focusFraud………….

An Insurance Fraud Bureau of Massachusetts Publication

Current Trends in Workers’ Compensation Premium Fraud

by Arleen L. Lempicki, Director

Alternative Markets Division, Property & Casualty Lines, Travelers Insurance Company

The methods used to commit workers’ compensation premium fraud have been changing over the last decade.  In past years, the most common ways for an employer to commit workers’ compensation premium fraud has been to either misclassify the type of work being performed by its employees, fraudulently change ownership of a corporation to avoid an experience modification factor, form a sister company to avoid a debt or shift payroll to a bordering state with a lower rate.  Today, a new trend has emerged — avoiding the workers’ compensation system entirely.

One of the latest attempts to avoid workers’ compensation premium is for a corporation to establish separate and distinct Limited Liability Partnerships (LLP’s).  Both the corporation and the LLP obtain workers’ compensation coverage, and then the corporation subcontracts all of its work to the LLP.  

 So where’s the problem?  First, the alleged partners of the LLP are nothing more than employees of the corporation.  Second, the reason for the LLP structure is to permit the alleged partners to exclude themselves from coverage.  Thus, two workers’ compensation policies exist — one for the corporate entity, and one for the LLP that virtually covers no one.  That is, until someone gets hurt.

This scheme is quite elaborate, and often requires the assistance of an accountant.  The insurance carrier will usually find that all of the paperwork required by a LLP is appropriately filed and maintained.  The carrier will also find, however, that the LLP partners will change frequently.  The carrier may also see large payments to the partners and experience difficulty following the distribution of payments made by the LLP. 

Typically the insurance carrier will discover that there is a third layer, or tier, of employees being paid in cash by the LLP.  The questions that often arise are:  “Who is responsible for policing the legitimacy of a corporate structure?”  “Is it the IRS, the Department of Labor, the insurance industry or all of the above?”  Currently it is all of the above.

Over the past five to seven years, another method that has been used by employers wishing to avoid the workers’ compensation system has surfaced.  The employer makes all of its employees alleged independent contractors.  On Friday, for instance, the alleged independent contractor was an employee, but on Monday - after signing an independent contractor agreement - he or she becomes an alleged independent contractor.  Similar to the LLP situation, the alleged independent contractor obtains workers’ compensation coverage, which excludes them from coverage.  In most cases, the workers’ compensation policy for the alleged independent contractor is purchased by the corporate entity.  Again, similar to the LLP scheme, workers’ compensation policies are issued to the corporate entity and the alleged independent contractors that cover no one until someone is injured.

The insurance carrier must protect itself from the inherent exposure that these types of schemes encompass, but the problem goes far beyond the workers’ compensation system.  When an employer dictates to an employee that, in order to retain their employment, they must become either an independent contractor or a partner in a partnership, the proper state regulatory agencies need to be notified so they may take immediate action to protect the workers.

Ms. Lempicki is the keynote speaker at the October 24, 2002 seminar on Worker’s Compensation Premium Evasion Fraud.  See page 15 for details about the seminar.

Automobile Fraud

Shrewsbury Physician Pleads Guilty

WORCESTER-  An investigation found that a Shrewsbury family practitioner, along with former Ellis & Ellis senior law partners James N. Ellis, Jr. and Nicholas J. Ellis, former law firm associate Michael Bryant and client Jay Rosenfield together conspired to submit false statements to insurance companies in the course of several motor vehicle insurance claims.  Investigators found that the physician took part in one of the insurance fraud schemes by submitting a medical report to National Grange Insurance Company on behalf of his patient, Jay Rosenfield.  The report falsely represented Rosenfield’s relevant past medical history, including several injuries the physician himself treated.  The doctor concealed the past injuries and falsely described them in his report. 

Mario Moretti, a Shrewsbury family practitioner, pled guilty to one count of motor vehicle insurance fraud.  He was sentenced to probation for one year and ordered to pay $10,000 in fines and court costs.  Other individuals in the case have previously been convicted.  Assistant Attorneys General David Marks of Attorney General Tom Reilly’s Business and Labor Protection Bureau and John O’Leary of AG Reilly’s Insurance and Unemployment Fraud Division prosecuted the case. 

“Operators of East Boston Body Shop Indicted for Fraud” Case Update

EAST BOSTON-   The owner of an East Boston auto body shop filed multiple motor vehicle insurance claims for damage to her vehicles, which occurred either while the car was parked or in accidents that never occurred.  For instance, in one claim the owner reported that another person was driving her Mercedes and caused heavy damage to her car when it slid into a guardrail.  When questioned, the alleged driver said the accident never occurred.  The owner’s brother reported, in one claim, that his Cadillac was hit by a pick-up truck with a snowplow hitch on the front.  The Cadillac was inspected by Quality Auto Body and an appraiser determined the cost of repairs to be $8,275.  However, an accident reconstruction expert inspected both vehicles and determined that the accident did not happen as claimed.  In addition, the owner and her brother also submitted fictitious claims for reimbursements for rental cars they claimed to have used while their cars were being repaired.  The rental contracts submitted by the owner were from an agency that did not exist.  Insurance companies involved include Plymouth Rock Assurance Corporation, and Safety, Commerce and Metropolitan Insurance Companies.

Lorraine Nazarian, owner of Quality Auto Body, and her brother, Michael Carrafiello, pled guilty to multiple counts of motor vehicle insurance fraud, larceny and conspiracy.  Nazarian was sentenced to serve eight months in jail and to pay $25,000 in restitution.  Carrafiello was sentenced to serve 12 months in jail and to pay $25,000 in restitution.  Both will be on probation for five years after their jail time and during that time they may not work in or have any ownership of any car repair business, auto body shop or car rental agency.  Assistant District Attorney John L. Ciardi of the Special Prosecutions Unit in Suffolk County District Attorney Daniel F. Conley’s Office prosecuted the case.

It’s a Small World (or It’s Small Claims Court)

STONEHAM- A Stoneham woman, after hitting a parked car and fleeing the scene of the accident, was apprehended when witnesses provided police the license number of the fleeing vehicle and described the driver.  The woman was placed under arrest for Operating Under the Influence.  She also admitted to police that she had fled the scene of an accident.  The subject’s friend subsequently reported to her insurer, Commonwealth Mutual Insurance Company, that she was the driver of the vehicle at the time of the accident.  The subject’s insurance coverage with Old Boston Colony Insurance Company had been cancelled prior to the accident for nonpayment of premium.  Commonwealth Mutual paid damages for both the subject's vehicle and the parked car totaling $6,988.  However, after the adverse driver sued the subject in small claims court for the difference between the value of his vehicle and the amount received from the insurer, it was revealed that the subject, and not the friend, was the actual driver of the vehicle at the time of the accident.

Complaints were issued against two women on March 28, 2002 in Woburn District Court.  Each was charged with larceny, conspiracy and fraudulent motor vehicle insurance fraud.   Assistant District Attorney Mark Canner of Middlesex District Attorney Martha Coakley’s Office is prosecuting the case.

Caught in the Act!

DORCHESTER- A Dorchester woman reported to Boston police that her 1995 Geo Tracker had been hit while parked outside her residence.  The car sustained damage to the passenger side door and fenders.  The insurance claim was denied after a Liberty Mutual Company appraiser and an accident reconstruction expert each determined that the damage was not caused by a hit and run while the car was parked and that some of the damage had been deliberately inflicted.  Several months later, the woman canceled her insurance and added her vehicle to her husband’s policy with Premier Insurance Company.  The Tracker was inspected and was in good condition.  The woman subsequently reported her car had been hit while parked and filed a claim with her new insurer.  The appraiser found the damage was inconsistent with a hit and run accident and hired an accident reconstruction expert to examine the vehicle.  Coincidentally, the expert was employed by the same agency that did the first expert examination.  The second expert determined the damage was not caused by a hit and run and some of the damage had been deliberately inflicted.  The second accident claim was denied.  Photos of both examinations revealed that the exact damage existed after both accidents.  Further investigation revealed that the damaged parts that were on the car after the first accident were replaced when the car was inspected by the insurer and then were put back on the car so the woman could file the second accident claim.  It was also determined that the woman’s husband worked at a Dorchester auto body shop. 

Antonio and Elizabeth Lopes pled guilty to charges of motor vehicle insurance fraud and attempted larceny in Dorchester District Court on April 9, 2002.  They were each sentenced to a year’s probation, ordered to pay restitution for costs of expert examinations and to pay fines of $1,000.  The case was investigated by Detective Joseph Lally of the Boston Police Department Auto Theft Unit and the IFB.  It was prosecuted by Assistant District Attorney John L. Ciardi of the Suffolk County District Attorney’s Office.

Former Chiropractor Indicted on Insurance Fraud Charges

PEABODY- A former chiropractor allegedly submitted bills to eight automobile insurance carriers for chiropractic treatments administered to individuals injured in auto accidents in 1997-98, after his license to practice as a chiropractor had been suspended. As a result, the subject allegedly collected $40,265 from the various insurance companies.  Further investigation revealed that, in addition to practicing without a license, the subject also allegedly billed the insurers for treatments that were never rendered to his patients.  As a result, he allegedly collected $3,560 from various insurers.   Carriers affected include Plymouth Rock Assurance, MetLife, Safety, Liberty Mutual, Arbella Mutual, Sentry, Hanover and Travelers Insurance Companies.

A former Peabody chiropractor was indicted in Essex County Superior Court on March 28, 2002 on 31 counts of insurance fraud, 17 counts of larceny, three counts of attempted larceny and one count of practicing without a license.  The case is being prosecuted by Assistant Attorney General David B. Andrews of Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division. 

Double Trouble

CAMBRIDGE- The Registry of Motor Vehicles received information alleging a man had registered and insured a vehicle under an alias.  The information also alleged that he intentionally inflicted property damage to his 1986 Mercedes and then filed a property damage claim with Metropolitan Property & Casualty.  The subject was issued a Massachusetts driver’s license by allegedly using a social security number of a Florida resident.  RMV Digital Imaging shows that the subject and the Florida resident are one and the same person.  After a review of the claim on the Mercedes, a reconstruction analysis concluded that multiple points of impact were involved and that the damage was consistent with being caused by a tool of force. 

Complaints were issued against a Cambridge man charging him with one count each of insurance fraud, attempt to commit a crime and identity fraud and two counts of larceny on April 30, 2002 in Cambridge District Court.  Middlesex Assistant District Attorney Mark Canner is prosecuting the case.

N.Y. Rates Too High for this Brooklyn Man

SPRINGFIELD- In February 2001, a Brooklyn, New York resident applied for Massachusetts auto insurance with Premier Insurance Company and provided a New York motor vehicle title and driver’s license at the time of application.  He also filed an RMV-1 to register his vehicle in Massachusetts.  All documents were signed in the presence of his insurance agent.  The subject was subsequently involved in two motor vehicle accidents, both in the city of New York.  Premier paid a total of $10,136 for the two accidents.  During an investigation, it was revealed that the subject was never a resident of Massachusetts and he admitted to insurance company SIU that he registered his vehicles in Massachusetts because the insurance was too costly in New York. 

A Brooklyn man was arraigned on May 7, 2002 in Springfield District Court on three counts of filing a fraudulent insurance claim.  Assistant District Attorney David Jenkins of Hampden County District Attorney William M. Bennett’s Office is prosecuting the case.

“This Subject Didn’t ‘Get the Story Straight!’” Case Update

WINCHESTER- A Winchester man was involved in a two-car motor vehicle accident when he pulled out of a parking area and struck another vehicle.  The subject was cited by police for operating an unregistered and uninsured vehicle.  Shortly after the accident, the subject contacted the other driver and suggested they should stage an accident after the subject insured his car so that both men could then file insurance claims and get paid for the damages.  The other driver reported the conversation to the IFB.  The subject called the other driver several more times and left messages on his answering machine including plans to stage the “new” accident and when he had reported a “new” accident to his  insurer, Plymouth Rock Assurance Company.  Investigators determined that the subject obtained insurance after the original accident and then contacted his agent to report the “new” accident.  His description of the accident and damage was similar to the accident that had happened three months prior.  Plymouth Rock paid the subject $9,213 before the fraud was discovered.

Ehab Sadeek pled guilty to a charge of motor vehicle insurance fraud.  Sadeek paid full restitution of $9,213 plus costs and expenses and was also ordered to pay a $2,000 fine, to perform 100 hours of community service and to complete one year of probation.  The case was prosecuted by Suffolk County Assistant District Attorney John L. Ciardi.

Minor Fender Bender Causes Total Loss

WEYMOUTH- A Weymouth woman was driving a friend’s Honda on Boston’s Central Artery in April 2001 when she was involved in a minor collision.  The accident took place when the woman was struck in the rear by a pick-up truck and happened while both cars were creeping along in bumper-to-bumper traffic.  The accident allegedly caused virtually no damage to either vehicle.  Several days after the accident, when the friend’s Honda was appraised, the vehicle allegedly had significant rear-end damage and was declared a “total loss” due to the damage.  The friend allegedly filed an insurance claim for the damage and Safety Insurance Company paid $4,357 for damages and $658 for a rental car claim.  The woman later allegedly filed a bodily injury claim, stating she suffered back and leg injuries in the accident.  An investigation by the insurer and an expert determined that the damage to the Honda allegedly was not caused by the April accident. 

Complaints were issued against a Weymouth man and woman charging them with motor vehicle insurance fraud, larceny and conspiracy on June 3, 2002 in Boston Municipal Court.   Suffolk County Assistant District Attorney John L. Ciardi is prosecuting the case.

Faulty Recall

DORCHESTER- A Dorchester man filed theft reports with the Boston Police Department and Liberty Mutual Insurance Company in April 2001 stating that his 2001 Honda had been stolen.  As part of the claim, the subject reported that he had installed a $3,000 DVD navigation system in the car and he presented a receipt for the system.  Upon inspection of the recovered vehicle, inspectors determined that the ignition security systems had not been defeated and the car could not have been operated except with an original key, which was in possession of the subject.  Further investigation revealed that the subject returned the $3,000 DVD navigation system and had never installed it in his car. 

Jome Kieta pled guilty to charges of filing a false report of a crime, insurance fraud and attempted larceny on June 13, 2002 in Dorchester District Court.  He was sentenced to two years probation and ordered to pay $1,500 in court costs and probation fees.  Detective Joseph Lally of the Boston Police Department and the IFB investigated the case.  It was prosecuted by Suffolk County Assistant District Attorney John L. Ciardi.

False Identity Nets $37,000

RANDOLPH- In February 1995, a former Randolph man, whose own license had been suspended for motor vehicle infractions, allegedly obtained a second Massachusetts driver’s license using a stolen social security number and a fictitious name.  He allegedly used the identity and clean driving record to obtain several motor vehicle insurance policies.  From August 1995 through October 1997, the subject allegedly filed a number of claims using both the alias and his own identities and was compensated approximately $37,000 as a result of the claims.  The subject would have been unable to obtain the policies from Arbella Mutual, Peoples Service, Commerce, Fitchburg Mutual and Trust Insurance Companies had the companies been aware of his suspended sentence.

On June 26, 2002 in Quincy District Court, a former Randolph man was charged with one count of using a forged motor vehicle operator’s license and nine counts each of motor vehicle insurance fraud and larceny.  Assistant Attorney General Michael McNally of the AG’s Insurance and Unemployment Fraud Division is prosecuting the case.

Stoughton Auto Appraiser Charged with Insurance Fraud

STOUGHTON- A Stoughton man’s Pontiac Grand Am was allegedly heavily damaged when a fire started in the dashboard of the car as he drove down the street.  The subject, a licensed auto appraiser, alleged that due to severe fire damage, the odometer was unreadable.  On several occasions, the subject allegedly made statements to his insurer, Quincy Mutual Fire Insurance Company, claiming that his vehicle had approximately 48,000 miles on it.  Based on that assumption, an appraisal was performed on the vehicle and a dollar amount was assigned.  Investigation revealed that the vehicle had approximately 119,000 miles on it at the time of the fire and that the subject allegedly understated the mileage to Quincy Mutual so that he would receive a larger settlement. 

A Stoughton man was charged with attempted larceny and insurance fraud on June 14, 2002 in Quincy District Court.  Special Assistant Attorney General Lea May of the AG’s Insurance and Unemployment Fraud Division is prosecuting the case.

Stolen Vehicle Found in Landlord’s Garage

LAWRENCE-  A Lawrence woman alleged that her 1989 Ford Tempo had been stolen and filed a stolen vehicle claim with her insurance carrier.  Sentry Insurance Company paid her $970 for comprehensive coverage and $509 for replacement vehicle costs.  The alleged stolen vehicle was subsequently found in a garage owned by the woman’s landlord.

Complaints were issued in Lawrence District Court on June 27, 2002 against a Lawrence woman on two counts each of larceny and motor vehicle insurance fraud and one count each of perjury/false statement of theft, concealment of a motor vehicle and intentional false report of a crime.  Assistant District Attorney Lena Robinson of Essex County District Attorney Kevin M. Burke’s Office is prosecuting the case.

Memory Lapse

LAWRENCE- On July 28, 1997, a Lawrence man reported to the Lawrence Police Department that his 1996 Chevrolet Corsica was stolen from his residence.  The subject signed a Proof of Loss report for his insurer, Amica Mutual Insurance Company, and claimed in a recorded statement that his vehicle was stolen from in front of his home.  On July 27, 1997 a detective from the Newark, New Jersey Arson Squad responded to a vehicle fire.  The vehicle turned out to be the subject’s 1996 Corsica.  The subject allegedly stated that he last operated his vehicle on July 28^th although the vehicle was destroyed in the fire a day earlier. 

Complaints were issued on June 27, 2002 in Lawrence District Court against a Lawrence man on motor vehicle insurance fraud, attempted larceny, perjury/false statement to police, removal or concealment of a motor vehicle and intentional false report of a crime.  The prosecutor is Assistant District Attorney Lena Robinson of the Essex County District Attorney’s Office.

Brockton Man Uses Alias to Collect $42,000 in Claims

BROCKTON- A Brockton man was involved in a motor vehicle accident in March 1997 which killed a passenger in his vehicle.  The subject’s license was revoked indefinitely by the Registry of Motor Vehicles after he was convicted of motor vehicle homicide and other charges.  Investigation revealed that about five months after the accident, the subject applied for and received a motor vehicle driver’s license under another name.  In his application for the new motor vehicle license, the subject allegedly falsely claimed that he had never had his license or right to operate a motor vehicle suspended or revoked.  The subject allegedly used the fraudulently obtained license and applied for and received motor vehicle insurance policies from Safety, Metropolitan, Trust and Premier Insurance Companies.  Between February 1998 and July 2000, the subject allegedly filed six claims for collision and comprehensive damage to his vehicle, resulting in the carriers paying out more than $41,500 in benefits. 

On June 26, 2002 in Suffolk Superior Court, a Brockton man was indicted on ten counts of larceny by false pretenses, ten counts of motor vehicle insurance fraud and one count of making a false statement in an application for a license.  Assistant Attorney General John A. Curseaden of the AG’s Insurance and Unemployment Fraud Division is prosecuting the case.

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Multi-Lines Fraud

Lynnfield Couple Indicted on 73 Insurance Fraud Charges

LYNNFIELD- From 1995 to 2000, a Lynnfield man, either acting alone or with his wife, allegedly filed numerous fraudulent claims for personal injury protection, bodily injury and general liability insurance benefits against various insurance companies.  He allegedly used three different schemes: he would fabricate or exaggerate injuries suffered, falsify employment to recover lost wages, or falsely claim disability while actually self-employed.  In 1998, the husband allegedly threatened a doctor who failed to corroborate an alleged injury for which he made insurance claims.  He also allegedly filed a false claim seeking to recover for a lost diamond on his homeowners policy with Preferred Mutual Insurance Company and allegedly falsified his income on various applications for credit to qualify for loans to purchase his home and automobiles.  The insurance companies allegedly defrauded include CNA, Concord General Mutual, Metropolitan Property &  Casualty, Peoples Service, Plymouth Rock, Safety, Trust, Hanover, American General, Holyoke Mutual and Norfolk & Dedham Insurance Companies.

A Lynnfield couple was indicted on March 25, 2002 by an Essex County grand jury on charges they allegedly used various schemes to defraud eleven different insurance companies of $100,000.  The husband was indicted on 19 counts of insurance fraud, 18 counts of larceny, six counts of attempted larceny, four counts of obtaining credit by false pretenses, seven counts of conspiracy, two counts of commercial extortion, two counts of solicitation of a felony and one count of attempted extortion.  His wife was indicted on four counts of insurance fraud, three counts of larceny and seven counts of conspiracy.  The case is being prosecuted by Assistant Attorney General John A. Curseaden of  Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division.

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Workers’ Compensation Fraud

Former Big Dig Worker Admits Fraud

REVERE- A Revere man worked for a subcontractor on the Central Artery Tunnel Project and was employed as a carpenter foreman until April 27, 2001 when he reported he injured his left knee and ankle.  The subject had a previous knee injury in 1998 but returned to work after that injury and claimed that his 2001 injury was a new injury.  He filed a total disability workers’ compensation claim with CAT insurer AIG.  The claim was denied because investigation showed no specific injury incident that caused the new complaint of disability.  Further investigation by AIG determined that the subject was doing renovation work at a Gold’s Gym in August 2001.  The subject was videotaped on several different dates and he showed no signs of a left knee or ankle impairment.  The subject also returned an Employee Earnings Report to the insurer reporting no income for the previous six months, a period of time in which he was found to be working.  Subpoenaed records from Gold’s Gym demonstrated that the subject was working and paid for his work.

Eric Kearley admitted on July 23, 2002 in Boston Municipal Court that he committed workers’ compensation fraud and attempted larceny.  He was placed on probation and must pay $2,500 to the insurer to cover the costs of the fraud investigation.  In addition, Kearley must dismiss his workers’ compensation claim with prejudice, meaning that he cannot re-open his claim and seek further benefits from the insurer.  Assistant District Attorney John L. Ciardi of Suffolk County District Attorney Daniel F. Conley’s Special Prosecution Unit prosecuted the case.

“Home Health Aide Claims Disability” Case Update

WALPOLE- In February 1994, a Walpole woman claimed to have injured her neck and back after slipping on ice while employed as a home health aide.  She reported that she was totally disabled due to the accident and filed claims with her employer’s workers’ compensation carrier, Liberty Mutual Insurance Company.  She collected more than $29,000 in tax-free workers’ compensation total disability benefits between March 1994 and December 1996.   The woman also filed a personal injury lawsuit against the owners of the property where she allegedly fell and collected a $12,000 settlement as the result of her lawsuit.  Investigators discovered that while the subject claimed to be totally disabled, she worked for a local contractor under her maiden name.  To conceal her employment from the two insurers she defrauded, she received paychecks made out to her husband totaling more than $17,000. 

Additionally, while claiming to be totally disabled and collecting benefits, the subject obtained a Family Day Care Provider license which authorized her to care for six children in her home.  As part of her day care responsibilities, she filed day care food reimbursement claims with the Nutrition Education and Child Care Food Program (NECCFP) which indicated that she cared for and provided meals to as many as six children per day, seven days per week.  Investigators discovered that the subject had overstated and did not provide care for two of the children listed on her daily day care attendance sheets and defrauded NECCFP of approximately $4,800.

Anne Brown, also known as Anne DeRosa, pleaded guilty on April 4, 2002 in Norfolk Superior Court to two counts of larceny and one count each of perjury, workers’ compensation insurance fraud and conspiracy to commit larceny.  She was sentenced to probation for 10 years and ordered to pay $24,800 in restitution.  Assistant Attorney General John Crimmins of Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division prosecuted the case.

Hyannis Man Steamrolls Benefits

HYANNIS- A Hyannis man claimed neck and back injuries in October 1997 as a result of a work-related accident while employed as a steamroller operator.  He remained out of work after seeking medical treatment from a number of different providers for his alleged injuries and received weekly benefits of $665 from AIG Group for approximately five months.  Benefits were discontinued on April 1, 1998 when an IME doctor found no objective signs to substantiate the complaints by the subject and wrote that the subject should be able to return to work.   Investigation revealed that the subject was working that same day and during the time he collected benefits operating heavy equipment and doing construction work.  The subject later appeared at a DIA proceeding using a cane and claiming to be in pain and unable to work.  He also filed an Employee Earnings Report on which he reported no income for the previous six months.

In Boston Municipal Court on May 3, 2002, complaints were issued against a Hyannis man on charges of workers’ compensation fraud and larceny.  Suffolk County Assistant District Attorney John L. Ciardi is the prosecutor.

“Irrigation Installer Digs Deep to Commit Fraud” Case Update

WALTHAM- A Waltham man began collecting disability for a 1996 injury but actually returned to work.  He continued to report to Granite State Insurance Company that he was disabled.  The subject worked full-time throughout much of 1997 and 1998 while simultaneously collecting total disability benefits until October 1998.  He never reported his return to work or his change in physical condition to the insurer.  A perjury case came after the subject falsely testified before a grand jury that:  1) he did not work for the irrigation company in 1997, 2) his wife actually worked at the company, 3) paychecks made payable to his wife were for work that she performed, and 4) he never instructed his employer to pay him for work he performed through checks payable to his wife. 

On June 3, 2002, Peter A. Nutile pled guilty to workers’ compensation fraud, larceny and attempted larceny charges plus four counts of perjury for false testimony before a grand jury in Middlesex Superior Court.  He was sentenced to serve six months house arrest with electronic monitoring and seven years probation.  He was also ordered to pay the insurer $22,635 in restitution and $2,550 in investigative costs.  Assistant Attorney General John A. O’Leary of the AG’s Insurance and Unemployment Fraud Division prosecuted the case.

North Carolina Man Arrested at DIA Hearing

BOSTON- A former Marlborough man appeared at the Department of Industrial Accidents in Boston to pursue a workers’ compensation claim.  The subject, currently a resident of North Carolina, worked for a van lines until June 1999 when he claimed he sustained a work-related lower back injury.  He reported the injury and filed a workers’ compensation claim with AIG. He began to collect $507 per week in benefits.  In June 2000, the subject moved to North Carolina and allegedly began working again.  In October 2000, the subject’s workers’ compensation attorney allegedly filed a demand for $84,300 to settle the pending claim.  Investigation revealed that the subject allegedly was working and had been running a business for about one year, painting lines and markings in parking lots in North Carolina.  Additionally, investigators videotaped the subject on a trip to the beach showing the subject allegedly running and diving into the ocean, playing on a “boogie board” and throwing a football.  The subject also filed an Employee Earnings Report alleging no income for the period of alleged disability.

A former Marlborough man, currently a resident of Robersonville, NC, was arrested when he appeared at the DIA in Boston to pursue a workers’ compensation claim.  Following his arrest he was arraigned and charged with larceny and workers’ compensation fraud in Boston Municipal Court on June 10, 2002.  Assistant District Attorney John L. Ciardi of the Suffolk County District Attorney’s Special Prosecutions Unit is the prosecutor. 

Chelsea Man Caught Working While Collecting

CHELSEA- A Chelsea man claimed he injured his lower back when he slipped and fell in a work-related accident. He filed a total disability claim and began collecting weekly benefits from AIG.  The subject’s own doctor stated that the subject could return to work as long as he did not lift excessive amounts.  An independent medical examination also reported that the subject could return to work.  Claiming he was still totally disabled, the subject turned down a light duty offer from his employer.  The subject continued to claim he was disabled, telling doctors he was unable to work and filed an earnings report with the DIA 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.  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. 

Santos Mejia pled guilty to charges of workers’ compensation and larceny in Chelsea District Court on June 26, 2002.  He was ordered to serve probation for five years during which time he must repay $9,000 in benefits he received fraudulently.  Assistant District Attorney John L. Ciardi of Suffolk County District Attorney Daniel F. Conley’s Office prosecuted the case. 

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Property Fraud

Moving Nightmare

QUINCY- A Quincy man contracted with a moving company to transport two truckloads of household and personal items from Quincy to his new home in Florida.  One truck never arrived for the pickup of the items.  The subject allegedly claimed to Providence Mutual Insurance Company a $72,000 loss of his personal items.  Investigation revealed that the subject allegedly had placed the articles in storage in Quincy and had kept in touch with the storage company while making a police report and filing a report of theft.

Complaints were issued against a Quincy man on two counts each of insurance fraud and attempted larceny on April 1, 2002 in Stoughton District Court.  Special Assistant Attorney General Lea May of Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division is the prosecutor. 

“Coincidence or Insurance Fraud?” Case Update

BOSTON- An Andover man and a Methuen man each made separate reports at different times to their respective insurance companies that they had been mugged by unknown assailants and robbed of several items of jewelry.  Pennsylvania Millers Mutual Insurance Company paid the Andover man $5,900 for his theft loss.  However, a subsequent investigation by the insurer revealed that the descriptions and written appraisals for jewelry submitted by the Andover man were identical to those submitted by the Methuen man.  Worcester Insurance Company denied this claim. 

John Pappalardo and James Buyck each pled guilty to insurance fraud, larceny, conspiracy and false report of a crime to a police officer in Lawrence District Court on May 7, 2002.  Pappalardo was sentenced to serve one year in the House of Corrections, with three years suspended.  He was also ordered to pay $5,900 in restitution.  Buyck was sentenced to six months in the House of Correction, suspended, and ordered to pay a $1,000 fine.  Special Assistant Attorney General Lea May of the AG’s Insurance and Unemployment Fraud Division prosecuted the case.

Brockton Man Arrested for Alleged Arson

BOSTON- A Brockton man allegedly set fire to his store in Taunton in April 2001 and then filed a fraudulent insurance claim with Commerce Insurance Company.   

A Brockton man was arrested on May 30, 2002 on federal arson charges.  He was indicted on charges of arson, mail fraud and use of fire to commit a felony in U.S. District Court.  The case was investigated by the Bureau of Alcohol, Tobacco and Firearms, the Massachusetts State Police Fire Marshal’s Office, and the Taunton Police Department, working in conjunction with the Taunton Fire Department and the IFB.  The case is being prosecuted by Assistant U.S. Attorney John Bradley of United States Attorney Michael J. Sullivan’s Major Crimes Unit.

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  Agent Fraud

Hyde Park Agent Allegedly Embezzled From Policyholders

HYDE PARK- From March 1990 to December 1999, a Hyde Park man was employed as an insurance agent with Boston Mutual Life Insurance Company.  The agent allegedly embezzled numerous insurance premium payments totaling more than $25,000 from approximately 40 Boston Mutual policyholders he serviced in various Boston neighborhoods from January 1997 through December 1999. 

A Hyde Park insurance agent was indicted on charges of agent embezzlement and larceny on June 19, 2002 in Norfolk Superior Court.  The case is being prosecuted by Assistant Attorney General Michael McNally of the AG’s Insurance and Unemployment Fraud Division. 

Dorchester Agent Charged with Embezzlement

DORCHESTER-   In September 1998, a client approached a Dorchester insurance agent about purchasing a workers’ compensation policy for his construction business.  The agent allegedly helped the client complete a finance agreement and a workers’ compensation policy application.  Believing he had coverage, the client allegedly paid the agent a down payment and then made monthly payments to the agent totaling more than $4,000 for a one year policy.  Investigation revealed that the agent allegedly never submitted any documents or payment to the insurer, Legion Insurance Company, resulting in no coverage for the client.  Further investigation revealed that the agent allegedly submitted false documents to the Department of Industrial Accidents and the Division of Insurance when asked to prove the existence of a policy for his client.  The agent’s license to sell insurance was revoked by the Division of Insurance in November 2000 for five years. 

A Dorchester insurance agent was charged in Dorchester District Court on May 9, 2002 with one count each of embezzlement, larceny, forgery and uttering a forged instrument.  The case is being prosecuted by Assistant Attorney General Lawrence Christopher of the AG’s Insurance and Unemployment Fraud Division.

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Disability Fraud

“Insurance Fraud Fits This Subject Like a Glove” Case Update

BOSTON- The owner of a glove manufacturing company sold the company in 1997.  As part of the sales agreement, he continued to work for the company as a consultant until the consulting agreement was terminated later that year.  In April 1998, the subject filed disability insurance claims under six private disability policies he had purchased over the years claiming that he had injured his left shoulder and arm and could no longer perform the physical tasks demanded of him as a consultant.  He collected more than $23,000.  Investigation by the insurer, Provident Unum, revealed that physical requirements of his consulting work were misrepresented and that the subject had not been working when he claimed he was disabled. 

Stephen C. Berger was found guilty of insurance fraud and larceny on June 13, 2002 in Suffolk S