Auto insurance fraud: Crash a car — or burn it

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

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

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

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

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

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

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.”


Chiropractor participates in PIP ‘fraud factory’ and is convicted for it

March 11th, 2014

The assembly line began at the site of staged accidents and ended in the wallet of a Naples chiropractor. The factory churned out more than $100,000 of fraudulent billings for Personal Injury Protection (PIP) claims for four years until authorities shut down the operation. The ringmaster is scheduled for trial this month.

A Collier County jury has found chiropractor Esmaeel Samaliazad, 49, guilty of guilty of organized scheme to defraud, insurance fraud involving more than $20,000 and insurance fraud involving less than $20,000.

“It basically was a fraud factory and they paid people to actually be patients,” prosecutor Michael Anthony Pica was quoted by the Naples Daily News as telling jurors during his summation. “(Patients) were paid, they staged an accident and then they didn’t receive treatments. This was a very corrupt clinic.”

As in some cases involving PIP fraud, Samaliazad wasn’t the mastermind. Prosecutors say Feghen Delva, 44, a chiropractic assistant, set up Cardinal Chiropractic Center in July 2008 and paid Samaliazad and another chiropractor a monthly fee to be straw owners to avoid state licensing requirements. Samaliazad worked in Naples two days a week, while also working at Delva’s clinic in Fort Myers.

The deal was a good one for Samaliazad. He earned more than $100,000 for basically looking the other way while the clinic committed fraud, Pica told jurors. They agreed and found him guilty on multiple accounts; he faces up to 15 years in a state prison on the top offense and five years each for the others.

Here’s how the fraud worked, according to published reports:

Delva hired recruiters to find Hispanic drivers to crash into vehicles in which Haitians were passengers. Delva paid the Haitians $2,000 each for agreeing to undergo 40 treatments, only some of which they received. Chiropractors and massage therapists, including James Greenhut, sometimes double-billed for treatments. Patient recruiter Guerold Dolcine acted as a lookout outside the clinic, watching for insurance and government inspectors.

After being alerted by a receptionist, the Florida’s Division of Insurance Fraud, the Office of the Attorney General, the National Insurance Crime Bureau, Geico and Direct General began investigating. They arrested five people in May 2012. Greenhut, 54, pleaded guilty. Dolcine, 38, pleaded guilty in November to obtaining more than $50,000 by fraud and was sentenced to time served in county jail.

Delva and office manager Marie Stephania Zamy, 28, face grand theft charges; Delva faces a money laundering charge in their joint trial scheduled for March.

Double the auto insurance fraud for Jacksonville resident?

March 2nd, 2014

Stacy Lasondo Jackson has been charged in North Carolina with 10 counts of insurance fraud. But is it the first time she has committed this kind of crime?

Investigators with the N.C. Dept. of Insurance say that while she was living in Fayetteville, N.C., she obtained several thousand dollars from multiple insurance companies by filing fraudulent insurance claims for damage to her automobile and motorcycle between January and May 2013. They say that Jackson claimed the same vehicle was damaged more than once. Sometimes, there was no damage.

However, this may not be her first offense of this type. Jackson, 39, is from Jacksonville, Fla. According to North Carolina’s department of insurance, she was arrested on similar charges in Florida on Dec. 20, 2013. She lived in Jacksonville until she was extradited to North Carolina with the cooperation of Florida Dept. of Financial Services Division of Insurance Fraud and the Jacksonville Sheriff’s Office.

On Feb. 25, Jackson was arrested by N.C. Dept. of Insurance criminal investigators and placed under a $10,000 bond.

South Florida drivers should thank PIP prosecutor Ann Marie Villafana

February 24th, 2014

One of the biggest Personal Injury Protection (PIP) fraud rings is no more, thanks to the hard work of a person who does a great job without making headlines.

Ann Marie Villafana, assistant U.S. attorney for the Southern District of Florida, has been the lead prosecutor in Operation Sledgehammer, a multi-year effort to break up a criminal ring that staged auto accidents and then worked with others to collect fraudulent PIP claims.

Villafana has charged 101 suspects and obtained convictions that have resulted in 714 years in prison for the defendants and the repayment of more than $18 million. And she is not yet done going after the bad guys.

Her tireless effort has won her the Prosecutor of the Year award from the Coalition Against Insurance Fraud.

“Drivers in South Florida should be relieved. Breaking up a significant no-fault crash ring has made the roads of Palm Beach County safer. Villafana has stemmed a large-scale insurance theft that helped make no-fault premiums among the highest in America,” Dennis Jay, executive director of the Coalition, said in a statement.

Villafana received her award in a ceremony at the coalition’s annual member meeting in Washington. She collaborated with the FBI, IRS, Secret Service, Florida’s Division of Insurance Fraud and Palm Beach County state attorney’s office in building cases that led to 92 people being charged in federal and state court.

Villafana was a newcomer to fighting PIP fraud. She had to learn about no-fault and insurance fraud; she prepared so well that dozens of defendants plead guilty rather than go to trial.

They were part of a group that staged low-speed auto crashes in which no one was injured. Sometimes, the accident organizers made the damage look worse by striking cars with sledgehammers, which is the how the investigation got its name.

Accident participants filed false police reports and injury claims. Criminal organizers directed the individuals to medical providers that were part of the PIP fraud conspiracy. Chiropractors and other medical providers filed millions of dollars worth of PIP claims for treatments that were either not needed or not given. Attorneys who were part of the criminal ring sued auto insurers to ensure payment.