Friday, February 1, 2008

The Many Faces of Insurance Fraud

The Many Faces of Insurance Fraud
Examples from the Coalition Against Insurance Fraud

Staged Auto Accidents. Juan and Maria Lopez and their 2-year-old daughter Joanna were burned alive during an auto accident two men staged on the Long Beach (Calif.) freeway to collect insurance money in 1997. The scammers suddenly stopped in front of a tractor-trailer the Lopezes were following. A gravel truck then rammed the Lopezes from behind, killing the young family instantly. Isidorio Medina Gomez and Esteban Galves Solano each received 11 years in state prison in 1998.

Arson. Helen Tidwell hired two local teenagers to torch her Tampa restaurant, Gram's Country Kitchen, so she could collect insurance money in 1996. But fumes from the gasoline the boys poured in the restaurant accidentally ignited, causing an explosion. One boy died and the other was permanently scarred. Tidwell received 30 years in prison in 1999.

Health Insurance Fraud (corporate). Columbia/HCA Healthcare has agreed to pay at least $754 million after over billing taxpayer-funded Medicare for years. If the deal stands, it will be the largest healthcare fraud settlement in U.S. history. The chain (now named HCA) billed Medicare for unneeded lab tests, improper diagnoses to make patients seem sicker than they were, and disguising un-reimbursable expenses as reimbursable. Criminal charges still are pending.

Health Insurance Fraud (individual). Massachusetts orthopedic surgeon Harold Goodman routinely gave patients potentially harmful X-rays and steroid injections they didn't need so he could falsely bill Medicaid. Goodman spent as few as five minutes with each patient, giving one patient 74 X-rays and 112 steroid injections in less than three years. Goodman received six months in prison in 2000.

Faked Death. Bonnie McCaslin bought 78 life insurance policies on her ex-husband Timothy, who knew nothing about the policies. She then tried to collect $11 million from dozens of life insurance companies by claiming he died in an earthquake in Mexico in 1995. McCaslin received two years in jail in Nebraska, but blames Timothy for not cooperating with her ruse. "He's such a jerk. If it weren't for him, I wouldn't be in here," she told Forbes magazine.

Murder for Insurance. Dina Abdelhaq suffocated her seven-week-old daughter Tara to collect $200,000 in life insurance money to feed her gambling addiction in 1995. Jobless and on welfare, the Illinois resident was deeply in debt from riverboat gambling. Tara died in her crib just two weeks after Abdelhaq took out a life policy on the child. Abdelhaq received 21 years in prison for insurance fraud in 2000.

Insurer Fraud. Thousands of investors, many of them retirees left almost penniless, were financially devastated when National Heritage Life Insurance Co. collapsed in 1995 after being looted of $450 million by company insiders. The insiders lived lavish lifestyles while retirees who invested in the company lost their entire life savings. Four major players were convicted in 1999, and dozens more are charged in America's largest insurer insolvency caused by fraud.

Property Insurance. California software distributor Irwin Bransky had a lot of useless merchandise on his hands. So when the Northridge earthquake struck California in 1994, Bransky ordered employees to jump on the software packages and bend them with their hands to inflate an insurance claim. Bransky filed a $5-million claim, and the insurer paid $840,000 before an employee blew the whistle. Bransky received 51 months in prison in 1998.

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