An Oxford attorney pled guilty on May 10, 1994 in Worcester Superior Court to two counts each of insurance fraud and larceny, marking the first successful prosecution of an attorney by the IFB. The subject was sentenced to two years probation, 500 hours of community service, restitution of $5,000 to USF&G Insurance Company and was ordered to surrender his license to practice law within 60 days. A co-defendant in the case was ordered to pay restitution of $1,700 to Cigna Insurance Company as a condition of pre-trial probation.
The attorney submitted fraudulent wage verification statements to insurance companies in connection with two separate motor vehicle accident insurance claims. He filed personal injury and lost wage claims with USF&G as a result of one of these accidents. He was subsequently paid $20,000 by the carrier for his claims. In the second motor vehicle accident, both subjects filed personal injury and lost wage claims with Cigna Insurance Company. Cigna settled with the co-defendant for $1,765.78 in lost wages when she falsely stated in a wage verification that she was employed as a legal secretary in the attorney's law office. The attorney represented her on the lost wage claim.
In the course of the IFB investigation, Department of Revenue records were accessed and it was discovered that over $400,000 of earned income was never reported by the attorney. The subject is now facing additional charges of failure to pay taxes.
In an effort to communicate the Insurance Fraud Bureau achievements
and highlights we are pleased to introduce our first issue of
the IFB's focusFraud. The primary focus of this newsletter
will share IFB successes and significant court activity with you
as the IFB carries out its mission in Massachusetts to prevent,
detect and refer suspected fraudulent insurance transactions for
criminal prosecution.
The IFB has more to tell you about than our recent third anniversary
or the receipt of our 5,000th referral. We recently achieved the
conviction of the first attorney investigated by the IFB. In the
past three months, guilty verdicts have been rendered against
nine other individuals. Additionally, seventeen subjects have
been indicted or issued a complaint. Individuals involved in recent
court activity include an attorney, a physical therapist, a former
insurance agent, an auto body shop owner, a chiropractor, as well
as a number of ordinary citizens.
We welcome your comments and suggestions on our new publication.
(through June 3, 1994)
Convictions - 55
Since September 1993 some members of the IFB staff have been assigned
to the Front End Fraud Detection Unit whose investigative duties
are to determine the validity of applications of various companies
seeking workers' compensation insurance via the assigned risk
pool. The intent of these investigations is not with the ultimate
goal of criminal prosecution but rather to prevent the crime of
insurance fraud. The IFB receives referred files from the Workers'
Compensation Rating and Inspection Bureau. Unit members then
determine whether the applicant company is utilizing deception
in order to avoid premium or commit other crimes. Early involvement
can prevent crimes, assist in gathering valuable information and
losses can be avoided. As a result of IFB investigations, the
Department of Industrial Accidents has issued stop work orders
to two companies for not having workers' compensation insurance.
These companies have agreed to pay premium owed to insurance
carriers and to establish current workers' compensation coverage
before they are allowed to re-open their businesses.
In late 1993 the Commissioner of Insurance approved and the Automobile
Insurers Bureau of Massachusetts activated the Detail Claims Database
(DCD) of all closed automobile personal injury and bodily injury
claims. Simultaneously, the Insurance Fraud Bureau was given access
to this information base through its Research Division. The DCD,
with more than 50,000 claims as of May 1994, improves upon and
complements the claims history provided by "The Index",
which the IFB already uses extensively. Beyond finding hidden
auto claims, the IFB can test referrals against industry claim
patterns in a way that was only possible before by soliciting
large numbers of claims files from the insurance companies. These
DCD patterns can then be applied to those claims associated with
a possible IFB investigation. The value of the DCD in fraud prevention,
detection, and prosecution should be great and as the DCD grows
its contribution to the IFB's mission will also increase.
Are you on the mailing list to receive IFB Fraud Alerts? Following
is a brief summary of each Alert. If you have not received one
or more of the Alerts and would like to receive the complete version,
please let us know and we will send it to you as well as place
you on our mailing list for future Alerts.
A Brighton man, the only occupant of his vehicle, was involved
in an intersection collision. An uninvolved witness to the accident
stopped to offer assistance. This witness had observed the subject's
erratic driving preceding the accident and that the driver was
alone in the vehicle. When the subject reported the accident to
his carrier, Commerce Insurance Company, he included his wife
and son as passengers. A second subject, a Newton man, also claimed
that he had witnessed the accident and had observed the entire
family in the car. It was determined through investigation that
the two subjects were friends. This case originated with a letter
to the IFB's hotline unit from the adverse driver.
On March 18, 1994 the Brighton man was found guilty of insurance
fraud and was sentenced to two years probation and $1,500 in court
fines. The Newton man was found guilty of insurance fraud and
sentenced to two years probation and $1,000 in court fines. The
verdicts were returned by a Middlesex jury.
Auto Body Shop Owner and Manager Plea Guilty to Insurance
Fraud Scheme
The owner and the manager of a Watertown auto body shop orchestrated
what they thought to be the perfect insurance fraud scheme. The
men used cars that were legitimately at their shop for repairs,
then claimed that they were the owners of the vehicles and that
they were involved in auto accidents. The manager, using assumed
identities, purchased auto insurance polices with no collision
coverage on an older model vehicle, then claimed to be the at-fault
driver in several of the fictitious accidents. The subjects collected
proceeds for property damage caused by the fictitious accidents.
Several friends and employees at the garage served as "claimants"
confirming the accident description. To eliminate suspicion, no
injuries were ever reported. Carriers affected in this scam included
Hanover, Commerce, Kemper, Arbella, Liberty Mutual, Travelers,
CNA and Commercial Union Insurance Companies.
The owner pled guilty on April 22, 1994 in Middlesex Superior
Court to four counts each of insurance fraud, larceny and conspiracy.
He was sentenced to serve two years in the House of Correction
and restitution. On April 21, 1994 the manager pled guilty to
insurance fraud charges. He was sentenced to serve six months
in the House of Correction and restitution. Two other subjects
in this case had already pled guilty and received suspended sentences.
Two additional subjects received pre-trial probation.
Stolen Car Found Hidden in Box Trailer
A Hopkinton man reported his vehicle stolen from the Natick Mall
and Hanover Insurance Company paid $14,000 to his auto financing
company and $600 to the subject for "extras" he had
added to the car. Two and a half years after the reported theft,
while responding to a report of a brush fire in the backyard of
the subject's brother, the fire department found the vehicle hidden
in a box trailer.
On April 21, 1994 the man was found guilty in Framingham District
Court on charges of insurance fraud and related crimes. He was
sentenced to six months in the House of Correction, suspended
for two years, and restitution of $14,600 to Hanover. In addition,
the subject's driver's license was suspended.
Jump-In Passenger Fined $530
A Dorchester man was a jump-in passenger in a two car collision.
The driver and passenger of one vehicle reported that only two
people occupied the vehicle they rearended. However, the driver
of the vehicle in which the subject was reportedly a passenger
claimed to his carrier, Aetna Casualty and Surety, that four people
occupied his vehicle.
The charge of filing a fraudulent insurance claim was continued
without a finding in Brockton District Court on May 17, 1994 against
the subject. He was given three months probation and fined $530.
Doctor/Patient Deja Vu
A woman from Fall River was injured in an auto collision and claimed
injuries, pain and suffering and lost wages. She was treated
by a physical therapist who billed and was paid in full by her
insurance carrier, Hanover Insurance Company. Four months later,
the subject was a passenger involved in another automobile accident.
She reported the same injuries and was again treated by the same
physical therapist who submitted duplicate treatment dates to
another insurance carrier, Amica Mutual Insurance Company. When
questioned about the bills, the physical therapist claimed typographical
errors.
On April 13, 1994 the woman and her physical therapist pled
to charges in Waltham District Court. Both cases were continued
without a finding for one year and each subject was ordered to
pay $1,000 in court costs.
Sting Operation Nets Guilty Pleas
Investigators from the IFB and the Rhode Island State Police coordinated
a sting operation to recover a stolen vehicle and arrest the vehicle's
owner. The subject reported his classic 1967 Chevrolet Chevelle
stolen from a mall parking lot and then put out the word that
he was looking for a buyer for his car. IFB investigators monitored
the sale as an undercover cop posed as an interested buyer for
the vehicle.
Three subjects pled guilty on concealment of a motor vehicle
to commit insurance fraud and other related charges. The owner
of the vehicle was sentenced to two years probation in Rhode Island
and one year probation in Massachusetts and 30 days loss of license.
The other subjects were sentenced to 75 hours of community service.
A Taunton man claimed to be totally disabled due to an injury
he sustained at his place of employment. Despite this claim of
disability, the subject gained employment as a full time painter
at another company. He collected over $9,000 in disability benefits
from Wausau Insurance Company.
The subject pled guilty to workers' compensation and larceny
charges on June 2, 1994 in Bristol County Superior Court. He
was sentenced to 2½ years in the House of Correction, suspended,
two years probation, and restitution of $9,245.
Disabled Man Holds Two Jobs
A subject sustained a work-related injury and collected over $14,000
in total temporary workers' compensation benefits from Universal
Underwriters Insurance Company. Through investigation it was discovered
the former Woburn man was employed at two other places during
this period of time.
A former Woburn man pled guilty to workers' compensation charges
in Framingham District Court on June 2, 1994. He was sentenced
to three years probation and restitution of $2,500.
All Fenced In
A Holbrook man, with the help of his girlfriend, collected over
$31,000 in workers' compensation benefits from Cigna Insurance
Company when he allegedly sustained a work- related injury while
employed as a painter. The subject indicated he had not returned
to work or received any earnings while collecting benefits. During
a routine activity check conducted by the carrier, the subject
was photographed and videotaped measuring job sites and installing
fences for his own company. The subject's girlfriend was allegedly
providing the job proposals and checks were being made payable
to her.
Indictments were rendered against two Holbrook residents in
Norfolk Superior Court on May 18, 1994 on insurance fraud and
conspiracy charges.
Franklin Man Hits Paydirt
A Franklin man employed as a landscaper claimed to his employer's
insurer, Cigna Insurance Company, that he was allegedly injured
while transporting dirt in a wheelbarrow. However, it is alleged
that the subject began working only four days after the disabling
accident as a full-time laborer with a Rhode Island construction
company while continuing to collect disability benefits.
A complaint was issued against this subject in Framingham District
Court on April 29, 1994 on one count of workers' compensation
fraud and one count of larceny over $250.
School Van Driver Takes a Jump
A Gilbertville woman alleged that she sustained a knee injury
due to a fall while performing her duties as a school van driver.
She received temporary total disability payments in excess of
$20,000. Through investigation it was determined that the alleged
injury did not occur at the subject's workplace but rather at
her home where she injured her knee while jumping down four or
five stairs. This case originated from a phone call to the IFB
toll-free hotline number.
A complaint was issued on April 27, 1994 in Ware District
Court on charges of insurance fraud, workers' compensation fraud
and larceny over $250 against a Gilbertville woman.
A Holbrook resident filed a claim against his friend's homeowner
policy alleging that he fell outside of the friend's home and
injured his elbow. The carrier, Hingham Mutual Insurance Company,
suspected fraud and denied the claim. It is alleged that the subject
was actually injured while he and his friend attended a bachelor
party at the Foxy Lady Lounge in Providence, Rhode Island. The
subject's wife allegedly helped her husband create the false wage
statement.
Three Holbrook residents were indicted on March 21, 1994 in
Plymouth Superior Court on insurance fraud charges.
A co-owner of a Brockton insurance agency prepared fraudulent
premium finance agree-ments for insureds allegedly seeking financing
for their insurance policies. However, the mailing address indicated
on each agreement was a Brockton post office box which, in fact,
was rented by the insurance agency. The agent paid approximately
$8,000 in installment payments to avoid suspicion. The finance
company paid over $51,000 to the "clients" when in actuality
they were paying the insurance agency. This case originated from
a phone call to the IFB toll-free hotline from one of the victims.
In Plymouth Superior Court on June 3, 1994, the former Brockton
woman pled guilty to 29 counts of insurance fraud and forgery.
She was sentenced to two years in the House of Correction, suspended,
and ordered to pay $40,000 in restitution.
Sales Assistant Steals from Friends and Relatives
A former Metropolitan Insurance Company clerical sales assistant
allegedly forged the endorsements of several policyholders and
cashed their proceed checks which totalled over $15,000. The
policyholders were friends and relatives of the subject. The sales
assistant also allegedly embezzled policy deposits made for payment
on automobile policies submitted by sales representatives. An
internal audit uncovered the thefts.
A Wakefield woman was charged with multiple counts of larceny
in Lynn District Court on June 1, 1994.
An Allston man submitted a total disability claim to his carrier,
Colonial Life and Accident Insurance Company, alleging a slip
and fall injury he sustained in his home. The subject received
a total of $4,520 in benefits. Upon conclusion of an investigation
by the carrier, it was alleged that the claim forms submitted
by the subject were fraudulent. The treating physician listed
on the form did not exist and the employer's signature on the
form was forged.
A complaint was issued in West Roxbury District Court on March
15, 1994 against the subject on insurance fraud and larceny
charges.
Disability Benefits Used for Car Payments
A former Springfield woman submitted disability forms to American
Health and Life Insurance Company in support of her claim for
disability benefits in which both the doctor and employer names
were forged. The subject admitted to the forgeries and stated
that the $3,100 insurance proceeds were used for car payments.
A complaint was issued against a former Springfield woman on
insurance fraud charges on May 24, 1994 in Springfield District
Court.
An East Boston man claimed to his insurer, Fitchburg Mutual Insurance
Company, that his twenty-five foot power boat was stolen from
a locked garage. Upon investigation, it was determined the garage
measured just nineteen feet long!
On March 3, 1994 a guilty verdict was filed in East Boston
District Court against the subject. He received probation for
one year and $500 in court costs. Another subject in this case
had previously pled guilty to insurance fraud charges.
Message from the Executive Director
IFB Progress Report
Individuals Indicted - 76
Complaints Issued - 62
Cases Referred for Prosecution - 163
Front End Fraud Detection Unit
IFB Goes On-Line with the New Auto Claims Database
Fraud Alerts
Automobile Highlights
Jump-in Family
Workers' Compensation Highlights
Subject Paints Himself into a Corner
Property Highlights
He Should Have Danced All Night!
Multi-Lines Highlights
Insurance Agency Owner Embezzles $51,000
Life Highlights
Allston Man "Slips Up" in Disability Claim
Marine Highlights
Math Gaffe Nets Guilty Plea