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.

How bad is PIP fraud in Florida? Watch this news report

February 19th, 2014


Personal Injury Protection (PIP) fraud costs Florida drivers millions of dollars every year, and a large part of that is the result of staged accidents. WFTV in Orlando investigated faked crashes and injuries, reported how they work, and how authorities are stepping up prosecutions. It’s all here in this report.


‘Sledghammer’ swings around again, clobbers

February 17th, 2014

Operation Sledgehammer, now in its sixth chapter, has put more Personal Injury Protection (PIP) fraudsters behind bars and fined them millions of dollars. A massive effort by federal, state, local and private investigators is paying big dividends; this type of action should be commended and receive regular funding from public and private sources.

Between June 2011 and now, 92 defendants have been charged for their participation auto insurance fraud. Federal prosecutors have charged 56 of them and won more than $5 million. The Palm Beach County State Attorney’s Office has charged the other 36.

Here are the results Operation Sledgehammer VI, according to an FBI announcement:

  • Elias Sebastian Munguia — 102 months in prison, three years of supervised release, restitution of $3.49 million
  • Aleida Capdevila — 53 months in prison, three years of supervised release, restitution of $1,04 million
  • Yenisleydi Ramos — 50 months in prison, three years of supervised release, restitution of $1.67 million
  • Juan Francisco Avon — 38 months in prison, three years of supervised release, restitution of $$866,801
  • Oscar Montiel Martinez — 76 months in prison, three years of supervised release, restitution of $1.36 million
  • Teresita Mena — 66 months in prison, three years of supervised release, restitution of $1.32 million

The defendants pleaded guilty to a number of charges related to mail fraud and money laundering. Here’s how the criminals operated, according to the FBI:

Between approximately October 2006 and December 2012, the conspiracy members staged automobile accidents by recruiting individuals to participate in the accidents. Martinez and Mena served as accident participants and Martinez and  Contino recruited others to participate in staged accidents. The participants were referred to as “Perro” and “Perra” or “Macho” and “Hembra.” “Perro” is Spanish for dog and “Hembra” is female.

Clinic owners, including Munguia, submitted false insurance claims through chiropractic clinics that were controlled by members of the conspiracy. The true owners of the chiropractic clinics, including Munguia, recruited individuals who had the medical or chiropractic licenses required by the state to open a clinic, to act as “nominee owners” of the clinics.

The co-conspirators also hired licensed chiropractors and licensed chiropractic physicians’ assistants, including Avon, who prescribed and billed for unnecessary treatments and/or for services that had not been rendered. Those employees prepared and submitted claims to the automobile insurance companies for payment for these unnecessary or non-rendered services.

The FBI says that 21 clinics participated in this scheme. Munguia was the “true owner” of three of those clinics. Munguia’s aunt, Aleida Capdevila, served as the office manager of two.

Once fraud proceeds were received from the insurance companies, the clinic owners, including Munguia and Capdevila, also recruited individuals, including Martinez, Ramos, and Mena, to help the clinics launder the insurance proceeds.

The U.S. Attorney’s office in Miami thanked the FBI, IRS-CI, the Florida Department of Insurance Fraud, the Palm Beach County State Attorney’s Office, and the Greater Palm Beach County Health Care Fraud Task Force “for their outstanding work in this case.” The office also recognized the National Insurance Crime Bureau (NICB) for its collaboration and assistance.

After ‘examinations,’ investigators produce PIP-related arrests

February 5th, 2014

The Miami man was not properly licensed and the clinic owner never performed medical services. But that didn’t stop the two from trying to collect on Personal Injury Protection (PIP) claims.

An investigation by the Division of Insurance Fraud of the Florida Department of Financial Services led to the arrests of Leonardo F. Marquez Garcia and Dayleann Marie Vallejo-Ruiz on charges of insurance fraud.

The DIF found that Garcia, of Miami conducted what was called ‘initial examinations” on auto accident victims. He then sent them to Injury Rehabilitation Center, which Vallejo-Ruiz owns, for physical therapy treatments that qualified for PIP claims.

Vallejo-Ruiz, who is a licensed massage therapist from Orlando, arranged for patients to sign blank treatment forms. Those were sent to the insurance company requesting PIP payments for services never provided, investigators say.

“This kind of deceit and abuse hurts all Floridians in the form of higher premiums,” said CFO Jeff Atwater in a news release. “I am proud of my team for putting a stop to this fraud and for their continuing success keeping other fraudsters off our streets.”

Investigators became aware of irregularities after Allstate Insurance Co. received bills for alleged medical treatments between Feb. 3 and March 16, 2012. Marquez Garcia filed PIP claims for his initial examinations made on behalf of Global Rehabilitation Center in Miami Lakes.

However, the center is not an Area of Critical Need facility, which can be a county health department, VA clinic, community health center, or a facility in a federally designated Health Professional Shortage Area.

Marquez Garcia, while an Area of Critical Needs doctor, is not licensed to practice medicine. So, Garcia was also charged with the unlicensed practice of medicine for operating outside the scope of his license, according to the DIF.

Additional arrests are expected. Each defendant faces up to 15 to 20 years in prison.

PIP reform produces premium savings across the board

January 27th, 2014

The naysayers of Personal Injury Protection reform in Florida should take a good look at a preliminary report just out from the Florida Office of Insurance Regulation. The 20 largest insurers writing PIP insurance have lowered rates an average of 13.2 percent.

The analysis covers the period starting in October 2012 to a second rate filing on Jan. 1 of this year. The cuts came after a PIP reform bill (HB 119) went into effect in 2012.

“The anticipated cumulative effect of these two rate filings in the legislation was a 25 percent overall decrease in PIP rates,” according to a news release from the regulator. “Most insurers calculated their rates using a Pinnacle study, which projected that reforms contained in HB 119 would generate PIP premium savings ranging from 14 percent to 24.6 percent.”

“Based on the Office’s analysis, all of the top 20 personal auto insurers accounted for and recognized the projected savings from HB 119 in PIP rates filed with the Office,” the release said.

The decreases have a double benefit to drivers. In 2011, 86 percent of rate filings proposed increases in PIP premiums, most of them 10 percent or more. Had the law not taken effect, policyholders would have been paying even more to cover their vehicles.

PIP insurance accounts for about one-fourth of an insurance premium cost, the regulator said. The decrease in PIP rates should reduce the overall cost of insurance 3 percent to 4 percent depending on the coverage purchased.

Some drivers are saving more. Customers of some of the largest insurers in Florida – Geico, Progressive and USAA — saw their PIP premiums decrease 25 percent to 34 percent. Customers of UAIC experienced a decline of 7.7 percent.

PIP premiums have room to fall even more. If the courts continue to stay or turn aside challenges to the law, insurers can use the reforms to bring down costs. Increased investigation of PIP fraud – a big driver of premium increases – will also benefit drivers and insurance companies.

PIP fraud crackdown results in arrest of Fort Myers chiropractor

December 20th, 2013

An investigation by the Florida Division of Insurance Fraud has resulted in the arrest of a Fort Myers chiropractor at Gate Parkway Diagnostics Center on charges of Personal Injury Protection (PIP) fraud.

Harold John Pompey, 68, was charged with defrauding auto insurance companies by filing false and fraudulent insurance claims for PIP benefits, according to an official account. Investigators discovered that Pompey and the center prepared forms to support PIP claims to be paid to the center.

“PIP fraud impacts all Floridians by driving up auto insurance rates,” Florida CFO Jeff Atwater said in a statement. “I am proud of our dedicated fraud investigators who work to protect honest and hardworking Floridians by getting these fraudsters off our streets and out of our wallets.”

Tim Shaw, president of Tim Shaw Insurance-Acentria, based in Fort Myers, said the arrest was just of many instances of PIP fraud in Florida.

“I think the cleaning up of fraud and PIP is a long, drawn-out process,” he told the Fort Myers News-Press.

Investigators said that diagnostic tests performed at the center enabled Pompey and others to collect up to $10,000 in PIP coverage for every patient. Recruiters connected to treatment clinics in Florida would tell participants what to say about their supposed injuries in a way that would not create suspicion at insurance companies.

Following a search of the center, investigators found that between October 2011 and December 2012 the center filed claims for 514 patients. Pompey was listed at the chiropractor on more than 300 of those files.

Pompey was arrested in Fort Myers on a Duval County warrant and charged with one count of a first degree scheme to defraud and six counts of false and fraudulent insurance claims.