subject was observed by investigators working at a gas station and videotaped working on several occasions. AIG had the subject examined by a doctor to determine if he could work. The subject allegedly stated he had not returned to work and could not work, even though he was already working at the gas station. In addition, when an earnings report form was sent to the subject which required him to report all earnings, he refused to fill out and return the form. Further investigation revealed that the subject allegedly filed his claim the day after he was scheduled to be laid off from his work on the Central Artery because of a change in work plans.

WORCESTER- Evidence showed that a Worcester attorney, his client and other co-conspirators made false statements to insurers, wrongly denying that the client had suffered numerous prior injuries to the same parts of his body. Despite their knowledge of the client’s prior injury claims, the subject and his co-conspirators agreed that the client would deny his history of prior injuries to doctors in three separate motor vehicle insurance claims. They then submitted these false statements to the insurers involved, knowing that the false information would inflate the potential value of each claim.

BRAINTREE- A Braintree man filed a stolen motor vehicle report with police claiming that his 1995 Pontiac Grand Am had been stolen from his driveway. Investigation revealed that at the time of his claim, the car was with the subject’s girlfriend and had remained in her possession since the day he purchased it for her, and had never been in his driveway that day. Later, the subject signed a notarized Affidavit of Theft with Plymouth Rock Assurance Company but failed to tell the insurer that he knew the Grand Am was in his girlfriend’s possession. Plymouth Rock paid the subject $9,239 based on his claim. The girlfriend was using the car when it was recovered by South Hadley Police five months later. No signs of forced entry were detected when the car was inspected.

BROCKTON- A Brockton man was injured in auto accidents in Fall River, New Bedford and Brockton. Following each accident, the subject filed fraudulent personal injury and bodily injury claims. He knowingly concealed information about his prior medical and accident history from his doctors and chiropractors, resulting in false statements by the medical providers to Trust, Commerce, Commercial Union and Liberty Mutual Insurance Companies. As a result of the subject’s claims, he was paid a combined total of $8,863 in personal injury benefits and $10,750 in bodily injury benefits.

WEBSTER- A Webster couple reported that the vehicle in which they were traveling was rear-ended as they drove through a snowstorm. They claimed to Commerce Property and Casualty Insurance Company that the vehicle which struck them fled the scene after the accident. An investigation revealed evidence which was inconsistent with the subjects’ claim of being struck by another motor vehicle.

WINCHESTER- In October 1999 a Winchester man allegedly caused an accident when he collided with a second vehicle. He was cited by police for operating an unregistered and uninsured vehicle. Because his car was not insured at the time of the accident, the subject could not collect insurance payments to repair his car. Shortly after the accident, the subject called the other driver and tried to arrange a scheme to stage an accident on a new date, after he obtained insurance on the vehicle with Plymouth Rock Insurance Company. The other driver reported the solicitation to the IFB. In January 2000, the subject reported to Plymouth Rock that he had an accident on January 20^{th. The information about the accident was identical to the accident in October 1999. The subject also allegedly called the other driver in the original accident and told him that he had reported the new accident and needed to go over the facts so they could “get their story straight.” Plymouth Rock paid $9,000 for damage to the vehicle, unaware that the damage had been sustained before the car was insured.}