BOSTON- The Insurance Fraud Bureau (IFB), one of an increasing
number of companies and agencies taking advantage of modern technology
and state of the art communication methods, recently debuted its
Home Page on the World Wide Web portion of the Internet. The "Web"
is an electronic network of home pages containing articles, pictures,
charts and even videos. The IFB's Internet address is http://www.ifb.org
The IFB Home Page includes facts about the IFB, past issues of
focusFraud, current press releases and the complete listing
of publications found on the Insurance Fraud Research Register
(IFRR). In addition to accessing information about the IFB, people
connected to the Internet can transmit hotline tips to the IFB
Hotline Desk; communicate comments on focusFraud, the IFB,
and the IFB Home Page; and submit articles or publications for
inclusion to the IFRR. The IFB Home Page is an ideal vehicle for
the public, government agencies and insurance carriers to exchange
general information chronicling the activities of the IFB.
The first hotline tip via the IFB Hotline Desk was recently received.
The informant, from Cedar Rapids, Iowa, reported thefts of heavy
equipment that was reported stolen to several insurance carriers
under various corporate names. While this hotline tip will be
referred to another jurisdiction for possible follow-up, it is
an example that people take advantage of the Internet to report
information. The IFB is the first fraud bureau that has an electronic
hotline capability.
Convictions - 123
The effectiveness of the Insurance Fraud Bureau is dependent upon
communication and partnerships that are both required by statute
and have been cultivated over time.
When the IFB was created by the insurance industry and authorized
to conduct criminal investigations by state statute, the enabling
legislation established a partnership between the IFB and prosecutors
including the Office of the Attorney General, the Office of the
United States Attorney, and Offices of the various District Attorneys.
The effectiveness of the IFB partnerships with federal, state,
and local prosecutors is demonstrated by the 262 cases referred
for prosecution, the 260 indictments and complaints, and the 123
convictions which have resulted to date. The AG-IFB partnership
has been viewed as a national model in a cooperative effort to
criminally investigate and prosecute all lines of insurance fraud.
This public-private partnership is the only one of its kind in
the country where the insurance industry funds not only the Insurance
Fraud Bureau, but also provides an additional $400,000 to the
Office of the Attorney General. The continued dedication of insurance
industry partners is crucial to the ongoing success of IFB efforts
as its five year anniversary approaches in early 1996.
Currently, some insurance industry personnel exchange claim-related
information on cases of suspected fraud. Other companies refuse
to exchange believing there is no immunity which would insulate
the insurer from liability for the dissemination of this claim-related
fraud information. Currently, immunity statutes only apply between
automobile Special Investigative Units (SIUs), Commonwealth Automobile
Reinsurers, and law enforcement agencies, and by insurers on fire
losses to real or personal property and law enforcement entities
investigating those losses. To remove this perceived obstacle,
the IFB Board of Governors voted to support the exchange of claim
information on all lines of insurance where fraud was suspected.
The IFB Board of Governors authorized the IFB to request that
the Office of the Attorney General secure an Opinion of the Attorney
General construing the Consumer Protection Act in Massachusetts.
It is hoped that the Opinion will support the proposition that
in the absence of malice or bad faith, it should not be considered
an unfair or deceptive claims practice within the meaning of Chapter
93A for an insurer or its employees or agents, or for an employee
of the Division of Insurance or Department of Industrial Accidents,
to furnish evidence or information to another insurer, a law enforcement
agency, the IFB, or the Division of Insurance in connection with
the investigation of a suspected violation of any insurance law
or regulation.
Adoption of this position in an Opinion of the Attorney General
should provide insurance companies writing all lines of insurance
with assurance that their legitimate efforts to combat fraud should
not be met with subsequent civil liability. Early detection and
investigation, including the exchange of information where fraud
is suspected at the claim level, is critical to assist carriers
in removing the waste from the insurance system by those who would
abuse it. Schemes to defraud employed by various groups and individuals
will be detected and stopped sooner, thereby eliminating payments
from the system that never should have been made. In turn, valid
claims may also be processed and paid more quickly, allowing carriers
the opportunity to dispose of claims where fraud suspicions are
allayed upon receipt of information addressing a particular level
of suspicion.
An IFB criminal investigation and subsequent prosecution of insurance
fraud would not occur without the dedication and communication
from many partners including insurance companies, employers, the
public, and other governmental and non-governmental entities that
assist the IFB.
The staff of the IFB and the many partners that we work with to
achieve the IFB mission of detecting, preventing, and combatting
insurance fraud are committed to ongoing efforts to assist in
the investigation and subsequent prosecution of all lines of insurance
fraud.
IFB General Counsel
AUTOMOBILE HIGHLIGHTS
"Isn't This a Bus Stop?" Case Update
LOWELL- A Lowell man was driving a van when he was involved
in a four-car intersection accident. He claimed to his insurance
carrier, Liberty Mutual Insurance Company, that he and six passengers
suffered injuries in the collision. However, witnesses at the
scene stated that the six passengers were not in the vehicle at
the time of collision but entered the van minutes after the collision
occurred.
On November 14, 1995, seven Lowell residents were found guilty
of insurance fraud and attempted larceny charges in Lowell District
Court. Sokhom Toek, Sambath Keo, and Chhom Ouk were each sentenced
to serve six months in the House of Correction. Chantha Duong
and Touch Sok were each sentenced to a suspended sentence and
probation. Reang Sao and Mengky Phan are awaiting sentencing.
"Arlington Auto Ring Broken" Case Update
ARLINGTON- Three subjects submitted false lost wage and bodily
injury claims in connection with five separate automobile accidents
over a five year period. The trio claimed personal injuries and
filed PIP applications. They also used falsified Wage and Salary
Verification forms to claim lost wages or to extend the lost wage
period. Carriers victimized in the schemes include Aetna, American
Universal, CNA, Farmers Insurance Group, Hanover, John Hancock,
Liberty Mutual and National Grange Mutual Insurance Companies.
Joseph Voci of Wakefield, who headed the fraud ring, pled guilty
to multiple counts of insurance fraud, larceny and perjury charges
in Suffolk and Middlesex Superior Courts on November 15, 1995.
He was sentenced to serve six months in the House of Correction
and six months house arrest with an electronic bracelet, probation
and $25,000 restitution. On November 20, 1995, in Boston Municipal
Court, a second subject pled guilty to larceny charges. He was
sentenced to probation and $4,000 in restitution. The third subject
had previously pled guilty.
"Have We Met Before?" Case Update
BRIGHTON- Five subjects staged a two-car collision and
claimed injuries. An accident reconstructionist, however, reported
that there was no evidence of a reciprocal collision. The vehicle
operators claimed not to know each other although they had worked
together for the same supervisor for a two year period. Other
subjects who claimed to be in the vehicles were found to be at
work when the auto accident occurred. The carriers that insured
the two vehicles were Amica Mutual and Commerce Insurance Companies.
In Dedham District Court on October 27, 1995, a Brighton man
pled guilty to motor vehicle insurance fraud. He was sentenced
to one year in the House of Correction, suspended, and ordered
to pay a fine and restitution totalling $3,735. A second subject
pled guilty to motor vehicle insurance fraud. She was sentenced
to one year in the House of Correction, suspended, and a fine
and restitution totalling $2,255. On November 21, 1995, a third
subject in the case pled guilty to motor vehicle insurance fraud
and was sentenced to probation and a fine and restitution totalling
$2,235. Trials for the other two subjects are upcoming.
It Was a Long Walk for Tickets
TAUNTON- After parking his Mercedes 450SI in the Downtown
Crossing area of Boston, a Taunton man walked over to Boston Garden
to buy tickets. After returning to the area where the vehicle
was allegedly parked, he discovered the vehicle missing and reported
to police that the Mercedes was stolen. He also reported the
theft to his insurance carrier, Arbella Mutual Insurance Company,
and attempted to collect for the stolen vehicle. The vehicle
was later located at the home of one of the subject's friends
who claimed he was asked to store the vehicle in his garage for
the winter.
Michael Cardoza pled guilty to motor vehicle insurance fraud,
attempted larceny and concealing a motor vehicle to defraud an
insurer in Quincy District Court on October 2, 1995. He was sentenced
to serve one year in the House of Correction and ordered to pay
$625 in fines.
"Damage? I Don't See Any Damage!" Case Update
MALDEN- A subject claimed that his Corvette, in excellent
condition and without pre-existing damage, was stolen from outside
his home. However, a couple of weeks prior to the alleged theft,
police responded to a larceny in progress regarding this same
vehicle and wrote a report indicating the extent of damage. However,
this damage was never reported to the subject=s insurance carrier,
Aetna Insurance Company. Two weeks after the act of vandalism,
the subject reported the vehicle stolen. The vehicle was recovered
the same day and declared a total loss. In an EUO, the subject
denied the vehicle had any pre-existing damage, even after viewing
the police report.
A Malden man pled guilty to insurance fraud and attempted larceny
in Malden District Court on October 2, 1995. He received one
year probation and was ordered to pay restitution of $500.
"Couple Conjures up Collision Claim" Case Update
SPRINGFIELD- Two subjects were involved in a two-car collision.
One of the subjects submitted a claim for personal injuries to
his carrier, John Hancock Insurance Company. Although the subject
denied that he knew the other driver, it was discovered that the
two subjects were married. Additionally, the first subject listed
another passenger in his vehicle as being injured. This passenger
is non-existent and was an alias name used in order to file a
PIP claim with the adverse carrier, National Grange Mutual Insurance
Company.
A husband and wife pled guilty to insurance fraud and larceny
charges in Springfield District Court on September 7, 1995. Their
cases were continued without a finding. The husband was ordered
to pay restitution of $2,935 and a fine.
"Worcester Auto Fraud Ring Broken" Case Update
WORCESTER- Four subjects staged a series of automobile
collision accidents and submitted claims for property damage,
medical and lost wage claims for those accidents to Commerce,
Hanover, and Safety Insurance Companies.
A Worcester man pled guilty to motor vehicle insurance fraud
and larceny in Worcester Superior Court on September 26, 1995.
He was sentenced to one year in the House of Correction, six
months to serve and the balance suspended for three years. He
must also pay restitution in the amount of $7,034. A second subject
in the case pled guilty to the same charges. He will be sentenced
at a later date. The other subjects are awaiting trials.
Glass Shop Owner Indicted on 35 Counts
RANDOLPH- The owner/operator of a Randolph auto glass repair
company allegedly collected over $56,000 in illegal insurance
payments by submitting false claims to seven insurance companies.
The subject allegedly submitted 166 false claims, inflating the
value of the glass he installed. Companies affected in this scam
include Commercial Union, Hanover, Safety, Travelers, USF&G,
CNA and Liberty Mutual.
A Randolph man was indicted on a total of 35 counts in Norfolk
and Suffolk Superior Courts on July 24 and August 30, 1995. The
indictments include counts of insurance fraud, larceny and attempted
larceny.
"Employer Fights Back" Case Update
PLYMOUTH- A Plymouth man had been operating his motorcycle
when he was struck by an automobile. He subsequently filed a
claim with his insurance carrier, Aetna Casualty and Surety Company,
for lost wages. However, the subject's employer contacted the
IFB through the hotline to notify us that the subject had stolen
company stationery. The owner stated that the subject had forged
his signature on a letter which indicated that the subject had
missed a longer period of time than he actually did and that he
was also earning a larger salary.
Paul David pled guilty to insurance fraud, larceny, forgery
and uttering charges in Worcester District Court on July 14, 1995.
He was sentenced to one year in the House of Correction, suspended,
fined $500 and ordered to pay restitution of $4,800.
Phony Documents Aid Man in Collecting $20,000
STOUGHTON- A Stoughton man was operating a taxi when he
was struck by another vehicle. The owner of the taxi company
completed a Wage and Salary Verification form and indicated that
the subject was not an employee of the company but was an independent
contractor who leased the taxi from him and was not paid any wages
or salary from the company. The owner also indicated that the
subject resumed his lease agreement five days after the accident.
The subject later admitted to investigators that tax documents
and a Wage and Salary Verification form he submitted for his claim
were phony and were submitted by him to fraudulently obtain insurance
money from Merchants Insurance Company of New Hampshire.
Alfred Moughalian pled guilty in Dedham District Court on July
10, 1995 to motor vehicle insurance fraud, larceny and attempted
larceny. He was sentenced to two and a half years in the House
of Correction, suspended, ordered to perform 150 hours of community
service and to pay restitution of $20,000.
WORKERS' COMPENSATION HIGHLIGHTS
Dual Identity Nets Second Income
SALEM- A subject sustained a work-related neck and back
injury and collected total temporary workers' compensation benefits
from her employer, Salem Hospital. It was discovered through
investigation that the woman, while collecting these benefits,
was working elsewhere under a different name and social security
number. The DIA referred this case to the IFB.
The case against a Salem woman was continued without a finding
in Salem District Court on October 27, 1995. She was ordered
to pay restitution of $1,122 to her employer.
"Day Care Worker Collects Benefits" Case Update
ATTLEBORO- A Providence, Rhode Island woman sustained a
work-related injury and collected over $24,000 in workers' compensation
benefits and medical payments from Continental Insurance Company.
She completed and signed an Employee Earnings Report indicating
that she had not received any earnings during the time of disability.
However, the subject was employed and operated a family day care
center out of her home during a portion of her period of disability.
A Rhode Island woman pled guilty to workers' compensation fraud
and larceny charges in Attleboro District Court on October 25,
1995. The case was continued without a finding. The subject
was sentenced to probation and was ordered to pay restitution
of $4,760.
"Ladders Can Be Hazardous to Your Health" Case Update
WATERTOWN- A Watertown man was injured in a job-related
incident and was receiving workers' compensation benefits from
American Policyholders Insurance Company. While still collecting
benefits, he became employed as an independent painting contractor.
During one of his jobs, he fell off a ladder and was treated
at a nearby hospital for this new injury.
David Bourinot pled guilty to workers' compensation and larceny
charges in Malden District Court on October 10, 1995. He was
sentenced to one year probation, ordered to pay restitution of
$5,000 and to perform 500 hours of community service.
"Subject Bakes Up a Story" Case Update
WORCESTER- A Worcester man, while employed as a baker,
claimed that he sustained an injury and applied for workers' compensation
benefits from Hartford Accident Insurance Company. His employer
contended, however, that his records indicated that the subject
voluntarily terminated his employment several weeks before the
injury occurred.
On September 22, 1995, in Worcester District Court, a subject
pled guilty to insurance fraud, workers= compensation fraud, attempted
larceny and corruption of a witness. The case was continued without
a finding for one year with one year supervised probation. He
was ordered to pay $2,165 in restitution and $1,030 in court
costs.
Talk About Bad Luck!
LEOMINSTER- A subject had reported a work-related back
injury and received temporary total disability benefits for three
months for approximately $2,000. During her period of disability,
she obtained employment under a different name, social security
number and address. However, she provided the same date of birth
and home telephone number. At her new place of employment, she
again claimed a work-related back injury and filed a workers'
compensation claim. Both companies were insured through Liberty
Mutual Insurance Company who discovered that she was the same
person using two different identities.
A Leominster woman was found guilty of insurance fraud and
larceny charges on September 11, 1995 in Worcester District Court.
She was sentenced to one year in the House of Correction, suspended,
ordered to pay restitution and fines totalling $2,900, and to
perform 150 hours of community service.
City Councilman Pleads Guilty to Premium Fraud Evasion Charges
HAVERHILL- The owner/operator of a window and siding company
devised a scheme to defraud Continental Insurance Company when
he provided false information regarding job code classifications
of employees. The subject also falsified salaries of various
employees by establishing a payroll system in which his company
"split" the compensation paid to its workers into two
categories: 40% of the salary was falsely classified as labor
and 60% of the salary was falsely classified as materials. After
the subject orchestrated the misclassification and payroll split,
he called for a reaudit of the payroll and was granted a substantial
rebate and reduced premium payments by the carrier. The subject
also defrauded the IRS when he agreed to make an employee's paychecks
payable to another person in order to circumvent IRS efforts to
seize this employee's pay.
On September 14, 1995, in U.S. District Court, William Chase,
owner/operator of Valley Window & Siding, Inc. and an elected
member of the Haverhill City Council, pled guilty to conspiracy
to defraud his workers' compensation insurer and to conspiracy
to defraud the Internal Revenue Service. He will be sentenced
in December, 1995.
Security Manager Caught Stealing $97,000
TEWKSBURY- A Tewksbury man allegedly claimed that he suffered
shoulder and back injuries in an automobile accident. As a result,
he received over $97,000 from Continental Insurance Company in
total temporary disability benefits from his job as the owner
of a security company. It is alleged that while he was receiving
disability benefits, the subject was actually employed for several
months as the security and maintenance manager of a self-storage
facility and was also running a mail order business out of his
home. He allegedly submitted statements claiming that he was
not working while he was receiving the benefits.
On August 3, 1995, a subject was indicted in Middlesex Superior
Court on one count each of workers' compensation fraud, insurance
fraud and larceny.
IFB Marks 100th Conviction in "Oh, Brother" Case
Update
SALISBURY- An employee of Midas Muffler in Burlington claimed
to be disabled due to a work-related injury. Despite his claim
of total disability, he worked full-time for three separate employers
in Beverly, Lawrence and Seabrook, N.H. The subject used an alias
to avoid detection and collected more than $31,000 from American
Policyholders Insurance Company in total disability benefits while
working for these employers.
Sean DiPietro pled guilty to insurance fraud, workers' compensation
fraud and larceny in Middlesex Superior Court on July 31, 1995.
He was sentenced to serve one year in the House of Correction.
He was also ordered to pay $31,879 in restitution.
Calculated Miscalculation
LOWELL- The president of a New Hampshire company which provides
client companies in Massachusetts, Rhode Island and New Hampshire
with unskilled laborers on a temporary basis allegedly avoided
paying $446,319 in unemployment taxes and interest from April
1991 through June 1995 by knowingly misclassifying these workers
as "independent contractors" instead of as "employees"
of the company. The subject also allegedly diverted approximately
$426,463 from Liberty Mutual Insurance Company by providing false
information regarding the actual number of employees.
A subject was indicted on a total of 21 counts in Middlesex
Superior Court on September 15, 1995. Charges included failure
to pay unemployment contributions, failure to file quarterly contribution
reports, misclassification of employees, workers' compensation
premium fraud and larceny of property belonging to an insurance
company.
PROPERTY HIGHLIGHTS
"But It Worked the First Time!" Case Update
CHELMSFORD- A subject submitted two claims for property
damage to Liberty Mutual Insurance Company for pre-existing damage
to his home. He had previously submitted the same claims for
damage to Cambridge Mutual Fire Insurance Company for which he
was paid almost $1,000 for his losses. The duplicate claims were
discovered through a check with the Central Index Bureau.
A Chelmsford man pled guilty to two counts each of insurance
fraud and larceny in Lowell District Court on August 16, 1995.
The case was continued without a finding and he was ordered to
pay restitution in excess of $2,200.
MULTI-LINE HIGHLIGHTS
IT'S OFFICIAL!
BOSTON- Chiropractor Alan Rosenthal and his wife
Caterina carried out a series of schemes in order to generate
additional business and to increase their personal income by defrauding
Massachusetts automobile and workers' compensation insurance carriers.
On September 7, 1995, Alan Rosenthal was officially sentenced
to serve 15 months in federal prison and two years supervised
probation. He was also ordered to pay $129,000 in restitution,
over $300,000 in fines and to forfeit his Massachusetts chiropractic
license for 30 months. On August 24, prior to the official sentencing,
the Board of Registration of Chiropractic announced that Rosenthal's
license to practice chiropractic in the Commonwealth of Massachusetts
was revoked indefinitely. On November 16, 1995, Alan Rosenthal
surrendered to the United States Marshal Service to begin his
prison sentence at a federal facility. Rosenthal's wife, Caterina,
was sentenced to two years supervised probation.
HEALTH HIGHLIGHTS
IFB Goes World Wide!
IFB Progress Report
(through November 30, 1995)
Individuals Indicted - 129
Complaints Issued - 131
Cases Referred for Prosecution - 262
Message from the General Counsel
IFB's Helping Hands