Archive for the ‘Uncategorized’ Category

Clinic sues for $14 in PIP benefits and loses not just trial, but the appeal

Friday, June 13th, 2014

Would you sue for $14? Wellness Associates of Florida did when an auto insurer reduced its Personal Injury Protection (PIP) claim.

Some medical clinics like to scream “Foul!” in court when they don’t receive everything they asked. PIP attorneys are all happy to accommodate them because they can bill upwards of $300 per hour — sometimes $500 an hour — to fill out the paperwork. Lawyers and their clients are happy when they win because the insurance company pays their damages and fees.

Wellness Associates went home unhappy after it lost its appeal to the Fourth District Court of Appeals. Northwood Sports Medicine was also disappointed when the court put the clinics’ two cases into one opinion.

Wellness had initially sued the insurer for damages and amended that to bad faith when the last $14 in PIP benefits were paid. The insurer moved for summary judgment, saying it had paid every dollar it owed, and won.

The clinic appealed, where its case was consolidated with that of Northwood. It had sued another insurer for damages and then bad faith, and also lost.

In its opinion on the Wellness case, the appellate court said that an insurer doesn’t have to pay anything more on a valid PIP when the full amount was paid if the insurer met certain legal requirements.  Also, an insurer doesn’t have to set aside the disputed dollar amount when it it denies or reduces a claim.

“Where the reasonableness of the provider’s claim is in dispute, post-suit exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled to under PIP,” the court wrote in its opinion.

In other words, if the PIP benefits have been used up before the disputed amount is settled, the claim is considered settled. The court also said it didn’t matter whether the benefits were used up before or after the lawsuit was filed.

Maybe that will make some clinics think twice before picking up the phone and asking its lawsuit-happy attorney to run to the courthouse.

Mid-level PIP fraudsters sentenced in staged accident scheme

Thursday, June 5th, 2014

From left, Noylan Barreto, Freddie Freytes and George Ortiz. Photo from News 4 Jax.

They weren’t the guys who came up with the Personal Injury Protection (PIP) fraud scheme; they were the ones who helped make it happen.

Three men were sentenced to prison in late May for organizing staged auto accidents in Jacksonville and directing vehicle passengers to rehabilitation clinics that then defrauded auto insurance companies with falsified PIP claims. For their crimes, they received prison time:

  • Noylan Barreto, 21, three years and 10 years of probation on two counts of committing a staged motor vehicle accident and one count of false insurance claims.
  • Freddie Alberto Freytes, 43, six years on two counts of committing a staged motor vehicle accident and three counts of false insurance claims.
  • George Orlando Ortiz Jr., 33, nine-and-one-half years after pleading guilty to four counts of committing a staged motor vehicle accident, false insurance claims and schemes to defraud

The three men recruited people to sit in vehicles involved in the faked accidents. When the police arrived at the scene, the individuals would complain of injuries.

Acting in secret, the three men sent the recruits to clinics that provided no real services. PIP invoices were concocted and collected, totaling more than $150,000 for the accidents the three men set up.

Investigators arrested 17 other people who participated in the PIP fraud scheme. Among them was the fraud mastermind, David Rodriguez Lopez; he was sentenced to 15 years in prison.




Operation No-Med Services produces another PIP fraud arrest

Saturday, May 31st, 2014

Operation No-Med Services has put the cuffs another person charged with committing Personal Injury Protection (PIP) fraud. Authorities hauled in 16 people a year ago, when the investigation was in full swing.

Aurora Hernandez
(from Local 10)

Aurora Hernandez was accused in late May of this year of organizing a staged accident and billing for faked injuries, according to a statement from Florida CFO Jeff Atwater.  She operated Magic Hands Medical Services, one of four clinics that participated in a scheme to defraud auto insurance companies.

Investigators found that individuals were recruited to participate in coreographed auto accidents in Miami-County between August 2010 and September 2012. The drivers and passengers falsely told police that they were injured. They were referred to clinics for treatment never provided. The clinics submitted to insurers falsified PIP bills totaling more than $408,000.

Investigators think that Magic Hands and the other clinics — Clarke Medical Services, Emoge Medical Services and New Life Rehab Services –  were involved in other staged accidents.

Last year, authorities arrested a medical doctor, two clinic owners, five medical licensees, six staged accident organizers and six others. Two massage therapists caught in Operation No-Med Services had been arrested in 2012 on charges of PIP fraud in related cases. Hernandez faces up to 235 years in prison for her involvement in PIP fraud.

“I am proud of our investigators for their commitment to keeping fraudsters off the streets and out of the pockets of hard-working Floridians,” said Atwater. “Every act of fraud drives up the cost of insurance and we refuse to allow those selfish acts to continue.”
 The investigation continues. The Florida Department of Financial Services Division of Insurance Fraud is pursuing Ricardo Jimenez, who owns two clinics that closed.

Auto insurance fraud: Crash a car — or burn it

Monday, May 26th, 2014

If you have looked at your auto insurance premium lately, you know that what you’re paying is probably not based on how well you drive. And you’re right. Fraud, including Personal Injury Protection (PIP) fraud, costs Florida drivers millions of dollars each year.

The money stolen through staged accidents and falsified medical claims adds about $50 per driver per year, according to estimates. Other forms of fraud, such as burning a vehicle for the insurance money, raise the bill.

A Florida insurance company and the Miami-Dade Fire Department are working together to educate investigators on how to detect when a car is set ablaze so that it can be reported as a total loss.

“The fraud in Florida is very high,” Carlos Torres of Infinity Auto Insurance told News 10 in Miami. “Usually people have a financial motive or don’t like their car anymore, so they’ll set them on fire to make them a total loss.” The video shows how criminals operate.

Another agency fighting insurance crime has teamed up with investigators nationwide. ICS Merrill in Jacksonville sends its 600 employees after all types of fraud, including PIP.

The Coalition against Insurance Fraud, based in Washington, supports that effort.

“Staged accidents have been a problem around Florida, especially in urban areas like Jacksonville,” James Quiggle, association communications director, told TV station WJXT in Jacksonville. “Sometimes you can arrest the lower level recruiters or fake patients and convince them that they need to rat out the ring members or leaders.

“There’s good research to suggest that families pay fraud tax of almost $100 a year in higher auto insurance premiums, so the cost to Florida consumers is very real.”

Tampa business owner sentenced to 2 years for PIP fraud

Friday, May 16th, 2014

To the opponents of the PIP reform law, we offer exhibit A, Dailin Rojas Perez, who perpetrated Personal Injury Protection (PIP) fraud through almost every means possible. The 2012 law was aimed at stopping people like her from ripping off the system and raising Florida auto insurance premiums.

The 30-year-old pleaded guilty in mid-May and was sentenced to 24 months of house arrest, according to an announcement from Florida CFO Jeff Atwater. Perez must pay $350,000 in restitution to insurance carriers and nearly $40,000 in investigative costs.

Her company, Today’s Medical Marketing, worked with  and Global Solutions Plus and accident clinic Medical Therapy Practitioners to fraudulently bill insurance carriers, swindling them out of $340,000. How did they do it? The clinic billed for services not rendered, participating in a staged auto accident scheme, and claimed that patients who had no injuries needed treatment.

The rampant fraud was evident in an admission by the clinic’s massage therapist Devin Sweet. He told investigators that in six weeks of working at the clinic, he had filled out approximately 5,000 fraudulent therapy forms for patients he never treated. According to one report, “Sweet stated he was surprised he didn’t have carpal tunnel after signing so many fraudulent forms. He sat at his desk and falsified medical treatment forms all day long, Monday through Friday, 9 a.m. through 6 p.m.”

A key part of the reform law — one that clinics are fighting in court — requires accident victims to visit a doctor before being referred to a clinic in order to collect PIP benefits. That extra step is proving to cut down on PIP fraud.

Doctors are more likely to play by the rules. Medical Therapy Practitioners did not. It fraudulently obtained an exemption from the Agency for Health Care Administration when chiropractor Anthony Esposito fraudulently claimed to be the 100 percent owner. Esposito told detectives from the Florida Division of Insurance fraud that he was recruited to be the straw owner of the clinic by Daysi Rojas, sister of Dailin.

Medical Therapy Practitioners tried to circumvent insurance carrier inspections by requiring them to make an appointment, which allowed the owner time to remove pre-signed treatment forms from the patient’s folder. The clinic also tried to avoid billing for undercover law enforcement officers by checking  potential patients against a list that contained suspected undercover officers.

Legitimate clinics have nothing to fear from the PIP reform law. In fact, business should be better for them once the PIP fraudsters are shut down.

Florida’s highest court removes obstacle to lower PIP premiums

Monday, May 5th, 2014

The forces trying to slow or stop Personal Injury Protection (PIP) reform have been dealt a serious blow. In late April, the Florida Supreme Court declined to hear an appeal that kept key provisions of the 2012 PIP  law in place.

A circuit court judge in Tallahassee had issued an injunction blocking parts of the law at the request of chiropractors, acupuncturists and others who claimed the law violated the state constitution by prohibiting them from providing services. An appeals court lifted the injunction, and the Florida Supreme Court declined to hear an appeal that could result in a reinstatement of the injunction.

“Recent evidence reveals implementation of the 2012 PIP reforms led to reduced fraud and suppression of the PIP portion of auto rates, yet certain individuals still sought to put the brakes on the reforms benefiting Florida’s drivers,” the The Property Casualty Insurers Association of America said in a statement.

“Floridians deserve better,” the association said, “and its members wish to see that Florida’s consumers are provided with much needed relief once and for all as we move forward. The decision by the Florida Supreme Court today is just that, a step forward.”

The business associations that brought the initial lawsuit said they will be back in court, trying again to undo the law.






Federal judge OK’s lawsuit claiming RICO violations in PIP scam

Wednesday, April 30th, 2014

Federal prosecutors used to use the Racketeer Influenced and Corrupt Organizations Act, or RICO, to go after drug dealers. Now, the law is being used in civil court to go after another kind of crook, people and companies that commit Personal Injury Protection (PIP) fraud.

GEICO sued two chiropractic centers in Orlando, their founders and other people who participated in a scheme to stage auto accidents, report fake injuries and soak insurance companies for medical services not needed and not provided.

Even when there were real accidents, the people sometimes claimed injuries that weren’t real and received treatments when unnecessary. The total tab: $2.3 million.

The auto insurer went after everybody in July 2012 in a legal complaint that was 143 pages long. The claims started with civil conspiracy and unjust enrichment; they ended with violations of the RICO and the Florida Deceptive and Unfair Trade Practices, according to an article by Courthouse News Service. As with most staged-accident scams, the defendants offered money to people who would help stage accidents and recruit people to be passengers and, later, patients.

The defendants fought the civil charges, but the U.S. District Court for Florida’s Middle District, Orlando Division, adopted the recommendation of a federal magistrate that all counts but one move forward.

Why is that bad news for the defendants? GEICO can seek triple damages. That award would be a huge win for the insurer and send a strong message to criminals that fraud can be costly.



South Florida chiropractors involved in PIP fraud convicted

Monday, April 28th, 2014

Federal prosecutors have won another set of convictions in Operation Sledgehammer, a joint effort of federal, state and private investigators to rid South Florida of Personal Injury Protection (PIP) fraud.

A jury found guilty three chiropractors — Hermann J. Diehl, 44, of Miami; Kenneth Karow, 54, of West Palm Beach; and Hal Mark Kreitman, 50, of Miami Beach — on charges that they organized fake auto accidents, filed phony medical claims and pocketed the money.

It was your classic PIP fraud scheme, with assistance from Joel Antonio Simon Ramirez, 29, of West Palm Beach, was found guilty for helping stage the accidents. People would be recruited and paid a small sum to tell police who arrived at the accident scene that they had injuries. The individuals were directed to clinics of the three chiropractors, signed forms that they needed and had received treatment, and went on their way.

The chiropractors filed PIP claims for treatments not needed and never given and, when insurance payments came, cashed the checks to  pay themselves, recruiters, the phony patients, and other participants.

As part of the scheme, the three men allegedly recruited individuals with medical or chiropractic licenses required by the state to open a clinic to pretend that they owned the clinics, when in fact, Diehl, Karow and Kreitman did.

Diehl was found guilty on three counts of money laundering and two counts of mail fraud. Karow was found guilty on 11 counts of money laundering and 48 counts of mail fraud.

Kreitman was found guilty on two counts of money laundering and 21 counts of mail fraud. Simon Ramirez was found guilty on one count of money laundering and eight counts of mail fraud.

They each face a maximum sentence of 20 years in prison and are scheduled for sentencing in July.

Operation Sledgehammer has produced federal and state charges against 93 defendants, resulting in court-ordered restitution of more than $11 million to the defrauded insurance companies, according to the United States Attorney’s Office for the Southern District of Florida.

With the latest verdicts, 51 of 57 defendants in federal court have been convicted by jury or by guilty plea. The arrests were produced through the collaboration of the FBI, IRS, Florida Division of Insurance Fraud, Palm Beach County State Attorney’s Office, Greater Palm Beach County Health Care Fraud Task Force and the National Insurance Crime Bureau (NICB).



What sets off the alarms in PIP fraud investigations? Not accidents

Sunday, April 20th, 2014

You don’t have to read more than a few posts here to know the biggest red flags for Personal Injury Protection (PIP) fraud. State, local and private investigators see them every day.

The National Insurance Crime Bureau has compiled what set off the alarms most often from 2010 through 2013:

  1. Faked or exaggerated injuries: nearly 5,000 referrals
  2. Medical provider: nearly 5,000
  3. Billing for services not rendered: 4,000-plus
  4. Excessive treatment: 4,000-plus
  5. Lack of cooperation from insured: about 2,900

Let’s look behind the numbers. Faked or exaggerated injuries relate to minor injuries that are made into big ones, or injuries that don’t exist except to file insurance claims. Until PIP reform, medical clinics could submit bills for up to $10,000 per person for an accident. In cases that later generated convictions, investigators found that people would be paid to say they were injured in car wrecks that never happened.

Medical providers would have the patients sign over their insurance benefits and send invoices to insurance companies. Investigators would look for patterns of activity that let them to question the claims. One suspicion: Services were not rendered.

When injuries were documented, investigators looked into whether there was excessive treatment. Again, in the days before PIP reform, clinics would schedule treatments right up to the dollar limit. When investigators sat down the people about their injuries and treatments, they sometimes encountered a lack of cooperation from the insured. Why was that? The lack of responses made investigators dig deeper.

PIP reform is working in Florida, and here are the numbers to prove it

Thursday, April 3rd, 2014

The battle against Personal Injury Protection (PIP) fraud is beginning to pay off in Florida. Better laws and tougher enforcement have pushed down the number of questionable claims related to car accidents, according to a data analysis by the National Insurance Crime Bureau.

Florida has long been a hotbed of PIP abuses, with staged car accidents, insurance claims for medical services not needed or given, and excessive billing. A state reform law that went into effect in 2012 has survived legal challenges and stepped-up prosecution of fraudsters are showing results.

The bureau says that while the number of questionable car insurance claims rose 22.9 percent from 2010 through 2013, the figure fell 7.67 percent between 2012 and 2013.


Questionable claims for PIP benefits fall in Florida. Source: NICB











The decrease isn’t a statistical oddity. Questionable claims fell an average of 20 percent in four of the five cities with the worst PIP fraud problems:

  • Miami: Up 59% from 2010-2013, down 26% from2012-2013
  • Hialeah: Up 22% from 2010-2013, down 15% from2012-2013
  • Orlando: Up 0.3% from 2010-2013, down 8% from2012-2013
  • Jacksonville: Up 620% from 2010-2013, down 24% from2012-2013

It’s worth noting that questionable claims fell in Tampa during the four-year period due in large part to a county ordinance that cracked down on fraud. However, a lawsuit has blocked that effective tool against crime.

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