A Comprehensive Guide to NJ Insurance Fraud Law Special R Special Report

www.NJInsuranceFraud.org N E W J E R S E Y New Jersey Office of the Attorney General Attorney the of Office Jersey New INSURANCE SpecialSpecial RReeporport:t: audaud • • AA ComprehensiveComprehensive rr 2004 Annual Report of the New Jersey Office of the Insurance Fraud Prosecutor Fraud Insurance the of Office Jersey New the of Report Annual 2004 FF GuideGuide toto NJNJ InsuranceInsurance FraudFraud LawLaw

OIFP Leads Nation’s Insurance Fraud War OIFP Takes on One of State’s Largest Racketeering Rings Best Practices Guide for Insurance Company Peter C. Harvey, Attorney General Referrals to OIFP Vaughn L. McKoy, Director, Division of Criminal Justice Greta Gooden Brown, Insurance Fraud Prosecutor 2004 Annual Report of the New Jersey Office of the Insurance Fraud Prosecutor Inside Front Cover Annual Report of Annual Report Staff First Assistant Insurance Fraud Prosecutor John J. Smith The New Jersey Assistant Attorney General Editor Melaine B. Campbell Supervising Deputy Attorney General Office of the Co-Editors Stephen D. Moore Supervising Deputy Attorney General Marquis D. Jones, Jr. Insurance Fraud Deputy Attorney General Michael A. Monahan Assistant Supervising Deputy Attorney General Prosecutor Copy Editor Joan Enright Administrative Analyst Feature Writers for Calendar Year 2004 Paula Carter Analyst Diane Ibrahim Submitted Intern March 1, 2005 Lewis Korngut Supervising Deputy Attorney General (Pursuant to N.J.S.A. 17:33A-24d) John Krayniak Supervising Deputy Attorney General Annie Meredith Special Investigator Scott Patterson Supervising Deputy Attorney General Christina Runkle Analyst Contributors Michelle Apgar Peter C. Harvey Supervising Civil Investigator Attorney General John Butchko Special Assistant Jennifer Fradel Vaughn L. McKoy Deputy Attorney General, DOL Director, Division of Criminal Justice Charles Janousek Special Assistant Pat Miller Greta Gooden Brown Administrative Assistant Barry T. Riley Insurance Fraud Prosecutor Supervising State Investigator Photographers Vincent A. Matulewich Managing Deputy Chief Investigator Prepared by: Carlton A. Cooper Civil Investigator Office of the Attorney General Production Department of Law and Public Safety Paul Kraml Art Director Division of Criminal Justice Sina Adl Office of the Insurance Fraud Prosecutor Graphic Designer Administrative and P.O. Box 094 Technical Support Susan Cedar Trenton, NJ 08625-0094 Technical Assistant 609-896-8888 Cynthia Ronan www.njinsurancefraud.org Administrative Assistant Contents

Message From The Insurance Fraud Prosecutor 5

OIFP Leads Nation’s Insurance Fraud War 8

Special Report — A Comprehensive Guide to New Jersey Insurance Fraud Law 24

OIFP Takes on One of State’s Largest Racketeering Rings 38

$100 Million Scam Part of Growing Trend in Insurance Professional Fraud Uncovered by OIFP 44

GlaxoSmithKline to Pay $2.1 Million to NJ’s Medicaid Program in National Settlement 50

Best Practices Guide for Insurance Company Referrals to OIFP 54

OIFP Offers Rewards for Reporting Insurance Fraud 60

Leveling the Playing Field — OIFP Targets Workers’ Compensation Premium Fraud 64 Demystifying the HIPAA Privacy Rule 68

OIFP’s Medicaid Fraud Unit Protects the Elderly 72

Behind the Scenes in Law Enforcement — The Role of Analysts in Criminal Investigations and Prosecutions 76

Dennis Jay, Executive Director of the Coalition Against Insurance Fraud, Speaks Out 82

NJ Insurance Fraud Case Notes 86 OIFP Criminal Case Notes – Insurance Fraud 90 OIFP Criminal Case Notes – Medicaid Fraud 132 OIFP Civil Case Notes 136 DOL Civil Litigation Case Notes 142 County Prosecutors’ Offices Criminal Case Notes 144 Professional Licensing Proceedings 152

Closing the Loopholes on Fraud — OIFP’s Recommendations for Legislative and Regulatory Reform 156

County Prosecutor Contacts 146 OIFP Industry Contacts 148 This Page Was Intentionally Left Blank A Message from The Insurance Fraud Prosecutor

Taking the War on Insurance Fraud to the Next Level We are pleased to present the sixth Annual Report of the New Jersey Office of the Insurance Fraud Prosecutor (OIFP). As with all of our programs at OIFP, we strive to improve our prior year’s efforts in every respect, and this year’s Annual Report is no exception. In this year’s Report, we not only summarize OIFP’s accomplishments in 2004, we also provide a handy reference guide for all who are interested in combating insurance fraud in New Jersey and elsewhere, be they government officials, industry executives, or concerned citizens. In addition to our usual statistical summaries, case synopses, and narrative descriptions of OIFP’s functions and programs, we have included in this year’s Annual Report a wealth of highly informative materials, including an article recounting the events culminating in the creation and shap- ing of OIFP, a section providing a comprehensive guide on New Jersey’s insurance fraud laws, a Greta Gooden Brown “best practices guide” for insurance company referrals to OIFP, a detailed explanation of how the Health Insurance Portability and Accountability Act (HIPAA) affects law enforcement, an interview with the Executive Director of the Coalition Against Insurance Fraud, a directory of key official contacts, and other useful reference materials. Unfortunately, as this year’s Annual Report demonstrates only too clearly, insurance fraud continues to maintain its dubious distinction as one of the underground economy’s largest growth industries. Indeed, the current pandemic of insurance fraud continues to adversely impact not only private insurance carriers, but also governmental programs that provide various forms of social insurance, including health insurance, unemployment insurance, disability insurance, workers’ compensation insurance, and various programs administered by the Social Security Administration. Losses caused by those who loot these programs deplete the programs’ resources and diminish the benefits otherwise available to those among us who must genuinely depend upon them for their very subsistence. Whether as an opportunistic crime or an organized criminal enterprise, insurance fraud permeates our society and drains our economic vitality. The good news, however, is that OIFP continues to redefine the manner in which government attacks insurance fraud. As it has from the very beginning, OIFP remains committed to fight all forms of insurance fraud. From OIFP’s birth as a fraud-fighting organization six years ago, it has screened over 60,000 reports of suspected insurance fraud, imposed over 4,500 fines totaling more than $22 million, obtained orders for over $46 million in civil and criminal restitution, pursued criminal prosecutions resulting in the conviction of approximately 840 insurance fraudsters and sent nearly 300 of them to jail for a total of 648 years. Now, as a new day dawns, OIFP is prepared and poised to take the war against insurance fraud to the next level. While our mandate to lead New Jersey’s fight against insurance fraud is broad, our core function remains the investigation, prosecution, and imposition of criminal and civil sanctions against insurance cheats. To this end, 2004 was another banner year for OIFP in the number of defendants sentenced to jail terms for committing insurance fraud and the amount of restitution ordered on behalf of those victimized by insurance fraudsters. Indeed, In 2004, OIFP obtained more restitution and greater jail sentences than in any other year in OIFP’s history. Most notably in 2004, the number of those sentenced to jail for committing insurance fraud significantly increased over those sentenced to jail in 2003. In 2004, criminal prosecutions by OIFP resulted in the imposition of jail sentences totaling 199 years of incarceration, an increase of over 70% from the prior year. Gains in the amount of restitution ordered for victims were similarly noteworthy, more than doubling from 2003 to over $16 million in 2004. Together with County Pros- ecutor Insurance Fraud Units funded by OIFP, in 2004, New Jersey filed criminal insurance fraud- related charges against 527 defendants, 93 of whom were sentenced to a total of 258 years in jail. OIFP, alone, accounted for over 79% of the jail time meted out to those convicted of insurance fraud. In 2004, OIFP recorded an impressive 100% conviction rate. Among OIFP’s more notable trial convictions in 2004 were guilty verdicts obtained against Linda Clements-Wright, an insurance company claims specialist who stole nearly $600,000 in bogus claim settlement monies, and Eliezer Martinez, a Medicaid provider who submitted nearly $140,000 in fictitious counseling claims to the Medicaid Program. Most significantly in 2004, OIFP again ratcheted up its efforts to identify, infil- trate, and dismantle organized insurance fraud conspiracies, as evidenced by the successful prosecution of the insurance fraud ring headed by kingpin, Anhuar Bandy, who was sentenced to spend the next 29 years of his life behind bars. This conviction represents New Jersey’s first successful prosecution of a staged accident ring as a criminal racketeering enterprise. As in years past, OIFP was recognized in 2004 by others in the international fraud-fighting community as a fraud-fighting model to be admired, studied, and emulated. OIFP and its staff received awards in 2004 from the International Association of Arson Investigators, the International Associa- tion of Special Investigative Units, the United States Social Security Administration, and the New Jersey Vehicle Theft Investigators Association. OIFP’s public awareness campaign garnered awards for its creativity and effectiveness, and, once again, officials from throughout the international fraud- fighting community called upon OIFP for guidance and assistance. Over the years, OIFP has also conducted hundreds of training sessions benefitting thousands of law enforcement and insurance industry professionals engaged in fighting insurance fraud. Although the acclaim and acknowledgement received by OIFP and its staff are well deserved, we can and must do even better if we are to succeed in taking our war on insurance fraud to the next level. However, if we are to sustain New Jersey’s unparalleled success in waging a successful war on insurance fraud, and if we are to take that challenge to the next level, we will continue to depend upon the full cooperation, assistance, and support of our colleagues in law enforcement and other government agencies, as well as the insurance industry and the citizens of New Jersey. One of our most important goals at OIFP has been to develop a relationship with our insurance industry partners borne out of mutual respect and responsible stewardship. Today, I am proud to say that this partnership is one of the premier public/private partnerships in the fraud-fighting arena and is the cornerstone of OIFP’s success. Similarly, our relationship with our allies in law enforcement and other government agencies has developed to the point where government bureaucracy no longer im- pedes our efforts to combat insurance fraud effectively. Were it not for the statewide coordination of all anti-insurance fraud efforts envisioned and mandated by our Legislature when it created OIFP, insurance fraud cases handled by disparate State and local agencies would otherwise escape the notice of others having the jurisdiction and authority to impose additional or complementary sanctions. As in quantum physics, the whole is truly greater than the sum of its parts in New Jersey’s fight against insurance fraud. As evidenced in this Report, our many partners in the war against insurance fraud in New Jersey have joined to produce far greater results than if they had continued to work in isolation, as was the case prior to OIFP’s creation in 1998. As reflected in this Report, OIFP has ful- filled our Legislature’s visionary plan by implementing a comprehensive, collaborative, and cohesive approach to fighting insurance fraud in New Jersey. Even greater challenges lay before us, however, if we are to take our war on insurance fraud to the next level. By its very nature, insurance fraud is often inconspicuous and difficult to detect. In- variably, insurance fraud referrals present obstacles that must be overcome in order to successfully investigate and prosecute these cases. As word of our successes at OIFP spreads, it comes as no surprise that determined insurance cheats are becoming more sophisticated, more organized, and more motivated than ever before. The simpler and more commonplace types of insurance fraud that sometimes seemed so abundant in the early days of OIFP are becoming fewer and farther between. Consequently, maintaining OIFP’s high level of criminal and civil prosecutions today, and in the future, has become an ever-increasing challenge which grows harder with each passing day. In response, OIFP must continue to develop the skills, know-how, and tools necessary to detect and investigate fraud effectively. We must increasingly focus our efforts and resources on complex, labor-intensive, and time-consuming investigations that target the most damaging and costly organized insurance fraud rings and enterprises. Such investigations are long term in nature, involve large multi-party conspiracies, and frequently require highly-specialized linguistic and technical expertise. Undoubtedly, OIFP owes a debt of gratitude to the tireless efforts of our partners in the insurance industry and the law enforcement community. Without their support and assistance, OIFP’s success would not be possible. Nor would OIFP’s success be possible without the enlightened leadership of Attorney General Peter C. Harvey and Vaughn L. McKoy, Director of the Division of Criminal Justice. Yet, we in New Jersey now find ourselves at a critical juncture in the war on insurance fraud. As insurance fraudsters continue their ceaseless quest to exploit vulnerabilities in our system of insurance, and as they become ever more secretive and sophisticated, we must become even more vigilant in our efforts to quash their schemes. To remain ahead of the curve, we must double our efforts and apply our resources more effectively and efficiently than ever before. Taking our war on insurance fraud to the next level will require more from each and every one of us. It will require the assurance of adequate and stable funding, an informed judiciary, and the continuing support of the insurance industry, the law enforcement community, and the citizens of New Jersey. For our part, in taking the war on insurance fraud to the next level, we at OIFP commit to taking the battle to our foes, reclaiming the economic vitality of our insurance system for the benefit of all New Jerseyans, and dedicating ourselves to fight insurance fraud as aggressively and effectively as possible. Respectfully submitted, Greta Gooden Brown New Jersey Insurance Fraud Prosecutor Office of the Insurance Fraud Prosecutor

Managing Deputy Chief Insurance Fraud First Assistant Insurance Investigator Prosecutor Fraud Prosecutor Civil and Criminal Civil and Criminal Investigations Oversight Prosecutions Oversight ••••••

Civil Deputy Attorneys General

Case Screening, Health Property Litigation Liaison Auto and and Medicaid and Analytic Life Casualty Support

Criminal Criminal Criminal Civil Criminal Civil Criminal Civil Criminal Deputy Deputy Deputy Investigators, Deputy Investigators, Deputy Investigators, Deputy Attorney Attorney Attorneys Professionals Attorneys Professionals Attorneys Professionals Attorneys General, General, General, and General, and General, and Clerical General, Criminal Criminal Investigators, Clerical Investigators, Clerical Investigators, Support Criminal and and and Support and Support and Investigators, Civil Special Clerical Clerical Clerical Professionals Investigators, Investigators, Support Support Support and Professionals Professionals Clerical and Clerical and Clerical Support Support Support OIFP Leads Nation’s Insurance Fraud War

8 OIFP Leads Nation’s Insurance Fraud War by Stephen D. Moore The $100 Billion Industry cidents and file phony medical claims. It seemed that Vito Gruppuso had After a lengthy undercover investigation found that profitable niche in the world by OIFP, Bandy and 27 other co-con- of business that most of us can only spirators, were charged in ten sepa- dream of. He brokered expensive, rate State Grand Jury indictments with high-end insurance policies for more multiple counts of conspiracy, rack- than 100 housing, retail, and office eteering, Health Care Claims Fraud, complexes throughout the United theft by deception, and possession of States in a sophisticated premium fi- a firearm without a permit. Bandy’s nancing arrangement involving loans fraud ring “staged” more than 90 auto- from banking institutions. Unfortu- mobile accidents which resulted in 24 nately, Gruppuso didn’t always use insurance companies paying more those funds to buy insurance for his than $2 million in fraudulent automobile trusting clients. Rather, an investiga- accident and personal injury medical tion by New Jersey’s Office of the In- claims. Bandy was sentenced to 29 surance Fraud Prosecutor (OIFP) re- years in State prison and ordered to vealed that he had, in fact, stolen more pay a $100,000 fine and an amount of than $100 million in his profitable little restitution as yet to be determined. niche. Mr. Gruppuso is now expected Dr. Carl Lichtman successfully to spend much of his future behind combined multi-level marketing tech- bars and to make restitution to his vic- niques with a psychology degree to tims in the tens of millions of dollars. grow his counseling practice into a Anhuar Bandy was living the multi-million dollar money machine. American dream. He had worked hard Lichtman lost his Midas touch, how- to become the proud owner of a string ever, when an investigation by OIFP re- of chiropractic clinics in Northern New vealed that nearly 200 of the “patients” Jersey...and he wasn’t even a chiro- participating in his elaborate kickback practor. In fact, he had no educational scheme never received the treatment background or experience whatsoever for which he had billed some 35 insur- in the field of health care. Yet, in the ance carriers and other insurers, in- short span of three years, his clinics cluding the New Jersey Health Ben- earned him millions of dollars of in- efits Plan. Lichtman had established a come. Bandy, however, was an excel- “referral” system to recruit new pa- lent organizer. He devised, planned, tients in return for a recruiting fee of and organized an entire ring of thieves $750 per new patient and 25 percent of who conspired to stage automobile ac- the insurance proceeds for the nonex- istent treatments. The toppling of

9 OIFP Leads Nation’s Insurance Fraud War

Lichtman’s bogus patient pyramid by surance claims. Ms. Vitullo was but OIFP resulted in the successful pros- one of many people who are caught by ecution of approximately 190 people, OIFP and County Prosecutors every including many former teachers and year ditching their SUVs, sports cars, other public employees who lost their and other vehicles to file insurance right to hold public employment when claims in order to get out from under a convicted. Lichtman was sentenced to heavy loan payment, a substantial spend five-and-a-half years behind bars, lease-end mileage charge, or the sour make restitution of approximately $2 recurring costs of owning a “lemon.” million, and sign a $200,000 judgment. Let there be no doubt; insurance You would think Donna Vitullo fraud is big business, very big busi- would have been delighted when inves- ness. Studies conducted over the past tigators came knocking on her door to ten years have pegged the amount of inform her they had recovered the 1988 our nation’s losses attributable to in- Porsche she had previously reported surance fraud in the range of $100 bil- stolen. Instead, she “fessed up” to lion to $200 billion per year. While a committing insurance fraud. Her ve- 2000 study estimated that insurance hicle, it seems, had been hauled from fraud costs U.S. insurance consumers the bottom of a remote lake in the New $96.2 billion in higher premiums in Jersey Pinelands, where fishing expe- 1999, the same study estimated that ditions by law enforcement officials fraud costs our domestic economy as yielded numerous other vehicles which much as $530 billion annually in total had also been disposed of by their costs of goods and services. Accord- owners in conjunction with phony in- ing to a 1992 study by the U.S. Gov- ernment Accounting Office (GAO), “New Jersey tops fraud war: New Jersey beats other states hands fraud and abuse in our country’s Medi- down in fighting fraud, says staff writer Amita Tandukar: (Article from Fraud International Issue 22 May-June 2004: Reprinted with care and Medicaid systems had also the permission of Fraud International copyright 2004) reached as much as $100 billion annually; and that study estimated that fraud, alone, accounts for approximately 10 percent of our nation’s health care spending. Other studies have suggested that, if the “enterprise” of insurance fraud were a corporation, it would rank in the top 25 of the Fortune 500 list of America’s companies and would be considered a growth industry unto itself. But insurance fraud is not a legitimate enterprise and it can be devas- tating to both legitimate companies and individuals alike. At least 30 percent of the 302 property and casualty insurance companies that became in- solvent between 1969 and 1990 were reportedly due to fraudulent activities. And it has been estimated that, on a personal level, insurance fraud costs the average American household as much as $1,000 annually, including

10 the addition of as much as $200 to at all, sometimes purchasing fake in- Acting Governor Richard J. Codey was $300 in insurance premiums to every surance cards on the black market to instrumental in establishing the Office of the family’s automobile insurance policy. avoid New Jersey’s severe penalties Insurance Fraud Prosecutor in his role as a Insurance fraud displays its many for driving without insurance, which in- member of the Joint Committee on Automobile faces in persons and places both cluded hefty fines and mandatory driv- Insurance Reform in 1998. strange and familiar. Insurance fraud is ers’ license revocation. as simple and common as lying on an Unless drastic measures were focus to detail akin to that of a application for automobile or life insur- taken immediately, the situation was constitutional convention. ance and as veiled and complex as a going to get worse, much worse, be- While the challenge of crafting leg- sophisticated fraud ring comprised of fore it got better. When the New Jer- islation to deal with the monumental crooked doctors, corrupt lawyers, and sey Legislature convened hearings problem of insurance fraud engendered phony accident victims. It may be nearly eight years ago in a desperate broad bipartisan support, it would committed by a hardened career crimi- effort to grapple with the State’s auto- come as little surprise that one of its nal, but as a crime of opportunity, it mobile insurance crisis, it quickly be- main proponents was a prominent leg- may just as likely be committed by came clear that, as a major contribut- islator with professional experience as your next-door neighbor. And, contrary ing factor to New Jersey’s skyrocket- a licensed insurance producer, the to what sometimes seems the “con- ing insurance rates, the problem of State Senate’s Minority Leader, who ventional wisdom,” insurance fraud is rampant insurance fraud would have to would years later unexpectedly find not a victimless crime. Every time be addressed in a dramatic fashion. himself as Acting Governor, Richard someone commits insurance fraud, the As in other states, New Jersey’s Codey. The principal issue confronting pockets he picks are ultimately the approach to dealing with the problem then Senator Codey and his legislative pockets of those of us who purchase of insurance fraud had been piecemeal colleagues was not whether to mount the protection afforded by insurance. and fragmented. The relatively few an unprecedented offensive on insur- Because states which are most criminal investigations and prosecu- ance fraud, but how to go about it in densely populated, such as New Jer- tions for insurance fraud in New Jersey the most effective way possible. sey, tend to generate higher rates of were usually undertaken by a mod- In the hearings which ensued, crime and automobile accidents, both estly staffed unit within the New Jersey many ideas were floated, debated, de- of which correlate closely to the inci- Attorney General’s Division of Criminal flated, and sunk: how to ensure con- dence of insurance fraud, it is those Justice, and even more infrequently, by tinued medical coverage for those in- most densely populated states that are one of the State’s 21 County Prosecu- jured in auto accidents while controlling most adversely impacted by the current tors’ Offices. Although, in 1983, the spiraling medical costs; how to estab- pandemic of insurance fraud. Indeed, New Jersey Legislature created the Di- lish an effective mechanism for resolv- New Jersey has long held the dubious vision of Insurance Fraud Prevention ing disputes between insureds and in- distinction as having the highest auto- within the Department of Banking and surers; how to reform the antiquated mobile insurance rates in the country. Insurance, its Civil Investigators were rating system; and how to attack armed with only the narrow authority to insurance fraud. A Gathering Storm impose civil fines for a limited array of It was an idea whose time had come, and not a moment too soon. After years of climbing automobile various types of insurance fraud. While the concept had long been ban- insurance rates, fueled in large part by Prior Legislatures had attempted died about the corridors of the State the hidden costs of insurance fraud, repeatedly without success to reform House, it appears to have first been the automobile insurance crisis in New New Jersey’s insurance laws in a futile formally proposed by New Jersey Jersey had grown to epic proportions effort to contain New Jersey’s ever-in- Manufacturers Insurance Company at by the spring of 1998. Many motorists creasing insurance rates. But this time a Senate Commerce Committee hear- were finding they had to spend more to it would be different. Unlike the manner ing in May of 1997 when, in remarks insure their cars than they had left to in which legislation had all too often prepared and submitted by Bernard put dinner on their tables at night, if been hastily enacted in response to Flynn, the Company requested that they were even able to find an insurer. emergent problems or the demands “consideration should be given to the Despite New Jersey’s compulsory au- of political expediency, this time the creation of a single State Insurance tomobile insurance laws, many simply New Jersey Legislature pursued its Fraud Prosecutor to coordinate infor- chose to drive without any insurance mission with a fervor, foresight, and

11 OIFP Leads Nation’s Insurance Fraud War

mation and action among the various bile Insurance Cost Reduction Act of and Medicaid fraud in New Jersey. agencies involved in fighting fraud. Such 1998 (AICRA). In an unusually detailed AICRA also empowered OIFP and the a person could be designated adminis- preamble to the law borne of the auto Insurance Fraud Prosecutor to oversee tratively by the Attorney General to fa- insurance crisis, the Legislature de- and coordinate the anti-insurance fraud cilitate anti-fraud efforts creating little, scribed and defined many of the causes efforts of law enforcement and other if any, additional bureaucracy. The form of New Jersey’s insurance crisis, in- public agencies and departments the position takes is less important cluding the problems associated with throughout New Jersey with those of than the substance. Serious fraud insurance fraud, and clearly defined its the insurance industry. cases must result in serious criminal goals and objectives for dealing effec- AICRA established OIFP as a law penalties to deter future conduct.” tively and appropriately with those enforcement agency within the State’s The call for a special State pros- problems. As explained in the preamble, Division of Criminal Justice in the De- ecutor to investigate and prosecute in- the high cost of automobile insurance partment of Law and Public Safety with surance fraud was echoed nine in New Jersey presented “a significant a primary objective of criminally investi- months later, in February 1998, by the problem for many lower income resi- gating and prosecuting insurance President of the New Jersey State Bar dents of the State, many of whom have fraud. However, in order to consolidate Association, Jay H. Greenblatt, when, been forced to drop or lapse their cov- civil and criminal authority for investi- in prepared remarks before the Joint erage in violation of the State’s manda- gating insurance fraud in a single Committee on Automobile Insurance tory motor vehicle insurance laws....” agency, AICRA also required that the Reform, he stated, “we call for the im- It also recognized that, “fraud, entire civil investigative staff of the De- mediate appointment of a special pros- whether in the form of inappropriate partment of Banking and Insurance be ecutor from the ranks of the Office of medical treatments, inflated claims, transferred to the fledgling agency. Attorney General, with sufficient staff- staged accidents, falsification of Among other things, AICRA re- ing expertise to aggressively prosecute records, or in any other form, has in- quired that a section of OIFP “be des- fraud and deter future conduct. People creased premiums, and must be un- ignated to be responsible for establish- don’t cheat on their income taxes be- covered and vigorously prosecuted, ing a liaison and continuing communi- cause they fear consequences. Auto- and while the pursuit of those who de- cation between the office... any profes- mobile insurance fraud must be pre- fraud the automobile insurance system sional board in the Division of Con- vented in the same way.” has heretofore been addressed by the sumer Affairs in the Department of Law As in planetary alignment, it was State through various agencies, it has and Public Safety, the Department of the rarest and most auspicious of mo- been without sufficient coordination to Banking and Insurance, the Division of ments, when the insurance industry aggressively combat fraud, leading to State Police, every county prosecutor’s and the legal profession would mutu- the conclusion that greater consolida- office, such local government units as ally agree upon a key element of insur- tion of agencies which were created to may be necessary or practicable and ance reform: the dire need for a dedi- combat fraud is necessary to accom- insurers.” OIFP was also charged with cated State prosecutor to lead New plish this purpose....” establishing a statewide fraud enforce- Jersey’s war on insurance fraud. From While most of the Act dealt with a ment policy for all State and local that moment forward, the solution to variety of detailed and complicated agencies, including the promulgation attacking New Jersey’s fraud monster regulatory measures to reform New of detailed guidelines for investigating became where, rather than whether, an Jersey’s automobile insurance laws, and prosecuting insurance fraud. The Insurance Fraud Prosecutor would several critical pages spelled out in Insurance Fraud Prosecutor was also stand in the pantheon of public great specificity the Legislature’s ex- required to establish and maintain da- officialdom, and the task at hand was pectations and mandate for New tabases for all cases in which fraud is to craft a blueprint to guide the Jersey’s new Insurance Fraud Pros- suspected, and incorporating compre- Prosecutor’s efforts while providing the ecutor. AICRA vested the Insurance hensive information with respect to Prosecutor with the resources required Fraud Prosecutor and OIFP with broad various types of insurance claims to get the job done right. authority and responsibility for investi- made against private insurers. The New Jersey Office of the In- gating all types of insurance fraud, and surance Fraud Prosecutor was finally for conducting and coordinating civil, established on May 19, 1998, when criminal, and administrative investiga- the Legislature enacted the Automo- tions and prosecutions of insurance

12 A Record of Accomplishment An Immediate and Growing Impact The enactment of AICRA in May of 1998 was followed several weeks later by Governor Whitman’s issuance of Reorganization Plan No. 007-1998 on transfer of the entire civil investigative Insurance Fraud Prosecutor June 25, 1998, which specified, in staff from the Department of Banking Greta Gooden Brown accepts the New Jersey broad terms, those steps to be taken Vehicle Theft Investigators’ Association and Insurance to the Division of Crimi- Robert A. Ziegler Award for the successful OIFP to effect the transfer, consolidation, nal Justice within the Department of “Give and Go” prosecution. (l. to r.) and reorganization of numerous func- Law and Public Safety; the integration Joanne Roberts, Assistant Vice President of tions of the respective agencies af- of the Insurance Fraud Unit and the Selective Insurance Company; Deputy Chief fected by AICRA, particularly the De- Medicaid Fraud Section of the Division Investigator Richard Falcone; Deputy Chief partments of Banking and Insurance Investigator Sheila Brown; State Investigator of Criminal Justice into the newly-cre- Jose A.Vendas; State Investigator and of Law and Public Safety. The en- ated OIFP; and the conducting of Jaroslaw Pyrzanowski; Insurance Fraud tire reorganization and the official es- screening, background investigations, Prosecutor Greta Gooden Brown; Deputy tablishment of the New Jersey Office and hiring of additional qualified investi- Attorney General Michael Monahan; of the Insurance Fraud Prosecutor was gative, prosecutorial, and administra- Supervising Deputy Attorney General to be completed within 60 days. Tina Polites; and State Investigator tive and clerical support staff. Marc Cafone. Immediately after the enactment of On October 28, 1998, a seasoned AICRA, the officials charged with its prosecutor from the Division of Criminal implementation sprang quickly into ac- Justice, Edward M. Neafsey, was tion. On July 17, 1998, the Commis- sworn in as New Jersey’s first Insur- sioner of the Department of Banking ance Fraud Prosecutor. By late 1998, and Insurance and the Attorney Gen- the foundations had been laid for the eral, as head of the Department of Law nascent agency, at long last, to realize and Public Safety, entered into a de- the vision the legislators and insurers tailed Memorandum of Agreement “to had labored so long and hard to fash- effectuate the timely and efficient ion: a definitive model to attack insur- transfer of the functions, powers, du- ance fraud through a statewide pro- ties and responsibilities relating to in- gram. Early in 1999, the civil investiga- surance fraud investigation and pros- tors transferred from the Department of ecution from the Department of Bank- Banking and Insurance physically ing and Insurance to the Department of joined with criminal investigators and Law and Public Safety.” prosecutors from the Division of Crimi- Those charged with the arduous nal Justice, as they established their task of actually effectuating the central headquarters in Lawrenceville change promptly turned their full atten- and satellite offices in Whippany and tion to reviewing, identifying, and ad- Cherry Hill, and quickly went about the dressing those thousands of details business of building the new govern- necessary to create a new and un- mental agency from the ground up. precedented governmental agency to And from those first heady, tumul- oversee the anti-insurance fraud efforts tuous days of OIFP, it rapidly emerged of the entire State of New Jersey. Their as one of the nation’s premier insur- charge was monumental, entailing, ance fraud-fighting institutions. among other things, the establishment of three regional offices located, re- Blueprint for Success spectively, in the southern, central, The crafting of OIFP’s structure and northern portions of the State; the may be viewed, in retrospect, as noth-

13 OIFP Leads Nation’s Insurance Fraud War

ing short of the most successful blue- ized sections. Specialization within the best numbers in its relatively brief print for the operation of a dedicated in- OIFP was further refined by a major re- existence as a law enforcement surance fraud-fighting agency in his- organization in 2002 which resulted in agency. Since it commenced opera- tory. First and foremost, in designating the creation of specialized insurance tions six years ago, OIFP has reviewed OIFP as New Jersey’s lead agency to fraud sections, mirroring classifications and screened over 60,000 matters of implement a comprehensive program in the insurance industry, in both the suspected or actual insurance fraud, for the investigation and prosecution of criminal and civil bureaus. issued 4,546 civil Consent Orders and insurance fraud, the Legislature vested As a result of the restructuring, agreements, imposed approximately OIFP under AICRA with authority and OIFP-Criminal was broken down into $22 million in civil fines, convicted responsibility for investigating every sections focusing on auto fraud, health nearly 840 persons of insurance fraud type of insurance fraud, and with the and life fraud, and property and casu- or insurance fraud-related offenses, ob- tools for conducting and coordinating alty fraud, as well as the Medicaid tained restitution totaling $46,347,499, criminal, civil, and administrative inves- Fraud Section. OIFP-Civil was similarly and sentenced 289 people to jail terms tigations and prosecutions of insur- structured along the lines of special- totaling over 648 years. ance and Medicaid fraud throughout ized teams of Civil Investigators who the State. Moreover, to provide for the were assigned to investigate cases of Knowledge is Power most effective and well integrated possible violations of the New Jersey OIFP recognized early that infor- strategy possible to combat insurance Insurance Fraud Prevention Act (Fraud mation, knowledge, and intelligence fraud throughout the State, the Legisla- Act) and, where appropriate, seek res- are essential to the success of any in- ture empowered OIFP under AICRA to titution and civil fines. vestigative law enforcement agency oversee and coordinate the anti-fraud Because of the greater burden of and that OIFP would be no exception. efforts of law enforcement and other proof required in criminal cases, that of OIFP has striven, from its inception, to public agencies in New Jersey with proof “beyond a reasonable doubt,” expand the channels through which it those of the insurance industry. OIFP-Civil has frequently been able to obtains information and to implement OIFP was officially established as impose fines or obtain restitution in mechanisms to ensure that information a law enforcement agency within the cases where the facts would be unable is shared, utilized, and employed as State’s Division of Criminal Justice un- to sustain a successful criminal pros- effectively as possible to identify, in- der the direction of a State Insurance ecution. Inasmuch as civil actions are vestigate, and pursue appropriate ac- Fraud Prosecutor, appointed by the subject to a longer ten-year Statute of tion against insurance cheats. Governor, confirmed by the Legislature, Limitations, civil actions may also be OIFP’s system to manage infor- and overseen by the New Jersey Attor- undertaken in lieu of a criminal pros- mation begins with a carefully designed ney General, with a singular mission ecution in many cases where a crimi- Section for receiving, screening, as- to pursue insurance fraud wherever nal prosecution is barred by the signing, and tracking up to 10,000 new found, in whatever form, as aggres- shorter five-year Statute of Limitations cases annually, known within OIFP as sively and effectively as possible. applicable to criminal prosecutions. the Case Screening, Litigation and AICRA also required that, in order to While the imposition of penalties at the Analytical Support Section (CLASS). unify both criminal and civil authorities conclusion of an OIFP-Civil investiga- Every referral to OIFP, whether from for investigating and prosecuting insur- tion is frequently an effective alternative the mandatory reporting of suspicious ance fraud in one agency, the civil en- outcome to a criminal prosecution, the claims by insurance carriers, OIFP’s forcement functions previously in the imposition of civil penalties is often a hotline or Web site, law enforcement Division of Insurance Fraud Prevention complement to a successful criminal or other public agencies, citizen com- in the Department of Banking and In- prosecution wherein both civil and plaint letters or walk-ins, first under- surance would be transferred to the criminal penalties are imposed. goes an “intake” process in which newly established OIFP. While crimi- Ultimately, the objective yardstick each referral is promptly date stamped nal and civil authority for insurance by which the success of any endeavor and entered into OIFP’s case tracking fraud was now consolidated in OIFP, must be measured is that of its perfor- system known as Law Manager. Case those functions would now be adminis- mance as reflected in the number and numbers are assigned, existing data- tered in separate criminal and civil bu- quality of matters it has pursued to a bases are searched for overlapping in- reaus within OIFP which, in turn, successful conclusion. Today, OIFP formation, and cases are screened by would be comprised of several special- continues to thrive and post some of specially trained Civil Investigators to

14 determine whether the referral contains sufficient information to initiate a civil or criminal investigation. Where it appears that a criminal investigation is warranted, the matter is referred to a Supervising Deputy At- torney General who, in most instances, makes the final determination able to identify fraudulent patterns and New Jersey Attorney General Peter C. Harvey as to whether to open a formal criminal trends amidst an otherwise incompre- discusses OIFP’s insurance fraud-fighting investigation. The screening process efforts with New Jersey Network News at hensible myriad of data. the Seventh Annual Insurance Fraud Summit. typically involves the obtaining of back- An effective strategy to wage war ground information on the person sus- on insurance fraud requires both the pected of committing insurance fraud enlistment of critical allies, such as through queries of a variety of govern- those in the insurance industry, law mental and public records databases. enforcement, and other governmental Cases warranting investigation are agencies having a stake in addressing coded according to the type of alleged insurance fraud, and arming those allies insurance fraud, such as automobile, with the knowledge, skills, and exper- life, or disability, and assigned for fur- tise necessary to do the job. Law en- ther investigation to the most geo- forcement and OIFP’s other partners in graphically appropriate of OIFP’s three the war on insurance fraud must have, regional offices. Subsequent to the as- or develop, a thorough understanding signment of cases, Analysts and Tech- of what constitutes insurance fraud nical Assistants in the CLASS Unit fre- and the “red flag” identifiers that should quently continue to assist in the inves- alert an officer or investigator to the tigations, employing a variety of so- possibility that a particular matter may phisticated software applications to involve insurance fraud and may war- analyze the complex relationships ex- rant further investigation. Law enforce- isting among individuals, businesses, ment officials whose primary responsi- and their financial relationships. bilities are to investigate or prosecute Through its Liaisons, OIFP has also insurance fraud must have an even established, and maintains, databases more sophisticated knowledge and ex- of information through collaborative and pertise with respect to the unique cooperative arrangements with other characteristics of insurance fraud. law enforcement agencies, other gov- As the State’s designated leader ernmental agencies, and the Depart- in the war on insurance fraud, OIFP in ment of Banking and Insurance. its infancy quickly went about the task Finally, after years of planning and of implementing programs to share its collaboration with insurance industry own expertise through an ambitious representatives, OIFP went online in and comprehensive program for the 2004 with its All Claims Database training and instruction of law enforce- which encompasses comprehensive ment and insurance industry officials data submitted by insurance carriers throughout the State. Through its regarding New Jersey automobile in- County Prosecutor Liaison, OIFP has surance claims involving a theft or an provided annual in-service instruction accident. The Database’s utility will be on many facets of insurance fraud to enhanced with a software tool which is Assistant Prosecutors and investiga- arguably the most powerful “data min- tive personnel in County Prosecutors’ ing” application available. By “mining” Offices in the State’s 21 counties. such claims data, OIFP expects to be Through its Insurance Industry Liaison,

15 OIFP Leads Nation’s Insurance Fraud War

OIFP has instituted a joint training pro- been designated by the State’s Insur- gram with experienced insurance in- ance Fraud Prosecutor to serve as the dustry professionals to offer training to Office’s primary vehicle to foster com- investigative staff from both OIFP and munication, cooperation, and coordina- insurance industry special investigative tion among fraud fighters throughout units. Through its Law Enforcement Li- New Jersey. aison, OIFP has scheduled quarterly To ensure that the Liaison Section law enforcement coordination meet- of OIFP is able to effectively coordinate ings in each of its three regional offices the many overlapping responsibilities which provide opportunities to share in- and activities of the public agencies formation and intelligence among law and insurers which investigate or come enforcement agencies at every level in into contact with insurance fraud in New Jersey and neighboring states, in- New Jersey, OIFP assigned experi- cluding municipal police departments, enced professionals to serve as County Prosecutors’ Offices, the New County Prosecutor, Law Enforcement, Jersey State Police, and federal agen- Insurance Industry, and Professional cies such as the Federal Bureau of In- Boards Liaisons. Each Liaison is re- vestigation and the United States sponsible for insuring that all OIFP in- Postal Inspector’s Office. vestigations are coordinated with the OIFP continued in 2004 with its in- activities of those agencies or entities novative program of training and in- falling within their purview. struction and, in addition to the regularly scheduled training opportunities County Prosecutors provided by OIFP’s Liaisons, partici- By virtue of their local presence pated in many seminars and sympo- throughout the State, County Prosecu- sia, such as OIFP First Assistant tors in New Jersey have developed, Prosecutor, John Smith’s, presentation and maintain, an intimate familiarity to the Chubb Insurance Company in with the landscape of criminal activities Supervising Deputy Attorney General New York and presentations for New Stephen D. Moore with NJSIA within their respective jurisdictions. President Kevin Crimmins after Jersey’s Institute for Continuing Legal Consequently, their knowledge of the appearing as a guest speaker on Education, as well as for insurance in- demographics of crime within their behalf of OIFP at the December dustry investigators and personnel. counties and their ability to cultivate in- 2004 NJSIA meeting. formants and identify potential criminal Leading a Coordinated Effort suspects often enables them to inves- OIFP’s success in fighting insur- tigate and prosecute insurance cheats ance fraud is due, in great part, to the and organized insurance fraud enter- manner in which it has responded to prises which might, in many cases, the Legislature’s mandate that it lead a avoid detection by a centralized State comprehensive effort to marshal and agency such as OIFP. utilize all possible resources in both It was in recognition of this critical the public and private sectors to com- role of the State’s County Prosecutors bat insurance fraud. In recognizing that that AICRA provided a mechanism to a greater consolidation of resources fund their efforts at fighting insurance was necessary to effectively carry out fraud within their respective counties. this mandate, AICRA required that From its creation in 1999, the New Jer- OIFP establish a section of the Office sey County Prosecutor Insurance for the specific purpose of acting as li- Fraud Reimbursement Program, ad- aison with law enforcement and other ministered by the Attorney General public agencies and the insurance in- through the Insurance Fraud Prosecu- dustry. OIFP’s Liaison Section has tor, has provided funding for fraud-fight-

16 ing personnel and equipment in 20 of 129 convictions by guilty plea or trial, gators with the critical documentation New Jersey’s 21 counties. resulting in jail terms totaling more than necessary for successful undercover The funding has served to enhance 51 years. Some of the most notable sting operations. the ability of County Prosecutors to in- cases handled by units funded by OIFP The Law Enforcement Liaison is vestigate and prosecute insurance are summarized in this Annual Report. assigned responsibility for distributing fraud by supporting or contributing to Unfortunately, as a result of five training and other informative materi- the salaries of 38 detectives and inves- years of flat funding levels in the OIFP als, such as OIFP’s roll call training tigators, 11 assistant prosecutors and budget, budgetary pressures nearly re- videos, to local police departments 6 technical and administrative support sulted in the elimination of the County throughout New Jersey. The Law En- staff, and by encouraging and allowing Prosecutor Reimbursement Program forcement Liaison is also responsible counties to undertake new and innova- at the close of 2004. Efforts by the At- for distribution of over 1,000 copies of tive initiatives carefully designed to torney General and Insurance Fraud the OIFP Uninsured Motorists Identifi- catch insurance cheats within their re- Prosecutor saved the program from cation Directory (UMID), which pro- spective jurisdictions. elimination in 2005, though funding vides law enforcement agencies with a The County Prosecutor Insurance was reduced by nearly 20 percent. comprehensive directory of insurance Fraud Reimbursement Program re- Budgetary pressures in 2004 did, how- company hotline phone numbers to quires that counties work closely with ever, require the elimination of a pro- verify insurance coverage. Among the OIFP’s County Prosecutor Liaison and gram funded by OIFP which supported Law Enforcement Liaison’s other coordinate their activities with OIFP on the Insurance Fraud Unit of the New responsibilities is the scheduling of a continuing basis. Among other Jersey State Police, which focused on periodic regional insurance fraud meet- things, County Prosecutors submit the use or sale of counterfeit insurance ings throughout the State in which Cumulative Monthly Reports which in- identification cards. many law enforcement agencies par- clude pertinent identifiers with respect ticipate to share intelligence and infor- to all persons within their jurisdictions Law Enforcement mation and learn from guest speakers under investigation for possible insur- OIFP also coordinates its activities with special expertise in areas such ance fraud. The information in these with many law enforcement agencies as health care fraud, fraud rings, and reports is scrutinized by the County other than County Prosecutors’ Of- insurance fraud forensics. Prosecutor Liaison and incorporated in fices, ranging from local and county OIFP’s own databases to ensure that police departments, to County Sheriffs’ Insurance Industry the investigative and prosecutorial ac- Departments, to the New Jersey State In enacting AICRA, legislators rec- tivities of OIFP and County Prosecu- Police, and to federal law enforcement ognized that the insurance industry tors do not duplicate or undermine agencies such as the Federal Bureau was an integral partner in order for gov- each other. This information also en- of Investigation and the United States ernment to be successful in address- ables OIFP, in many cases, to open Postal Inspector’s Office, as well as ing the State’s insurance fraud prob- corresponding civil cases where the law enforcement agencies in nearby lem. Consequently, AICRA expressly suspected insurance fraud may sub- states. OIFP has assigned a Law En- required that OIFP establish a formal ject the perpetrator to civil penalties forcement Liaison whose primary re- liaison with the insurance industry for pursuant to the provisions of the Insur- sponsibility is to coordinate OIFP’s in- the purpose of ensuring effective coor- ance Fraud Prevention Act. vestigations and prosecutions with dination and open channels of commu- The reporting of subjects under in- those of other law enforcement agen- nication. Such coordination is particu- vestigation by County Prosecutors in cies both in and beyond New Jersey’s larly important because the vast major- 2004 enabled OIFP to open nearly 712 borders. OIFP has also vested the Law ity of OIFP’s insurance fraud cases civil investigations, few of which would Enforcement Liaison with responsibil- are opened from referrals received by have come to OIFP’s attention but for ity for administering a number of other insurance carriers, which are required the reporting protocol of County Pros- law enforcement support protocols and by regulation to report all cases of sus- ecutors under the terms of the Reim- services such as the issuance of pected fraud. OIFP’s Insurance Indus- bursement Program. Further, in 2004, documentation used in undercover in- try Liaison maintains appropriate stan- County Prosecutor Insurance Fraud vestigations including fictitious insur- dards for referrals from insurance com- Units and personnel funded by OIFP ance cards and pretext insurance poli- panies and acts as OIFP’s primary charged 313 defendants and obtained cies which provide undercover investi- point of contact with the insurance in-

17 OIFP Leads Nation’s Insurance Fraud War

dustry. Through its Industry Liaison, requirements for reporting fraud by in- OIFP provides technical guidance and surance companies. In 2004, the In- assistance and sponsors Working dustry Liaison offered training or in- Groups which meet regularly to iden- struction to nearly 1,789 insurance in- tify areas of common concern and ex- dustry personnel as part of his official plore the manner in which OIFP and responsibilities. OIFP’s Industry Liai- the insurance industry can work con- son was, again in 2004, instrumental structively together to further their re- in orchestrating both the Annual New spective efforts to combat insurance Jersey Insurance Fraud Summit and fraud. Many of the recommendations the Annual Conference of the New Jer- incorporated in OIFP’s Annual Reports sey Special Investigators Association. have sprung from discussions in the OIFP also works closely, through Working Groups. In 2004, the Industry the Industry Liaison, with New Liaison and his staff provided guidance Jersey’s Department of Banking and and assistance to those in the insur- Insurance, coordinating investigations ance industry on 875 occasions. and tracking OIFP cases which involve The Industry Liaison also repre- professionals licensed by the Depart- sents OIFP in numerous meetings ment, which includes public adjusters, with insurance industry officials and in- real estate agents, and licensed insurance producers. In 2004, the Industry Liaison tracked 82 such cases in coordination with the Department. Professional Licensing Boards According to the Health Insurance Association of America, over three- quarters of health care fraud is committed by health care professionals. surance industry trade associations The New Jersey Legislature rightly rec- throughout the year affording both ognized that any effort to contain insur- OIFP and the insurance industry the ance fraud in New Jersey would have opportunity for open and ongoing com- to make provision for ensuring that munications regarding issues of mu- crooked health care professionals tual interest. In 2004, the Industry Liai- would not benefit from a system of en- son attended meetings of the National forcement in which the “right hand Insurance Crime Bureau, the Insurance didn’t know what the left hand was do- Council of New Jersey, the New Jersey ing.” Accordingly, AICRA expressly Special Investigators Association, the provides that OIFP should coordinate Anti-Fraud Association of the North- its activities with the professional east, the Delaware Valley and national boards in the Division of Consumer Af- meetings of the International Associa- fairs which license, among others, tion of Special Investigative Units, and those employed in the field of health the New Jersey Vehicle Theft Investi- care. OIFP’s Professional Boards Liai- gators Association. In conjunction with son has been charged with responsibil- this participation in industry trade as- ity for providing and maintaining a sociations and his communications mechanism that ensures effective co- with insurance carriers, the Industry Li- ordination between OIFP and profes- aison also frequently conducts insur- sional licensing authorities which have ance fraud training concerning the the power to impose such sanctions structure and operations of OIFP and as license suspension, license revoca-

18 tion, and fines. To that end, OIFP’s tinuing exchange of information con- vestigators and attorneys in both Professional Boards Liaison has es- cerning licensees within their respec- OIFP’s criminal and civil sections. tablished, and maintains, a database tive areas of concern, OIFP’s Profes- of professional licensees who have sional Boards Liaison and the profes- A Growing Reputation been the subject of complaints to ei- sional boards ensure that actions Recognition and Acclaim ther a County Prosecutor’s Office, taken by any one agency do not ad- As in years past, OIFP’s promi- OIFP, or one of New Jersey’s many versely impact upon the actions taken nence in the field of insurance fraud is professional licensing boards. by any other agency. This sharing of perhaps best reflected by the recogni- OIFP’s database of professional information also serves to enhance tion and acclaim the agency and its licensees includes information con- each agency’s ability to effectively staffers have received from others cerning the nature and source of the conduct its own investigations and de- joined in the fight on insurance fraud. referral or complaint and the status of termine what, if any, further action While OIFP’s record of success has any proceedings brought by the En- should be taken against a licensee. yielded great dividends to New Jersey’s forcement Bureau of the Division of In 2004, the Liaison and Continu- citizens, the benefits of its efforts, and Consumer Affairs, the enforcement ing Communications Group monitored the recognition of those benefits, have arm of the professional licensing sys- 634 active cases of suspected insur- spread well beyond New Jersey’s rela- tem in New Jersey. The database also ance fraud. Since it was established in tively small geographic bounds. In- includes information concerning the 1998, the Group has reviewed and dis- deed, the New Jersey model for fight- status of any investigation or prosecu- posed of 198 cases by way of civil or ing insurance fraud has garnered the tion of a listed licensee by a prosecut- criminal actions undertaken by OIFP, attention of government and insurance ing authority such as OIFP, a County licensing sanctions taken by a profes- industry officials not only throughout Prosecutor, or their counterparts in the sional licensing board, or by adminis- the United States, but throughout the federal or another state system. trative closure. Of those monitored in world; and the manner in which OIFP The Professional Boards Liaison 2004, 12 licensees were indicted, 8 has approached the war on insurance administers a protocol pursuant to pled guilty or were found guilty after a fraud has been widely studied, which professional licensing boards trial, and 7 received sentences ranging praised, and emulated. are promptly notified whenever OIFP from 2 years of probation with restitu- Among the honors which OIFP re- initiates an investigation of any licensee tion and fines, to jail terms of up to 7 ceived in 2004 was its selection for the within the board’s jurisdiction, and years. Coordination by the Profes- Outstanding Achievement Award of the OIFP is promptly notified whenever sional Boards Liaison also assisted International Association of Arson In- any of the professional boards receive professional licensing boards with the vestigators, recognizing OIFP’s suc- a complaint against one of their lic- imposition of 33 disciplinary actions cesses in attacking arson frauds and ensees which involves insurance fraud. against licensees in 2004. cracking a major arson insurance fraud In addition to daily communications Like his colleagues in the Liaison ring. OIFP was also presented with the between the Professional Boards Liai- Section, the Professional Boards Liai- Ziegler Award of the New Jersey Ve- son and the various licensing boards, son communicates daily with his hicle Theft Investigators Association in the Liaison conducts quarterly meet- counterparts in other agencies such 2004, which is awarded to an individual ings with key members of the Enforce- as the Board of Medical Examiners, or group that “has shown extraordinary ment Bureau and OIFP’s investigative and the Nursing, Pharmacy, Dentistry, initiative or achieved outstanding re- and prosecutorial staff, designated the and Chiropractic Boards. Within OIFP, sults in the area of auto theft.” OIFP Liaison and Continuing Communica- the Professional Boards Liaison also was also the recipient in 2004 of the tions Group, to share information re- works closely with OIFP’s intake unit, Attorney General Award for Fraud Pre- garding the status of any proceedings, the Case Screening, Litigation and vention, awarded by the New Jersey planned or pending, against any lic- Analytical Support Section (CLASS), Attorney General in recognition of ensee in the database involving any so that referrals to OIFP involving pro- OIFP’s outstanding achievements. type of official action such as the fessional licensees are entered into OIFP’s Medicaid Fraud Unit was bringing of administrative charges, the the database which he maintains, and recognized as a national leader in the initiation of an investigation or prosecu- to ensure that cases involving profes- fight against Medicaid fraud in June of tion, or the imposition of civil fines. sional licensees are appropriately as- 2001 when it was featured prominently By ensuring the timely and con- signed and coordinated among the in- throughout a United States General

19 OIFP Leads Nation’s Insurance Fraud War

years, such as its selection in 2003 by the International Association of Chiefs of Police (IACP) as a national finalist for its Excellence in Criminal Investiga- www.NJInsuranceFraud.org tions Award. The Award recognizes quality achievements in the management and conduct of criminal investigations and promotes the sharing of information on successful programs. It is presented nationally to the law enforcement agency, unit, task force, or inter-agency task force which most demonstrates exceptional innovation and excellence in criminal investigations. OIFP’s staffers were also again recognized in 2004 as outstanding members of our nation’s insurance fraud-fighting community. OIFP’s Insur- ance Industry Liaison, John Butchko, was presented with the Outstanding Service Award by the International As- sociation of Special Investigative Units, which recognizes individuals who have demonstrated unusual commitment and made outstanding contributions in the fight against insurance fraud. Other OIFP staffers were honored at the Re- gional Commissioner’s Honor Award Ceremony of the United States Social Security Administration for their investi- Accounting Office report as a notable nized for its creativity and effective- gative efforts in combating fraud, example of a Medicaid Fraud Control ness, garnering the Creativity 34 Award waste, and abuse in Social Security Unit which was particularly well run. of Distinction awarded by Creativity, an Administration programs. The New Jer- That report, GAO-01-662, State Efforts Advertising Age magazine devoted to sey Director of the Division of Criminal to Control Improper Payments Vary creative excellence. The Creativity Justice also cited the outstanding ac- (2001), recognized New Jersey’s Med- Awards are awarded annually to na- complishments of many OIFP staffers, icaid Program for its stringent enroll- tional global advertising and design including Administrative Assistant Pat ment requirements, its use of readily agencies. OIFP’s public awareness Miller, Supervising State Investigator available software for analyzing claims campaign has been similarly recog- Ciro Sebasco, and State Investigator for unusual patterns prior to making nized in previous years by leaders in Andrea Hayes who received special payment, and for conducting pre-en- the marketing and advertising world. In Director’s Awards. rollment site visits to the premises of the past, OIFP’s television and radio In years past, OIFP staffers have re- potentially high risk enrollees. Be- commercials have earned OIFP first- ceived awards by such organizations as cause of its effectiveness, OIFP’s place trophies from the New Jersey the American International Group, the Medicaid Fraud Unit was one of only Business Marketing Association, the Detectives Crime Clinic of Metropolitan four such units selected nationally by New Jersey Advertising Club, and the New Jersey and New York, the Delaware GAO for a site visit as part its prepara- New Jersey Communications and Valley Chapter of the International Asso- tion for the issuance of its report. Marketing Association. ciation of Special Investigation Units, the In 2004, OIFP’s public awareness OIFP has also been the recipient Society of Investigators of Greater New- campaign was also once again recog- of many prestigious awards in prior ark, and the Western New Jersey Chap-

20 ter of the American Society for Industrial New Jersey, from other states, and fective ways of establishing their own Security, to name but a few. from other countries around the globe. fraud-fighting programs. In past years, OIFP’s accomplishments in the In 2004, Insurance Fraud Prosecu- OIFP has hosted dignitaries and con- field of fighting insurance fraud have tor Greta Gooden Brown was a fea- tingencies from Japan, Columbia, and also been noticed by those reporting tured speaker at numerous confer- several provinces in Canada, as well on insurance fraud or by those in other ences and meetings in a variety of ven- as from other states such as New York, jurisdictions charged with responsibil- ues, including the American Bar Asso- to provide them with information and in- ity for fighting insurance fraud. An ar- ciation Health Fraud 2004 Program in sight as to how to best establish an ef- ticle in Fraud International magazine in New Orleans, the Puget Sound Spe- fective fraud-fighting agency. OIFP con- 2004, entitled “New Jersey tops fraud cial Investigators in Washington State, tinues to routinely field inquiries from of- war,” observed that, “New Jersey beats the New Jersey Insurance Fraud Sum- ficials from other states with respect to other states hands down in fighting mit, and meetings of the Insurance a variety of matters concerning the best fraud....” In late summer, a headline in Council of New Jersey and the New practices for fighting insurance fraud. a major New Jersey daily trumpeted, Jersey State Bar Association. The In- “Fraud crackdown credited for GEICO’s surance Fraud Prosecutor was also in- Raising the Public’s return to N.J.” In the accompanying vited in 2004 to deliver a keynote ad- Consciousness article, billionaire Warren Buffet cred- dress at the II International Seminar on OIFP understood from its earliest ited New Jersey’s “get tough” stand Insurance Fraud in Bogota, Colombia. days that, while its primary mission against insurance fraud for GEICO In- Similarly, in 2003 and prior years, the was the effective investigation and surance Company’s decision to return Insurance Fraud Prosecutor spoke be- prosecution of insurance fraud, New to New Jersey after an absence of fore the Asia-Pacific Fraud Conference Jersey’s ultimate success in address- nearly 30 years. In 2003, the New Jer- in Australia, the National Health Care ing its insurance fraud problem would sey Lawyer, a weekly newspaper for Anti-Fraud Association in Washington, likewise require a sea change in the the New Jersey legal profession, re- D.C., the Delaware Valley Chapter of public’s awareness and attitudes reported, “Jersey’s insurance fraud pros- the International Association of Special garding insurance fraud. Various stud- ecutions tops in U.S.,” based upon a Investigation Units, the New Jersey ies over the years have shown that in- national survey and study by the Coali- Special Investigators Association, and surance fraud is little understood and tion Against Insurance Fraud. OIFP’s the New Jersey Judicial College. lightly taken by most members of the successes and accomplishments have OIFP’s Executive Staff were also public. Such studies also suggest that also been covered by such prominent frequent speakers at conferences, nearly two-thirds of Americans tolerate publications as the Coalition Against In- seminars, and similar events in 2004, insurance fraud to some degree, insurance Fraud’s Fraud Focus, Mealey’s addressing the New Jersey Special In- cluding up to a third who believe it is Litigation Report-Insurance Fraud, and vestigators Association, the Interna- acceptable to “pad” insurance claims similar periodicals of regional and national Association of Special Investiga- to compensate for deductibles or prior tional stature. OIFP has also been tion Units, the New Jersey Insurance premiums paid. cited as an example of a highly effec- Fraud Summit, the New Jersey Chiefs Successful prosecutions, in and of tive fraud-fighting agency in at least one of Police Association, the American themselves, achieve a real and tan- leading college textbook, Criminology. Physical Therapy Association, the gible, albeit small, measure of deter- New Jersey Institute for Continuing Le- A Community Presence rence in many cases by removing gal Education, the Insurance Fraud guilty culprits from society. The greater As one of the world’s recognized Executive Council in Charleston, deterrence from successful prosecu- leaders in fighting insurance fraud, South Carolina, and the Health Care tions, however, is derived by making OIFP has assumed responsibility for Compliance Certification Program of the general public aware of the conse- sharing its expertise with others en- Seton Hall University. quences of committing insurance gaged in the war on insurance fraud, As a model for waging a statewide fraud, as well as by making the public both here and abroad. The New Jersey campaign against insurance fraud, aware of the added costs they directly Insurance Fraud Prosecutor, OIFP, and OIFP has frequently been called upon incur as a consequence of those who its staffers are routinely called upon by by officials from other jurisdictions in successfully commit insurance fraud. law enforcement officials for guidance the United States and abroad for guid- Prior to the advent of OIFP, it was and advice in fighting fraud from within ance and counsel as to the most ef- rare to hear of anyone being pros-

21 OIFP Leads Nation’s Insurance Fraud War

ecuted for insurance fraud, not only be- OIFP’s well-publicized successes in A Catalyst for Reform cause such prosecutions actually fighting insurance fraud have been a ma- Consistent with its legislative man- were relatively rare in the larger jor factor in this amazing transformation. date to lead New Jersey’s fight against scheme of things, but also because For the first time in many years, insurance fraud, AICRA expressly em- those prosecutions which were suc- automobile insurers are actively powered OIFP to craft recommenda- cessfully undertaken usually received seeking approval to market their tions to enhance New Jersey’s ability to little or no notice by the public. Conse- products to New Jersey motorists, deal with all aspects of the insurance quently, OIFP embraced a comprehen- reversing a ten-year trend in which fraud problem. From its inception, OIFP sive, proactive, multi-pronged approach New Jersey drivers saw more than has incorporated proposed recommen- to informing the public of the nature, twenty automobile insurance carri- dations in its Annual Reports for regula- scope, and consequences of insurers flee the State. At the end of tory and legislative reforms to ance fraud in New Jersey. OIFP rou- 2003, Mercury Insurance, a large strengthen law enforcement’s hand in tinely issues press releases with re- west coast insurance carrier, be- dealing with insurance fraudsters and to spect to significant events in most of came the first new carrier in seven close loopholes through which creative its major insurance fraud prosecutions, years to seek to enter the New Jer- and unscrupulous individuals try to including indictments, guilty pleas, trial sey automobile insurance market. “game the system.” Among the recom- convictions, and sentences. OIFP has State Farm, the largest auto insurer mendations advanced by OIFP over the also over the years conducted an am- in the State, initiated a voluntary years which have been embodied in leg- bitious media campaign in both the print statewide rate reduction of 4.1 per- islation or regulation are requirements and broadcast media. OIFP maintains cent, suspended its practice of drop- for the inclusion of anti-counterfeiting an informative Web site and produces ping 4,000 policyholders a month, technology in insurance identification and distributes informative publications and withdrew from its plans to pull cards, changes in insurance regula- such as brochures and posters to out of the New Jersey market alto- tions concerning “eligible persons” warn the public of the consequences gether. USAA, Liberty Mutual, and which permit insurance carriers to re- of committing insurance fraud and to Allstate Insurance Companies low- strict coverage in the open insurance encourage the reporting of instances of ered their rates, and New Jersey market for those individuals who have suspected insurance fraud to OIFP. Manufacturers Insurance Company committed insurance fraud, and the es- announced the payment of some $60 tablishment of a program offering a re- million in dividends to nearly 350,000 A Friendlier Market for ward of up to $25,000 for those who re- Automobile Insurance New Jersey policyholders, averaging approximately $173 per policy. port insurance fraud. While the savings attributable to Perhaps most significantly, the Perhaps most significantly, OIFP’s OIFP’s efforts are impossible to quan- GEICO Insurance Company, which participation was instrumental in the tify, it is undeniable that OIFP’s proven had fled from New Jersey after it enactment of legislation in June of track record of success in pursuing in- switched to a no-fault system of insur- 2003 which created what is arguably surance cheats and its award-winning ance nearly 30 years ago, recently the toughest criminal insurance fraud message of deterrence have been in- returned to New Jersey, crediting its law in the country. Resembling in many strumental in transforming New return, in large part, to New Jersey’s respects New Jersey’s Health Care Jersey’s once abysmal automobile in- crackdown on insurance fraud. At a Claims Fraud Act of 1997, Public Law surance market to one where new in- news conference in Trenton this past 2003, Chapter 89, created the crime of surers are joining, old insurers are re- summer, billionaire and Chairman of “Insurance Fraud” in New Jersey as a turning, and current insurers are pay- GEICO Insurance Company’s corpo- distinct and clearly defined crime al- ing dividends and rebates to their rate parent, Warren Buffet, explained lowing State prosecutors to charge in- insureds. And while a variety of cir- that New Jersey’s tough stand against surance fraudsters with serious crimi- cumstances, including the relaxing of insurance fraud starting in the late nal offenses involving most types of in- a stringent regulatory environment, 1990s (which coincided with the cre- surance fraud without having the former have contributed to making the New ation of OIFP), was an important burden of aggregating thousands of Jersey automobile insurance market reason for his company’s decision separate fraudulent acts to reach what more attractive and profitable to insur- to finally return to New Jersey. had been a monetary threshold of ance companies, it is clear that $75,000 for a second degree crime.

22 Prospects for the Future Are we, at long last, beginning to “win” the war on insurance fraud? Follow-up studies on the effectiveness of OIFP’s media campaign suggest that New Jersey’s citizens are growing far more knowledgeable, and consequently intolerant, of insurance fraud and its negative impact on New Jersey’s OIFP Special Assistant quality of life. And it would appear that John J. Butchko (lower left) OIFP’s continuing track record of suc- is awarded the International cessful investigations and prosecu- Association of Special tions has taken a significant toll on Investigative Units’ 2004 Annual Outstanding Service those who would dare to commit insur- Award. (Reprinted with the ance fraud in New Jersey. The invest- permission of SIU Awareness ment of our insurance industry and citi- and the International zens in OIFP has undeniably yielded Association of Special tremendous dividends. Yet, it is virtu- Investigative Units.) ally axiomatic that, “the more you learn, the more you learn you don’t grams. It is only with continued sup- know.” In the field of insurance fraud, port and the funding necessary to con- OIFP has found that, the more it inves- tinue OIFP’s programs, that the citi- tigates and prosecutes insurance zens of New Jersey can expect that fraud, the greater and more complex OIFP will be able to continue to ex- appears the magnitude of the problem. pand the war on insurance cheats The prospects for OIFP’s continu- and spread its message of deter- ing success, indeed, New Jersey’s rence; that those who commit insur- success, in its war on insurance fraud, ance fraud pick all of our pockets and will, of necessity, depend upon the will be called to account through civil continuing support of both the insur- and criminal prosecutions. The con- ance industry and State government. tinuing success of New Jersey’s war Despite provision in the law allowing for on insurance fraud ultimately depends an increase in OIFP’s annual budget, not only upon the leadership, accom- its budget has, in actual dollars, re- plishments, or expertise of OIFP and mained essentially static over the past its staff of dedicated professionals, five years. When taking into account but also upon those who determine the effects of inflation over that period, whether OIFP’s funding will, in real OIFP’s budget has actually decreased dollars, continue to shrink in the in terms of its ability to support its shadow of creeping inflation. staffing and programs. As a consequence of these grow- Stephen D. Moore is a Supervising ing fiscal pressures, OIFP was regret- Deputy Attorney General with the tably compelled to terminate its finan- Office of the Insurance Fraud Pros- cial support of the New Jersey State ecutor, where he supervises its Liai- Police Insurance Fraud Unit, which it son Section. Prior to joining OIFP in had funded since its inception. It was 1999, he served as the Cape May also forced to decrease the funding it County Prosecutor. has provided to County Prosecutors to support their insurance fraud pro-

23 A Comprehensive Guide to NJ Insurance Fraud Law

176 A Comprehensive Guide to NJ Insurance Fraud Law by John J. Smith Studies have shown that, in the utes specifically to combat insurance United States, insurance fraud, in all fraud, such as Health Care Claims its various forms, costs the insurance Fraud,3 Criminal Use of Runners,4 and, industry as much as $100 billion each recently, Insurance Fraud.5 These ini- year. Until 1998, law enforcement’s tiatives have given New Jersey’s pros- approach to insurance fraud in New ecutors more tools to effectively address Jersey was ad hoc, relying on criminal the insurance fraud epidemic. statutes, such as Theft by Deception,1 Through OIFP and specific criminal that proved to be ineffective in deterring and civil statutes designed to combat most fraud. Coordination between the insurance fraud, New Jersey attacks insurance industry and law enforce- insurance fraud with criminal prosecu- ment was lacking. Data in the posses- tions, civil fraud penalties, and profession of insurance carriers showing pat- sional licensing sanctions for licens- terns of fraud was seldom shared with ees who commit violations of the Insur- law enforcement, and vice versa. How- ance Fraud Prevention Act (the Act).6 ever, beginning in 1998, the State of OIFP routinely conducts both criminal New Jersey responded to the insur- and civil insurance fraud investigations, ance fraud crisis with several bold ini- as well as investigations of suspected tiatives. The Legislature significantly fraud directed at government-spon- amended the Insurance Fraud Preven- sored insurance programs, including tion Act2 and created the Office of the Medicaid. Since 2000, OIFP has con- Insurance Fraud Prosecutor (OIFP). ducted a total of 30,349 such investi- This provided coordination of law gations many resulting in the imposi- enforcement’s anti-insurance fraud ef- tion of civil insurance fraud penalties or forts and provided a central repository criminal convictions.7 for fraud data gathered by both law en- OIFP’s successes in 2004 and forcement and the insurance industry. prior years is largely attributable to a The Legislature enacted criminal stat- legislative blueprint that creates a

1 N.J.S.A. 2C:20-4. Under the traditional approach of charging insurance cheats with Theft by Deception, prosecutors were unable to seriously threaten first-time offenders with incarceration in State prison unless the theft exceeded $75,000. Therefore, the vast majority of those engaged in insurance fraud faced nothing more than a term of probation. 2 N.J.S.A. 17:33A-1, et seq. (Herein- after referred to as the Act.) 3 N.J.S.A. 2C:21-4.2, et seq. 4 N.J.S.A. 2C:21-22.1. 5 N.J.S.A. 2C:21- 4.4, et seq. 6 N.J.S.A. 17:33A-1, et seq. 7 In calendar years 2000, 2001, 2002, 2003, and 2004, OIFP opened 519, 409, 508, 474, and 464 criminal investigations, respectively, and 6,589, 4,986, 4,639, 3,525, and 8,236 civil insurance fraud investigations, respectively. Because many law enforcement agencies and prosecutorial agencies lack the expertise and resources to commit to complex insurance fraud investigations, much insurance fraud is likely not investigated or prosecuted.

25 A Comprehensive Guide to NJ Insurance Fraud Law

comprehensive single State agency campaign, are designed to illuminate whose sole focus and mission is to the serious consequences associated fight insurance fraud as well as spe- with such criminal conduct. cific criminal and civil statutes de- An examination of the Act, the signed to combat insurance fraud. purpose of which is to “[c]onfront aggressively the problem of insurance Insurance Fraud fraud in New Jersey,”10 demonstrates Prevention Act the comprehensive and aggressive ap- An understanding of New Jersey’s proach taken with respect to this seri- response to the serious problem ous law enforcement issue. Among posed by insurance fraud, and the the significant provisions of the Act statutory basis for OIFP, begins with are the following: an analysis of the Act. Enacted in 1. Identification of the conduct which 1982 and substantially amended by constitutes civil insurance fraud.11 the Automobile Insurance Cost Reduc- In most cases, conduct which tion Act (AICRA) in 1998,8 the Act pro- violates the Act and constitutes vides for a comprehensive law enforce- civil insurance fraud consists of ment response to insurance fraud in- presenting or causing to be pre- cluding investigations, prosecutions, sented any written or oral false and anti-insurance fraud programmatic statements in support of an in- efforts, all of which are necessary to surance claim.12 Therefore, the address criminal conduct widely con- focus of the investigation is to sidered “acceptable” by many people.9 identify those false statements This sweeping approach to combating and obtain evidence to prove insurance fraud, combined with the im- their falsity. Because the same position of civil insurance fraud penal- fraudulent conduct can violate ties and professional licensing sanc- both the Act as well as many tions, serves as a deterrent to insur- criminal statutes, one of the ance fraud-related conduct, while the most difficult decisions made by programmatic efforts undertaken by law enforcement is whether to OIFP, including a relentless media approach the conduct as a civil insurance fraud matter, a criminal insurance fraud matter, a

8 “Automobile Insurance Cost Reduction Act,” Laws of 1998, Chapter 21, 5/19/98. 9 In a poll conducted in 2002 in connection with OIFP’s media advertising campaign, 43% of respondents did not believe insurance fraud to be a substantial problem. However, following a wave of anti-insurance fraud advertisements, 83% of respondents considered insurance fraud to be a substantial problem. See New Jersey Office of the Insur- ance Fraud Prosecutor, Advertising and Public Relations Study by Grafica, Inc. (June, 2002). 10 N.J.S.A. 17:33A-2. 11 N.J.S.A. 17:33A-4. Conduct which constitutes civil insurance fraud as set forth in the Act can also constitute certain crimes, including Health Care Claims Fraud, N.J.S.A. 2C:21-4.2, et seq., Insurance Fraud, N.J.S.A. 2C:21- 4.4, et seq., Theft by Deception, N.J.S.A. 2C:20-4 and Falsification of Medical Records, N.J.S.A. 2C:21-4.1. 12 Likewise, in several criminal statutes used to prosecute insurance fraud, including Health Care Claims Fraud, N.J.S.A. 2C:21-4.2, et seq., and Insur- ance Fraud, N.J.S.A. 2C:21-4.4, et seq., the focus is on the presentation of false written or oral statements in support of an insurance claim.

26 professional licensing matter, or are predicated on identifying and 4. Recovery of compensatory dam- any combination of the three. proving individual fraudulent ages following civil litigation, in- The answer to this dilemma is statements or omissions made cluding costs of litigation and seldom clear at the time of refer- to support a claim or to obtain attorneys’ fees. ral. Indeed, the only means of an insurance benefit. In addition to civil insurance fraud making the appropriate determi- 3. Avoidance of litigation fines, the costs of investigation nation is through a thorough through entry of a civil and attorneys’ fees can be re- analysis of a quality insurance Consent Agreement. covered by the State upon the company referral which will sup- The Act provides that civil insur- successful conclusion of a civil port a quality investigation.13 ance fraud cases may be re- lawsuit.19 Similarly, the Act pro- 2. Imposition of penalties for solved through a written agree- vides that insurance companies20 civil violations of the Act.14 ment between the State and the damaged as the result of insur- The civil insurance fraud penal- subject of the investigation in ance fraud may sue and recover ties found in the Act are sub- which the subject agrees to pay compensatory damages, includ- stantial. Under the Act, a civil a civil fine, thereby avoiding liti- ing investigative expenses, costs fine of up to $5,000 may be lev- gation. These agreements are of suit, and attorneys’ fees.21 ied for a first violation, up to known as Consent Agreements, Moreover, successful claimants $10,000 for a second violation, more commonly known as Con- can recover treble damages if and up to $15,000 for each sub- sent Orders.17 If the subject the defendant who committed in- sequent violation.15 Each false elects not to enter into a Consent surance fraud has engaged in a statement, or fraudulent omis- Order, with the concomitant pay- “pattern” of violating the Act.22 sion, in a single claim may be ment of a civil insurance fraud considered separate violations of fine, the matter is referred to the Act. In fact, multiple viola- Deputy Attorneys General in the tions can be contained within a Division of Law for review and the single document submitted in possible filing of a civil lawsuit.18 the same insurance claim.16 These civil penalties, therefore,

13 Among the factors which inform the decision to commence a criminal or civil investigation include: (1) whether or not the preliminary evidence is sufficient to meet the criminal standard of proof beyond a reasonable doubt; (2) whether the fraudulent conduct constitutes a serious (second degree) or less serious (third or fourth degree) crime based on the grading and sentencing provisions found in the New Jersey Criminal Code; (3) whether, in the case of conduct constituting a less serious crime, the civil penalties available under the Act (e.g., substantial monetary fines and/or professional licensing sanctions) would be more likely to deter the defendant and others similarly situated than would lesser criminal sanctions (e.g., probation or Pre-trial Intervention); and, (4) the venue where the case is likely to be laid, as experience has revealed that juries in urban counties are less likely to view insurance fraud as a serious crime when compared to the crimes of violence routinely encountered in such counties. 14 N.J.S.A. 17:33A-5. 15 Ibid. 16 See Merin v. Maglaki, 126 N.J. 430, 599 A.2d 1256 (1992). For this reason, some civil insurance fraud penalties can be more severe than the available criminal penalties for conduct constituting a third or fourth degree crime. 17 N.J.S.A. 17:33A-5(d). 18 N.J.S.A. 17:33A-5(a) and (b). The Statute of Limitations for civil insurance fraud actions brought by the State is ten years. N.J.S.A. 2A:14-1.2(a). The Statute of Limitations for civil insurance fraud actions brought by private insurance carriers is six years. N.J.S.A. 17:33A-7(e). 19 N.J.S.A. 17:33A-5(b). There is no similar provision for recovery of costs of investigation or attorneys’ fees as restitution in a criminal case. 20 N.J.S.A. 17:33A-7(a). 21 Insurance carriers who file civil lawsuits pursuant to the Act must provide OIFP with notice of the suit. N.J.S.A. 17:33A-7(c). Following a review of the matter, OIFP may institute a criminal or civil investigation or join the lawsuit. If OIFP joins the lawsuit and prevails, it may seek a judgment for civil fines, court and investigative costs, as well as reasonable attorneys’ fees. N.J.S.A. 17:33A-7(d). 22 N.J.S.A. 17:33A-7(b). “Pattern” is defined as “five or more related violations of (the Act). Violations are related if they involve either the same victim, or same or similar actions on the part of the person or practitioner charged with violating (the Act).” N.J.S.A. 17:33A-3.

27 A Comprehensive Guide to NJ Insurance Fraud Law

5. Apportionment of costs of ad- order to conduct thorough civil ministering the Act among insur- investigations of violations of the ance carriers doing business in Act following referral of such New Jersey. matters.27 As a law enforce- The Act provides that the costs ment agency, OIFP also can of administering the Act, includ- and routinely does open criminal ing the cost of operating OIFP, grand jury investigations which shall be apportioned among result in the issuance of grand insurance carriers doing busi- jury subpoenas and the return of ness in New Jersey based indictments.28 The Act provides on the percentage of the net that imposition of civil insurance premiums received by such fraud penalties does not pre- insurance companies.23 clude criminal prosecution 6. Mandatory reporting based on the same conduct.29 of violations of the Act. The Act provides that any person The Burden of Proof in who believes that a violation of Civil Insurance Fraud Penalty the Act has occurred shall notify Actions Is Preponderance OIFP.24 Any person so reporting of the Evidence a suspected violation of the Act In civil proceedings to recover a “in good faith and without malice” statutory penalty under the Act, the is immune from civil liability for li- State satisfies the burden of proof if it bel or violation of privacy.25 establishes a defendant’s violation by 7. Subpoena Power. a preponderance of the evidence.30 In The Act provides further that general, the burden of proof in civil ac- health insurers and private pas- tions is presumed to be the preponder- senger automobile insurers shall ance standard.31 The Legislature is submit to the Department of keenly aware of the “preponderance Banking and Insurance a plan presumption,” as is evidenced by its for the prevention and detection prescribing a higher burden when it of insurance fraud.26 The Act has seen fit to do so.32 provides OIFP with civil insurance fraud subpoena power in

23 N.J.S.A. 17:33A-8(g). Similar state law provisions have been challenged in Minnesota, Massachusetts, and California on the theory that private funding provided by the insurance industry to law enforcement disqualified law enforcement by creating a conflict of interest. Those challenges were unsuccessful in disqualifying law enforcement. 24 N.J.S.A. 17:33A-9(a). The vast majority of referrals to OIFP, which have ranged between approximately 6,000 and 14,000 annually, are made by insurance carrier representatives. 25 N.J.S.A. 17:33A-9(b). Analogous to this provision is a provision contained in the Insurance Fraud statute, discussed infra. See N.J.S.A. 2C:21-4.7(e). 26 N.J.S.A. 17:33A-15. These plans are known as Insurance Fraud Detection Plans. 27 N.J.S.A. 17:33A-10. 28 OIFP routinely conducts criminal investigations of insurance fraud through State Grand Juries or grand juries empaneled in any of the 21 counties. OIFP utilizes grand jury subpoenas to compel the attendance of witnesses and production of records. However, the Appellate Division recently held that grand jury subpoenas cannot be used to obtain a person’s bank records in the custody of a third party bank because persons, to include insurance claimants, possess “a right to privacy” in bank records in the possession of the bank. This opinion, if upheld on appeal, will adversely impact insurance fraud and other financial crimes investigations. The decision is on appeal to the New Jersey Supreme Court. See State v. McAllister, 366 N.J. Super., 251 (2004), petition for certification granted 180 N.J. 151 (2004). 29 N.J.S.A. 17:33A-14. OIFP routinely conducts parallel civil and criminal investigations of suspected insurance fraud-related conduct. 30 Department of Health v. Concrete Specialties, Inc., 112 N.J. Super. 407, 411 (App. Div. 1970); Department of Conservation and Economic Development, Division of Fish and Game v. Scipio, 88 N.J. Super. 315, 322, cert. denied, 45 N.J. 598 (1965); State v. Cale, 19 N.J. Super. 397, 399 (App. Div. 1952). 31 See Hyland v. Aquarian Age 2000, Inc., 148 N.J. Super. 186, 191 (App. Div. 1977). 32 See, e.g., N.J.S.A. 2A:15:5.12a (punitive damages awarded only if plaintiff proves with clear and convincing evidence that defendant acted willfully).

28 The absence of language in the Moreover, the State now has the made a (2) material misrepresentation Act prescribing a standard of proof ability to pursue violations of the Act to another, (3) intending to induce reli- other than the preponderance standard administratively.35 New Jersey has ance, and upon which misrepresenta- indicates that the Legislature did not long recognized that the usual burden tion such other person in fact (4) rea- intend to have a higher standard of of proof for establishing claims before sonably relied to his (5) detriment, suf- proof apply. Should the Legislature State agencies in contested adminis- fering damages as a result.41 have so intended, it would have pre- trative actions is by a fair preponder- Unlike common law fraud, how- scribed a higher burden as it has done ance of the evidence.36 This further ever, a violation of the Act does not re- on other occasions. demonstrates the Legislature’s intent quire that the defendant has had any The clearly stated purpose to establish a preponderance of the evi- intention to commit fraud; that another of the Act is to: dence standard for violations of the Act. reasonably relies upon a false state- ...confront aggressively the prob- The preponderance standard has ment; or that any fixed damages be lem of insurance fraud in New Jer- been routinely applied to civil penalty sustained in a particular case. Instead, sey by facilitating the detection of actions as being consistent with con- for there to be a violation of the Act, insurance fraud, eliminating the stitutional due process protections. the defendant, for example, must have occurrence of such fraud through Other proceedings wherein the prepon- prepared or made with the intent to be the development of fraud preven- derance standard has been applied in- presented to the insurer (1) a written or tion programs, requiring the resti- clude: actions for false claims under oral statement for the purpose of ob- tution of fraudulently obtained in- the federal False Claims Act,37 actions taining an insurance policy or pursuing surance benefits, and reducing the to recover civil penalties for violation of a claim for benefit, (2) containing false amount of premium dollars used to the Alien Immigration Act,38 proceed- or misleading information, (3) knowing pay fraudulent claims.33 ings under the Securities Exchange that the information was false or mis- The imposition of any standard of proof Act,39 and administrative actions to re- leading, and (4) the false statement beyond the presumed preponderance voke occupational licenses.40 was material to the application or standard would run contrary to this Even though the higher “clear and claim.42 Nowhere in the Act is it re- purpose to aggressively pursue civil convincing” burden of proof may apply quired that the defrauded party actually fraud penalties. The Court has recog- to certain types of common law fraud, suffer a loss for there to be a violation. nized that “[i]nsurance fraud is a prob- the elements necessary to establish Therefore, as in other civil penalty ac- lem of massive proportions that cur- statutory violations under the Act are tions, the State satisfies its burden of rently results in substantial and unnec- distinct from the elements required to proof if it establishes that the defen- essary costs to the general public in prove common law fraud. Common law dant violated the Act by a preponder- the form of increased rates.”34 fraud historically has required that the ance of the evidence. person so charged has (1) knowingly

33 N.J.S.A. 17:33A-2. 34 Merin v. Maglaki, 126 N.J. 430, 436-37 (1992). See also 1997 N.J. Laws c.353 § 1 (Legislative findings and declarations regarding Health Care Claims Fraud); N.J.S.A. 2C:21-4.4 (Legislative findings regarding Insurance Fraud). 35 See N.J.S.A. 17:33A-5. 36 In re Polk, 90 N.J. 550, 560 (1982). 37 Brooks v. United States, 64 F.3d 251, 255 (7th Cir. 1995). 38 United States v. Regan, 232 U.S. 37 (1914).39 Herman & Maclean v. Huddleston, 459 U.S. 375, 389-90 (1983). 40 Polk, supra, 90 N.J. at 550. 41 Bell Atlantic Network Services, Inc. v. P.M. Video, Corp., 322 N.J. Super. 74, 95-96 (App. Div. 1999). 42 N.J.S.A. 17:33A-4 sets forth actions which violate the Act.

29 A Comprehensive Guide to NJ Insurance Fraud Law

Office of the Insurance 6. Establish and maintain a com- insurance fraud enforcement, in- Fraud Prosecutor prehensive database including cluding the Judicial Branch.54 In 1998, OIFP was established referrals, all reports of fraud in- 11. Provide an Annual Report to the within the Division of Criminal Justice vestigations and prosecutions or Governor and the Legislature re- 55 by amendment to the Act.43 In addi- litigation, and the disposition of garding OIFP activities. 50 tion to granting broad powers to inves- those proceedings. 12. Make recommendations on li- tigate and prosecute civil and criminal 7. Prepare a standard reporting censing sanctions, including insurance fraud,44 the Legislature man- form for the submission of suspension or revocation, to the dated OIFP perform the following func- claims information by insurance appropriate licensing board tions, among others: carriers, including information re- when a professional holding a garding stolen vehicles, automo- State license or certification is 1. Provide a liaison and communi- bile accidents, injuries sustained adjudicated guilty of fraud.56 cate with other State agencies in those accidents, and medical The Act provides that the Insur- with respect to the detection, service providers treating those ance Fraud Prosecutor shall have ac- investigation, and prosecution injuries, for the purpose of identi- cess to all information concerning in- 45 of insurance fraud. fying patterns of fraud, with the surance fraud enforcement activities in 2. Receive referrals of insurance claims information received to the possession of all State depart- fraud matters for investigation, be shared with other law en- ments and agencies, and will meet on as well as provide information forcement agencies.51 a regular basis with State departments to and coordinate information 8. Confer with other governmental and agencies and County Prosecutors 46 among referring entities. entities to coordinate insurance to set goals and strategies for the ef- 3. Develop, on behalf of the fraud enforcement activities, fective detection, investigation, and Attorney General, a statewide share information, and provide prosecution of insurance fraud.57 In insurance fraud enforcement assistance as necessary.52 addition, signaling the coordination of policy in consultation with the 9. Formulate and evaluate propos- efforts between law enforcement and 47 County Prosecutors. als for legislative, administrative, the insurance industry, the Act pro- 4. Fund insurance fraud and judicial initiatives to vides that State and local law enforce- units within the County strengthen insurance fraud en- ment agencies, including the New Jer- 48 Prosecutors’ Offices. forcement.53 sey State Police, shall make automo- 5. Provide assistance to 10. Act as a liaison for the Execu- bile accident reports available to insur- County Prosecutors in tive Branch with other Federal ance carrier investigators.58 49 prosecuting cases. and State agencies involved in

43 N.J.S.A. 17:33A-16. 44 See, e.g., N.J.S.A. 17:33A-20, “Statewide fraud enforcement policy,” and N.J.S.A. 17:33A-23, “Access to agency information.” 45 N.J.S.A 17:33A-18(a). Specifi- cally, OIFP is required to communicate with the Department of Health and Senior Services, the Department of Human Services, the Professional Boards in the Division of Consumer Affairs in the Department of Law and Public Safety, the Department of Banking and Insur- ance, the Division of State Police, all 21 County Prosecutors’ Offices, and local government agencies. 46 N.J.S.A. 17:33A-18. The term “referring entities” as used in the Act means insurance companies as well as other law enforcement and governmental agencies. 47 N.J.S.A. 17:33A-20. 48 N.J.S.A. 17:33A-28. In calendar year 2004, 19 of the 21 New Jersey County Prosecutors’ Offices had Insurance Fraud Units funded by OIFP. 49 N.J.S.A. 17:33A- 20. 50 N.J.S.A. 17:33A-22(a). 51 N.J.S.A. 17:33A-22(b). See All Claims Database Regs. Chapter 88. N.J.A.C. 13:88-2.2. 52 N.J.S.A. 17:33A-24(a). Among other methods by which OIFP discharges this obligation is through law enforcement in-service training seminars regarding statutory changes and trends in insurance fraud activity. 53 N.J.S.A. 17:33A-24(b). Such recommendations are frequently made part of the Annual Report published by OIFP. 54 N.J.S.A. 17:33A-24(c). 55 N.J.S.A. 17:33A-24(d). OIFP Annual Reports for the calendar years 1999-2004 are available on the OIFP website at www.njinsurancefraud.org. 56 N.J.S.A. 17:33A-25. 57 N.J.S.A. 17:33A-27. 58 N.J.S.A. 17:33A-29.

30 Health Care Claims Fraud sey Legislature enacted the Health Care Claims Fraud in the course Beginning in 1998, the New Jersey Care Claims Fraud statute.62 Effective of providing professional services Legislature recognized that, given the July 15, 1998, the Health Care Claims is guilty of a crime of the third serious and pervasive problem of insur- Fraud statute substantially increased degree (i.e., the presumption of ance fraud, existing criminal statutes the criminal penalties for fraud relating no incarceration applies).66 were inadequate to address thefts and to health care claims while significantly C. A non-practitioner who knowingly frauds committed against insurance lowering the threshold dollar amount commits five or more acts of companies and other types of insurers. whereby an offender (including one with Health Care Claims Fraud, and Indeed, prior to 1998, most criminal in- no prior criminal record) is subject upon who thereby obtains or seeks to surance frauds were prosecuted as conviction to a State prison sentence. obtain in excess of $1,000, is thefts. In order to impose a State The penalties for violating the stat- guilty of a crime of the second prison sentence on an offender with no ute depend on whether the offender degree.67 Otherwise, a non- prior indictable convictions, the State qualifies as a practitioner or non-practi- practitioner who knowingly com- needed to prove that more than tioner. Generally, a “practitioner” is mits Health Care Claims Fraud $75,000 was stolen or attempted to be broadly defined as any person “li- is guilty of a crime of the third stolen.59 Even though the New Jersey censed, registered or certified by any degree.68 Criminal Code permitted prosecutors State agency” in New Jersey or “in an- D. A non-practitioner who recklessly to aggregate individual insurance other jurisdiction,” including health care commits Health Care Claims claims of lesser dollar amounts if they professionals.63 While the statute pro- Fraud is guilty of a crime of the proved a “continuing course of con- vides very stiff penalties for practitio- fourth degree.69 duct,”60 many false insurance claims ners and non-practitioners alike, the All “acts” of Health Care Claims are for far less than $75,000; therefore, most severe penalties are reserved for Fraud constitute separate and distinct many individuals engaged in insurance the practitioner offender, as follows: offenses.70 In keeping with the broad fraud activity, such as the filing of false A. A practitioner who knowingly reach of the statute, multiple acts of health care claims, never faced serious commits a single act of Health Health Care Claims Fraud may be consequences for their criminal acts. Care Claims Fraud in the course contained even in a single claim docu- To address this deficiency in the of providing professional services64 ment. In other words, each and every Criminal Code, and “to enable more effi- is guilty of a crime of the second cient prosecution of criminally culpable degree (i.e., the presumption of a persons who knowingly, or with criminal State prison sentence of between recklessness, submit false or fraudulent five and ten years applies).65 claims for payment or reimbursement B. A practitioner who recklessly for health care services,”61 the New Jer- commits a single act of Health

59 N.J.S.A. 2C:20-2 and N.J.S.A. 2C:43-6. 60 N.J.S.A. 2C:20-2(b)(4). 61 1997 N.J. Laws c. 353 § 1(d). 62 N.J.S.A. 2C:21-4.2, et seq. “Health Care Claims Fraud” is broadly defined as “making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omitting a material fact from, or causing a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted for payment or reimbursement for health care services.” N.J.S.A. 2C:21-4.2. 63 N.J.S.A. 2C:21-4.2. “Practitioner” is defined as “a person licensed in this State to practice medicine and surgery, chiropractic, podiatry, dentistry, optometry, psychology, pharmacy, nursing, physical therapy, or law” and “any other person licensed, registered or certified by any State agency to practice a profession or occupation in the State of New Jersey or any person similarly licensed, registered, or certified in another jurisdiction.” A non-practitioner, therefore, is any other person who does not fit within the above definition. 64 N.J.S.A. 2C:21-4.3(a). Unlike the crime of Theft by Deception, N.J.S.A. 2C:20-4, which is graded according to the amount stolen (e.g., theft in the second degree if in excess of $75,000), a practitioner can be convicted of Health Care Claims Fraud in the second degree regardless of the amount “obtained or sought to be obtained.” 65 Common to all penalties for violation of the statute, for both practitioners and non- practitioners alike, and without regard to the level of culpability, is exposure to a criminal fine in an amount of up to five times the pecuniary benefit obtained or sought to be obtained. See N.J.S.A. 2C:21-4.3(a)-(d). 66 N.J.S.A. 2C:21-4.3(b). For purposes of the statute, “a person acts recklessly with respect to a material element of an offense when he consciously disregards a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that, considering the nature and purpose of the actor’s conduct and the circumstances known to him, its disregard involves a gross deviation from the standard of conduct that a reasonable person would observe in the actor’s situation.” N.J.S.A. 2C:21-4.3(h). 67 N.J.S.A. 2C:21- 4.3(c). 68 Ibid. 69 N.J.S.A. 2C:21-4.3(d). 70 N.J.S.A. 2C:21-4.3(e).

31 A Comprehensive Guide to NJ Insurance Fraud Law

false misrepresentation or omission in a who submitted or attempted to single document constitutes separate submit documents alleging more “acts” of Health Care Claims Fraud.71 treatments or procedures than Moreover, consistent with the “zero tol- could have been performed during erance” policy for fraud committed by a period of time in which the treat- practitioners, a conviction for recklessly ments or procedures were alleged violating the statute will result in a man- to have been performed.74 datory license suspension of at least C. That a practitioner has read and one year, while a second conviction for reviewed any treatment record or recklessly violating the statute, or a other claim document submitted first conviction for knowingly violating where the practitioner has signed the statute, will result in mandatory or initialed the document.75 permanent license forfeiture and debar- An examination of criminal cases ment from the profession.72 resulting in convictions under the The statute also contains three Health Care Claims Fraud statute inferences which the trier of fact demonstrates its reach and broad ap- Supervising Deputy Attorney General Tina Polites discusses auto fraud trends during a may accept: plication. For example, a defendant workshop at the Seventh Annual Insurance A. The falsity or misleading nature of may be convicted of Health Care Fraud Summit. a statement contained in a treat- Claims Fraud even if the defendant ment record or other claim docu- sustained actual injuries and sought ment, in the case of a practitioner, treatment for those injuries if the inju- where the practitioner, in recom- ries were sustained during the course mending a course of treatment, of staging a fictitious slip and fall. In failed to examine or otherwise as- such a case, the Superior Court, Ap- sess the condition of the patient.73 pellate Division, recently held that a B. The falsity or misleading nature of defendant who was a licensed insur- a statement contained in a treat- ance agent, and who submitted 19 ment record or other claim docu- claims with a value of approximately ment, in the case of any person $5,400 pursuant to a health insurance (e.g., medical office personnel) policy issued by an insurance company, was properly convicted of Health Care Claims Fraud.76 The defendant argued that even if he intentionally

71 Ibid. 72 N.J.S.A. 2C:51-5(a)(1)-(3). 73 N.J.S.A. 2C:21-4.3(f)(1). 74 N.J.S.A. 2C:21-4.3(f)(2). An example of this could be the submission of the results of the same diagnostic tests, each of which is alleged to take 20 minutes to complete, allegedly conducted on 50 patients on the same day. 75 N.J.S.A. 2C:21-4.3(f)(3). 76 State v. Bruce Tarlowe (decided by the Appellate Division A-3063-02T2 on June 24, 2004).

32 staged a false slip and fall accident in tients. Indeed, many of those patients, using “runners” through enactment of a grocery store by faking his fall on a if they exist at all, have no injuries and the Criminal Use of Runners statute.78 lettuce leaf, he nonetheless actually have never been seen or treated by the Effective July 12, 1999, the statute im- injured himself doing so. The Court re- health care practitioner, thus their treat- poses the same severe criminal sanc- jected the defendant’s “actual injury” ment charts fabricated out of whole tions on the “runner”79 and other per- defense reasoning that if he were in- cloth. Frequently, to secure a steady sons, including a provider,80 who utilize jured while staging a fake slip and fall stream of new patients, thereby assur- the “runner.” Indeed, knowingly acting insurance claim, even if his injuries ing the ongoing profitability of the fraud as a “runner” and knowingly using, so- were real, he committed Health Care ring, the corrupt health care facility will liciting, directing, hiring, or employing Claims Fraud. The defendant’s convic- engage the services of “runners” to a “runner” are violations of the statute, tion and three-year prison sentence procure those patients. To find those constituting crimes of the third de- were upheld. patients, “runners” sometimes bribe gree.81 However, providing an indica- public officials for access to recent tion of the seriousness with which the Criminal Use of Runners motor vehicle accident reports. In addi- Legislature viewed the “runner” prob- Many of the more complex insur- tion, “runners,” who may be paid sev- lem, the presumption of non-incarcera- ance fraud schemes involve coordina- eral hundred dollars for each patient re- tion, i.e., probationary treatment that tion among and between several indi- ferral, often solicit others to become normally attaches to a third degree viduals, each performing different roles patients by participating in staged or crime committed by an offender with to assure the success of the fraud op- fictitious “paper” accidents, and com- no prior indictable convictions,82 does eration. For example, in the case of a plain of non-existent injuries, with the not apply. Rather, a conviction under corrupt health care office that routinely promise, or hope, of a lucrative bodily the statute will typically result in the submits false or fraudulent medical injury lawsuit at the end.77 imposition of a State prison sentence records in support of contrived Per- Recognizing the critical but perni- between three and five years regard- sonal Injury Protection (PIP) claims for cious role played by “runners” in insur- less of the offender’s lack of a prior services never rendered, the success ance fraud rings, and in the despicable criminal record.83 of the fraud will depend on complicity practice of “ambulance chasing” on be- between the health care professional, half of personal injury attorneys, the the office staff, and, perhaps, the pa- Legislature criminalized the practice of

77 For examples of such cases prosecuted by OIFP, see OIFP 2003 Annual Report at 84-87, 102-03, 105-06, and 108-09. 78 N.J.S.A. 2C:21-22.1. According to the comments accompanying the legislation, the act of “running” “facilitates fraud and serves no legitimate purpose” and, moreover, exposes “the client, patient or customer (to) inadequate or inappropriate care or services.” 1999 N.J. Laws c. 162. For statutory proscriptions of similar conduct, see also N.J.S.A. 2C:40A-4 and N.J.S.A. 2C:40A-5. 79 A “runner” is defined under the statute as “a person who, for a pecuniary benefit, procures or attempts to procure a client, patient or customer at the direction of, request of or in cooperation with a provider whose purpose is to seek to obtain benefits under a contract of insurance or assert a claim against an insured or an insurance carrier for providing services to the client, patient, or customer.” N.J.S.A. 2C:21-22.1(a). Specifically excluded from the definition are those who attempt to procure clients, patients, or customers for a provider through public advertisements, or who make referrals to a provider “as otherwise authorized by law.” Ibid. 80 A “provider” is defined under the statute as “an attorney, a health care professional, an owner or operator of a health care practice or facility, any person who creates the impression that he or his practice or facility can provide legal or health care services, or any person employed or acting on behalf of any of the aforementioned persons.” Ibid. 81 N.J.S.A. 2C:21-22.1(b). 82 See N.J.S.A. 2C:44-1(e). 83 N.J.S.A. 2C:21-22.1(c). To overcome the presumption of incarceration, the defendant must show “that imprisonment would be a serious injustice which overrides the need to deter such conduct by others.” Ibid. The language in this section is identical to that found in N.J.S.A. 2C:44-1(d), establishing the presumption of incarceration for crimes of the first or second degree. In cases discussing the presumption of incarceration under N.J.S.A. 2C:44-1(d), courts have regularly held that the presumption is not easily overcome and that the burden on the defendant is a heavy one. See, e.g., State v. Soricelli, 156 N.J. 525, 533- 34 (1999); State v. Libra, 357 N.J. Super. 500, 508-10 (App. Div. 2003).

33 A Comprehensive Guide to NJ Insurance Fraud Law

Insurance Fraud Statute self insurers, health maintenance orga- On June 3, 2003, the State of New nizations (HMOs), and government- Jersey came full circle in its legislative sponsored insurance plans as well.86 retort to insurance fraud activity with Analogous to the Health Care the enactment of the comprehensive Claims Fraud statute upon which it Insurance Fraud statute.84 Conceived was patterned, Insurance Fraud sub- as a complement to Health Care stantially increases the criminal penal- Claims Fraud and Criminal Use of Run- ties for fraud relating to any insurance ners, but much broader in scope, In- claim while significantly reducing the surance Fraud85 imposes harsh crimi- threshold monetary amount whereby nal penalties for fraudulent conduct, in an offender becomes subject upon all its various forms, committed against conviction to a State prison sentence. not only private insurance carriers but Indeed, any person who knowingly

84 N.J.S.A. 2C:21-4.4, et seq. The full text of the Legislative Findings, codified at N.J.S.A. 2C:21-4.4, reveals the seriousness with which the Legislature views this activity: a. Insurance fraud is inimical to public safety, welfare and order within the State of New Jersey. Insurance fraud is pervasive and expensive, costing consumers and businesses millions of dollars in direct and indirect losses each year. Insurance fraud increases insurance premiums, to the detriment of individual policy holders, small businesses, large corporations and governmental entities. All New Jerseyans ultimately bear the societal burdens and costs caused by those who commit insurance fraud. b. The problem of insurance fraud must be confronted aggressively by facilitating the detection, investigation and prosecution of such misconduct, as well as by reducing its occurrence and achieving deterrence through the implementation of measures that more precisely target specific conduct constituting insurance fraud. c. To enable more efficient prosecution of criminally culpable persons who knowingly commit or assist or conspire with others in committing fraud against insurance companies, it is necessary to establish a crime of “insurance fraud” to directly and comprehensively criminalize this type of harmful conduct, with substantial criminal penalties to punish wrongdoers and to appropriately deter others from such illicit activity. d. In addition to criminal penalties, in order to maintain the public trust and ensure the integrity of professional licensees and certificate-holders who by virtue of their professions are involved in insurance transactions, it is appropriate to provide civil remedial provisions governing license or certificate forfeiture and suspension tailored to this new crime of insurance fraud and other criminal insurance-related activities. e. To enhance the State’s ability to detect insurance fraud, which will lead to more productive investigations and, ultimately, more successful criminal prosecutions, it is appropriate to provide members of the public with significant incentives to come forward when they may have reasonable suspicions or knowledge of a person or persons committing insurance fraud. The establishment of an Insurance Fraud Detection Reward Program will enable the Insurance Fraud Prosecutor to obtain information which may lead to the arrest, prosecution and conviction of persons or entities who have committed insurance-related fraud. 85 Similar to Health Care Claims Fraud, a person commits Insurance Fraud: [I]f that person knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omits a material fact from, or causes a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted as part of, in support of or opposition to or in connection with: (1) a claim for payment, reimbursement or other benefit pursuant to an insurance policy, or from an insurance company or the “Unsatisfied Claim and Judgment Fund Law,” P.L.1952, c. 174 (C.39:6-61 et seq.); (2) an application to obtain or renew an insurance policy; (3) any payment made or to be made in accordance with the terms of an insurance policy or premium finance transaction; or (4) an affidavit, certification, record or other document used in any insurance or premium finance transaction.N.J.S.A. 2C:21-4.6(a). 86 “Insurance company” is broadly defined as: any person, company, corporation, unincorporated association, partnership, professional corporation, agency of government and any other entity authorized or permitted to do business in New Jersey, subject to regulation by the State, or incorporated or organized under the laws of any other state of the United States or of any foreign nation or of any province or territory thereof, to indemnify another against loss, damage, risk or liability arising from a contingent or unknown event. “Insurance company” includes, but is not limited to, an insurance company as that term is defined in section 3 of P.L.1983, c. 320 (C.17:33A-3), self-insurer, re-insurer, reciprocal exchange, inter-insurer, hospital, medical or health service corporation, health maintenance organization, surety, assigned risk plan, joint insurance fund, and any other entity legally engaged in the business of insurance as authorized or permitted by the State of New Jersey, including but not limited to any such entity incorporated or organized under the laws of any other state of the United States or of any foreign nation or of any province or territory thereof. N.J.S.A. 2C:21-4.5. This definition is much broader than the definition of “insurance company” found in the Insurance Fraud Prevention Act, supra, which does not presently include HMOs, self-insurers, or government-sponsored insurance plans. See N.J.S.A. 17:33A-3.

34 commits five or more acts of Insurance among other types of fraud now sub- Fraud, and who thereby obtains or ject to the criminal penalties of the seeks to obtain in excess of $1,000, statute are application fraud,92 includ- is guilty of a crime of the second de- ing automobile rate evasion or reverse gree.87 Otherwise, the knowing com- rate evasion93 and workers’ compensa- mission of Insurance Fraud is a crime tion insurance premium fraud,94 95 of the third degree.88 other frauds historically addressed as Insurance Fraud shares other simi- civil violations of the Act, and insur- larities to Health Care Claims Fraud. As ance premium financing transactions.96 in Health Care Claims Fraud, each “act” of Insurance Fraud constitutes a sepa- Restitution New Jersey Division of Criminal Justice rate and distinct offense.89 And, like Obtaining restitution on behalf of Director Vaughn McKoy addresses insurance that statute and the civil Act, multiple victims of insurance fraud is a central professionals at the Seventh Annual Insurance misrepresentations or omissions con- objective and recurrent theme in New Fraud Summit. tained in even a single document will Jersey’s statutes enacted to address constitute separate “acts” of Insurance the insurance fraud epidemic. Indeed, Fraud.90 Moreover, the trier of fact may disgorging insurance cheats of their ill- infer that a person has read and re- gotten gains is a “major priority” for viewed any claim document containing OIFP in both criminal and civil ac- that person’s initials or signature.91 tions.97 To that end, OIFP conducts There, however, the similarities comprehensive investigations not only end. While Health Care Claims Fraud to develop evidence to support criminal specifically applies to fraudulent health prosecutions and civil litigation but care claims and medical-related insur- also to identify and locate the money ance claims, Insurance Fraud has ap- stolen from insurance companies and plicability across the whole spectrum other victims of insurance fraud. How- of insurance-related fraud. Indeed, ever, the ability to obtain restitution at

87 N.J.S.A. 2C:21-4.6(b). 88 Ibid. 89 Ibid. “Acts” of Insurance Fraud may include “acts” of Health Care Claims Fraud. 90 Ibid. 91 N.J.S.A. 2C:21-4.6(c). 92 N.J.S.A. 2C:21-4.6(a)(2). Application fraud consists of the submission of false or misleading insurance applications to obtain insurance coverage for persons not entitled to same, or at a lower premium rate. Examples include automobile insurance applications (e.g., failing to report poor driving history, misrepresenting principal driver, or misrepresenting location where vehicle is principally garaged), and employer-sponsored group health insurance applications (e.g., a small business falsely listing persons as employees to obtain a lower group premium rate). 93 Rate evasion and reverse rate evasion occur where an insured misrepresents the state (or region of the state) in which he resides, or misrepresents the state (or region of the state) in which his automobile is principally garaged (e.g., in a suburban or rural area rather than an urban area) in order to obtain a lower automobile insurance premium rate. 94 These matters may include the submission of a workers’ compensation insurance application misrepresenting the number of employees or the type of work done by the employees, or failing to disclose a past workers’ compensation claims history, or failing to disclose the cancellation of prior workers’ compensation insurance policies for non-payment of premium, all for the purpose of obtaining lower insurance premiums. 95 See also N.J.S.A. 34:15-57.4 (proscribing the submission of false statements or misrepresentations in connection with a workers’ compensation application) and N.J.S.A. 34:15-79 (penalizing the failure to provide workers’ compensation insurance). 96 N.J.S.A. 2C:21-4.6(a)(3) and (4). Insurance premium financing is common in commercial settings. Frequently, insurance carriers require commercial insurance coverage be paid in full at the time the coverage is bound. However, many smaller business owners do not have the cash on hand and require a loan from a premium financing institution to obtain the coverage. In most cases, insurance agents or brokers arrange for premium financing for those commercial clients, with the broker receiving the financing monies from the lender, to be remitted to the insurance carrier. Typical examples of fraud in insurance premium financing situations include the outright theft by an insurance broker (as the fiduciary of the client) of the financing monies received from a lender, failure of the broker to remit to the client unearned premiums (e.g., where a policy is cancelled or coverage is deleted), and “double dipping” (where the broker applies for premium financing with two or more lenders for the same policies, apparently on behalf of the client, retaining for himself the proceeds of the additional loan). 97 N.J.S.A. 17:33A-26. See also N.J.S.A. 17:33A-2; N.J.S.A. 17:33A-5(a) and (b).

35 A Comprehensive Guide to NJ Insurance Fraud Law

the conclusion of criminal cases is There are other limitations to the it is extremely difficult to obtain com- sometimes hampered by several prac- imposition of restitution. While many pelling evidence that a health care pro- tical and legal factors. investigations of less complex insur- vider submitted PIP claims knowing For restitution to be imposed at ance fraud matters are successful in the accident was staged or otherwise the conclusion of a criminal case, the determining the exact amount of the fictitious and, therefore, the claimant State must establish both that the vic- insurance company’s loss,103 in other, “patients” were not injured.104 105 Ac- tim suffered a loss98 and that the de- more complex cases, the amount of cordingly, unless sufficient proofs can fendant has the ability to pay.99 100 In the insurance company’s actual loss be developed to charge the deep-pock- making the “ability to pay” determina- is much less apparent, and the ability eted health care provider and/or lawyer tion, the sentencing court must con- to recover restitution in an amount ap- for complicity in the fraud, including sider all financial resources of the de- proaching the total loss is much less some evidence that some medical ser- fendant, including probable future earn- certain. For example, in claims involv- vices were billed but not rendered, the ings.101 In establishing the amount of ing automobile accidents later proven PIP carrier will not likely recover those restitution, the Court’s goal is not to to be fictitious or staged, the costs of costs as criminal restitution, even make the victim whole (although that health care services rendered to pa- though considered a “loss” by the car- may be accomplished) but, rather, to tients allegedly injured in those acci- rier. Inasmuch as the imposition of res- “provide the victim with the fullest com- dents will be billed by health care pro- titution in criminal insurance fraud pensation for loss that is consistent viders to the driver’s automobile Per- cases is limited by both the with the defendant’s ability to pay.”102 sonal Injury Protection (PIP) insur- defendant’s ability to pay and by prac- Therefore, both statutorily and by judi- ance carrier, notwithstanding that the tical limitations related to the avail- cial decision, the imposition of restitu- alleged injuries are non-existent. In able proof of knowing conduct on the tion in criminal insurance fraud cases those cases, absent an undercover part of health care providers and oth- is presently limited by the defendant’s law enforcement investigation that in- ers, additional avenues to obtain resti- ability to pay. filtrates a corrupt medical office, or co- tution should be considered.106 operation of medical office personnel,

98 For purposes of establishing restitution or imposing fines, the New Jersey Criminal Code defines “loss” as: the amount of value separated from the victim or the amount of any payment owed to the victim and avoided or evaded and includes any reasonable and necessary expense incurred by the owner in recovering or replacing lost, stolen or damaged property, or recovering any payment avoided or evaded, and, with respect to property of a research facility, includes the cost of repeating an interrupted or invalidated experiment or loss of profits. N.J.S.A. 2C:43-3(e). 99 N.J.S.A. 2C:44-2(b). Upon such a showing, the Court “shall” impose restitution as a condition of the sentence. Ibid. This sometimes requires law enforcement to conduct a complex financial investigation to locate money and assets in addition to obtaining evidence of the underlying fraud. Sometimes such investigations are not feasible or practical. 100 See State v. McLaughlin, 310 N.J. Super. 242, 263-65 (App. Div.), certif. den., 156 N.J. 381 (1998) (where court affirmed conviction and ten-year prison sentence for insurance fraud-related theft but vacated restitution imposed in amount of $271,305 and remanded matter to trial court for hearing to establish the defendant’s ability to pay). 101 N.J.S.A. 2C:44-2(c)(2). Information regarding the defendant’s financial resources, among other information, is provided to the Court in the pre-sentence report prepared by the Probation Department. N.J.S.A. 2C:44-6(b). However, due to manpower constraints of the Probation Department preventing a thorough analysis of the defendant’s financial resources, the financial complexities of many insurance fraud cases and the seemingly countless methods by which white collar criminal defendants attempt to hide assets, the sentencing court will often have an incomplete picture of the defendant’s true “ability to pay.” In some cases, law enforcement will conduct a financial investigation in addition to, or as part of, the investigation to prove fraud. Financial investigations are complex, time consuming, and resource intensive. 102 Ibid. (emphasis added). In no case will the amount of restitution exceed the victim’s loss. N.J.S.A. 2C:43-3(h). 103 This is true most often in single incident insurance fraud claim cases. Examples include (1) property loss claims which are inflated or “padded” through fraudulent receipts used to establish the amount of the loss, and (2) owner- initiated automobile “give-up” cases where an automobile insured “gives-up” his automobile to another to be chopped up, re-tagged (changing the Vehicle Identification Number, or VIN) and sold, or otherwise concealed so that a fraudulent automobile theft claim can be submitted to the automobile insurance carrier. In these cases, the amount of the insurance carrier’s loss is likely to be a sum certain. 104 Likewise, it is extremely rare to obtain evidence that a lawyer has represented an alleged motor vehicle accident victim in a lawsuit for non- economic losses knowing the accident was staged and, therefore, that the claimant was not really injured. 105 This is different than the corollary issue of “medical necessity” of the diagnostic tests and treatments provided to the patient. The issue of “medical necessity” is frequently a matter of subjective medical opinion and is a challenging issue to prove as fraud beyond a reasonable doubt in a criminal case, or even by a preponderance of the evidence in a civil case. 106 Obtaining restitution through a civil case, where the burden of proof is lower and the rules of evidence are not as stringent, may be advisable for some of these cases.

36 Additionally, in more complex insurance fraud matters (including, for example, a corrupt medical provider who regularly submits fraudulent or fictitious health care claims), the pros- OIFP attorneys update investigators on insurance fraud law. (l. to r.) John J. Smith, AAG; ecutor is confronted with practical con- Steven Farman, DAG; John Krayniak, SDAG; Melaine B. Campbell, SDAG. siderations that may impact the amount of restitution ultimately avail- der since they are analogous to the re- able following a successful criminal covery of the costs of prosecution by John J. Smith is the First Assistant trial. Those considerations, including the State which costs are not permit- Insurance Fraud Prosecutor and as- the presentation of a streamlined pros- ted as part of restitution.107 These costs sists the Insurance Fraud Prosecutor ecution to allow for a clearer, more may, however, be recovered in a civil with all facets of the Office’s opera- manageable case to the jury (and be- action brought pursuant to the Act.108 tions including its investigations, crimi- cause the defendant would not be ex- Since recovery of restitution for in- nal prosecutions, and civil litigation. posed to any greater criminal penalties surance companies is a high priority, it He is a 20 year veteran prosecutor with were all claims successfully pros- is frequently negotiated by prosecutors the Division of Criminal Justice. ecuted) and the availability of wit- when a defendant agrees to plead Michael A. Monahan contributed sig- nesses or of other corroborating evi- guilty before trial. In those cases, in re- nificantly to this article. Monahan is an dence, may compel the prosecutor to turn for other sentencing consider- Assistant Supervising Deputy Attorney seek a limited number of charges ations, including the prosecutor’s General in the Office of the Insurance against the defendant even though the agreement to seek a shorter sentence Fraud Prosecutor where he has served investigation may have yielded evi- of imprisonment, the prosecutor may as the Assistant Section Chief of the dence of hundreds of fraudulent require the defendant to agree to pay a Auto Fraud Section since 1999. He claims. In such a case, the restitution greater amount of restitution than previously served as an Assistant amount available to the insurance car- would be available following a convic- Prosecutor with the Union County rier following a trial conviction is limited tion at trial.109 Furthermore, in the Prosecutor’s Office for seven years. to the amount of loss alleged in the case of a negotiated plea, the pros- charges proven beyond a reasonable ecutor may also obtain restitution on doubt, notwithstanding that the actual charges that are dismissed pursuant loss sustained by the insurance carrier to the plea, provided a factual basis from the fraud was greater. admitting guilt is given by the defen- Moreover, not all expenses in- dant and the victim’s loss and the curred by insurance carriers are pres- defendant’s “ability to pay” are other- ently considered to be directly related wise established.110 In those cases, to the fraud and, therefore, recoverable therefore, the amount of restitution will in a criminal proceeding as restitution. better approximate the total amount of Indeed, at least one New Jersey trial the victim’s loss.111 court has held that the costs of an insurance carrier’s investigation, including attorneys’ fees incurred during the investigation, are not permitted to be included in the criminal restitution or-

107 State v. Robin Ellison, Indictment #I-2202-05-0697 (Law Div. May 23, 2003); See also State v. Topping 248 N.J. Super 86 (1991). 108 See N.J.S.A. 17:33A-7(a). 109 See State v. Corpi, 297 N.J. Super. 86 (App. Div.), certif. den., 149 N.J. 407 (1997). 110 See State v. Bausch, 83 N.J. 425, 435-36 (1980); State v. Krueger, 241 N.J.Super. 244, 253-54 (App. Div. 1990). 111 OIFP has made innovative use of N.J.S.A. 2C:20-21 to enjoin defendants from dissipating stolen insurance claims money. This statute allows the State to obtain an injunction which has the effect of “freezing” bank accounts and other assets into which stolen claims money can be traced. Similarly, OIFP, in conjunction with the Civil Forfeiture Unit within the Division of Criminal Justice, has utilized the Civil Forfeiture statute, N.J.S.A. 2C:64-1 et seq. to obtain restitution for insurance company victims.

37 OIFP Takes on One of State’s Largest Racketeering Rings OIFP Takes On One of State’s Largest Racketeering Rings by Melaine B. Campbell OIFP achieved a significant victory rants; a detailed review of thousands of in 2004 by dismantling a major staged insurance, patient, business, and fi- accident fraud ring. When a jury re- nancial records; and interviews of wit- turned guilty verdicts for racketeering, nesses. Law enforcement officers on conspiracy, Health Care Claims Fraud, the federal, state, county, and local and related charges in State v. Anhuar levels participated in the investigation Bandy, et al., the saga of OIFP’s pros- that ultimately uncovered evidence of ecution of Anhuar Bandy and his rack- numerous staged accidents and the eteers came to a successful close. submission of fraudulent insurance New Jersey Attorney General Peter C. claims exceeding $2 million. Harvey announced: “These convictions represent the dismantling of one of the An Anonymous Tip largest phony accident rings in the his- Opens the Door tory of the State. Aside from stealing The Governor’s Office received an money from insurance companies, anonymous tip by letter. The letter’s thereby contributing to higher auto author claimed several chiropractic insurance rates, these criminals put clinics located throughout the State at risk the lives and safety of New were involved in a large-scale staged Jersey’s drivers.” accident ring and were submitting false Anhuar Bandy and Elvin Castillo automobile insurance claims and Per- masterminded and orchestrated a mas- sonal Injury Protection (PIP) claims to sive staged accident ring in order to fun- insurance companies. Simultaneously, nel accident participants as patients New Jersey-based insurance carriers through several Bandy-owned or oper- began investigating suspicious acci- ated chiropractic clinics. The clinics were dents in the Perth Amboy area and co- the Elizabeth Injury Center in Elizabeth, operating with the Insurance Fraud Divi- the Amboy Injury Center in Perth Amboy, sion (IFD), OIFP’s predecessor, in the Prospect Spinal Trauma Center in New- Department of Banking and Insurance. ark, Plainfield Injury Center in Plainfield, Following the creation of OIFP, and the Golden Medical Center in Eliza- State Investigator Ciro Sebasco, expe- beth. The clinics ceased operations fol- rienced in complex insurance fraud lowing the OIFP investigation. cases, led the ensuing criminal investi- The extensive OIFP investigation gation. The office manager for the included physical and electronic sur- Elizabeth Injury Center operated by veillance of the targets; undercover Bandy began to cooperate with OIFP. penetration of the staged accident ring; Later, OIFP placed an undercover of- execution of search and arrest war-

39 OIFP Takes on One of State’s Largest Racketeering Rings

ficer in the Elizabeth Injury Center to with the racketeers. These accidents gather evidence concerning the staged occurred in Linden, Edison, and Union accident ring. The undercover officer Township, New Jersey. A fourth acci- obtained valuable information concern- dent was staged directly with the OIFP ing suspected staged accidents while investigators by Bandy. working in the clinic. Based upon the information devel- To bring an end to the danger de- oped from the investigation, including fendants presented to the motoring OIFP’s direct monitoring of staged ac- public by staging accidents in the pub- cidents by the targets, OIFP con- lic thoroughfares of New Jersey, OIFP ducted court-authorized interceptions infiltrated the ring with undercover op- of wire and electronic communications eratives. OIFP also proactively mini- utilized by Bandy and his co-conspira- mized the effects of threats and intimi- tors. The conspirators utilized tele- dation directed at witnesses by the phones, including “cloned” cell phones and electronic paging devices, to arrange staged accidents and to maintain contact with each other. Conspira- tors utilized the stolen cell phone numbers as disposable commodities in an effort to avoid detection by law enforcement. Hundreds of conversa- tions were captured on the interceptions and translated. OIFP, along with federal, state, racketeers. Through the use of infor- county, and local law enforcement mants, undercover OIFP investigators agencies, executed search and arrest were introduced to Bandy’s rack- warrants that generated volumes of eteers, Alejandro Ventura, a/k/a Alex, evidence concerning the staged acci- a “runner” operating out of the Eliza- dent ring. Documentary evidence in- beth Injury Center, and Victor Almonte, cluded patient files, billing records, a/k/a Bacana. OIFP subsequently par- check registers, corporate documents, ticipated in three staged accidents disbursement journals, and tax

OIFP Deputy Attorneys General Walter Krako and Marysol Rosero, who tried State v. Bandy et al., question State Investigator Ciro Sebasco.

40 records. OIFP analysts isolated the staged accidents and the Bandy “runners” responsible for each one. They also quantified the billings generated and payments made by insurance carriers for questionable collisions. OIFP analysts then prepared charts showing the dates and locations of staged accidents, the operators and passengers in the vehicle, the Bandy clinics utilized for treatment, the amounts billed and paid by the insurance carriers, and the dates claims were closed for each separate accident. OIFP Proves the Racketeering Case A State Grand Jury returned ten indictments. Anhuar Bandy and Elvin Castillo were charged in one of the indictments with second degree con- Division of Criminal Justice Direc- State Investigator Ciro Sebasco receives a tor Vaughn McKoy noted: “This was Director’s Award from NJ Division of Criminal spiracy to commit racketeering, rack- Justice Director Vaughn McKoy for his work in the eteering, conspiracy to commit Health the first time that the Office of Insur- State v. Bandy et al. case. Care Claims Fraud, theft by deception, ance Fraud Prosecutor brought rack- and Health Care Claims Fraud, as well eteering charges against defendants in as third degree theft by deception. The connection with a staged accident State presented ample evidence that ring. These convictions represent a the chiropractic clinics in question major milestone in our efforts to com- were owned, operated, and controlled bat insurance fraud.” by Bandy, even though he was not licensed as a chiropractic physician. Melaine B. Campbell is a Supervising Moreover, the evidence established Deputy Attorney General and serves as that Bandy headed the large-scale a Special Assistant to the Insurance staged accident ring that operated out Fraud Prosecutor. She has been a of his clinics. By staging accidents, prosecuting attorney for over 24 years, the racketeers generated patients who serving terms as an Assistant Prosecu- were then referred to Bandy’s clinics tor in Hunterdon County and Acting for treatment. False insurance claims County Prosecutor in Somerset County. were then filed for patients. The State tried Bandy and Castillo in Union County. Following a six-week trial, the jury convicted both defendants on all the charges. Bandy was sentenced to 29 years and Castillo to 13 years in State prison. Twenty-five co-defendants entered into plea agreements with the State, some of them testifying as State’s witnesses during the trial. Another co-defendant remains a fugitive.

41 OIFP Takes on One of State’s Largest Racketeering Rings

Criminal Enterprise 1997 1998-1999 1999 Source Source Source Nydia Undercover Investigation Martinez Investigation of 3/31/99 Accident

Anhuar Bandy Chief/“Jefe” Cesar Caba Alejandro Ventura ■ Staged Accident #1 ■ Staged Accident #4 (8/23/97) (7/15/98) ■ Staged Accident #2 Nydia Martinez Elvin Castillo Raynaldo Cuevas ■ Staged Accident #5 (9/8/97) ■ Manager of Elizabeth ■ Manager of Spinal ■ Manager of Prospect (9/9/98) ■ Between 1996 and Injury Center Health Center Spinal Trauma Center ■ Staged Accident #6 1998, Staged at least ■ Identified 26 Accicents of Elizabeth ■ Staged 15 Accidents (4/23/99) 10 Accidents for Bandy that were Staged and ■ Staged Accident # 3 for Bandy ■ Staged Accident #8 ■ Paid in Cash Directly Patients Treated at EIC (4/23/98) with Cuevas ■ Staged Accident #3 (5/23/99) by Bandy ■ Assisted in Staging (4/23/98) ■ Only Does Business Accident #7 (3/31/99) ■ Staged Accident #7 with Bandy ■ ■ Involved in Staging 7 (3/31/99) Identified Bandy as Accidents identified ■ Involved with Bandy the Money Man ■ by Martinez in Staging 4/24/99 Gets Money from NY Bus Accident Bandy

Staged Collision Summary

26 Staged ! 77 Patients Claims Submitted to Collisions Treated Insurance Carriers From 2/25/95 Through 10/14/97 Insurance Company Company Total Paid Total Paid to Elizabeth Injury Center Material Damage Adjustment $228,286.27 $73,144.27 Allstate $205,494.65 $58,108.65 Continental $133,546.10 $4,137.50 National General $76.322.17 $22,060.79 Prudential $43,303.13 $16,438.69 Progressive Casualty $36,712.28 $18,620.29 National Continental Progressive $31,594.54 $4,257.00 Clarendon National $22,001.45 $7,937.20 Ohio Casualty $20,566.24 $20,566.24 Parkway $18,114.00 9,179.80 State Farm $14,577.25 $4,730.25 Total Payments Eagle $9,894.21 $4,572.03 for the above Wasau $482.40 $482.40 claims that have been certified by Total s $840,894.69 $244,235.11 the carriers

42 ABP AnhuarDefendants Bandy P(?) Summary Defendants Summary Racketeering Sentence Criminal Sanctions* Civil Consent Defendants and Restitution Orders Issued Anhuar Bandy 29 Years State Prison $100,155 Fines; Restitution $14,898 $1,440,000 Cesar Caba 15 Years State Prison $155 Fines Elvin Castillo 19 Years State Prison $50,775 Fines; Restitution $64,116 $270,000 Raynaldo Cuevas 6 Years State Prison $5,155 Fines; Restitution $6,474 $10,000 Victor Almonte (Bacana) 5 Years State Prison $155 Fines; Restitution $162 $10,000

Other Defendants Joel Cuevas 9 Years State Prison $155 Fines $5,000 Ramon Reyes 3 Years Probation $155 Fines $5,000 Angelita Guerrero 3 Years Probation and $465 Fines $5,000 180 Days County Jail Ramon D. Arias 3 Years Probation $2,655 Fines $5,000 Dignorah A. Flores 3 Years Probation $2,155 Fines $5,000 Mohamed Attalla 3 Years Probation $155 Fines $5,000 Fernando Sanchez 3 Years Probation and $155 Fines; Restitution $3,648 $3,000 220 Days County Jail Nydia Martinez 3 Years Probation and $155 Fines $2,500 30 Days County Jail Josue Cespedes 3 Years Probation and $155 Fines $2,500 6 Days County Jail Raudi Arias 3 Years Probation $2,655 Fines $5,000 Jessica Montalvo 3 Years Probation $155 Fines; Restitution $2,658 $2,500 Mayreni Guerrero 3 Years Probation $155 Fines; Restitution $2,000 $5,000 Samuel Alvarez 3 Years Probation $655 Fines $1,500 a/k/a Samuel Ortega Jacqueline Vasquez 3 Years Probation $155 Fines $1,500 Kenia D. Gonzalez 3 Years Probation $655 Fines Widania A. Montanez 3 Years Probation $155 Fines $5,000 Luis Henriquez-Uzeta 2 Years Probation $155 Fines Humberto Diaz 1 Year Probation $355 Fines; Restitution $5,859 $5,000 Juana D. Nunez** 1 Year Pre-Trial $2,500 Intervention Program Francisco Marcelino 3 Years Pre-Trial $5,000 Intervention Program Emily M. Nieves 3 Years Pre-Trial $5,000 Intervention Program Jose Rafeal Perez 3 Years Pre-Trial (Diego Ivan Torres) Intervention Program

* Criminal sanctions include criminal, VCCB, Safe Streets, and LEOTEF fines. ** Nunez was also sentenced to 60 hours of community service.

43 $100 Million Scam Part of Growing Trend in Insurance Professional Fraud Uncovered by OIFP $100 Million Scam Part of Growing Trend in Insurance Professional Fraud Uncovered by OIFP by Lewis Korngut Vito Gruppuso stole over $100 mil- May of 1998 and March of 2003. lion in the largest insurance fraud Gruppuso also admitted to stealing scheme ever prosecuted by the State $6,320,055 from AIG Insurance Com- of New Jersey. Gruppuso’s case is in- pany, $3,746,524 from Wausau Insur- dicative of a growing trend in insurance ance Company, and $4.9 million from fraud scams being perpetrated by XL Reinsurance Company as part of some licensed insurance/securities the scheme. Gruppuso used the agents and some other licensed insur- money to finance his expensive ance professionals. Difficult economic lifestyle and his business ventures. times have intensified competition in OIFP’s investigation also revealed the insurance industry and increased that Kemper Insurance Company, insurance rates. While most insurance through a bonding company known as professionals tighten their belts, others Universal Bonding Insurance Company choose to defraud both insurance com- (UBIC), suffered $48 million in losses panies and unsuspecting individuals. Of- as a result of fraud committed by ten, it’s the promise of lucrative commis- Gruppuso. Gruppuso’s premium loan sions and easy access to money that finance company, United Premium lures agents to fraudulent schemes. Services (UPS), provided insurance premium finance loans. Allegedly, Insurance Agent Stole many of those fictitious loans defaulted Over $100 Million because Gruppuso and another indi- An investigation by the Office of vidual falsely placed the insurance the Insurance Fraud Prosecutor (OIFP) risks with a commercial risk manage- revealed Gruppuso’s theft of more than ment plan known as AIMCO, which $100 million. Gruppuso, a licensed in- was created to provide insurance cov- surance agent, was the owner and erage for certain commercial real es- former president of National Program tate properties. Gruppuso wrongfully Services (NPS), an insurance brokerage placed ineligible commercial insureds servicing the commercial community. who sought insurance for only one Gruppuso pled guilty on January year into the AIMCO risk management 30, 2004, and admitted that he failed program for three years and, without to remit approximately $15.8 million of the knowledge of those insured, falsely insurance premiums obtained from his financed their insurance premiums insurance customers, primarily com- through his premium financing busi- mercial businesses, to the Virginia ness for three years. This scheme en- Surety Insurance Company between abled Gruppuso to have easy access to vast sums of money intended only

45 $100 Million Scam Part of Growing Trend in Insurance Professional Fraud Uncovered by OIFP

to be used by those who needed to securities broker, is charged with theft borrow money to finance insurance by unlawful taking, misapplication of coverage. Eventually, AIMCO became entrusted property, and forgery. The in- aware of this aspect of Gruppuso’s dictment alleges that Chamberlain fraud and pulled out of the program. systematically looted the victim’s an- UBIC was called upon to reimburse nuity accounts, invested the monies lenders for more than $90 million repre- for his own benefit, and ultimately pur- senting premium finance loan money chased a resort home valued at more stolen through Gruppuso’s company, than $400,000 in Florida. If convicted, UPS. Since UPS’s premium finance Chamberlain faces possible prison loans were purportedly backed by time, a fine of up to $355,000, and the Kemper Insurance in its capacity as a loss of his New Jersey securities li- lender, through UBIC, Kemper was re- cense. He could also be ordered to quired to pay the defaulted loans. pay restitution to the victim. The alleged victim is a decorated Insurance Broker Charged WW II veteran who was shot down over with Stealing Life Savings the Philippines. In 2003, the senior was of Senior Citizen notified by the Internal Revenue Service that he owed more than $56,000 in A State Grand Jury has indicted back taxes from taxable withdrawals former insurance broker and financial from his annuity accounts. When he planner Michael Chamberlain with Civil Investigator Bud Fifield and State Investigator contacted Chamberlain to inquire about stealing nearly $300,000 from the re- Earl Washington document evidence obtained the status of the accounts, the senior while executing a search warrant at the office of an tirement accounts of a 78-year-old se- was allegedly told that the monies had insurance professional. nior citizen. Chamberlain, a licensed been invested and stolen. As a result of the alleged fraud, the senior is without retirement funds, nearly penniless, and living in a room in a retirement home. Insurance Company Claims Processing Specialist Convicted of $614,000 Theft Linda Clements-Wright was convicted, following an eight-day trial, of conspiracy, theft by unlawful taking, and money laundering for stealing over $614,000 from Allstate Insurance Company while employed as a Claims Processing Specialist. The jury found that Clements- Wright fraudulently issued more than

46 150 insurance claim checks totaling over $614,000. The fraudulent checks were issued to at least 11 friends and relatives who were not entitled to the monies. OIFP presented evidence at trial that Clements-Wright had devised several schemes whereby unauthorized persons would receive and cash Allstate claim checks and then split the money. One scheme involved Insurance Fraud Prosecutor Greta Gooden Brown announced charges against Michael Chamberlain cashing claim checks payable to pur- for allegedly scamming more than $300,000 from a senior citizen. Senior investors were also given investment tips and were encouraged to report fraud to law enforcement authorities. ported elderly Allstate claimants living in senior care facilities who were un- Clark also admitted that from able to directly receive the funds. ance agent with contracts to write an- Clements-Wright paid a ten percent nuity and/or insurance policies for vari- January 1, 1999, through December commission to conspirators who ous insurance companies and brokers. 31, 2000, he defrauded at least ten cashed the claim checks; Clements- Clark admitted he purchased several people, including his mother and other Wright kept the balance of the monies. annuity policies for himself and family family members, by convincing them In another scheme, Clements-Wright members between June 7, 2001, and to invest a lump sum of money in issued unauthorized insurance claim October 28, 2003, in order to receive phony investments that would pay the checks to purported claimants for un- commissions for the sales. The personal investor 12 percent annual interest. reported property damage claims. Six checks he submitted to pay for premi- The investment accounts were non-ex- co-conspirators who cashed insurance ums were returned for insufficient funds. istent. Clark used the monies for per- claim checks for Clements-Wright in OIFP’s investigation determined that sonal expenses. This case was re- the schemes previously pled guilty to Clark fraudulently collected unautho- ferred to OIFP by Allianz Life Insurance conspiracy charges. rized commissions from the following Company of North America. insurance companies: Agent Scammed ■ American National Public Adjuster was Leader Family and Friends Insurance Company: of “Arson-for-Profit” Ring $56,034 Camden County insurance pro- Marc Rossi operated the biggest ■ vider Peter Clark is serving a three- Allianz Life Insurance Company: “arson-for-profit” ring ever uncovered in year prison sentence for stealing more $36,125 Mercer County. OIFP successfully than $429,000 in a complex insurance ■ Conseco Services LLC: prosecuted all seven individuals who fraud and investment scheme in which $38,500 made up the ring. The leader of the he convinced family and friends to in- ■ American Equity Investment ring was public adjuster Marc Rossi. vest in non-existent investments. Life Insurance Company: Rossi, a former investigator with the Clark, 36, pled guilty before $9,400 Mercer County Prosecutor’s Office, Camden County Superior Court Judge ■ American Investors Life: pled guilty to operating an “arson-for- Linda G. Baxter to crimes contained in $6,717 profit” and insurance fraud scheme responsible for at least six burned build- a criminal Accusation that charged ■ ING USA Annuity & Life ings. The Court sentenced him to eight Clark with theft by failure to make re- Insurance Company: years in prison and ordered him to pay quired disposition of property received $44,603 and theft by deception. The Court sen- a total of $537,673 in restitution to six ■ Midland National tenced Clark on August 6, 2004, to insurance companies. Life-Annuity Division: three years in State prison and ordered Rossi owned and operated Rossi $15,961 him to pay $390,484 in restitution. Adjustment Services, a Trenton-based ■ Clark, as part of the sentence, also North American Company Life insurance claims adjusting firm. Rossi surrendered his insurance license to and Health Insurance: planned the setting of fires to at least the Division of Banking and Insurance. $9,948 six buildings. In most cases, Rossi Clark was an independent insur- knew the owners of the buildings he

47 $100 Million Scam Part of Growing Trend in Insurance Professional Fraud Uncovered by OIFP

Investment Tips for Senior Investors ■ Map out financial goals before meeting with a financial planner, broker, or investment advisor ■ Know your investment professional ■ Understand your investment ■ Understand how a financial professional is making money by selling an investment ■ Exercise caution when buying investments ■ Understand your account statements ■ Never be afraid to ask questions at any stage of the investment process

targeted for arson. While the fires were wick sticking out of it and noticed pour still raging, Rossi would appear at the patterns on the ground. Pour patterns scene to entice building owners to give generally indicate use of an accelerant their insurance claim adjusting busi- which causes the fire to burn. When ness to Rossi over competing adjust- the Bureau of Alcohol, Tobacco, and ers. Once hired, Rossi advocated for Firearms offered a reward for tips, a the property owner and attempted to caller gave investigators a list of names receive the highest dollar amount including Rossi’s. The investigation ul- from the insurance company. Rossi timately led to all seven ring members. received a percentage of the settle- One of the ring members, Michael ment for his efforts. Winberg of Levittown, Pennsylvania, As part of his guilty plea, Rossi pled guilty to second degree aggravated admitted he purposely caused prop- arson for setting the fire at the Country erty damage to an apartment he Barrel Inn. The Court sentenced owned in Bordentown to collect an in- Winberg to five years in State prison. surance claim reimbursement. He also Winberg was also a former licensed pled guilty to participating in a con- public insurance adjuster who had spiracy to inflate costs and steal been employed by Rossi Adjustment money from a construction project in- Services. He had previously been con- volving the East Windsor Police Ath- victed of theft related to his insurance letic League. Rossi further pled guilty business as a public adjuster. The to offering a bribe to a member of a Court sentenced Winberg on the theft Hamilton Township volunteer fire com- charge to three years probation and or- pany to obtain work for his insurance dered him to pay $15,337 in restitution. adjustment business. One of the businesses that Rossi Lewis Korngut is a Supervising targeted for arson was the Country Deputy Attorney General in charge Barrel Inn, a historic Mercer County of OIFP’s Property and Casualty landmark located in Hamilton, New Section. He was a Mercer County Jersey. The fire completely destroyed Assistant Prosecutor where he the building valued at over $350,000. tried capital cases including Investigators suspected arson when State v. Timmendequas. they found a broken beer bottle with a

48 OIFP receives the Outstanding Achievement in Arson Investigations Award from the International Association of Arson Investigators, Inc. for OIFP’s prosecution of the State v. Rossi “arson for profit” ring. Pictured from left to right: Supervising Deputy Attorney General Lewis Korngut, Chief State Investigator Anne Kriegner, Insurance Fraud Prosecutor Greta Gooden Brown, State Investigator Robert Stemmer, Civil Investigator Joseph Salvatore, and NJ Division of Criminal Justice Director Vaughn McKoy.

Indicators of Financial Abuse Against the Elderly ■ A recent acquaintance expresses an interest in finances, promises to provide care, or ingratiates him- or herself with the elder ■ A relative or caregiver has no visible means of support and is overly interested in the elder’s financial affairs ■ A relative or caregiver expresses concern over the cost of caring for the elder, or is reluctant to spend money for needed medical care ■ The utility and other bills are unpaid ■ The elder’s placement, care, or possessions are inconsistent with the size of his or her estate ■ A relative or caregiver isolates the elder, makes excuses when friends or family call or visit, and does not give the elder messages ■ A relative or caregiver gives implausible explanations about finances, and the elder is unaware of or unable to explain the arrangements ■ Checking account and credit card statements are sent to a relative or caregiver and are not accessible to the elder ■ At the bank, the elder is accompanied by a relative or caregiver who refuses to let the elder speak for him- or herself, and/or the elder appears nervous and afraid of the person ■ The elder is concerned or confused about “missing” money ■ There are suspicious signatures on the elder’s checks, or the elder signs checks and another third party fills in the payee and amount ■ There is an unusual amount of banking activity, particularly after joint accounts are set up or someone begins helping the elder with finances ■ A will, power of attorney, or other legal document is drafted, but the elder does not understand the implications

49 GlaxoSmithKline to Pay $2.1 Million to New Jersey’s Medicaid Program GlaxoSmithKline to Pay $2.1 Million to NJ’s Medicaid Program in National Settlement and $850,608 in State Settlement by John Krayniak New Jersey’s Medicaid Program In order to receive Medicaid reim- will receive more than $2.1 million as a bursement for drugs, pharmaceutical result of a national settlement reached manufacturers enter into a contract un- in 2004 that requires pharmaceutical der the Medicaid Drug Rebate Statute giant GlaxoSmithKline to pay $87 mil- that requires the return of monies to lion in damages and penalties to fed- state and federal Medicaid programs in eral and state Medicaid programs. The the form of rebates. In order to calcu- Office of the Insurance Fraud late the amount of the rebate, pharma- Prosecutor’s Medicaid Fraud Section ceutical companies must provide “best separately negotiated an additional price” information to CMS. “Best price” $850,608 to reimburse New Jersey’s is the lowest price that a manufacturer state-operated prescription drug pro- offers a product for sale to commercial grams. Using a national stage to also purchasers. As with Medicaid, state- fight fraud locally showcases New sponsored programs require pharma- Jersey’s current ability to fight Medicaid ceutical manufacturers to follow “best fraud, which is in stark contrast to the price” rules in order to participate in first decade after Medicaid was created state-funded pharmaceutical assis- when the program operated with few tance programs. As a result of provid- controls against fraud. ing inaccurate “best price” information, Federal attorneys alleged in the GlaxoSmithKline allegedly effectively national litigation that GlaxoSmithKline discounted the amount of rebate mon- sold pharmaceutical products to pri- ies owed to New Jersey’s two state- vately-operated health management or- funded pharmaceutical assistance pro- ganizations (HMOs) at deeply dis- grams, Pharmaceutical Assistance to counted prices, concealed the trans- the Aged and Disabled (PAAD) and actions, and then underreported “best Senior Gold (SG). price” information to the Center for GlaxoSmithKline avoided higher Medicaid and Medicare Services rebate payments by allegedly relabel- (CMS). This had the effect of artificially ing or repackaging certain drugs under deflating the price of the pharmaceuti- private HMO labels. For example, un- cals and, therefore, diminished the der a private labeling agreement with amount of money the company was California-based HMO Kaiser required to pay federal and state Med- Permanente, GlaxoSmithKline alleg- icaid programs — thus allegedly edly manufactured, packed, and cheating the states out of significant shipped Flonase to Kaiser, substitut- funding for prescription drug programs. ing Kaiser’s identification number for the GlaxoSmithKline identification

51 GlaxoSmithKline to Pay $2.1 Million to New Jersey’s Medicaid Program

number. The result of the private label- New Jersey, the Medicaid budget is ing arrangement was allegedly to allow over $992,000,000 (fiscal year 2004), Kaiser additional price discounts on representing a significant portion of the Flonase without having to report the State budget, and the MFCU has 36 full- discounted price asGlaxoSmithKline’s time staff. New York is the largest “best price,” thus allowing MFCU with over 300 staff persons and GlaxoSmithKline to avoid paying Wyoming is the smallest with only four higher rebates to the state Medicaid staff members. programs. Similarly, GlaxoSmithKline Joint federal-state investigations allegedly provided Kaiser discount that result in national settlements, prices on Paxil without reporting the such as the GlaxoSmithKline settle- discounted price to CMS in order to ment, generally arise with the filing of a avoid paying higher Medicaid rebates. federal false claims action, also called The state Medicaid programs col- a qui tam case. The Federal False lectively are one of the biggest pur- Claims Act includes provisions that chasers of pharmaceutical products. provide the authority and financial in- Prescription drug expenditures are a centive to private individuals, called re- significant portion of every state’s Med- lators, to enforce the Act on behalf of icaid budget. The budget constraints the Federal Government. These rela- felt by many states and the financial tors, sometimes known as whistle- recoveries received through state par- blowers, are generally current or former ticipation in federal cases have caused employees of a health care provider many states to take a hard look at and are protected from retaliatory ac- prescription drug costs. In state fiscal tions by the Act. A qui tam complaint year 2004, the State of New Jersey is filed under seal in Federal District spent $531,000,000 for PAAD and Court and remains under seal for at $19,500,000 for SG. These are signifi- least 60 days to allow the government cant programs whose costs are rising time to conduct an adequate investiga- dramatically. Our Medicaid Fraud Con- tion. Often the 60-day period is ex- trol Unit (MFCU) has applied tech- tended, sometimes for years. The niques successful in Medicaid investi- state MFCUs are notified that a qui gations to PAAD and SG. tam has been filed and an investigation Since the inception of the Medicare- has commenced when the Department Medicaid anti-fraud and abuse legisla- of Justice (DOJ) contacts the National tion that established the state MFCUs, Association of Medicaid Fraud Control the MFCUs have successfully pros- Units (NAMFCU) and requests the as- ecuted over 9,000 corrupt medical pro- sistance of the MFCUs. The NAMFCU viders and vendors — convictions that president, with the assistance of coun- would not have occurred without this sel, appoints a negotiating team to enabling legislation. The MFCUs po- work in conjunction with DOJ attor- lice most of the nation’s Medicaid ex- neys. Selection of team members is penditures with a combined staff of ap- based on varying criteria, but includes proximately 1,275 and a total federal experience, availability, and the extent budget of approximately $100,000,000. to which a state’s Medicaid program This amount represents a small frac- has been damaged. Each state team tion of the total Medicaid budget that meets with federal attorneys and at- the units are responsible for policing. tempts to set a framework for negotia- MFCU size varies state by state and tions. The issues generally are restitu- is dictated to some extent by the size tion, civil damages, exclusion or non- of the state’s Medicaid program. In exclusion from the Medicaid and Medi-

52 care programs, as well as criminal NAMFCU team. Authorized represen- necessary because settlement of charges. The teams consider the tatives of the defendant execute the these cases would be impossible if de- strength of the case and other factors in agreement and transfer the agreed- fendants sought to obtain settlements negotiating a settlement. These in- upon amount of money to a designated from individual states and negotiate clude the defendants’ economic liabil- escrow account. The money is then separate terms with each state. ity, whether a settlement would push distributed to the Federal Government NAMFCU provides the coordination na- them into bankruptcy, the impact it and then to each individual state. tionally, allowing New Jersey’s MFCU would have on innocent shareholders All MFCUs are members of the to also focus on effecting remedies for or employees, and the effect that ex- NAMFCU, which is based in Washing- state-funded programs. clusion of the provider from the Medic- ton, D.C. NAMFCU employs a full-time aid and Medicare programs would have counsel and paralegal and, because John Krayniak is a 17 year veteran on the programs’ abilities to provide the majority of the units are in state At- of the Division of Criminal Justice needed medical care to their beneficia- torneys General Offices, shares office and has been the Supervising Deputy ries. All settlements require the defen- space and works very closely with the Attorney General of OIFP’s Medicaid dant to enter into a Corporate Integrity National Association of Attorneys Gen- Fraud Section for 11 years. He Agreement which sets forth specific eral (NAAG). Since 1994, NAMFCU previously served for eight years as conduct that the provider will or will members have worked closely with a Deputy District Attorney in the not engage in. DOJ in investigating, prosecuting, and Los Angeles County District All recoveries and damages are negotiating settlements with providers Attorney’s Office. generally allocated based upon a whose business is national in scope state’s actual damages. Participating and affects the Medicare, Medicaid, MFCUs are asked to supply their and other health care programs. states’ specific Medicaid billing data. Cooperative efforts between state When the defendant’s conduct has and federal authorities are effective in been long running, billing data is not protecting Medicaid and Medicare from easily obtainable and negotiations pro- health care providers or vendors whose duce an agreed-upon extrapolation for- unscrupulous activities involve both mula. State and federal attorneys bar- programs and cross state lines. All gain and negotiate for the best pos- participants in these cases recognize sible settlement for the government. that while there is one Medicare pro- Because the Federal Government sub- gram, there are essentially 50 Medic- sidizes each state’s Medicaid program aid programs. A coordinating point is in differing amounts, damages are allocated based on the funding formulas. When the government team feels it has negotiated its best settlement, the proposed settlement agreement and release is distributed to each MFCU. These are reviewed at the state level by the MFCU and the Medicaid agency. A critical element in reaching a settlement is to obtain the agreement of the Medicaid agency to not exclude the provider as a Medicaid provider or to refuse to place a manufacturer’s drug on the state for- mulary. When appropriate, state agencies have agreed to the settlement and signed the agreement. The signed agreement is then returned to the

53 Best Practices Guide for Insurance Company Referrals to OIFP

Joseph Scrimo, Special Investigations Manager, Allstate New Jersey, accepts OIFP’s Second Annual Excellence in Investigation Award from Insurance Fraud Prosecutor Greta Gooden Brown at the Seventh Annual Insurance Fraud Summit. Best Practices Guide for Insurance Company Referrals to OIFP by Scott Patterson and John J. Smith The Insurance Fraud Prevention examiners and continue with the SIU. Act requires insurance companies to It is important for insurance company report suspicious insurance fraud personnel to carefully review the appli- claims to OIFP. Insurance company cations and claims records, identify Special Investigation Units (SIUs) false statements or omissions, and should ensure that their referrals result assist law enforcement with the devel- in an OIFP investigation. What are the opment of creative investigative strate- keys to a successful referral? gies to prove the statements are false and were submitted to steal insurance Identify the Lies coverage or claims money. Insurance Conduct which forms the basis of companies’ underwriting, claims, and criminal and civil insurance fraud, in SIU personnel are trained to review in- most cases, involves presenting or surance applications and claims and, causing to be presented any written or therefore, are uniquely poised to iden- oral false statement in support of an in- tify the false statements and omis- surance application for coverage, an in- sions which the insurance company surance claim for money, or an insur- relies upon in deciding whether to ex- ance benefit pursuant to an insurance tend coverage or pay a claim. False policy. The most commonly pros- statements or omissions frequently ecuted insurance fraud crimes require are difficult for law enforcement to iden- the identification of specific false state- tify because not only are they buried in ments or omissions made by criminal large volumes of claims documents, defendants during the course of sub- affidavits, insurance carrier adjuster mitting insurance policy applications notes, examinations under oath, medi- and claims. Therefore, it is important cal records, recorded statements, and for insurance company SIUs to identify other documents, but also because false statements or omissions submit- law enforcement is not sufficiently fa- ted to their insurance companies in miliar with the specific information car- connection with insurance applications rier underwriters and claims personnel or claims. The key to a successful re- consider critical when extending cover- ferral lies in the ability of the insurance age or paying claims. Both insurance company and law enforcement to iden- companies and law enforcement inves- tify the false statements submitted to tigators must painstakingly review the insurance company. each and every document contained in All insurance fraud investigations the insurance companies’ files to iden- must begin with the insurance tify potential misrepresentations, false company’s underwriters and claims statements, and omissions.

55 Best Practices Guide for Insurance Company Referrals to OIFP

For example, insurance company possession in connection with the re- personnel have greater expertise than ferral, OIFP can utilize its powerful in- law enforcement in the interpretation vestigative tools, such as search war- of, or application of, CPT Codes to par- rants, electronic surveillance, subpoe- ticular medical diagnostic tests, treat- nas (both civil and criminal), Court Or- ment, and procedures in connection ders authorizing seizure of assets, and with the adjustment of medical insur- arrests, to gather all of the additional ance claims and in connection with evidence necessary to prove both civil the adjustment of auto insurance Per- and criminal cases in court. sonal Injury Protection (PIP) claims. For example, medical service pro- Referrals to law enforcement by insur- viders may be criminally charged when ance companies regarding service pro- they bill for diagnostic tests and medi- viders who are suspected of misusing cal services which they have not ren- a CPT Code must include identifying dered, among other conduct. These the CPT Code(s) in dispute, identifying cases are aggressively investigated all claims in which that code was mis- and prosecuted, particularly when the used by the provider, identifying the referral reflects a pattern of fraudulent amount of money the provider billed conduct which can be corroborated by through misuse of the CPT Code, and the provider’s employees and by pa- the amount paid by the insurance tient testimony. A good referral for this company. The insurance company type of case includes: should also explain why each claim ■ evidence of fraudulent billings, was paid or settled. The referral should i.e. the claims forms and claims explain the insurance company’s rea- payment information; son for concluding the use of the CPT ■ any patient interviews that attest Code is fraudulent and include an to the fact that services were not expert’s report if necessary to clarify provided (law enforcement can the facts. If the medical provider’s and will obtain additional patient claims violate State health care licens- interviews as part of its field ing regulations or other regulations, investigation following carrier referral); such as fee schedules promulgated in ■ any sworn statements from the connection with the No-Fault insurance provider’s employees and/or former law, then insurance companies should employees attesting to the fact so advise law enforcement. that this was part of the provider’s Gathering and billing practice (experience teaches Obtaining Evidence that often former employees report the improper billing practices). After identifying the false state- Other kinds of insurance fraud ments and omissions, it is important for cases require referrals that include dif- insurance company personnel to gather ferent information and require a differ- and obtain all of the evidence in the ent investigative focus. For example, possession, custody, and control of the the criminal investigation of PIP rings, insurance carrier to prove that the state- involving automobile accidents staged ments are false. Insurance companies by “runners” and claimants to obtain should identify the corroborating proof PIP payments and bodily injury settle- which was obtained during the detailed ments for non-economic losses, underwriting or claims review processes present complex challenges for law or through the SIU investigation. enforcement. These cases require After the insurance company gathers careful analysis by insurance com- and obtains all of the information in its pany personnel of the interpretation

56 and application of CPT Codes for medical diagnostic tests and treatments rendered to the claimants, as well as complex field investigations conducted by law enforcement which target the claimants who participate in a suspect accident and the involve- ment of “runners,” medical service providers, and sometimes corrupt police officers and lawyers. The investigation of staged accident rings is frequently best begun with a review of the police report to de- claimants attended all of the medical New Jersey Attorney General Peter C. Harvey termine whether the accident actually treatments billed and whether the pro- welcomes Seventh Annual Insurance Fraud occurred. Insurance company person- viders billed for tests and treatments Summit Keynote Speaker Anthony Dixon, nel should consider “walk-in” police re- President and CEO of New Jersey not rendered to the claimants. Manufacturers Insurance Company. ports by claimants, which by definition The more difficult issue of whether do not include a police officer as wit- the diagnostic tests and treatments ness, as particularly suspect. No auto provided to the PIP claimant were PIP fraud matter should be referred to “medically necessary” is frequently a OIFP unless insurance company per- matter of subjective medical opinion sonnel first obtain and analyze the po- and is the most challenging issue for lice reports. Insurance company per- OIFP to prove as fraud. In all such sonnel should be aware that some of cases involving medical service provid- OIFP’s criminal and civil prosecutions ers, it is advisable for the insurance have included police reports which carrier to have an expert review the di- were wholly fictitious or obtained as a agnostic tests and medical protocols result of bribes paid to the police of- employed by the suspect medical ser- ficer in order to support an automobile vice provider and render a report. The insurance claim. expert’s report should be included as Insurance companies should iden- part of the referral to OIFP. tify the claimants and any evidence Although the ensuing field investi- which suggests the participation of gation conducted by law enforcement “runners.” If during Examinations Un- will always attempt to obtain evidence der Oath (EUOs) or depositions, that the medical service provider sub- claimants have not been confronted mitted insurance PIP claims knowing with inconsistencies surrounding the the accident was staged and the alleged occurrence of the accident and claimant was not injured, such evi- their medical treatment records, carrier dence has frequently proved to be diffi- personnel should specifically include cult to obtain. As a result, insurance this information in the referral so that carrier personnel and law enforcement law enforcement can question such in- should first focus on whether the medi- consistencies in the course of the field cal service provider submitted claims investigation. Law enforcement has for tests and treatments not rendered successfully located and confronted and also seek evidence or any investi- the claimants in order to obtain admis- gative leads which will prove that the sions and confessions which consti- medical service provider knew the ac- tute powerful evidence in court. cident was staged and the purported The SIU investigation should in- patients not injured. clude efforts to determine whether the

57 Best Practices Guide for Insurance Company Referrals to OIFP

Communicate the Fraud signed to promote effective communi- Theory and Evidence cation by requiring insurance carriers to focus on the specific omissions or It is important that the insurance false statements found in the investiga- company referral combine the information. The forms enable the insurance tion obtained through its investigation company to identify the false state- of the alleged fraud with the reasons it ments or omissions and the corrobo- believes the fraud occurred (i.e. the rating proofs or investigative leads it fraud theory) and effectively communi- obtained during its investigation and cate all of this information as well as present that information clearly. Careful any investigative leads to law enforce- utilization of these referral forms by in- ment. The OIFP referral forms were de- surance company personnel will provide law enforcement with clear investigative leads to develop evidence during field investigations to sustain the cases in court. As should be obvious from the above discussion, fraud referrals from insurance companies are not ready for court upon receipt by law enforcement. All referrals require further investigation. To prepare a case for prosecution, OIFP conducts an investigation which includes review and analysis of underwriting or claims records as well as a field investigation to identify witnesses and to produce admissible evidence. OIFP can issue subpoenas, execute search warrants, conduct undercover investigations, identify and interview witnesses, conduct electronic surveillance, and develop other evidence necessary to prosecute to conviction, impose civil insurance fraud penalties, and impose licensing sanctions. In addition, when a carrier refers a matter to OIFP involving suspected false claims, OIFP, as part of a comprehensive investigation, routinely canvasses other insurance companies and databases to determine whether the person submitting the suspected claim has submitted similar suspect claims to other carriers. Canvassing other insurance companies for additional information and evidence is often a key investigative step which, for a variety of reasons, insurance companies frequently cannot accomplish.

58 Successful Referrals The Act mandates that all suspicious claims be reported to OIFP. This means that approximately 10,000 cases are reported annually. Although all cases are carefully reviewed, insurance companies and law enforcement can work together as partners to insure that referrals develop into good cases. A good referral is clearly written, is objective, identifies the false statement or omission, and communicates to law enforcement the fraud theory as well as the relevant facts and corroborative evidence and investigative leads. Fi- nally, it is important to remember that quality referrals should be made as soon as possible to permit law enforcement to conduct the type of complex and time-consuming investigation these cases require so that cases can be filed in court prior to the expiration of the Statute of Limitations.

Scott R. Patterson is a 15 year veteran with New Jersey’s Division of Criminal Justice and currently serves as the Supervising Deputy Attorney General in charge of OIFP’s Case Screening and Litigation Support Sec- tion. He previously served as an As- sistant Prosecutor in Passaic County. Joanne Roberts, Assistant Vice President, Selective Insurance Company, receives OIFP’s Annual Appreciation Award at the Seventh Annual Insurance Fraud Summit.

59 OIFP Offers Rewards for Reporting Insurance Fraud OIFP Offers Rewards for Reporting Insurance Fraud by Melaine B. Campbell The public plays a significant role tion with respect to any insurance in the detection of insurance fraud and claim, application, payment, or docu- now New Jersey offers incentives to ment used in any insurance or pre- encourage people to join in that effort mium finance transaction, illegal. through the Insurance Fraud Detection Under the provisions of the new Reward Program. Following a recom- law, OIFP has promulgated regula- mendation by the Office of the Insur- tions to administer the reward pro- ance Fraud Prosecutor (OIFP), the gram. The regulations pursuant to New Jersey State Legislature enacted N.J.A.C. 13:88-3 provide a mecha- legislation creating the Insurance nism for individuals to report sus- Fraud Detection Reward Program. pected insurance fraud to OIFP and to The implementation of this program in apply for a reward under the Insurance 2004 by OIFP makes New Jersey one Fraud Detection Reward Program. of only a few states in the nation to offer such a reward. Under the terms of Making a Referral the program, a person providing infor- In order to be eligible for the re- mation in accordance with certain ward program, individuals may report guidelines is eligible to receive up to suspected fraud cases using one of $25,000 when the information leads to the following methods: the conviction of a person or entity for ■ Call the OIFP toll-free hotline at 877- Health Care Claims Fraud, Insurance 55-FRAUD (877-553-7283) during Fraud, or any other criminal offense re- regular business hours (Monday lated to an insurance transaction. through Friday 9:00 a.m. to 5:00 The Insurance Fraud Detection p.m.) and speak to a hotline operator; Reward Program is part of a package ■ Call the OIFP toll-free hotline num- of anti-fraud reforms enacted in 2003 ber at 877-55-FRAUD (877-553- that enhances the State’s ability to de- 7283) after regular business hours tect insurance fraud and to punish of- and leave a detailed message, in- fenders. As part of the anti-fraud re- cluding a name and phone number forms, the New Jersey State Legisla- at which the caller can be reached; ture created the new crime of “Insur- ■ Log onto the OIFP website, ance Fraud” which is part of the New www.njInsuranceFraud.org, Jersey Criminal Code. The crime of “In- and submit an online report; surance Fraud,” N.J.S.A. 2C:21-4.5 and 4.6, makes any false representa-

61 OIFP Offers Rewards for Reporting Insurance Fraud

■ Send an electronic mail message to A person seeking a reward must OIFP at [email protected]; either simultaneously file a reward ap- ■ Write directly to OIFP at the plication with the fraud referral or file an following address: Office of the Insur- application no later than 30 days from ance Fraud Prosecutor, P.O. Box the date the person initially provided 094,Trenton, New Jersey 08625- information to OIFP. 0094, Attention: CLASS. Criteria for Evaluating Reward Application a Reward Application Procedure OIFP may pay a reward following A person seeking a reward for in- the conviction of a person or entity for formation submitted to OIFP under Health Care Claims Fraud, Insurance this law must fully complete a reward Fraud, or any other criminal offense in- application form provided by OIFP. volving or related to an insurance trans- The form may be obtained by request- action. A person who provides such in- ing one in writing from OIFP, calling formation to OIFP and submits a timely the OIFP toll-free hotline and request- reward application shall be eligible for a ing one, or logging onto the OIFP reward only if the information: website and downloading the form. ■ leads to the conviction of a specific The form must be signed and nota- individual(s) or entity(ies) for speci- rized and mailed to the Office of the fied conduct occurring during a par- Insurance Fraud Prosecutor, P.O. Box ticular time period, as detailed in the 094, Trenton, New Jersey 08625-0094. reward program application submit- An applicant may be required to ted by the informant pursuant to submit to an OIFP interview regarding N.J.A.C. 13:88-3.5; or the provided information. An applicant ■ directly leads to the conviction of may also be required to give a verbal other individuals or other entities for statement under oath and sign a writ- specified conduct occurring during a ten memorialization of the statement. particular time period as detailed in The applicant may also be called to the reward program application sub- testify before the Grand Jury or at a mitted by the informant pursuant to trial or other related hearings. N.J.A.C. 13:88-3.5.

62 OIFP shall not grant a reward for Persons Ineligible or facilitated the reported offense and information relating to an individual or for a Reward individuals providing false information entity that, at the time the information are ineligible for a reward. Individuals or Although everyone is encouraged is provided, is already the subject of a entities who are eligible for a reward to report instances of insurance fraud referral to OIFP; is already the subject under any state, federal, or other re- to OIFP, certain individuals are not eli- of an investigation by OIFP; or is al- ward program based on a report of sub- gible to receive a reward for their infor- ready the subject of an insurance fraud stantially the same information reported mation. These individuals include investigation by the New Jersey De- to OIFP, are also ineligible for a reward. present or past officers or employees partment of Human Services, the New of any of the federal, state, county, or Jersey Department of Health and Se- Rules and Regulations municipal agencies listed in N.J.A.C. nior Services, the Health Care Financ- Under N.J.A.C. 13:88-3 13:88-3.8(c), as well as immediate ing Agency, the Office of the Inspector family members of these officers and N.J.A.C. 13:88-3, adopted in 36 General, the New Jersey Department of employees and present and past indi- N.J.R. 3297(b) on July 6, 2004, sets Banking and Insurance, the New Jersey viduals working on behalf of the agen- forth the complete rules for the imple- Department of Consumer Affairs and its cies or entities, or immediate family mentation of the Insurance Fraud De- licensing boards, or any other federal, members of these individuals, at the tection Reward Program. Individuals in- state, county or municipal agency. time they came into possession of or terested in participating in the reward divulged information leading to an ar- program should refer to these provi- Determination sions for complete requirements and and Notification of rest, prosecution, and conviction. Additionally, government employ- other information on the program. Eligibility for Reward ees, contractors, or grantees who OIFP will notify a reward applicant came into possession of or divulged in- whether that applicant is eligible for the formation in the course of their official reward within 90 days of the conviction duties; present or past employees of of the person(s) or entity(ies) who insurance companies or individuals committed Health Care Claims Fraud, working on behalf of an insurance Insurance Fraud, or other criminal of- company; or the immediate family fenses related to an insurance trans- members of such individuals at the action. Rewards will be made as time they came into possession of or promptly as possible, but will not be divulged information leading to an ar- made until all direct appeals of the rest, prosecution, and conviction, are conviction have been exhausted. ineligible for a reward. Obviously, individuals or entities that participated in

63 Leveling the Playing Field – OIFP Targets Workers’ Compensation Premium Fraud Leveling the Playing Field OIFP Targets Workers’ Compensation Premium Fraud by Melaine B. Campbell Lurking beneath the smoldering as assigned risk, and through surface of fraudulent workers’ compen- approved self-insurance. sation claims lies a hotbed of corpo- CRIB defines the residual market rate application and premium fraud. process as employers who are ineli- Although some businesses struggle gible for the voluntary market, purchas- to keep up with costs, others renege ing workers’ compensation insurance on their responsibility to protect injured through CRIB. Employers in the re- workers. In New Jersey, the Office of sidual market complete an application the Insurance Fraud Prosecutor (OIFP), for designation of an insurance com- the insurance industry, the Compen- pany. The application requires the em- sation Rating and Inspection Bureau ployer to disclose the name and loca- (CRIB), and producers are joining tion of the employer’s operations, tax- forces to combat workers’ compensa- payer identification number, legal station application and premium fraud. tus, location of payroll records, owner- Throughout 2004, OIFP and insur- ship interests, prior insurance record, ance carriers have intensified their ef- voluntary market rejections, descrip- fort to detect, deter, and eradicate tion of operations, general eligibility workers’ compensation application information, classification of opera- fraud on all levels through investigations, including the number of employ- tion, prosecution, education, and re- ees and payroll, as well as other infor- search. OIFP has been identifying mation designed to calculate the common fraud schemes and fraud inappropriate premium. dicators in workers’ compensation ap- After review and approval by CRIB, plications and from premium fraud re- a servicing carrier is designated to pro- ferrals. OIFP has participated in train- vide workers’ compensation insurance ing for law enforcement and the indus- to the employer. Under the residual try to identify these fraud schemes market, an assigned carrier must ac- and indicators, and has allocated cept an employer’s application and is- resources to address the rising tide sue a policy for at least one year. After of application and premium fraud. one year, the carrier may request relief from CRIB and the employer may be The Workers’ Compensation assigned to another carrier. System in New Jersey According to CRIB, premium rates Employers generally obtain work- in the involuntary market are based on ers’ compensation insurance through two basic factors: an annual premium the voluntary market, the residual or level that will assess the total amount involuntary market otherwise known of money needed to pay the antici-

65 Leveling the Playing Field – OIFP Targets Workers’ Compensation Premium Fraud

pated incurred indemnity/medical obli- Industry for purposes of workers’ Premium Fraud Scams gations and the allowable items of compensation insurance is divided into Some employers attempt to lower overhead expenses, and apportion- three categories: manufacturing, con- their premiums by lying on workers’ ment of this total amount among all struction/erection, and all other. These compensation insurance applications employers in a fair manner in relation categories are further subdivided to and lying during or avoiding audits. Pre- to their contributions to the total form the basis for approximately 600 mium fraud, however, generally involves claims cost. Cost apportionment is business classifications. Classification lies concerning payroll, classification accomplished by a classification sys- rates are based upon the losses that (type of work done), and experience tem that divides the industry in the occur and the payrolls expended in a modification factor (claims history). State into approximately 600 busi- given business. Classification rates Although the employer may pro- ness classifications. The realized represent an average rate intended to vide an estimated payroll to obtain hazards of each group are catalogued encompass both the hazardous and workers’ compensation insurance, a by compiling the payroll, premium, and non-hazardous work performed within failure to disclose a significant amount incurred loss experience. the business at risk. Less hazardous of payroll is a fraud indicator and one According to CRIB, this system operations within a given business re- of the most common types of premium provides a level playing field in terms of duce the overall rate for the class. fraud. Sometimes the scheme is more premium contribution, subject to statu- The premium is based primarily on elaborate with employers paying em- torily required application of experience a payroll estimate for the initial policy ployees “off the books” or misrepre- rating. Experience rating compares the term. The final premium is determined senting the employees as “indepen- loss history of a given employer with by a final audit at the expiration of a dent contractors.” Some employers the expected losses of other employ- policy. The final audit includes pre- even hide payroll by creating bogus ers of like size and kind assigned to mium adjustment to the actual payroll employee-leasing firms. Fraud may the same classification. By comparing expenditures made during the policy sometimes be detected when employ- similar employers, CRIB produces a term through review of original payroll ees are on the payroll of “subcontrac- credit experience modification and ex- records, disbursement books, general tors” or “vendors” with common man- tends premium savings to the em- ledgers, and payroll tax reports. The agement or ownership. Other payroll ployer enjoying fewer losses than aver- audit allows the carrier to review and fraud indicators may include a dispro- age. Conversely, greater losses than amend classifications and rates that portionate amount of claims for the average result in a debit modification apply to the business and work covered stated payroll, claimants who are not and increased premium cost. The sys- by the policy. The premium is basically listed as employees in the audit, dis- tem provides each group of employers calculated by the following equation: crepancies in payroll reported to the in- the opportunity to influence their own Payroll/100 x Classification(Rate) surer versus government agencies, premium rate, thereby offering an eco- x Experience Modification Factor and discrepancies in the size and type + Expense Constant + Surcharges nomic incentive to control the frequency of operation versus payroll. = Premium and severity of work-related injuries. Employers may attempt to lower rates by lying about the business classification and locations of operation. Employers may represent that their employees work at lower-risk tasks: for example, a construction company may fraudulently place more payroll in clerical or sales jobs and less payroll in roofing classifications. Red flags should immediately go up when industrial and construction operations report only low- risk classifications for workers. Another fraud scheme involves lying about the New Jersey Manufacturers Insurance Company Special Investigations Unit Director Loni Hand number or location of operations by set- discusses workers’ compensation premium fraud issues with John Kuller, Esq., at the Seventh Annual ting up storefront headquarters to hide Insurance Fraud Summit. Hand is co-chair of OIFP’s Workers’ Compensation Working Group. high-risk or higher-rated job sites.

66 Employers may fraudulently re- renders providing a false statement or (top left) Susan Aiani, Workers’ Compensa- duce their premiums by lying about misrepresentation in connection with a tion Special Investigator, Chubb Insurance Group, instructs OIFP investigators on the their loss and claims history. A busi- workers’ compensation application a detection of workers’ compensation fraud. ness with a poor claims history might fourth degree crime; and N.J.S.A. (top right) Neil Johnson, Vice President, form a shell company that is essen- 34:15-79 renders failing to provide Liberty Mutual Insurance Company and tially the same operation to handle on- workers’ compensation insurance a co-chair of OIFP’s Workers’ Compensation going jobs. fourth degree crime. Of course, the Working Group, reports to the Seventh Annual Insurance Fraud Summit on the Insurance carriers have become New Jersey Insurance Fraud Preven- Group’s 2004 application fraud initiative. increasingly concerned about audit tion Act, N.J.S.A.17:33A, provides civil fraud. In some instances, an employer penalties for workers’ compensation may repeatedly delay or impede a application and premium fraud. carrier’s audit or it may provide false documents to avoid a premium in- Closing the Loopholes crease. In other cases, scheming During 2004, a working group com- businesses might refuse to provide ad- prised of members of OIFP, the insur- equate records to a carrier. The State ance industry, CRIB, and producer may, however, subpoena records or groups addressed issues relative to this execute a search warrant if necessary type of fraud. The working group will to investigate misstatements of audit continue to seek ways to uncover and information or concealment of risk in deter schemes designed to conceal order to commit fraud. records, payroll, classification, and experience modification factor information. Workers’ Compensation Fraud Statutes Leveling the Playing Field The new Insurance Fraud Statute, Premium fraud is destructive to N.J.S.A. 2C:21-4.5, 4.6, makes it a the corporate sector and small busi- second degree crime to commit five or nesses. Premium fraud not only drives more acts of insurance fraud in an up the cost of insurance, it also gives amount of $1,000 or more, and a third the fraudsters an unfair competitive ad- degree crime for fewer than five acts or vantage. This year’s workers’ compen- less than $1,000. Prosecutors can sation anti-fraud initiative provides the charge other crimes, such as theft, un- means to level the playing field. der other criminal statutes in appropriate cases. Underwriting fraud is ad- Ron Brazda, Director-Underwriting, dressed in several workers’ compensa- Compensation Rating and Inspection tion statutes: N.J.S.A. 34:15-70 re- Bureau, contributed to this article. quires many employers to procure workers’ compensation insurance for their employees; N.J.S.A. 34:15-57.4

67 Demistifying the HIPAA Privacy Rule Demystifying the HIPAA Privacy Rule Disclosing Protected Health Information (PHI) to Law Enforcement

by Diane Ibrahim and Melaine B. Campbell Enactment of HIPAA Congress enacted the Health In- HIPAA includes regulations per- surance Portability and Accountability taining to privacy, known as the “Stan- Act (HIPAA) in 1996 to “improve port- dards for Privacy of Individuals’ Identifi- ability and continuity of health insur- able Health Information,” or the “Pri- ance coverage in the group and indi- vacy Rule.” (45 C.F.R. § 160 and 164). vidual markets, to combat waste, HIPAA’s Privacy Rule is also intended fraud, and abuse in health insurance to protect an individual’s privacy while and health care delivery, to promote allowing law enforcement to investigate the use of medical savings accounts, and prosecute crimes, including health to improve access to long-term care care fraud. Nonetheless, questions of- services and coverage, to simplify the ten arise from insurance carriers, doc- administration of health insurance, and tors, hospitals, pharmacies, and oth- for other purposes.”1 HIPAA went into ers when they are asked to disclose effect on April 14, 2001. Most covered patient information to law enforcement entities were given until April 14, 2003, officials. The concerns center around to comply with the Privacy Rule and HIPAA’s Privacy Rule and a misunder- smaller entities were given until standing of its provisions and excep- April 14, 2004, to comply. tions regarding disclosures of pro- Part of HIPAA’s main focus is health tected health information (hereinafter care fraud, one of the main sources of referred to as PHI). excessive health care costs. When It is important for law enforcement Congress enacted HIPAA, the House and covered entities to understand Committee on Government Reform and that, under certain circumstances, Oversight issued a report stating that covered entities are permitted to dis- in 1995 alone, approximately $1 trillion close PHI to law enforcement officials was spent on health care, divided without the individual’s written authori- among Medicare, Medicaid, and vari- zation pursuant to the law enforcement ous state and private programs.2 Esti- exception. Furthermore, when PHI is mates indicated that as much as ten requested through a grand jury sub- percent, or $100 billion ($274 million a poena or a Court Order, disclosure is day), was lost to fraud and abuse.3 required. HIPAA does not protect the

1 Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936 (1996). 2 H.R. Rep. No. 104-747 (1996). 3 Ibid.

69 Demistifying the HIPAA Privacy Rule

confidentiality of the information require such written authorization. The ■ information about a crime occurring quested by a grand jury subpoena and Privacy Rule generally allows covered on the premises of the covered entity, should not be cited as a basis to resist entities to use or disclose PHI without such as a hospital or nursing home; complying with the subpoena. written authorization for treatment, pay- ■ reporting crime in emergencies; ment, and health care operations. Uses ■ information pertaining to victims of The Privacy Rule and disclosures between covered enti- abuse, neglect, or domestic violence; The Privacy Rule creates national ties that are sometimes allowed include ■ coroner’s request; standards to keep medical records the detection of health care fraud and ■ information needed to avert a serious and PHI confidential. It restricts the abuse, or compliance with HIPAA. threat to health/safety; ability of covered entities to divulge an ■ other important miscellaneous individual’s medical records to unau- Law Enforcement Exception exceptions, such as national thorized persons. The Code of Federal to the Privacy Rule security or intelligence and law Regulations (C.F.R. Parts 160-164) The Privacy Rule provides several enforcement custody. governs the ability of “covered entities” specific exceptions under 45 C.F.R. There are three limitations under to use and disclose “individually identi- 164.512 to permit disclosure of PHI by 45 C.F.R. § 164.512 to the law en- fiable health (medical) information con- a covered entity to law enforcement forcement exception. First, the infor- cerning a person, called protected without an individual’s written authori- mation sought must be relevant and health information (PHI).” The regula- zation. Pursuant to the law enforcement material to a legitimate law enforce- tions specifically identify three types of exception, a covered entity may dis- ment inquiry. Second, the request covered entities under HIPAA: (1) close PHI to a law enforcement official must be specific and limited in scope to health plans: group and individual for a law enforcement purpose without the extent reasonably practicable in light health insurance, HMOs, Medicare, the written authorization of the individual of the purpose for which law enforcement Medicaid, and other government health or the opportunity for the individual to seeks the information. Finally, de-identi- plans; (2) health care clearing houses: agree or object, if certain conditions are fied information cannot reasonably be billing services and providers; and (3) met. These conditions include: used to fulfill the request. health care providers: doctors, nurses, ■ information, such as certain wounds paramedics and other emergency ser- or injuries, required by law to be re- Minimum Necessary vices personnel; hospitals and clinics; ported to a law enforcement agency; Requirement pharmacies (45 C.F.R. 160.103). ■ Court Order, warrant, subpoena, or The Privacy Rule requires that cov- The regulations define PHI as “in- summons issued by a judicial officer; ered entities limit the use or disclosure dividually identifiable health informa- ■ grand jury subpoena; of PHI to the minimum amount neces- tion” that is transmitted by electronic ■ administrative subpoena or request sary to accomplish the intended lawful media, or maintained in any electronic where (1) the information sought is purpose.5 Generally, the minimum nec- medium (45 C.F.R. § 162.103) or trans- material to a legitimate law enforce- essary requirement does not apply to mitted or maintained in any other form ment inquiry, (2) the request is spe- uses or disclosures that are required by or medium. PHI is essentially all cific and limited in scope to the pur- law as described in 45 C.F.R. § health records identifiable by a patient pose for which it is being sought, 164.512(a),6 which includes reports of name or other personal identifiers such and (3) de-identified information4 victims of abuse, neglect, and domes- as a Social Security number. Covered could not reasonably be used; entities may not use or disclose PHI ■ information needed to locate or iden- unless permitted by a provision of tify a suspect, fugitive, material wit- these rules. PHI may be most readily ness, or a missing person; disclosed by written authorization from ■ information about a victim of a crime; the patient. Under certain circumstances, however, HIPAA does not re-

4 “De-identified information” is a term used in 45 C.F.R. §164.512(f)(1)(ii)(C)(3) which is defined in 45 C.F.R. §164.514(a) as follows: Standard: de-identification of protected health information. Health information that does not identify an individual and with respect to which there is no reasonable basis to believe that the information can be used to identify an individual is not individually identifiable health information. 5 45 C.F.R § 164.502(b),164.514(d). 6 45 C.F.R.§ 164.502(b)(2)(v).

70 tic violence. When responding to a law Notification of Disclosure Conclusion enforcement subpoena or Court Order, to Individuals HIPAA is an important law de- and if reasonable to do so, a covered There is no requirement under cur- signed to reduce roadblocks in patient entity may rely on the representations rent law for the covered entity to care, to fight health care fraud, and to of law enforcement that the requested proactively notify an individual that it protect PHI. In assisting to achieve information meets the minimum has disclosed PHI to law enforcement. these goals, covered entities with an necessary requirement.7 Although an individual has a right to re- understanding of the Privacy Rule and Specifically Protected ceive an accounting of the disclosure, its law enforcement exceptions can be confident when responding to requests Types of Medical Records the individual must request the accounting. Under the provisions of 45 for PHI. This article is a brief overview The Privacy Rule provides speci- C.F.R. § 164.528(a)(2), however, the of the law enforcement exception un- fied disclosure requirements for spe- covered entity must temporarily sus- der HIPAA’s Privacy Rule. In short, un- cially protected types of medical infor- pend an individual’s right to receive an der the exception, a covered entity mation. A covered entity must gener- accounting of disclosures to a law en- may disclose PHI to law enforcement ally obtain an authorization for any use forcement official for the time specified pursuant to a Court Order or court-or- or disclosure of psychotherapy notes. if such agency or official provides the dered warrant, a subpoena or sum- There are exceptions, however, to the covered entity with a written statement mons issued by a judicial officer, a authorization requirement. No authori- that the accounting would reasonably grand jury subpoena, or an administra- zations are needed for certain types of be likely to impede the agency’s activi- tive request, including an administra- treatment, for payment of health care ties, and specifies the requested sus- tive subpoena or summons, a civil or operations, for health oversight activi- pension time. If the law enforcement an authorized investigative demand, or ties, to avert serious threats to health agency or official makes an oral re- similar process authorized under law.9 8 and safety, or as required by law. quest to suspend the accounting, the Covered entities must review specific The “required by law” exception in- covered entity must document the re- code sections and regulatory text for a cludes disclosures for judicial and ad- quest, including the identity of the complete understanding of the require- ministrative proceedings and disclo- agency or official making the request. ments and exceptions regarding health sures for law enforcement purposes. In The covered entity may then tempo- information disclosures under HIPAA instances where a law enforcement rarily suspend the accounting of disclo- and the Privacy Rule. agency is seeking disclosure of spe- sures for no longer than 30 days from cially protected types of medical infor- the date of the oral request, unless a Diane Ibrahim is a third year student at mation, such as confidential communi- written request is submitted during that Temple University, Beasley School of cations subject to the psychologist-pa- time. In addition, a Court Order may af- Law. She was a 2004 intern with OIFP. tient privilege, information that a per- firmatively direct the covered entity not son has AIDS or HIV, or information to disclose to the individual or to others about substance abuse diagnosis and that information has been provided un- treatment, it may seek a Court Order der the law enforcement exception. to obtain such records.

7 45 C.F.R. § 164.514(d)(3)(iii)(a). 8 45 C.F.R. § 164.508(2). 9 45 C.F.R. § 164.512 (f)(1)(ii)(c).

71 OIFP’s Medicaid Fraud Unit Protects the Elderly OIFP’s Medicaid Fraud Unit Protects the Elderly by Marquis D. Jones, Jr. “I can only say, as all of us know, erly neglect at long-term care facilities, it takes more than a village to care and to prosecute individuals and cor- for a senior.” porations responsible for egregious – Catherine Macchi, cases of elderly neglect. Office of Senior Affairs, Jersey City The good news is that we are living longer than any time in our history. As the elderly population in- From 1920 to1965, the life expectancy creases, so do the daily risks they in this country increased by approxi- face when they unfortunately do not mately six years.2 “The average Ameri- have loving family members to care for can born today can expect to live more them. To better protect the elderly from than 76 years, and life expectancy has neglect, the New Jersey Medicaid risen dramatically for all age groups.”3 Fraud Control Unit (MFCU) created a The increase in life expectancy results dedicated unit in 2004 to focus on the in an increase in America’s elderly popu- continuous concern of proper care for lation. Some commentators project the New Jersey’s elderly population. In increase in the 85 and older elderly New Jersey, more than “70,000 elders population alone to double to seven are at risk of being physically, emo- million people by 2020, and further in- tionally, or financially abused or ne- crease to between19 million and 27 glected.”1 OIFP’s Medicaid Fraud dedi- million by 2050.4 cated unit is working with the New Jer- As the elderly population increases, sey Department of Health and Senior OIFP’s MFCU remains vigilant of the Services, Office of the Ombudsman for number of elderly citizens living in long- the Institutionalized Elderly, and the term care institutions and residential Division of Aging and Community Ser- facilities who may become victims of vices to investigate allegations of eld- neglect. Some commentators estimate

1 Elder Abuse, New Jersey State Nursing Association, Elder Abuse Position Statement at www.njsna.org. 2 Statement of Tray Baroni, Director of Policy, Pharmaceutical Research and Manufacturers of America, Testimony Concerning Health Care and Caregiving for the Elderly at Public Hearing before the New Jersey Advisory Council on Elder Care, December 9,1998. 3 Ibid. 4 Statement of Assemblywoman Carol J. Murphy, Chair, New Jersey Advisory Council on Elder Care, Public Hearing before the New Jersey Advisory Council on Elder Care, December 9,1998.

73 OIFP’s Medicaid Fraud Unit Protects the Elderly

Reporting that nationally there are approximately 1.6 million people living in approxi- Elder Abuse mately 17,000 licensed nursing homes 1 Elder abuse is generally defined as follows: with another 900,000 to one million liv- Physical Abuse: ing in approximately 45,000 residential A caregiver or someone who has custody of an elderly person care facilities that include assisted liv- 5 willfully inflicts physical pain or injury on the elderly person in ing facilities and homes for the aged. New Jersey is home to approxi- the form of direct beatings, sexual assault, or physical restraints. mately 1.4 million older adults.6 As of Emotional Abuse: December 2004, there were approxi- A caregiver or someone in a position of trust willfully inflicts mately 370 nursing home long-term emotional or psychological abuse on an elderly person with care facilities that provide approxi- 7 verbal assaults, threat, fear, humiliation, intimidation, or isolation. mately 52,045 available beds. Ap- proximately 195 assisted living facili- Neglect and Mistreatment: ties provide another 16,356 possible A caregiver or someone in a position of trust or who has a duty beds.8 New Jersey’s elderly citizens to care for an elderly person fails to provide care at a level that also reside in residential health care a reasonable person would provide to the elderly person, or in a facilities and boarding homes; however, competent fashion. The care may involve poor personal hygiene the exact number of elderly residents and unsanitary conditions, clothing, medical care, supervision, residing in such facilities is unknown. and protection from health and safety hazards. Often neglect “The elderly in residential long-term care settings are particularly vulnerable leads to the development of pressure sores or decubitus ulcers, to abuse and neglect, and the scant which are also known as bed sores. evidence available suggests abuse and Financial Exploitation: neglect are serious and widespread.”9 A caregiver or someone in a position of trust who steals or mis- In New Jersey, the number of nursing manages money, illegally or improperly uses the elderly home complaints increased each year person’s financial resources, or forces the elderly person to between 1999 and 2002. Significantly, most complaints regarded neglect and sign over assets to the abuser. care issues.10 Family and friends of elderly citizens with evidence In addition to prosecuting cases of of elder abuse are encouraged to call (in confidence) Medicaid fraud by medical service pro- the insurance fraud hotline at 1-877-55 FRAUD or log viders, OIFP’s MFCU’s legislative onto www.njInsuranceFraud.org. mandate includes prosecuting the various forms of elder abuse. Abuse of the 1 Elder Abuse, New Jersey State Nursing Association, Elder Abuse Position elderly generally falls into one of several Statement at www.njsna.org.; Statistics, New Jersey Department of Health and categories including physical abuse, Human Services, Aging and Community Services, Office of the Ombudsman for the Institutionalized Elderly, last modified July 1, 2003. sexual abuse, emotional abuse, neglect and mistreatment, and financial exploitation. The MFCU’s statewide prosecution jurisdiction includes the review of complaints of abuse and neglect against patients in health care facilities receiving Medicaid funding. The MFCU also reviews complaints of theft of patients’ private funds in these facilities.11 The MFCU maintains the authority to prosecute matters involving elder abuse under New Jersey’s criminal statutes, the Health Care Claims

74 Fraud Act, and the Medicaid fraud the physical or mental health of the statutes. Many matters involving elderly person or disabled adult.13 The physical abuse and other crimes statute applies when a person has a against the person are also referred to legal duty or the person assumes a various County Prosecutors. To en- continuing responsibility for the care of hance the protections afforded against a person 60 or older or a disabled elder abuse, the MFCU focuses on adult.14 In addition to earlier cases, the elderly neglect involving corporate enti- MFCU is currently investigating cases ties and caregivers. By focusing on the of elderly neglect opened since Sep- neglect cases, OIFP’s MFCU will con- tember 2004. The cases involve allega- tinue to develop the expertise and ex- tions of care issues ranging from perience to prosecute neglect cases physical and sexual abuse, to eco- centered on care issues. nomic exploitation, stolen property, If appropriate, OIFP’s MFCU will and forgery. prosecute corporations and caregivers Armed with a legislative mandate in neglect cases for Health Care and the necessary tools, OIFP’s Claims Fraud and Medicaid fraud un- MFCU looks forward to protecting New der a theory that they failed to deliver Jersey’s growing elderly population. services for which they were paid by Medicaid.12 Abusers may also be pros- Marquis D. Jones, Jr., is a Deputy ecuted under a New Jersey statute Attorney General in the Medicaid that makes it a third degree crime to Fraud Control Unit. He has over ten abandon an elderly person or disabled years of civil litigation experience. adult or to unreasonably neglect to do, or fail to permit, any act necessary for

5 Statement of Catherine Hawes, Professor and Director, Texas A&M University System Health Science Center, Elder Abuse in Residential Long-Term Care Facilities, Testi- mony before the U.S. Senate Committee on Finance, June 18, 2002. 6 Susan C. Reinhard and Charles J. Fahey, Rebalancing Long-Term Care in New Jersey: From Institutional Toward Home and Community Care (March 2003). 7 Interview with Noreen D’Angelo, Executive Assistant, Office of Commissioner, Department of Health and Se- nior Services in Lawrenceville, NJ (January 11, 2005). 8 Ibid. 9 Ibid. 10 Statistics, New Jersey Department of Health and Human Services, Aging and Community Services, Office of the Ombudsman for the Institutionalized Elderly, last modified July 1, 2003. 11 See 42 U.S.C. §1396(b)(q)(40)(A). Other State agencies may seek to develop protective programs under the Programs for Older Americans Act that provides allotments for agencies that develop and enhance programs for the prevention of elder abuse, neglect, and exploitation. See 42 U.S.C. §3058i (West 2004). 12 See N.J.S.A. 2C:21-4.3 (Gain 2004); N.J.S.A. 30:4D-17 (West 2004). 13 See N.J.S.A. 2C:24-8 (West 2004). 14 Ibid.

75 Behind the Scenes in Law Enforcement

NetMap for ClaimSearch and ViewLink Manager are data mining software tools which visually represent the relationships between claimants, addresses, providers, and claims. Behind the Scenes in Law Enforcement The Role of Analysts in Criminal Investigations and Prosecutions

by Christina Runkle, Paula Carter, and Annie Meredith While the roles of prosecutors and and investigative analysis, computer- investigators are well understood in the ized analytic methods, money launder- development and successful prosecu- ing, organized criminal groups, and the tion of a case, the law enforcement New Jersey racketeering statute. Addi- analyst’s function is generally less rec- tional training in various software appli- ognized due to its background nature. cations include Internet research, Corel Analysts can assist attorneys and inves- WordPerfect, Microsoft Access and tigators at all stages of a case as they Excel, and Analyst’s Notebook. Al- manage, organize, and derive meaning though analysts use a variety of tools from mountains of investigative data. to assist prosecutors and investigators, Generally, analysts help to mar- some of the main tools include exten- shal evidence gained from investiga- sive use of databases, investigative tions by examining source and under- analysis, software, visual exhibits, cover information as well as witness in- and charts. terviews, physical and electronic surveillance, the execution of search and Databases arrest warrants, and detailed review of Analysts create and use databases insurance, patient, business, and that are critical to developing meaningful financial records. information at the beginning of a case. OIFP has had an analytical com- OIFP analysts can take an extensive flat ponent since its establishment in file database2 of relevant information and 1998. Analysts are specially trained create a relational database3 to facilitate professionals who gather, organize, the identification of pertinent files. Orga- analyze, and derive meaning from data.1 nization of information at the beginning of The majority of OIFP analysts have a matter is important in the identification college degrees and have received law of fraud schemes. enforcement-related training in such Other information gathered at the areas as tactical and strategic intelli- inception of a case such as telephone gence analysis, criminal investiga- toll data may be helpful in defining the tions, financial records examination scope of a conspiracy if records show

1 Wayne J. Forrest and Marilyn B. Peterson, “Analytic Support for Prosecuting Attor- neys,” The Prosecutor September/October 1998:33. 2 A flat file database specifies data attributes (columns, data types, etc.) one table at a time. 3 A relational database takes the flat file approach several logical steps further. It allows for the specification of information in multiple tables and the relationships between those tables. This allows for more flexibility in queries and reports.

77 Behind the Scenes in Law Enforcement

a particular pattern of calls between or corporate papers, disbursement jour- sions. Additional fields permit further among certain numbers, or a signifi- nals, and tax records, is important. distillation of the data. Data distillation cant volume of calls on or around cer- Analysts may develop Microsoft Ac- allows for the generation of reports that tain significant dates. The OIFP inves- cess databases specific to patient in- isolate fraudulent events based on tigative team recognizes that the formation which capture the following specified individuals and providers in- prompt analysis of the toll data may fields: file origination date, policy num- volved in a fraud. be critical to the further development of ber, claim number, patient name, date Additionally, OIFP analysts create the case. The OIFP analysts utilize of loss, insurance company, payments custom databases that establish the custom Microsoft Access database by the carrier, and source information, cash flow between and among various applications to expedite the entry of including voucher and item numbers. co-conspirators, track corporate owner- toll data and prepare call pattern and Multiple queries and reports are cre- ship, and profile individuals employed frequency analyses. ated to assist investigative staff in the by various entities such as doctors, ac- An analyst may then export the prompt location of pertinent patient countants, and clerical staff. data from the existing program into files within such databases. After categorizing information and another Microsoft Access database. As the investigation progresses, defining fields, analysts build tables, This type of changeover permits ana- this same type of database permits queries, and data entry forms. The lysts to query the information in a analysts to isolate information, such completed database gives an investi- manner that facilitates the identification as staged accidents and “runners” re- gative team the ability to track financial of criminal conspirators. sponsible for each, and to quantify the transactions by individual and corpo- Seized evidence, including patient billings generated and payments made rate entity. Analysts may also create files, billing records, check registers, by insurance carriers for suspect colli- profiles of pertinent individuals and OIFP Reporting Requirements Insurance carriers must provide their ISO Assigned Code and ISO Universal Field Name as well as submitting the following information: Policy Number City Business Name VIN Role in Claim (Choose from ISO Appendix C) Policy Type State Address Information Date of Recovery (Theft) Role in Claim (if service providers reported with claim, their names, address required) Claim Number First Name (Role CL) City Vehicle Make Individual/Business Indicator Date of Loss Last Name (Role CL) State Recovery Agency Business Name (if a business) Location of Address Information Coverage Type Condition of Last Name Loss Address Recovered Vehicle (Theft) (incl. State) First Name City Loss Type VIN First Name (Choose either Role IN, CL) Last Name State Alleged Injuries/ Owner Retaining City (Choose either Property Damage Salvage Indicator Role IN, CL) Business Name First Name Vehicle Year Date of Salvage State (Choose either (Choose from Role IN, CL) ISO Appendix C) -Required if a Business Address Last Name Vehicle Make Buyer’s Business Name Information (Choose from (Abbrev.) OR Last and First Name ISO Appendix C) (if owner did not retain salvage)

78 businesses via the collection of ad- corroborative financial evidence are dresses, phone numbers, other identi- beneficial when analysts are tasked fying numbers, company/individual af- with determining a defendant’s worth filiations, and the source of their con- for criminal restitution purposes. It also nection. Analysts also use databases provides a valuable benchmark as to to capture events or other relevant evi- the accuracy of the financial picture from dence specific to the profiled entity. a review of seized business and subpoe- Such databases provide voucher and naed bank records. Flow charts are pre- item number references for each piece pared in anticipation of a net worth of information so the supporting docu- analysis or asset forfeiture question. mentation may be retrieved for review, or for use at trial. Analysis of database in- Future Analytical Tools formation pertaining to one defendant To provide even more support to may even reveal additional criminal acts. prosecutors and investigators, ana- After analysts compile information lysts continue to consider tools in de- for use through creation of databases, veloping cases, such as the All they can add to the financial database Claims Database, an in-house data and use corporate profiles to prepare source; i2’s Analyst’s Notebook Ver- a link chart in a visualization program sion 6, an enhanced form of this vi- called Analyst’s Notebook. Use of sual analysis program; and Sanction, Analyst’s Notebook may begin the a trial presentation application. focused preparation of a case for a grand jury presentation. Using Analyst’s All Claims Database Notebook, analysts create charts that The long-anticipated All Claims can show such information as all de- Database, mandated by the Automo- fendant-owned or controlled clinics and bile Insurance Cost Reduction Act management companies, all corporate (AICRA), became operational in 2004. officers, and connections to other AICRA tasked OIFP with developing a clinics and management companies database containing all automobile owned or operated by relatives, or as- claims paid by designated insurance sociated physicians. Charts also pro- companies conducting business in vide incorporation dates and can de- New Jersey. The database will include pict name changes for certain clinics. over 130,000 in automobile bodily in- Charts serve as quick reference guides jury claims and 500,000 in automobile to the numerous business entities and property claims estimated to be paid players affiliated with each. annually by the insurance industry. Often the complexity and volume The New Jersey Legislature deter- of information a prosecutor can present mined that such a database would be to the grand jury or trial jury prompts a an invaluable investigative tool and request for preparation of charts that source of statistical data for the identi- can simplify the presentation of the fication of fraudulent patterns and evidence by facilitating a visual analy- trends in filed insurance claims. Ana- sis of demonstrative evidence. lysts will examine information in the Analysts assist in the effort of the database for patterns of fraudulent ac- State to recover restitution. Analysts tivity. OIFP analysts may then share organize personal and corporate tax the information with County Prosecu- information into Excel spreadsheets tors, local law enforcement officials, and add tax return information seized and the New Jersey State Police. from defendants. Detailed review of tax The All Claims Database Unit is documents and careful organization of staffed with a Supervising Special In-

79 Behind the Scenes in Law Enforcement

vestigator and three analysts. The Unit items and the nature of their relationship. responds to requests for investigative NetMap and VLM draw lines that assistance on open cases. The Unit connect individuals, addresses, and also actively seeks to identify fraud claims. For example, Subject A is schemes. For instance, analysts have found to have been in an auto accident searched the database for geographic in early May 2004. Subject A also is areas exhibiting high accident rates, found to share an address and tele- and for physicians whose patients’ phone number with Subject B. Subject claims have been reported as suspi- B is found to have had an auto acci- cious to the National Insurance Crime dent, while driving Subject A’s car, in Bureau (NICB). In addition to develop- late May 2004. Subjects A and B are ing leads for OIFP investigators, the both found to have been receiving Unit can identify suspected fraudulent medical treatment from Doctors C, D, activity that impacts another state and and E. This scenario gives the analyst forward the information to the pros- a nexus for a potential insurance fraud ecuting authority for investigation. case. If connections indicate that a OIFP has also entered into an certain subject is more integral to the agreement with Insurance Services case, the focus of the investigation can Office, Inc., (ISO) of Jersey City to be quickly shifted to limit extraneous data mine4 claims information from its investigative effort. national database. ISO is an informa- The All Claims Database Regula- tion services provider to the property tions were developed and promulgated and casualty insurance industry. The in the N.J. Register in 2004, fulfilling majority of New Jersey carriers already the statutory mandate under AICRA. provide ISO with data, and the ISO database already contains suspicious Analyst’s Notebook Version 6 claims information. OIFP analysts continue to use the OIFP has also purchased two data industry standard for investigative mining applications to assist in the analysis software among law enforce- detection of fraudulent claims pat- ment agencies, Analyst’s Notebook. terns: NetMap for ClaimSearch and The program enables analysts to ViewLink Manager. NetMap for present complex scenarios in simple ClaimSearch analyzes claims data intuitive charts that have been used as from ISO ClaimSearch, the most aids in case development and for comprehensive claims database avail- grand jury and trial exhibits. able for property, casualty, and auto in- In 2003, the manufacturer signifi- surance.5 It facilitates the analysis of cantly enhanced the capabilities of multiple claims, by permitting analysts Analyst’s Notebook with the release of to view various connections across Version 6. OIFP analysts have begun time, claims, and physical distance, to integrate the new, improved docu- instead of searching claim by claim. mentation and data import features View Link Manager (VLM) is an auto- into their investigative support efforts. mated visual link analysis tool that Analyst’s Notebook now allows for the sorts through data to reveal connected combination of time line and network

4 According to WordNet ® 2.0, © 2003 Princeton University, data mining “is data processing using sophisticated data search capabilities and statistical algorithms to discover patterns and correlations in large preexisting databases; a way to discover new meaning in data.” 5 In 1997, ISO acquired the Index System, a database of bodily injury claims, and the Property Insurance Loss Register (PILR), a list kept by the American Insurance Association of all fire losses over $500,000. In 1998, the National Insurance Crime Bureau (NICB) transferred its auto (VIN history, salvage records, etc.) and claims databases to ISO. Under the ISO umbrella, the bodily injury, property, and auto and claims databases were merged to form ISO ClaimSearch.

80 views of investigative data and it per- aids for use before the grand jury and at mits analysts to automatically switch trial. Any case can benefit from analysts’ from one to the other. It further allows critical thinking and the application of for the conversion of chart information one or more analytical techniques to to a spreadsheet format. This facili- help organize, evaluate, and make sense tates sorting, evaluating, and duplicat- of any volume or type of evidence used ing data into Microsoft Excel and other by investigators and prosecutors to similar applications. Finally, Analyst’s successfully prosecute their case. Notebook Online iLink enables analysts to pull information from online Christina Runkle has been an Admin- sources, such as LexisNexis, and istrative Analyst with the Division of drag-and-drop the information directly Criminal Justice OIFP’s Case Screen- into an existing Analyst’s Notebook ing and Litigation Support Section for chart. iLink automatically merges the five years. She previously served 18 data from the online sources with ex- years as a Principal Intelligence Re- isting data sources. Further, the online search Analyst with the New Jersey source items maintain ties to their un- State Police. She is a Certified Crimi- derlying source so analysts can auto- nal Analyst and a member of the Inter- matically update charts. national Association of Law Enforce- ment Intelligence Analysts (IALEIA). Sanction The Sanction program is a trial Paula Carter has been with New organization and presentation software Jersey’s Division of Criminal Justice program purchased in 2004 by OIFP. for seven years and currently serves Sanction was adopted by the U.S. De- as a Supervising Administrative Ana- partment of Justice as the standard for lyst with the OIFP Case Screening and federal prosecutors. OIFP analysts will Litigation Support Section. She has use Sanction to assemble case exhib- been a law enforcement analyst for the its, design video and audio clips, and State of New Jersey for more than 23 to edit and annotate transcripts and years, serving previously with the State documents. Using Sanction, analysts Commission of Investigation and the will provide technical support to pros- State Police Intelligence Bureau. She ecutors whose cases benefit from a is a Certified Criminal Analyst and a digital court presentation by operating member of the International Associa- the program during trials. tion of Law Enforcement Intelligence Analysts (IALEIA). Conclusion Law enforcement analysts assist Annie Meredith is a Special Investi- investigators and prosecutors at virtually gator with OIFP where she heads the every phase of a major insurance fraud All Claims Database Unit. She previ- probe. In prosecutions and investiga- ously worked with the N.J. Division of tions, analysts assist in the manage- Consumer Affairs in both the Enforce- ment, organization, and evaluation of ment Bureau for the Professional thousands of pieces of evidence, includ- Boards and the Office of Consumer ing data collected from carrier files, toll Protection, Cyberfraud Unit. She also and DNR records, seized patient files, served with the Camden County and seized and subpoenaed financial Prosecutor’s Office. and corporate records. By developing and using databases and support products, analysts develop and refine visual

81 Dennis Jay, Executive Director of the Coalition Against Insurance Fraud, Speaks Out Dennis Jay, Executive Director of the Coalition Against Insurance Fraud, Speaks Out by Stephen D. Moore What is the Coalition Against Just how big of a problem Insurance Fraud and how would is insurance fraud? you describe its mission? With the hidden nature of insurance The Coalition is a national alliance of in- fraud, we likely will never have accu- surers, government agencies, and con- rate estimates of the extent of insur- sumers — all of whom are dedicated to ance fraud in the United States. Cur- combating all forms of insurance fraud. rent estimates vary widely, from 3 to Our mission is threefold: to advocate 25 percent of claims, depending on passage of strong state anti-fraud laws line of insurance and region. Studies and regulations, promote public aware- by the coalition and others strongly ness of fraud, and seek a greater un- suggest fraud is a huge problem, cost- derstanding of this national crime prob- ing society tens of billions of dollars lem through objective research. each year. We estimate it is at least $80 billion per year for both public and What was your background prior to private insurance. It’s either the number leading the Coalition Against Insur- one, or two, most expensive economic ance Fraud and how did you per- crime in America. It’s a problem that sonally become involved in the war touches all Americans — individuals on insurance fraud? and businesses. It causes a drag on Before the Coalition, I was vice presi- our economy, puts people in financial dent of communications for the Na- ruin, and even kills and injures people. tional Association of Professional In- surance Agents, where part of my role As you know, our Insurance Fraud was to coordinate strategic alliances Prosecutor, Greta Gooden Brown, between the insurance industry and was a keynote speaker at the Asia- national consumer groups. When the Pacific Fraud Conference held in idea of the coalition surfaced, the found- Australia. To what extent do you ing insurers’ members wanted some- consider insurance fraud to be a one with an insurance background and problem in other countries, as well the consumer groups wanted someone as in the United States? who had experience working for the With a global economy, it’s nearly consumer interest. I fit that bill. impossible to contain a problem like insurance fraud to a single country or continent. Ideas for committing finan-

83 Dennis Jay, Executive Director of the Coalition Against Insurance Fraud, Speaks Out

cial fraud are spreading as fast as it level of organized criminal enterprises takes to send an e-mail message involved in fraud scams has exploded. around the globe. We are hearing from Their schemes have become more so- other countries much more frequently phisticated and, sadly, more violent in the last few years. The United States is some cases. more advanced in combating fraud than most other countries, and they seem New Jersey has established a state- to want to learn from our expertise. level Insurance Fraud Prosecutor appointed by the Governor with As Executive Director of the both criminal and civil investigators Coalition, what has been your and prosecutors whose sole respon- greatest challenge? sibility is the investigation and pros- As an alliance of divergent interests – ecution of insurance fraud. In your insurers, government agencies, and opinion, how does this compare to consumer leaders – it can be challeng- the approach of insurance fraud ing sometimes to find common ground agencies in other states? on the details of legislative initiatives or New Jersey — with its severe public outreach campaigns. We are fraud problem — took a bold step in fortunate in that we work with dedi- creating the Office of the Insurance cated individuals, but they all come Fraud Prosecutor. It has become a from different perspectives. model that we encourage other states to consider. There are four aspects of What, would you say, this operation that we think are essen- has been the Coalition’s tial ingredients for success: greatest accomplishment? ■ Its place and high level within gov- Overall, our greatest accomplishment ernment give it excellent visibility has been helping to advance insurance and stature; fraud as an important issue nationally. ■ With its prosecutorial arm, the Our work has helped our key constitu- agency doesn’t have to worry about ents – legislators, insurers, and con- getting cases prosecuted, unlike sumers – understand the importance other state fraud bureaus; of combating this crime. And the re- ■ It appears to be sults of that include passage of anti- adequately funded; fraud legislation in 18 states, greater ■ The mix of criminal prosecutions and deterrence, and more effective anti- civil actions gives the agency potent fraud initiatives by insurers. tools to make a difference. What, if any, are the greatest Is public awareness an important changes you have seen in the part of your anti-fraud efforts to war against insurance fraud change public attitudes towards since joining the Coalition insurance fraud? How so? as its Executive Director? Public awareness is essential to suc- There have been many changes since cessfully fighting fraud. Our goal is to the early 1990s, including the enact- help people understand (1) what fraud ment of fraud laws in 28 states, the is, (2) how severe it is, (3) who really creation of 25 state fraud bureaus, ends up paying for it, and (4) how and probably a doubling of the number people can avoid being victimized. of SIUs. On the negative side, the Good public awareness also creates

84 deterrence and a stigma because What advice would you give to people begin to perceive there’s a everyone in New Jersey joined in likelihood that you will be caught if the battle against insurance fraud? you commit fraud, and punishment First off, be proud of your success as can be severe. It also encourages leaders in combating fraud. Yours is people to report fraud. an honorable business, fighting for an honorable cause. Fraud fighters are What, in your opinion, saving consumers millions of dollars in are the most effective means the State. But you need to keep chal- of deterring insurance fraud? lenging yourselves on how, as leaders, Different people are motivated by differ- you take this fight to the next level. ent things. Knowing that there are Resist fighting this battle one fraud at good detection methods by govern- a time, and create a system and a cul- ment and insurers will deter some ture that discourage people from com- people. The stigma of getting caught is mitting this crime. The real savings in one of their biggest fears. Others are combating fraud is not detecting the deterred by the prospects of a stiff jail crime or arresting people or putting term and fines. And then there’s a them in jail. It is preventing them from small percentage of criminals who are committing fraud in the first place. not deterred by anything. What should we expect What do you see as to see from the Coalition Against emerging trends in the Insurance Fraud in the coming realm of insurance fraud? months and years? Some of the trends we see include The Coalition will continue its core the increasing level of sophistication mandate to enact anti-fraud legislation, by organized frauds, new twists on old create greater public awareness, and scams, such as fraud involving air bags, to conduct research on the fraud is- glass repair, and street racers. The sue. For this next year, we are devel- number of insurance agents commit- oping some new information programs ting insurance fraud also is a concern. to aid the fraud-fighting community, sponsoring an aggressive outreach What would you say is program, and will begin a multi-year the greatest threat the insurance research project to understand trends industry faces in 2005 in the area in how the courts are punishing of insurance fraud? fraudsters. There’s still much work The greatest threat is taking their eye to be done. off the fraud ball. In some respects, insurers have not kept up with the growing level of sophistication of organized fraud. The industry needs to work more cohesively in all lines of the business to become smarter in combating fraud. That includes technology and providing greater support to their fraud units and to government as partners in this battle.

85 New Jersey Insurance Fraud Case Notes New Jersey Insurance Fraud Case Notes

OIFP has the authority and re- The Insurance Fraud Prevention sponsibility to investigate all types of Act (Fraud Act), N.J.S.A.17:33A-1, et insurance fraud and for conducting and seq., specifically provides OIFP with coordinating criminal, civil, and admin- authority to impose civil fines on insur- istrative investigations and prosecu- ance fraud violators in addition to, or tions of insurance and Medicaid fraud as an alternative to, criminal prosecu- throughout New Jersey. The most for- tion. Summaries of cases in which OIFP midable way to take action against in- entered into Consent Orders providing surance cheats is through criminal for the voluntary payment of such prosecutions. Criminal prosecutions fines, as well as cases in which OIFP’s may result in penalties ranging from civil attorneys pursued such violators the imposition of State prison or through civil litigation, are also included. county jail sentences to probationary When persons who are licensed or diversionary dispositions. These by the State commit insurance fraud, sentences may also include criminal action may be taken by the appropri- fines and restitution. Summaries of ate licensing board against the some of the most significant criminal person’s license. Such actions may cases brought by OIFP and County include the suspension or revocation of Prosecutors in 2004 are set forth in the license, or provide for a voluntary this section of the Report. surrender of the license. Summaries of Those who defraud the Medicaid cases in which licensing authorities Program are subject to the same and OIFP coordinate their efforts in or- criminal sanctions as those who de- der to effect a licensing sanction are fraud private insurance carriers. In ad- also included in this Report. dition to the imposition of criminal pen- The following tables summarize alties, however, other sanctions may OIFP’s 2004 statistics in criminal and be imposed upon Medicaid defen- civil actions. Also included is a table dants, such as debarment from partici- of licensing actions taken by the li- pation in the Medicaid Program as a censing authorities against profes- Medicaid provider. Where a criminal sional licensees who committed prosecution is not viable, Medicaid pro- insurance fraud. viders may also be sued under civil As reflected in the criminal table, Federal or State false claims statutes. in 2004, OIFP opened 464 new crimi- Oftentimes, these cases result in nal investigations and filed criminal settlements involving restitution and charges by Accusation or indictment the imposition of civil fines. Highlights against 214 defendants. OIFP pros- of such cases are included herein. ecutions during the year resulted in the

87 New Jersey Insurance Fraud Case Notes

OIFP Criminal Investigations and Prosecutions Statistics January 1, 2004 - December 31, 2004 New Cases Opened 464 Indictments/Accusations Filed 146

Number of Defendants Charged 214

Number of Defendants Convicted 177

Number of Defendants Sentenced 223

Number of Defendants Sentenced to State Prison 34 Total Number of Years 189

Number of Defendants Sentenced to County Jail 100 Total Number of Years 10

Total Criminal Fines Imposed $361,300 Total Criminal Penalties Imposed $37,010

Total Civil Penalties/Fines Imposed in Medicaid Cases $6,475,165

Total Restitution Imposed $16,222,1531

1 This total includes restitution imposed in criminal and civil actions

conviction of 177 defendants. Of the 223 defendants sentenced in 2004, 134 received jail terms totaling 199 years. Further, a total of over $16 million in restitution was ordered, including restitution imposed in civil actions. As indicated in the civil table, OIFP opened 8,236 new civil insurance fraud cases in 2004 and assigned 4,646 for further investigation. OIFP issued 427 Administrative Consent Orders totaling $3,897,500 during 2004. OIFP obtained 325 Executed Consent Orders totaling $1,684,230 in which subjects voluntarily admitted

88 OIFP Civil Investigations and Litigation Statistics1 January 1, 2004 - December 31, 2004 CIVIL Investigations Number Dollar Amount New Cases Opened 8,236 Number Forwarded for Investigation 4,646 No Investigation Warranted 3,590 Sanctions Imposed Insurance Fraud Letters of Admonition 1,029 Administrative Consent Orders Issued 427 $3,897,500 Administrative Consent Orders Executed 325 $1,684,230 Settlements Entered 103 $361,630 Judgments Entered 234 $1,593,345 Complaints Filed 139 Collections (Department of Banking and Insurance)2 Number of OIFP Accounts Paid in Full 577 Total Amount Received $1,815,039

1 These statistics comprehensively reflect the number of discrete actions undertaken by the Office of Insurance Fraud Prosecutor in pursuing civil sanctions against insurance fraud violators. It should be noted that, in some instances, more than one action was taken against a single violator or for a single violation. 2 These figures were reported by the Department of Banking and Insurance which is responsible for the Collections function.

committing insurance fraud and agreed to pay the civil fine imposed. In addition, OIFP effected 103 settlements totaling $361,630 and obtained 234 judgments totaling $1,593,345. Further, OIFP civil attorneys filed 139 lawsuits against Fraud Act violators in 2004.

Note: An indictment, complaint, or other charge is merely an accusation. A defendant is presumed to be innocent of the charges unless and until proven guilty beyond a reasonable doubt.

89 OIFP Criminal Case Notes – Insurance Fraud

Auto Insurance Fraud re-tagged van he had in his posses- New Jersey, and involved co-defen- sion. Pina pled guilty to theft by de- dants George Holly, Jr., Shaheed ception and was admitted into the PTI Johnson, Nathaniel Jones, and Altering of Program conditioned upon performing Rashonda Harris. All defendants alleg- Vehicle Identification 50 hours of community service and edly claimed to have sustained injuries payment of restitution in an amount to that required medical treatment. The State v. be determined on a later date. Pinto defendants allegedly submitted false Rafael “Bugzy” Ramos, pled guilty to theft by deception on PIP insurance claims under Holly’s au- February 26, 2004, and the Court sen- tomobile insurance policy for approxi- Ceaser Labrego, Neil Arruda, tenced him to five years probation con- mately $47,700 to Keystone Insurance Hernando Cordoso, Richard ditioned upon paying a $5,000 civil in- Company/AAA Mid-Atlantic Insurance Pina, Manuel Pinto and surance fraud fine. Braga Simao pled Company. The second phony accident Denise Braga Simao guilty to theft by deception and the Campbell allegedly planned occurred State v. Court sentenced her on April 2, 2004, on September 16, 1998, in Newark to 364 days probation. and involved co-defendants Robert Michael Garafalo In a separate indictment, Michael Paul Mitchner a/k/a “Shaboor,” Chad State v. Garafalo was charged with receiving Watson, Ramil Robinson, Duane John Faria stolen property. Garafalo pled guilty to Smith, Monesha Gray, and Deborah A State Grand Jury returned an in- the charge and was admitted into the Mathis. These defendants allegedly dictment charging Rafael “Bugzy” PTI Program conditioned upon perform- submitted fictitious PIP insurance Ramos, Ceaser Labrego, Neil Arruda, ing 50 hours of community service. claims to Keystone Insurance Com- Hernando Cardoso, Richard Pina, John Faria pled guilty to an Accu- pany/AAA Mid-Atlantic Insurance Manuel Pinto, and Denise Braga sation charging him with theft by de- Company for approximately $42,950. Simao with participation in a scheme ception, and on March 5, 2004, the In both cases, Keystone Insurance to sell re-tagged vehicles, including Court admitted him into the PTI Pro- Company/AAA Mid-Atlantic Insurance high-end luxury vehicles, by some- gram conditioned upon paying fines Company became suspicious of the times using fraudulently generated au- and restitution totaling $28,889. claims, denied payment, and referred tomobile documentation. A re-tagged the matters to OIFP. vehicle has it’s Vehicle Identification Criminal Use of Runners Campbell pled guilty on October 7, Number (VIN) altered to conceal the 2004, to health care claims fraud and identity of the rightful owner. State v. is scheduled to be sentenced in 2005. Johnson pled guilty on February 27, Ramos pled guilty to conspiracy Dannie Campbell, et al. and on March 29, 2004, and the Court 2004, to conspiracy and on June 25, The Court continued sentencing sentenced him to four years probation 2004, was sentenced to three years defendants in 2004 who were named in and 75 hours of community service. probation and ordered to pay a $2,500 three State Grand Jury indictments Labrego pled guilty to certain alter- civil insurance fraud fine. On January charging Dannie Campbell and ten ations of motor vehicle trademarks and 30, 2004, Jones pled guilty to health other defendants with conspiracy, identification numbers and on March care claims fraud, and on August 2, health care claims fraud, and at- 19, 2004, the Court sentenced him to 2004, he failed to appear at his sen- tempted theft by deception. Between two years probation and 100 hours of tencing and the Court issued a bench July of 1997 and March of 1999, community service. Arruda pled guilty warrant for his arrest. Mitchner pled Dannie Campbell allegedly master- to conspiracy and the Court sentenced guilty on January 26, 2004, to health minded two fictitious automobile acci- him on April 16, 2004, to four years care claims fraud and was sentenced dents. Co-conspirators allegedly probation conditioned upon serving 364 to two years probation with 11 days of treated for injuries purportedly sus- jail credit. Mathis pled guilty to health days in county jail, performing 75 tained in the fictitious accidents and care claims fraud and on January 12, hours of community service, and pay- submitted Personal Injury Protection 2004, was sentenced to three years ing a $60,000 civil insurance fraud fine. (PIP) insurance claims to an insurance The Court admitted Cardoso into the company. The first phony automobile probation and ordered to pay a $2,500 PTI Program on February 20, 2004, accident Campbell allegedly planned civil insurance fraud fine. conditioned upon forfeiture of a occurred on July 24, 1997, in Hillside,

90 The cases as to the other defen- ance. The Court sentenced Castillo to National, Continental Insurance, Farm dants are pending trial. 13 years State prison and ordered him Family Insurance Company, Liberty to pay $27,800 in restitution and a Mutual Insurance Company, Maryland State v. $50,000 criminal fine. Insurance Company, The Moxon Com- James Lee Campbell Anhuar Bandy and Elvis Castillo pany, National Continental Progres- On June 18, 2004, James Lee are two of 28 persons named in ten sive, National General Insurance Com- Campbell was found guilty of violation separate 2002 State Grand Jury indict- pany, NJ CURE, Ohio Casualty Insur- of probation and the Court sentenced ments that charged defendants with ance Company, Parkway Insurance, him to a new three-year term of proba- racketeering, conspiracy, health care Progressive Casualty, Red Oak Insur- tion. Campbell had pled guilty to a claims fraud, attempted theft, theft by ance Company, United States Automo- State Grand Jury indictment charging deception, use of a 17-year-old or bile Association (USAA), and New Jer- him with conspiracy and bribery. younger to commit a criminal offense, sey Manufacturers Insurance Com- Campbell, a “runner” for health care and possession of a weapon without a pany. The State alleged that most of providers, admitted paying undercover permit. All of the charges stem from the claim money was paid to Bandy police officers more than $1,000 to ob- the defendants’ alleged participation in owned, operated, or controlled tain police accident reports. He then re- phony automobile accidents in and chiropractic clinics. cruited victims in the reports to file in- around Union County for which they Six of the 28 defendants, Anhuar surance claims. Campbell’s earlier sen- submitted false insurance claims. Bandy, Alejandro Ventura, Elvin tence was five years probation condi- The State Grand Jury’s main in- Castillo, Raynaldo Cuevas, Victor tioned upon serving 180 days in jail. dictment charged Anhuar Bandy with Almonte, and Cesar Caba who is cur- racketeering and related crimes. The rently incarcerated at a federal prison Fraudulent PIP State alleged Anhuar Bandy owned, in Bridgeton, New Jersey, were controlled, or operated, as the chief charged with conspiracy to commit Insurance Claims by Doctors, corporate officer, six North Jersey chi- racketeering, racketeering, conspiracy, Chiropractors, and Other ropractic clinics, and that Alejandro health care claims fraud, use of a 17- Ventura, Elvin Castillo, Raynaldo year-old or younger to commit a crimi- Health Care Providers Cuevas, Cesar Caba, and Victor nal offense, theft or attempted theft by Almonte were associated with Bandy, deception, and possession of a State v. or the clinics, as “runners” who fabri- weapon without a permit. Cesar Caba Anhuar Bandy, Alejandro cated eight phony automobile acci- pled guilty to conspiracy to commit Ventura, Elvin Castillo, dents. The State alleged that defen- racketeering and theft by deception Raynaldo Cuevas, dants used information from the eight and was sentenced on December 3, phony automobile accidents to submit 2004, to 15 years State prison. Cesar Caba PIP insurance claims in excess of Raynaldo Cuevas pled guilty to con- and Victor Almonte, et al. $331,000 to several insurance compa- spiracy to commit racketeering and was OIFP realized significant success nies. Additionally, the State alleged in sentenced on December 3, 2004, to six this year in the prosecution of a 2002 the indictment that defendants submit- years State prison, ordered to pay indictment for a large-scale staged acted insurance claims in excess of $2 $6,474 in restitution to State Farm Insur- cident ring. On October 15, 2004, fol- million for more than 90 other phony ance Company, pay a $2,000 criminal lowing a six-week jury trial, Anhuar accidents, and that the accidents were fine as well as a $5,000 civil insurance Bandy and Elvis Castillo were con- constructed by obtaining cars, drivers fraud fine. Almonte pled guilty to convicted of racketeering, conspiracy, and passengers, faking accidents, and spiracy to commit racketeering and health care claims fraud, and theft by then sending the occupants of the was sentenced on December 3, 2004, deception. On December 3, 2004, the cars to treat at Bandy’s chiropractic to five years State prison and ordered Court sentenced Bandy to 29 years clinics so he could submit the PIP in- to pay $162 in restitution to Prudential State prison, ordered him to pay a surance claims. The State alleged that Insurance Company. $100,000 criminal fine and restitution insurance claims for more than 90 Twenty-two other defendants were in the amounts of $3,483 to Sentry In- phony automobile accidents were sub- charged in eight separate indictments surance, $14,106 to Allstate Insur- mitted to 16 other insurance carriers (a separate indictment for each acci- ance, and $472 to Prudential Insur- including Bayside Casualty, Clarendon dent) for allegedly submitting or caus-

91 OIFP Criminal Case Notes – Insurance Fraud

ing to be submitted fraudulent PIP in- ing charges, ordered to pay $17,200 care claims fraud and criminal use of surance claims for chiropractic treat- for taxes due and pay $19,040 in pen- runners. A State Grand Jury charged ments rendered by the Bandy or other alties for a total of approximately Baer with health care claims fraud, clinics to treat them for injuries pur- $36,240 due to the New Jersey Divi- criminal use of runners, and theft by portedly sustained in the phony auto- sion of Taxation. Castillo pled guilty on deception. Baer, a chiropractor, owned mobile accidents. The eight Grand November 30, 2004, to theft by decep- and operated a chiropractic practice. Jury indictments charged the 22 defen- tion involving a fraudulent mortgage ap- He was charged with submitting false dants with conspiracy, health care plication. He also pled guilty to failure PIP insurance claims on behalf of pa- claims fraud, and theft or attempted to file a New Jersey State income tax tients who were undercover OIFP State theft for their participation in the eight return and failure to pay New Jersey Investigators to Hanover Insurance phony accidents as passengers, ve- gross income tax with intent to evade. Company and Parkway Insurance hicle operators, and insurance claim- According to the first indictment, Company for approximately $20,153. ants. The defendants allegedly treated Castillo submitted a fraudulent residen- The State also alleged that Baer know- at various chiropractic clinics in order tial mortgage application and fictitious ingly used, solicited, or employed “run- to submit insurance claims as part of documentation in support of the mort- ners” to procure patients for his chiro- the conspiracies involving these phony gage loan application. The State al- practic practice. OIFP will also refer automobile accidents. The State alleged leged that Castillo submitted fraudulent the matter to the Board of Chiropractic that defendants submitted insurance information on the loan application, the Examiners for licensing action. claims in excess of $331,000 for these tax returns submitted with the loan ap- eight phony automobile accidents to at plication, and two letters submitted in State v. least eight different insurance compa- support of the loan application. The Franca DiLisio, et al. nies including Allstate Insurance Com- State also alleged that Castillo’s pri- A State Grand Jury returned two pany, Kemper Insurance Company, mary source of income was the Spinal indictments that charged a licensed MDA/Newark Insurance Company, Health Center of Elizabeth. The Spinal chiropractic physician and seven other Prudential Insurance Company, Re- Health Center was a chiropractic clinic people with health care claims fraud, public Western Insurance Company targeted as part of the ABP investiga- criminal use of runners, theft, and at- (U-Haul of Arizona), Selective Insur- tion. Castillo allegedly claimed he tempted theft by deception. The State ance Company, Sentry Insurance worked at the health center although it charged one defendant with miscon- Company, and State Farm was not an operating business at the duct by a corporate official. All the Insurance Company. time Castillo applied for the residential charges arise from allegations that the Three of the first six racketeers loan. The State also alleged in the in- defendants staged accidents for the who were indicted have pled guilty to dictment that the 1998 income tax re- purpose of submitting fictitious PIP in- conspiracy to commit racketeering turns Castillo submitted for purposes surance claims to five insurance carri- and face prison sentences. Another of calculating his monthly income were ers, or that automobile insurance defendant has pled guilty to health not filed with the New Jersey Division companies were billed for bogus care claims fraud and also faces a of Taxation. The State charged Castillo chiropractic treatments. prison sentence. On June 25, 2004, in the second indictment with filing a The State alleged in the first indict- the Court sentenced Joel Cuevas, who false or fraudulent New Jersey income ment that, between May 1, 1998, and previously pled guilty to conspiracy to tax return, failure to file a New Jersey October 4, 2000, Franca DiLisio, a li- commit health care claims fraud, to income tax return, and failure to pay censed chiropractor, arranged staged nine years State prison to run concur- New Jersey gross income tax. The accidents with the assistance of “run- rent with a previously imposed State alleged that Castillo failed to pay ners” Gerard Blanc and Rolando unrelated sentence. State income taxes for 1997, 1998, Pierre. A “runner” is a person who gets 1999, and 2000. paid to procure patients or clients for Elvin Castillo (Tax licensed professional service providers and Mortgage Fraud Cases) State v. so that insurance claims can be sub- Elvin Castillo was sentenced on Michael Baer mitted for fake injuries. The State al- December 3, 2004, to six years State Michael Baer was sentenced on leged that the accidents were staged prison to run concurrent to the 13-year January 30, 2004, to three years in so DiLisio could treat the occupants of prison sentence on the ABP racketeer- State prison. Baer pled guilty to health the vehicles for injuries they purport-

92 edly sustained, and then bill insurance carriers for PIP insurance claims even though the patients sustained no injuries. The defendants allegedly submitted a dozen false claims to Allstate In- surance Company, Selective Insurance Company, G.U.F.A.C. Insurance Com- State Investigator Jose Vendes describes OIFP’s “Give and Go” auto-theft ring investigation pany, and Colonial Penn Insurance at the New Jersey Vehicle Theft Investigators’ Association Annual Training Seminar. Company for false chiropractic treat- care claims fraud, and attempted theft ments on 302 separate dates for “pa- by deception. On October 1, 2004, the tients” who had not appeared for the State also charged Herbert in a sec- treatments. The claims totaled ap- ond indictment with attempting to ob- proximately $36,380, of which $3,435 tain CDS by fraud. The first indictment was paid by insurance carriers. Gerard alleged that between October of 1998 Blanc pled guilty to theft by deception and November of 1999, Herbert and his and on October 1, 2004, the Court office employees, Caraballo and sentenced him to two years probation Hernandez, conspired to submit bills pending his continued cooperation with for diagnostic tests and chiropractic the State’s investigation. treatments that were not rendered to a In the second indictment, the patient. The alleged patient was an un- State charged Marie Amay, Mimose dercover OIFP investigator, looking into Pierre, and Joane Amay with health fraudulent automobile insurance PIP care claims fraud and attempted theft claims. The State alleged that automo- by deception for acting as passengers bile insurance PIP claims totaling in staged accidents and generating fic- $2,219 were submitted to GSA Insur- titious medical treatment claims. ance Company even though the pro- State v. DiLisio allegedly submitted 16 PIP in- fessional diagnostic tests and treat- Jorge A. Salamanca surance claims for the women to ments were never done on the patient. Allstate Insurance Company, Selective Jorge A. Salamanca was admitted Herbert, a licensed chiropractor, Insurance Company, Colonial Penn In- into the Pre-trial Intervention Program owned Rehab Associates located in surance Company, Crawford Insurance (PTI) on February 20, 2004, condi- East Orange. In the second indict- Company, and Ohio Casualty for tioned upon paying full restitution to an ment, the State charged Herbert with $65,153. The insurance companies auto leasing company, a $5,000 civil allegedly attempting to obtain Tylenol failed to pay any of the 16 PIP claims insurance fraud fine, and his perform- with codeine, Diazepam, Lortab, and and some of these cases are pending ing 60 hours of community service. Acetaminophen with codeine by mis- in civil court and/or arbitration. Salamanca pled guilty to an Accusa- representation, fraud, forgery, decep- DiLisio is scheduled to go to trial tion charging him with tampering with tion, or subterfuge. in early 2005. The remaining seven de- public records or information. fendants are awaiting trial. Salamanca admitted that he falsely re- Fraudulent ported to the Elizabeth Police Depart- State v. Automobile “Give-Up” ment that his 1996 Acura had been Richard Herbert, stolen. He also admitted he filed a and Theft Claims fraudulent stolen car insurance claim Melisa Caraballo, with Allstate Insurance. Salamanca and Monique Hernandez told Allstate he last saw his vehicle at Trial is pending for Richard 5:30 p.m. on June 9, 2002, in Eliza- Herbert, Melisa Caraballo, and beth, New Jersey. The vehicle was Monique Hernandez after a State found at 1:30 a.m. on June 10, 2002, Grand Jury returned an indictment that in Miami, Florida, making it impossible charged them with conspiracy, health for him to have seen his car at 5:30

93 OIFP Criminal Case Notes – Insurance Fraud

p.m. on June 9 in Elizabeth. Allstate ing stolen property, tampering with pub- Selective Insurance Company, Sompo denied the claim and referred the lic records and information, and false Japan Insurance Company of America, matter to OIFP. swearing. In four of the indictments, the State and Country Fire Insurance State charged an additional ten people Company, State Farm Insurance Com- Operation “Give and Go” with conspiracy, receiving stolen prop- pany, Travelers Insurance Company, OIFP initiated a complex under- erty, tampering with public records, al- Universal Underwriters Insurance Com- cover investigation to address the in- teration of motor vehicle identification pany, and USAA Insurance Company. creasing problem of automobile theft numbers, and simulating a motor ve- OIFP investigators arrested Ryan and automobile insurance “give-ups” in hicle insurance identification card. December and Jason December. The North Jersey. The investigation led to State Investigators recovered 46 State charged Ryan December with 22 criminal indictments against 38 per- cars and SUVs from several persons conspiracy and receiving stolen prop- sons on charges that they allegedly who allegedly either stole the vehicle erty, and Jason December with con- planned or participated in actual thefts or acted as “middlemen” and received spiracy. Arrest warrants were issued of the vehicles or owner-involved auto- the “give-up” automobiles from car for Richard Ruiz, Carmen Marchitello, mobile thefts, known as automobile owners who filed false stolen car re- Gilberto Pascual, Rafael Padilla, “give-ups,” in order to collect more than ports. Undercover State Investigators Juan Naut, and “Junior” (last name un- $790,000 in insurance claims. Several also received some vehicles directly known). The remaining 19 defendants defendants pled guilty and were sen- from the owners. were issued summonses. tenced during 2004. The total market value of all the ve- On March 1, 2004, Ryan Decem- An automobile “give-up” is the vol- hicles recovered exceeded $1 million. ber pled guilty to receiving stolen prop- untary transfer of an automobile by the More than 32 automobile theft insur- erty and the Court sentenced him to owner to another person who then dis- ance claims were submitted to the 21 three years State prison and a $500 poses of the vehicle, often for a cash insurance companies. Insurance com- criminal fine. On the same date, Jason payment, for the purpose of allowing panies paid approximately $791,094 December pled guilty to conspiracy the owner to file a false auto insurance for the auto insurance theft claims. and the Court sentenced him to three theft claim with his automobile insur- Claims for $48,056 were not paid ei- years probation. Padilla pled guilty to ance carrier and collect insurance ther because the insurance company receiving stolen property and on De- money for the phony theft. The owner became suspicious of the claim, or the cember 10, 2004, he was sentenced may also have the car loan or lease OIFP investigation interrupted the to four years in State prison with 14 paid off by the insurance carrier. claims process. Most of the cars were days jail credit and ordered to pay a OIFP undercover State Investiga- turned over to the insurance carriers $500 criminal fine. Angel Vasquez pled tors leased a garage on Tonnele Av- because they owned the cars after the guilty to an Accusation on March 25, enue in Jersey City and, posing as an auto theft claims were paid. The com- 2004, charging him with theft by un- auto repair garage, let it be known that panies may seek restitution for the lawful taking for the theft of a 1999 anybody who owned or leased a car amount of money paid for claims. Isuzu Rodeo, and the Court sentenced and who wanted to get rid of it to avoid In total, phony automobile insur- him to two years probation conditioned further car payments or lease payments, ance theft claims were submitted to 21 upon performing 50 hours of commu- or because the car was damaged or insurance carriers including: AIG In- nity service. Anthony Guiliano, Jr., pled needed expensive repairs, could “give- surance Company, Allstate Insurance guilty to theft by deception, and on it-up.” After the owners “gave-up” the Company, Erie Insurance Company, June 4, 2004, the Court admitted him cars, they reported them stolen to the First Trenton Indemnity, Hanover Insur- into the PTI Program for two years, police, allegedly submitted false insurance Company, Liberty Mutual Insur- and ordered him to pay $7,500 restitu- ance auto theft claims, and the insurance Company, Manufacturers Insur- tion to Hanover Insurance, a $5,000 ance company paid the claims. ance Company, Metropolitan Property civil insurance fraud fine, and to per- As the result of the complex un- and Casualty, Motors Insurance Com- form 50 hours of community service. dercover investigation of auto theft and pany, Ohio Casualty Insurance Com- As part of OIFP’s continuing inves- phony “owner-initiated” automobile pany, Penn National Insurance Com- tigation into automobile theft and auto- “give-up” insurance claims, 28 people pany, Progressive Insurance Company, mobile “give-up” schemes, OIFP ob- were charged in 18 indictments with Prudential Insurance Company, tained additional indictments that conspiracy, theft by deception, receiv- Rutgers Casualty Insurance Company, charged ten people with crimes related

94 to phony automobile insurance “give- up” claims. Two of these additional indictments charged eight persons with conspiracy, alteration of motor vehicle trademarks and identification numbers, OIFP Administrative Assistant Pat Miller receiving stolen property, theft by de- receives a Director’s Award from DCJ . ception, and tampering with public Director Vaughn McKoy congratulated Mrs. records or information. The State al- Miller for her dedicated service to OIFP. leged in the two indictments that, between November of 2001 and August of charged Edward G. Whyte with posses- him to two years probation and or- 2002, three automobiles were allegedly sion of a stolen 2003 Mercedes Benz dered him to perform 100 hours of “re-tagged” by several of the eight de- that he had stolen from a Mercedes community service. Carmen fendants. A “re-tagged” car’s VIN has Benz dealership located in Plumstead, Marchitello pled guilty to conspiracy been altered in order to conceal the true Pennsylvania, by means of a “key and on March 19, 2004, the Court sen- identity of the car and its owner, and swap.” A “key swap” theft occurs tenced him to three years probation, hide that it has been “given-up” to fa- when a person posing as a customer ordered him to pay full restitution in an cilitate filing fraudulent auto theft insur- enters an automobile dealership and amount to be determined, and a $500 ance claims. Two of the defendants takes a test drive. During the test criminal fine. Juan Naut pled guilty to were allegedly involved in the automo- drive, the genuine ignition key is receiving stolen property. In an unre- bile “re-tagging” scam. Rafael “Bugzy” “swapped” for a fake key. The car is lated matter, on the same day, Naut Ramos and Ceaser Labrego were ar- stolen later by using the genuine igni- also pled guilty to an Accusation filed rested by OIFP investigators and tion key. Whyte pled guilty to receiving by the Division of Criminal Justice’s charged with conspiracy to commit al- stolen property and the Court admitted Major Narcotics Unit that charged him tering motor vehicle trademarks and him into the PTI Program conditioned with distribution of a controlled and conspiracy to commit possession of upon his performing 60 hours of dangerous substance (Ecstasy) . The altered property. As part of this inves- community service. Court sentenced Naut to four years in tigation, two additional people were Of the nine persons for whom ar- State prison to run concurrent with an named in two other State Grand Jury rest warrants were issued for “re- unrelated five-year State prison sen- indictments charging them with re- tagged” cars, six were arrested by tence for narcotics. The Court also or- ceiving stolen property and simulat- OIFP investigators. Guillermo Guzman dered him to pay $156,654 in restitu- ing a motor vehicle insurance pled guilty to attempted theft by de- tion and a Narcotics Unit-related crimi- identification card. ception. Guzman also pled guilty to an nal fine of $2,000. Richard Ruiz pled According to one of the indict- unrelated Accusation that charged him guilty to theft by deception. He also ments, Joaquin Martinez was allegedly with attempted theft by deception. pled guilty to an Accusation that driving a stolen Cadillac Escalade and Guzman admitted that he reported his charged him with retaliation against a the indictment also alleged that 1984 Oldsmobile Cutlass stolen in witness or informant. Ruiz admitted that Martinez produced a fictitious Fidelity Secaucus and that he submitted a on March 24, 2004, he caused or threat- and Guaranty Insurance Underwriters theft claim to Prudential Insurance ened bodily injury to an undercover infor- insurance identification card when po- Company with various fraudulent in- mant for OIFP who was assisting the lice stopped him. Martinez pled guilty voices indicating that he had a $1,000 State in its continuing investigation of the to receiving stolen property and the stereo system and $850 worth of rims “Give and Go” matter. The Court sen- Court admitted him into the PTI Pro- and tires recently installed in the car. tenced Ruiz on September 3, 2004, to gram conditioned upon his performing Guzman admitted the invoices were three years probation conditioned upon 60 hours of community service. Gilberto phony. The Court sentenced Guzman his serving 180 days in county jail and Pasqual pled guilty to receiving stolen to two years probation and ordered payment of a $3,000 civil fine. property and the Court sentenced him him to pay a $200 criminal fine. Noel Ortiz pled guilty to an Accu- on January 16, 2004, to three years in Ceasar Labrego pled guilty to certain sation that charged him with theft of State prison and ordered him to pay a alterations of motor vehicle trademarks moveable property, and the Court sen- $500 motor vehicle theft penalty. and identification numbers, and on tenced him on August 13, 2004, to three In the second indictment, the State March 19, 2004, the Court sentenced years in State prison. Ortiz admitted he

95 OIFP Criminal Case Notes – Insurance Fraud

was paid between $400 to $800 for paid approximately $23,407 for the State v. stealing six automobiles. The automo- phony automobile insurance theft Adam E. Turco biles were left running and unattended claim for Dasilva-Cristelo. Gavin’s The Court admitted Adam E. Turco for Ortiz to steal so the owners could case is pending trial. into the PTI Program on March 26, submit phony automobile theft claims. State v. 2004, for 36 months conditioned upon State v. his paying a $5,000 civil insurance Johnny Figueroa fraud fine. Turco previously pled guilty Paulo Dasilva-Cristelo On February 3, 2004, the Court to an Accusation that charged him OIFP filed an Accusation that admitted Johnny Figueroa into the PTI with attempted theft by deception. charged Paulo Dasilva-Cristelo with Program conditioned upon his perform- Turco admitted he falsely reported to theft by deception. The Court admitted ing 75 hours of community service and the East Brunswick Police Department Dasilva-Cristelo into the PTI Program ordered him to pay a $5,000 civil insur- that his 1996 BMW had been stolen on May 25, 2004, conditioned upon ance fraud penalty. Figueroa pled from the East Brunswick train station. paying restitution in the amount of guilty to an Accusation that charged Turco had hidden the car in Brooklyn, $23,407 and performing 100 hours of him with attempted theft by deception. New York, and filed a fraudulent auto community service. The State alleged Figueroa admitted he reported to the theft insurance claim with New Jersey that on August 10, 2001, Dasilva- Paterson Police Department that his Manufacturers Insurance Company. Cristelo falsely reported to the Wild- 1993 Lexus SC400 had been stolen wood Crest Police Department that his and he subsequently submitted a sto- State v. 1999 Chevrolet pick-up truck had been len vehicle theft claim to NJ CURE. Richard A. Brown stolen. He subsequently allegedly sub- Figueroa admitted that he registered Richard A. Brown pled guilty on mitted a stolen car insurance claim with and insured the vehicle in his own September 27, 2004, to tampering with the Camden Fire Insurance Associa- name as a favor to a friend who owned public records or information, and the tion. OIFP’s investigation revealed that the car and he knew that the car had Court admitted him into the PTI Pro- the FBI and Philadelphia Police Depart- not been stolen. gram for three years conditioned upon ment seized Dasilva-Cristelo’s pick-up State v. payment of $13,280 in restitution to truck in a sting operation on August 9, Liberty Mutual Insurance Company and 2001, which was one day prior to the Thomas Bright a $5,000 civil insurance fraud fine. A day he last reported seeing the vehicle. Thomas Bright was admitted into Passaic County Grand Jury returned the PTI Program on April 8, 2004, con- State v. an indictment that charged Brown with ditioned upon payment of $13,465 in tampering with public records or infor- Joseph Gavin restitution to Colonial Penn Insurance mation. The State charged in the in- As part of the Dasilva-Cristelo in- Company and performing 100 hours of dictment that Brown falsely reported to vestigation, on October 5, 2004, a community service. A Cape May the Paterson Police Department that Cape May County Grand Jury returned County Grand Jury returned an indict- his 1998 Honda Accord had been sto- an indictment that charged Joseph ment that charged Bright with theft by len for the purpose of submitting a Gavin with conspiracy and theft by de- deception, tampering with public fraudulent stolen vehicle theft claim ception. According to the indictment, records or information, and falsifying to Liberty Mutual Insurance Company. Gavin, who was also known as Joseph records. The State alleged in the in- Liberty Mutual denied the claim and Abadie, allegedly conspired with Paulo dictment that Bright submitted a referred the matter to OIFP Dasilva-Cristelo to submit a phony au- phony automobile theft claim to Colo- for investigation. tomobile insurance claim to the nial Penn Insurance Company for Camden Fire Insurance Association. $13,465 to be paid to the finance com- State v. The State also alleged in the indict- pany. Colonial Penn doubted Bright’s Geraldine Battista ment that Dasilva-Cristelo “gave-up” his auto theft claim because the Philadel- Geraldine Battista pled guilty on 1999 Chevrolet pick-up truck to Gavin phia Police Department possessed February 18, 2004, to an Accusation so that Dasilva-Cristelo could file a Bright’s 1995 Nissan Pathfinder before that charged her with theft by decep- false stolen vehicle report with the Bright last reported seeing his vehicle. tion. The Court admitted Geraldine Camden Fire Insurance Association. Battista into the PTI Program condi- Camden Fire Insurance Association

96 tioned upon her paying a $2,500 civil ing $17,538 in restitution to Sentry In- impounded Vendittoli’s Acura on Janu- insurance fraud fine and performing 25 surance Company and performing 50 ary 19, 2002, nine days prior to the re- hours of community service. Battista hours of community service. On Febru- ported theft in Secaucus. admitted she falsely reported to the ary 25, 2004, Holley pled guilty to an Elizabeth Police Department that her Accusation that charged him with tam- State v. 1995 Mitsubishi Galant had been sto- pering with public records or informa- Sakinah Banks len from the parking lot of the Saxony tion. At the time of his guilty plea, Sakinah Banks pled guilty to theft Motel in Elizabeth. Battista lent the Holley paid a $5,000 civil insurance by deception and on May 10, 2004, car to her boyfriend and knew it had fraud fine. Holley admitted that on De- the Court admitted her into the PTI not been stolen. Battista admitted she cember 17, 2001, he reported to the Program conditioned upon payment of submitted a fraudulent vehicle theft in- Newark Police Department that his a $5,000 civil insurance fraud fine. An surance claim to New Jersey Manufac- leased 1999 Dodge Durango SUV had Essex County Grand Jury returned an turers Insurance Company. New Jer- been stolen from a residential street in indictment that charged Banks with sey Manufacturers paid her $1,732 Newark. Holley also admitted that he theft by deception and tampering with for the loss. submitted a fraudulent vehicle theft in- public records or information. Accord- surance claim to Sentry Insurance ing to the indictment, Banks falsely re- State v. Company. OIFP’s investigation reported to the Newark Police Depart- Alberto Morales vealed that on December 13, 2001, ment that her 1996 Honda Accord was On September 23, 2004, Alberto four days prior to the purported theft, stolen from outside her home. She Morales pled guilty to falsifying Holley’s vehicle had been involved in also allegedly falsely reported the theft records. The Court admitted him into an automobile accident in the Bronx, to Clarendon National Insurance Com- the PTI Program conditioned upon his New York, and had been towed to a pany. Clarendon paid Banks $817 for paying a $2,500 civil insurance fraud salvage yard in the Bronx where it re- personal property in the car, and it paid fine. A State Grand Jury returned an in- mained for two months. Sentry paid off the car loan for $10,157. dictment that charged Morales with at- the lessor $17,575, plus $2,318 in tow- A Hunterdon County police officer tempted theft by deception, tampering ing, vehicle storage, and salvage fees. pulled Banks over driving the Honda with public records or information, and Accord she previously reported stolen falsifying records. According to the in- State v. to the Newark Police. The Hunterdon dictment, Morales reported to the Modesta Vendittoli County police officer noted the car Union City Police Department on Janu- Modesta Vendittoli pled guilty to showed no signs of theft or that it had ary 26, 2002, that his 1997 Acura had attempted theft by deception and on been tampered with, and Banks used been stolen. The State also alleged in April 30, 2004, the Court admitted her a key to operate the car. Further- the indictment that on February 4, into the PTI Program for one year con- more, the police officer’s inspection 2003, Morales submitted a fraudulent ditioned upon performing 225 hours of revealed the car’s security system vehicle theft insurance claim to community service. A State Grand Jury was still operational. Clarendon National Insurance Com- previously returned an indictment that pany. OIFP’s investigation revealed charged Vendittoli with attempted theft State v. that on January 25, 2002, the day be- by deception and tampering with pub- Elias Retamar fore Morales claimed he had last seen lic records or information. According to Elias Retamar was sentenced to his car, the Philadelphia Police Depart- the indictment, on January 28, 2002, three years probation on June 18, ment responded to a car fire. The po- Vendittoli falsely reported to the 2004, for submitting a false insurance lice ultimately identified the burned car Secaucus Police Department that, claim and receiving stolen property. as Morales’ Acura. while she was inside shopping, her The Court will determine restitution at 1999 Acura was stolen from the a later date. Retamar pled guilty to an State v. Harmon Meadow Plaza parking lot in Accusation that charged him with at- Donald T. Holley, Jr. Secaucus. Vendittoli also allegedly re- tempted theft by deception and receiv- The Court admitted Donald T. ported the false theft to her insurance ing stolen property. Retamar admitted Holley, Jr., into the PTI Program on carrier First Trenton Indemnity Com- he falsely reported a 2000 Lexus as April 19, 2004, conditioned upon pay- pany. OIFP’s investigation revealed being stolen to the North Bergen Po- that the Jersey City Police Department lice Department. He also submitted a

97 OIFP Criminal Case Notes – Insurance Fraud

false automobile insurance claim for ance “give-up” conspiracy. Valdez- don allegedly submitted an Affidavit of the Lexus to the NJ CURE Insurance Fernandez previously pled guilty and Vehicle Theft to State Farm Insurance Company. Retamar admitted that the entered the PTI Program conditioned Company on September 24, 2001, Lexus was not stolen, but that he had upon his paying $10,154 in restitution stating he last saw his vehicle on Au- hidden it in a Weehawken garage. and a $4,000 civil insurance fraud fine. gust 23, 2001, in the Pep Boys park- Retamar also pled guilty to three A Middlesex County Grand Jury re- ing lot and that he reported it missing counts of receiving stolen property. He turned an indictment that charged to the police. OIFP’s investigation re- admitted to knowingly receiving a sto- Caba with conspiracy and theft by de- vealed that New York City Police De- len 2003 Acura, a stolen 2002 Toyota ception. According to the indictment, partment Detective Kenneth DeStefano Camry, and a stolen 2001 Ford Mus- Caba conspired with Valdez- recovered Gordon’s vehicle in the tang GT convertible. Retamar admitted Fernandez to submit a phony automo- Bronx, New York, on August 23, 2001. he conspired with several individuals bile insurance claim to Newark Insur- Accordingly, it could not have been in who received stolen cars and replaced ance Company–The Robert Plan of the Pep Boys parking lot as reported VINs to conceal the true identity and New Jersey Corporation. The State al- by Gordon. ownership of the stolen cars. leged in the indictment that Valdez- Fernandez turned over his 1998 Toyota State v. State v. Camry to Caba so Valdez-Fernandez Larnardo R. Pittman James Good could submit a phony automobile theft A State Grand Jury returned an in- James Good pled guilty on De- claim to Newark Insurance Company. dictment on April 29, 2004, that cember 3, 2004, to falsifying records. The State alleged that Caba gave the charged Larnardo R. Pittman with theft He is scheduled to be sentenced in car to an individual who was working by deception, tampering with public early 2005. An Essex County Grand undercover for investigators from OIFP. records or information, and false Jury charged Good with falsifying The individual turned the Toyota over to swearing. According to the indictment, records. Good allegedly filed a false OIFP investigators and Valdez- Pittman allegedly reported to the New- stolen vehicle claim with Liberty Mu- Fernandez allegedly reported the car ark Police Department that his 2000 tual Insurance Company stating that stolen to the New York City Police De- Ford F-350 pick-up truck was stolen his 1989 Subaru had been stolen, even partment. Valdez-Fernandez also al- on June 9, 2002, in Newark. The State though he knew he was not entitled to legedly submitted a sworn Affidavit of also alleged in the indictment that any insurance money. OIFP’s investi- Automobile Theft to Newark Insurance Pittman reported the theft to Empire In- gation revealed that on October 12, Company. Newark Insurance Company surance Company, a subsidiary of 2001, Good’s 1989 Subaru was in- paid $14,234 to Toyota Financial Ser- Zurich North American Insurance Com- volved in a Newark automobile acci- vices, the company that financed pany. Based on OIFP’s investigation, dent where the driver and passenger Valdez-Fernandez’ car loan. the State alleged in the indictment that fled the scene. The State alleged that the statements about the truck being Good submitted the false claim with State v. stolen on June 9, 2002, in Newark Liberty Mutual in order to cover up for Omar K. Gordon were false, and that Pittman knew that the person driving the car because Omar K. Gordon pled guilty to at- the truck had not been stolen because she had wrongfully left the scene of tempted theft by deception and the he knew where it was located at all rel- the accident. Court admitted him into the PTI Pro- evant times. Empire Insurance Com- gram on July 8, 2004, conditioned pany paid Pittman in June of 2002 ap- State v. upon performing 50 hours of commu- proximately $29,000 based on the al- Francisco Caba nity service. A Hudson County Grand legedly fraudulent stolen truck insur- Francisco Caba pled guilty to con- Jury charged Gordon with attempted ance claim. His case is pending trial. spiracy to commit theft by deception theft by deception, tampering with pub- and on October 29, 2004, the Court lic records or information, and falsifying State v. sentenced him to five years probation records. Gordon allegedly reported to Antoinette Campbell and ordered him to pay $15,000 in res- the Jersey City Police Department that Antoinette Campbell pled guilty on titution. The State charged his co-con- his 1996 Nissan Maxima had been September 28, 2004, to an Accusation spirator, Geuris Valdez-Fernandez in stolen from a Jersey City Pep Boys that charged her with attempted theft connection with an automobile insur- parking lot on August 24, 2001. Gor- by deception and the Court admitted

98 her into the PTI Program conditioned Police Department. Progressive paid New Jersey Manufacturers paid $7,291 upon performing 50 hours of commu- the automobile theft insurance claim on the claim. Ortiz pled guilty on De- nity service. Campbell admitted she for $8,547 to Onyx Acceptance Corp., cember 8, 2004, to conspiracy to com- fraudulently reported to the Newark which had a lien on the vehicle. mit theft by deception and on the Police Department that her 1991 Acura Payano pled guilty to theft by deception same day he was admitted into the Legend had been stolen. Campbell and was admitted into the PTI Program PTI Program for three years condi- submitted a fraudulent stolen vehicle on November 15, 2004, and ordered to tioned upon performing 50 hours of claim to Clarendon Insurance Com- pay a $5,000 civil insurance fraud fine. community service and paying $6,631 pany. She later admitted her car had The State alleged in the second in- in restitution to New Jersey Manufac- not been stolen, but rather partially dictment that Maria Rivera and Jose turers Insurance Company. stripped and parked in her friend’s yard Garcia conspired to falsely claim that The cases as to the remaining de- where Newark Police recovered it. a 1994 Mitsubishi Eclipse was stolen fendants are pending trial. so an automobile insurance theft claim State v. could be submitted to First Trenton In- State v. Sixto Payano surance Company. Maria Rivera alleg- Jose Alvarez State v. edly reported the car stolen to the Jer- Jose Alvarez pled guilty to theft by Maria Rivera and Jose Garcia sey City Police Department and she deception on May 27, 2004, and was filed an Affidavit of Vehicle Theft with (a/k/a Antonio Garcia) admitted into the PTI Program condi- First Trenton Insurance Company. tioned upon paying $8,005 in restitu- State v. First Trenton Insurance Company paid tion to New Jersey Manufacturers In- Henry Rodriguez $3,925 on the claim. Rivera pled guilty surance Company. Alvarez, a former State v. on October 4, 2004, to theft by decep- West New York police officer, had Steven Collier tion and the Court sentenced her on been charged with arranging the “give- November 19, 2004, to three years and Carlos Ortiz up” of his 1997 Toyota Camry with co- probation, ordered her to pay $3,926 in conspirator, Alen Hernandez, for the A Hudson County Grand Jury re- restitution, and to perform 150 hours of purpose of submitting a fraudulent theft turned three indictments on May 18, community service. claim to his insurance carrier. Alvarez 2004, that charged three Union City The State alleged in the third in- allegedly turned the vehicle over to men, a Jersey City woman, and a dictment that Henry Rodriguez pos- Hernandez and reported to the Jersey Lakeworth, Florida, man with con- sessed a 1998 Toyota that had been City Police Department that the ve- spiracy, theft by deception, receiving reported stolen. Rodriguez was charged hicle had been stolen. Alvarez alleg- stolen property, and tampering with with possession of stolen property. The edly submitted a fraudulent Affidavit of public records or information. 1998 Toyota had been previously re- Vehicle Theft to New Jersey Manufac- The first indictment charged Sixto ported stolen by its owner and GEICO turers Insurance Company resulting in Payano with conspiracy and theft by Insurance Company paid a theft claim a payment to Alvarez of $15,665 to deception. The second indictment in the amount of $18,750 to the lien settle his claim. charged Maria Rivera with conspiracy, holder and to the owner of the vehicle. theft by deception, and tampering with A Hudson County Grand Jury re- State v. public records or information, and Jose turned an indictment on September 1, George T. Guden, Michael Garcia, a/k/a Antonio Garcia, with con- 2004, charging Steven Collier, a Jersey T. Guden, John E. Gassert spiracy and theft by deception. The third City police officer, and Carlos Ortiz indictment charged Henry Rodriguez with conspiracy and theft by decep- and Angela Guden with receiving stolen property. tion. According to the indictment, on A Middlesex County Grand Jury The State alleged in the first indict- June 4, 1999, Collier allegedly “gave- returned an indictment on June 17, ment that Payano falsely claimed that up” his 1999 Acura Integra to Ortiz, 2004, that charged George T. Guden, a 1994 Chevrolet van was stolen so an Collier’s auto mechanic. The State al- Michael T. Guden, John E. Gassert, automobile insurance theft claim could leged in the indictment that Collier and Angela Guden with conspiracy be submitted to the Progressive Insur- submitted a fraudulent vehicle theft and theft by deception. Angela Guden ance Company. The vehicle was re- claim to New Jersey Manufacturers In- was also charged in the indictment ported stolen to the Hialeah, Florida surance Company on June 7, 1999. with tampering with public records or

99 OIFP Criminal Case Notes – Insurance Fraud

information and false swearing. Ac- public records or information, and false tion that charged her with insurance cording to the indictment, between swearing. According to the indictment, fraud. Rivera admitted she fraudulently January of 2002 and March of 2002, Johnson allegedly reported that her reported to First Trenton Indemnity George T. Guden and Michael Guden 1999 Ford Expedition was stolen while Company that her 1996 Honda Accord allegedly ”gave-up” Angela Guden’s parked on East State Street outside of had been stolen when, in fact, she 1995 Lincoln Mark VIII car to John a laundromat. Later, she allegedly re- was involved in an automobile accident Gassert so it could be falsely reported ported to New Jersey Manufacturers and did not have collision insurance stolen to the police and an automobile Insurance Company that her car was coverage for the vehicle. insurance theft claim submitted to Lib- stolen at 5:30 p.m. on March 23, erty Mutual Insurance Company. 2003, from East State Street. OIFP’s State v. George T. Guden is married to Angela investigation revealed, however, that Ysirdo Paulino Guden and Michael Guden is their the car had been parked in a parking A Hudson County Grand Jury re- son. The State alleged that Angela garage located at 29th Street and 6th turned an indictment on June 30, Guden reported to the Woodbridge Po- Avenue in Manhattan since earlier in 2004, that charged Ysirdo Paulino with lice Department that the Lincoln was the day on March 23, 2003. Based on attempted theft by deception, tamper- stolen from the Woodbridge Shopping its investigation, OIFP doubted ing with public records or information, Mall. The Lincoln was later recovered Johnson’s claim that someone had and false swearing. According to the in the possession of John Gassert, who stolen the Ford Expedition. New Jer- indictment, Paulino allegedly falsely is alleged to be an acquaintance of the sey Manufacturers paid $21,324 for reported to the Jersey City Police De- Gudens. A fraudulent stolen car insur- the stolen auto insurance claim. partment on March 12, 2003, that his ance claim was allegedly submitted to 1999 Ford Windstar had been stolen. Liberty Mutual. Liberty Mutual paid ap- State v. Paulino also allegedly submitted a proximately $12,330 to Angela Guden Juan J. Garay fraudulent vehicle theft insurance claim for the reported theft of her Lincoln. The Court admitted Juan J. Garay to Allstate Insurance Company. OIFP’s John Gassert pled guilty to con- into the PTI Program on August 13, investigation revealed that the Newark spiracy to commit theft by deception, 2004, conditioned upon his paying a Police Department towed Paulino’s ve- and the Court sentenced him on Sep- $5,000 civil insurance fraud fine. Garay hicle to its impound lot on March 10, tember 30, 2004, to three years sus- pled guilty to an Accusation that 2003. Allstate suspected Paulino’s pended sentence conditioned on his charged him with attempted theft by fraudulent claim and denied the claim. full cooperation with the State’s investi- deception. Garay admitted he submit- Paulino’s case is pending trial. gation. The Court admitted Michael ted a fraudulent stolen automobile in- Guden into the PTI Program on Sep- surance claim to New Jersey Manufac- State v. tember 30, 2004, for 36 months condi- turers Insurance Company on October Wildor Jeannot tioned upon his paying $4,185 in resti- 30, 2002. Garay falsely claimed he Wildor Jeannot pled guilty to tution to Liberty Mutual Insurance last saw his 1989 Ford Bronco at ap- theft by deception and on November Company. The cases as to defendants proximately 12:30 a.m. on October 25, 29, 2004, he was admitted into the PTI George T. Guden and Angela Guden 2002, parked at his residence in New- Program and ordered to pay $9,595 in are pending trial. ark. The vehicle had been towed away restitution to Liberty Mutual Insurance by the Newark Police Department on Company. A Hudson County Grand State v. October 24, 2002. New Jersey Manu- Jury returned an indictment that Katrina Johnson facturers Insurance Company suspected charged Jeannot with theft by decep- The Court admitted Katrina Garay’s fraud and denied the claim. tion, tampering with public records, Johnson into the PTI Program on June and false swearing. According to the 21, 2004, conditioned upon paying State v. indictment, Jeannot falsely reported to $15,845 in restitution to New Jersey Natasha M. Rivera the Jersey City Police Department on Manufacturers Insurance Company The Court admitted Natasha M. February 5, 2003, that his 1997 and a $5,000 civil insurance fraud fine. Rivera into the PTI Program on Octo- Nissan Pathfinder had been stolen. A Mercer County Grand Jury returned ber 22, 2004, conditioned upon her Jeannot allegedly filed a stolen vehicle an indictment that charged Johnson paying a $5,000 civil insurance fraud insurance claim with Liberty Mutual In- with theft by deception, tampering with fine. Rivera pled guilty to an Accusa- surance Company. OIFP’s investiga-

100 tion revealed that the Pathfinder was covered in a garage in Lebanon, Penn- State v. recovered burning in an orange grove sylvania. OIFP’s investigation revealed Latoya Fisher outside of Orlando, Florida, on the same that allegedly Garcia had been paying Latoya Fisher pled guilty to an date it was reported stolen, making it im- storage to keep the truck in Pennsyl- Accusation on November 4, 2004, that possible to have been stolen in New Jer- vania. First Trenton, suspecting fraud, charged her with insurance fraud. sey nine hours earlier. Liberty Mutual denied the claim and referred the mat- Fisher admitted she reported to the paid $9,595 to the lien holder for the ter to OIFP. New York City Police Department that loss. Jeannot’s case is pending trial. her 2001 Mitsubishi Montero had been State v. stolen. Fisher also allegedly reported State v. Amalia Vanlaparra the fraudulent theft of the vehicle to her Maria M. Alicea The Court admitted Amalia insurer, First Trenton Indemnity Com- The Court sentenced Maria M. Vanlaparra into the PTI Program on pany. Fisher admitted the car had not Alicea on July 30, 2004, to five years October 27, 2004, conditioned upon been stolen, but rather she gave the probation conditioned upon her paying her paying $500 in restitution and a keys to an unidentified person who took $14,210 in restitution to Liberty Mutual $1,000 criminal fine. Vanlaparra pled the car. Fisher wanted to make a phony Insurance Company, a $3,500 civil in- guilty to an Accusation that charged stolen vehicle theft insurance claim with surance fraud fine, and a $100 criminal her with insurance fraud. Vanlaparra her insurer and no longer make pay- fine. Alicea pled guilty to an Accusa- admitted that she filed a fraudulent sto- ments on the vehicle. She is scheduled tion that charged her with arson of len vehicle claim with GEICO for her to be sentenced in early 2005. property for purpose of collecting insur- 2001 Toyota RAV 4. Vanlaparra knew ance proceeds, theft by deception, that the car had not been stolen, but State v. and tampering with public records or rather she “gave-up” the car to a per- James Walker information. Alicea admitted that she son to whom she paid $1,500 to dis- The Court admitted James Walker and other unidentified persons agreed pose of the Toyota. Vanlaparra wanted into the PTI Program on October 29, to set fire to her 2001 Mitsubishi Galant. to avoid paying the $469 monthly car 2004, conditioned upon his paying Later, Alicea falsely reported to Liberty lease payments. $8,869 in restitution to GMAC and or- Mutual Insurance Company that her dered him to perform 60 hours of com- car had been stolen and she submit- State v. munity service. Walker pled guilty to ted an automobile insurance theft Sean D. Walker an Accusation that charged him with claim to Liberty Mutual for $13,209. Lib- The Court sentenced Sean D. theft by deception. Walker admitted he erty Mutual paid Alicea’s car loan bal- Walker on November 12, 2004, to two falsely claimed to GMAC Insurance ance to Household Finance Company. years probation and ordered her to pay Company that his 1998 Chevrolet a $5,000 civil insurance fraud fine. Blazer had been stolen when he knew State v. Walker pled guilty to an Accusation he had parked the car in Jersey City. Steven Garcia that charged her with attempted theft He falsely reported the car stolen to Steven Garcia pled guilty on No- by deception. Walker admitted she the Roselle Police Department. vember 16, 2004, to attempted theft by falsely reported a 2002 Toyota Corolla Walker admitted making the false sto- deception. He is scheduled to be sen- she rented from Enterprise Rent-a-Car len car reports in order to submit a tenced in 2005. A Union County Grand as stolen to the Plainfield Police De- phony automobile insurance theft Jury returned an indictment that partment. She subsequently submitted claim to GMAC. Believing that charged Garcia with attempted theft by a vehicle theft claim to Liberty Mutual Walker’s car had been stolen, GMAC deception, tampering with public Insurance Company. Walker admitted paid Walker $1,968 on the auto insur- records or information, and false that the car was not stolen and she ance claim, and it paid Walker’s Fed- swearing. According to the indictment, had lent it to a friend who had been in- eral Credit Union $8,844, the balance Garcia submitted a fraudulent stolen volved in an accident. The Plainfield due on his car loan. vehicle insurance claim to First Tren- Police recovered the vehicle at the ton Indemnity Insurance Company. scene of the accident. Garcia allegedly claimed his 1999 Ford F-150 pick-up truck had been stolen. The truck was subsequently re-

101 OIFP Criminal Case Notes – Insurance Fraud

State v. Mazara’s car loan to Sovereign Bank had purchased the car at an automo- Lim Y. Bances for approximately $9,118 and it reim- bile auction for approximately $5,000. A Union County Grand Jury re- bursed Mazara $660 for her car rental Smith admitted falsifying the National turned an indictment on October 29, cost. In total, MetLife paid approxi- Auto Sales purchase agreement to in- 2004, that charged Lim Y. Bances with mately $10,243 on this phony automo- flate the amount of the theft claim and attempted theft by deception and tam- bile theft claim. She is scheduled to be collect insurance claim money from pering with public records or informa- sentenced in 2005. the Allstate Insurance Company. tion. According to the indictment, State v. State v. Bances allegedly knowingly falsely reported to the Elizabeth Police Depart- Israel Rivera Romonde Lominy Laguerre ment that her 2002 Nissan Altima had Israel Rivera pled guilty to an Ac- A Somerset County Grand Jury re- been stolen in order to collect insur- cusation on November 8, 2004, that turned an indictment on July 14, 2004, ance claim money from her insurance charged him with insurance fraud. that charged Romonde Lominy carrier, Metropolitan Property and Ca- Rivera admitted he falsely reported to Laguerre with attempted theft by de- sualty Insurance Company. Bances’ the Liberty Mutual Insurance Company ception, uttering forged writings, and case is pending trial. that his 2001 Honda Civic had been falsifying records. The State alleged in stolen. Rivera submitted an automobile the indictment that, between Septem- State v. insurance theft claim for approximately ber 15, 2000, and October 17, 2000, Raiza Y. Delossantos $10,398. Liberty Mutual paid the insur- Laguerre submitted false automobile Raiza Y. Delossantos pled guilty ance claim to satisfy the car loan and insurance claims to Liberty Mutual In- to an Accusation on November 8, towing and storage charges. Liberty surance Company following the theft of 2004, that charged her with tampering Mutual became suspicious of the a 1991 Ford Explorer which had been with public records or information. claim and referred the matter to OIFP. recovered. Laguerre also allegedly Delossantos admitted she falsely re- OIFP’s investigation revealed that submitted a false automobile repair in- ported to the Jersey City Police De- Rivera’s car was found burning in voice by altering the invoice amount partment that her brother’s 1997 Philadelphia prior to the date he re- from $310 to $3,995. Laguerre alleg- Chevrolet Blazer in her possession had ported the fraudulent theft to Liberty edly submitted false receipts indicating been stolen in order to collect insur- Mutual. Rivera is scheduled to be sen- that she paid for limousine transporta- ance money from Selective Insurance tenced early in 2005. tion to and from her place of employ- Company of America. She is scheduled ment on 41 dates for $2,460, when to be sentenced early in 2005. False Automobile she only used limousine transportation Related Insurance Claims on 28 dates for $1,680. State v. State v. Esther Mazara State v. Juana Perez Esther Mazara pled guilty to an Ronald K. Smith Accusation on December 14, 2004, The Court admitted Juana Perez that charged her with insurance fraud The Court sentenced Ronald K. into the PTI Program on April 30, 2004, and arson. Mazara admitted that she Smith to two years probation on April conditioned upon her performing 250 falsely reported to Metropolitan Prop- 16, 2004, and ordered him to perform hours of community service. Perez erty and Casualty Insurance Company 40 hours of community service. Smith pled guilty to an Accusation that (MetLife) that her 1999 Jeep Cherokee pled guilty to an Accusation that charged her with attempted theft by had been stolen. She also admitted charged him with attempted theft by deception. Perez was involved in a mi- she assisted an unidentified person deception. Smith admitted that, be- nor traffic accident in which her 1998 with setting fire to her 1999 Jeep tween April 30, 2001, and September Hyundai Elantra sustained minor Cherokee in order to collect the insur- 24, 2001, he submitted a fictitious scratches. Perez subsequently filed a ance claim money. Mazara’s car was Proof of Purchase Agreement from Na- vehicle damage insurance claim with found completely burned in Philadel- tional Auto Sales reflecting he pur- Liberty Mutual Insurance Company for phia prior to the time she reported the chased a 1991 Acura for approximately $3,044. Perez admitted she enhanced car stolen to MetLife. MetLife paid off $18,018. Smith, in fact, purchased the the damage to her car in order to inflate car from a relative for $100. The relative the cost of the repair and damages.

102 State v. sive sound system, wheels, and tires Baton Rouge, Louisiana, suspected John Callery with his stolen vehicle claim. The fraud and contacted First Trenton. First Trenton referred the matter to OIFP for John Callery was admitted into the phony invoices totaled approximately investigation and prosecution. Dunlock PTI Program on December 17, 2004, $8,560. Merchant’s Insurance Com- is scheduled to be sentenced in 2005. conditioned upon performing 75 hours pany, suspecting fraud, denied the claim and referred the matter to OIFP of community service. Callery pled State v. guilty to an Accusation that charged for investigation. Maximilia Scheuerer him with attempted theft by deception. State v. Callery admitted he was involved in an Maximilia Scheuerer was admitted automobile accident while driving his Yaw Boaten into the PTI Program on December 10, 1992 Dodge Caravan. In order to sup- Yaw Boaten pled guilty to an Ac- 2004, conditioned upon performing 50 port his claim for a larger settlement, cusation that charged him with insur- hours of community service and pay- Callery submitted fraudulent repair re- ance fraud, and on October 13, 2004, ing a $2,500 civil insurance fraud fine. ceipts supplied by another person to the Court admitted him into the PTI Scheuerer pled guilty to an Accusation Liberty Mutual Insurance Company. Program. Boaten admitted he was in- that charged him with attempted theft Liberty Mutual provided insurance cov- volved in an automobile accident when by deception. Scheuerer admitted he erage for the other vehicle involved in he had no automobile insurance. submitted a falsely inflated claim to the accident. Boaten also admitted he reinstated his Colonial Penn Insurance Company for automobile insurance with State Farm a Worthington trailer purchased for State v. Insurance Company, and he falsely $10,000. In fact, the trailer had been Zia Ghahary claimed the accident occurred after his purchased for only $5,300. When the trailer was allegedly stolen, Scheuerer Zia Ghahary pled guilty to an Accu- insurance policy was reinstated. He admitted he submitted a false claim for sation on December 14, 2004, that then submitted altered receipts for re- $10,000. Colonial Penn denied the charged him with insurance fraud. pairs to his car to State Farm. claim and referred the matter to OIFP Ghahary admitted he submitted a phony State v. for investigation. automobile insurance property damage Anthony Dunlock claim to The Hartford Insurance Com- State v. pany. Ghahary claimed the rear of his Anthony Dunlock pled guilty on vehicle was damaged in a automobile December 7, 2004, to an Accusation Jason Senf accident when the damage was pre- that charged him with theft by decep- A Mercer County Grand Jury re- existing and he was not entitled to tion. Dunlock admitted he used a ficti- turned an indictment on November 19, payment for the damage. He is sched- tious police report when he submitted 2004, that charged Jason Senf with in- uled to be sentenced in early 2005. an automobile insurance PIP claim to surance fraud and attempted theft by First Trenton Indemnity Insurance deception. According to the indict- State v. Company. He admitted he falsified the ment, Senf allegedly submitted an in- Mark Perillo police report to reflect he was injured surance claim to Foremost Insurance Company for damage done to his all- Mark Perillo pled guilty to an Ac- in an automobile accident that alleg- terrain vehicle (ATV). The State alleged cusation that charged him with insur- edly occurred on April 8, 2000. He that Senf claimed he damaged his ATV ance fraud, and on September 10, then allegedly went to medical profes- on June 22, 2003, when he struck a 2004, the Court sentenced him to sionals to seek treatment for injuries tree. Senf allegedly attempted to make three years probation and ordered pay- and caused bills to be submitted to a collision claim for damages to his ment of a $250 criminal fine and a First Trenton for approximately ATV. The State alleged that Senf’s $2,500 civil insurance fraud fine. $15,900. The insurance company that friend actually damaged the ATV ear- Perillo’s 2003 Mitsubishi was stolen in supposedly insured the other driver in the false police accident report, lier on April 18, 2003, when he struck a New York City on October 6, 2003. Pacesetter Adjustment Company of tree with the ATV. At that time, how- Perillo admitted he submitted phony ever, the ATV was not covered with col- invoices to Merchant’s Insurance Com- lision insurance by Foremost Insur- pany to fraudulently inflate his claim. ance Company. The State alleged that Perillo included receipts for an expen- after the ATV was damaged, Senf at-

103 OIFP Criminal Case Notes – Insurance Fraud

tempted to obtain insurance with colli- Insurance Fraud Committed State v. sion coverage. Foremost investigated by Police Officers Philip Major, et al. Senf’s June 22, 2003, claim and then A State Grand Jury returned four referred the matter to OIFP for further separate indictments on September investigation and prosecution. His State v. 24, 2004, that charged 39 persons, pri- case is pending trial. Lt. Jerome F. Bollettieri, marily from Essex County, with con- Sgt. Thomas G. DiPatri (ret.) spiracy to commit theft by deception Insurance Claims and Charles Warrington, II and official misconduct relating to au- Involving Identity Fraud Charles Warrington II, a registered tomobile insurance PIP fraud. Philip agent for American Spinal Care, Inc. Major, an East Orange police officer State v. (ASC), a Collingswood chiropractic fa- and the central figure in the con- David Scott, Nicole Barker and cility that submitted PIP automobile in- spiracy, was charged in a separate Ac- surance claims to insurance compa- cusation. Major pled guilty to con- Charles Gladney nies, pled guilty to criminal use of run- spiracy and official misconduct for writ- A State Grand Jury returned an ners; and the Court sentenced him to ing 16 false police automobile accident indictment on March 2, 2004, that three years in State prison on Novem- reports so that approximately 60 insur- charged David Scott with conspiracy ber 1, 2004. A State Grand Jury indict- ance claims could be submitted to in- to commit health care claims fraud, ment charged Warrington with con- surance companies for PIP, property theft by deception, and falsification of spiracy, bribery in official matters, and damage, and non-economic losses records. Nicole Barker and Charles criminal use of runners. According to arising from bodily injuries purportedly Gladney were each charged in the in- the indictment, Warrington requested sustained in automobile accidents. dictment with conspiracy to commit and paid for illegally obtained police Major admitted that he was a “runner” health care claims fraud. According to accident reports in order to solicit pro- and accepted bribe payments from two the indictment, Barker had an auto ac- spective patients for treatment at ASC. chiropractors for providing information cident in Philadelphia. She allegedly A State Grand Jury returned an indict- from police accident reports to the chi- conspired with Scott and Gladney to ment that charged former Camden Po- ropractors who used that information make it appear to the police and to the lice Department Lt. Jerome F. to recruit patients who submitted insur- insurance company that Barker was Bollettieri and Sgt. Thomas G. DiPatri ance claims. A “runner” is a person the driver and Scott was the passen- (ret.) with conspiracy, official miscon- who gets paid to recruit people for li- ger in Barker’s car when the accident duct, bribery, and criminal use of run- censed medical professionals or law- occurred. Gladney was a tow truck ners. At the time of the conduct al- yers so that insurance claims can be driver who allegedly supported leged in the indictment, Bollettieri was submitted. Furthermore, Major admit- Barker’s and Scott’s false claim. the officer in charge of the Camden ted he had a financial interest in Metro Scott pled guilty to conspiracy Police Department’s Traffic Records Medical Services, a medical facility and health care claims fraud and the Bureau. According to the indictment, that specialized in treating persons for Court sentenced him on December 3, DiPatri, a retired Camden police officer, insurance claims, and he also admit- 2004, to 364 days in county jail as a allegedly bribed Bollettieri to illegally ted he attempted to bribe another po- condition of three years probation. obtain police accident reports. The lice officer for additional police acci- Barker pled guilty to conspiracy on State also alleged in the indictment dent report information in order to re- September 27, 2004. She is scheduled that DiPatri obtained the police acci- cruit patients to submit insurance to be sentenced in 2005. Gladney’s dent reports to identify automobile ac- claims. He is scheduled to be sen- case is pending trial. cident victims in order to solicit pro- tenced in 2005. spective patients for treatment at ASC. The 39 defendants allegedly Following a bench trial, the Court agreed to be identified as having been found DiPatri guilty of conspiracy, involved in phony automobile accidents bribery, official misconduct, and crimi- in police reports written by former East nal use of runners. The Court sen- Orange Police Officer Philip Major. The tenced DiPatri to three years State State alleged that the conspiracy to prison. The case as to Bollettieri is create phony accidents occurred be- pending appeal and trial.

104 tween June of 1995 and October of Receiving “Operation Car Swap” 1999. Five of the 39 defendants (Jose Stolen Property State v. Frias, Cordell Vaxter, Lawrence Hannah, Terron Session Rafael Torres, and Brunilda Blanco) pled guilty on December 6, 2004, to “Operation VIN Swap” An Essex County Grand Jury conspiracy to commit official miscon- State v. returned an indictment on June 16, duct and theft by deception. They are Antonio Rodriguez-Baez 2004, that charged Terron Session with receiving stolen property. Accord- scheduled to be sentenced in 2005. OIFP investigators arrested Anto- ing to the indictment, Session alleg- Mark Bendet, a now-disbarred nio Rodriguez-Baez pursuant to com- edly was in possession of a stolen Passaic County attorney, pled guilty to plaint warrants that charged him with 1992 Lexus SC300, a 2002 Cadillac conspiracy, bribery, and theft by de- receiving stolen property. Rodriguez- DeVille, and a 2000 Honda VTR motor- ception and the Court sentenced him Baez allegedly bought and sold stolen cycle on February 15, 2002; the al- to 13 years in State prison and ordered and re-tagged cars at several garages leged stolen vehicles were worth ap- him to pay fines and restitution based located in Jersey City and North proximately $74,000. OIFP’s investiga- on charges that he committed con- Bergen. Re-tagging of automobiles is tion revealed that the vehicles were spiracy and official bribery. Bendet ad- done by altering the VIN to conceal stolen from a Port Authority storage mitted that he, his former wife Imelda the identities of the cars and facilitate facility utilized by Conrail. Session’s Toquero, and former East Orange Po- fraudulent insurance claims. A State case is pending trial. lice Officer Philip Major paid bribe Grand Jury returned an indictment on money for police automobile accident August 19, 2004, charging Rodriguez- reports. Automobile insurance PIP Baez with conspiracy, receiving stolen Staged and claims were allegedly submitted for property, and alterations of motor ve- Fictitious Accidents claimants by Metro Medical Services. hicle trademarks and identification Imelda Toquero pled guilty to a State numbers. Rodriguez-Baez is allegedly State v. Grand Jury indictment that charged the leader of an auto theft trafficking Owen Tracy her as a co-conspirator with her hus- network. According to the indictment, Owen Tracy pled guilty to health band, Bendet. She admitted she paid Rodriguez-Baez a/k/a “Tony,” Eladio care claims fraud, and the Court sen- a former East Orange police officer for Reyes, and/or Jaime Rodriguez alleg- tenced him on May 14, 2004, to three police reports as part of her role in edly bought and sold stolen automo- years probation conditioned upon serv- Metro Medical Services’ criminal biles; and Rodriguez-Baez allegedly ing four days in jail and payment of scheme. The Court sentenced Toquero conspired with others to organize, su- $40 in restitution and a $5,000 civil in- to one year probation and 364 days in pervise, finance, and manage the sto- surance fraud fine. A Middlesex county jail. The Court sentenced “run- len automobile ring that operated out of County Grand Jury returned an indict- ner” Eddie Boyd of Carteret for his role the Jersey City area. According to the ment that charged Tracy with health in the fraud. The State charged Boyd indictment, Rodriguez-Baez allegedly care claims fraud, attempted theft by as a co-defendant with Bendet and possessed numerous stolen vehicles, deception, and false swearing. Accord- Toquero for bribes paid to a fictitious including a 2000 Mercedes-Benz, a ing to the indictment, Tracy’s girlfriend person they believed was an Irvington 2001 Mercedes-Benz, a 2004 Cadillac was involved in a motor vehicle acci- police officer. The Court sentenced Escalade, and two 2002 Mercedes- dent in Perth Amboy and she was the Boyd to 364 days in county jail and or- Benzes. The State alleged that only occupant of the car at the time of dered him to pay $11,975 in restitution Rodriguez-Baez also ran the automo- the accident. Tracy allegedly claimed to the Robert Plan Insurance Com- bile re-tagging operation in order to re- he was a passenger in the car and pany. Boyd worked as a “runner” for sell or transport the vehicles out of wrongfully filed a PIP insurance claim Bendet, Toquero, Major, and Metro state. This case is pending trial. Medical Services. Boyd allegedly infor $1,672 with his girlfriend’s auto intended to use some of the police re- surance carrier, Rutgers Casualty. The ports to solicit the people named in the State also alleged that Tracy filed a reports to become insurance claimants. sworn affidavit claiming he did not have insurance coverage and was, therefore, entitled to insurance benefits under his

105 OIFP Criminal Case Notes – Insurance Fraud

girlfriend’s policy. Rutgers Casualty State v. fraudulent PIP insurance claims to suspected a “jump in” false claim (an Eric Boyer, et al. Progressive Insurance Company, State insurance fraud where a person claims State v. Farm Insurance Company, and Alamo- to be injured in a car accident when he National Union Fire Insurance Company. is not a passenger in the car). It de- Shaquan McClaurin, Boyer allegedly recruited Shaquan nied the claim and referred the matter Kirk McNeill, Alnicsa Franklin, McLaurin, Kirk McNeil, Alnicsa to OIFP for investigation. Otis Christopher, Rodney Franklin, Otis Christopher, Rodney Mayes and Raynelle Hamilton Mayes, and Raynelle Hamilton to State v. State v. claim that on October 5, 1998, they Wanda R. Middleton were passengers in a van driven by Wanda R. Middleton pled guilty to Tamika Sutton, Sakinah Hill, Boyer and that they were injured in a health care claims fraud and the Court Shinaka Hill, Vanessa Miller, phony accident. The defendants were sentenced her on May 14, 2004, to Louis McKenzie, Emilio allegedly treated for their purported in- three years probation and ordered her Mayes, Raphael McCray juries and allegedly submitted approxi- to pay a $5,000 civil insurance fraud and Kevin Douglas mately $66,052 in PIP insurance fine. A Middlesex County Grand Jury claims to Progressive Insurance. Pro- returned an indictment that charged State v. gressive denied the claims. McNeil Middleton with health care claims Tamika Sutton, pled guilty to attempted theft by defraud and attempted theft by decep- Shonique Carney, ception. The Court sentenced him on tion. According to the indictment, a Sheri Brown, February 27, 2004, to two years proba- motor vehicle accident took place in Sareesah Houston a/k/a tion conditioned upon his performing Edison, New Jersey, on September 8, 50 hours of community service and 2001. A driver and two passengers oc- Jareeseah Houston, paying a $3,000 civil insurance fraud cupied one of the vehicles involved in Ona Jones, Robert Henderson fine. Hamilton, McClaurin, and Rodney the accident. Only a driver occupied and Ali Sawab Mayes pled guilty to attempted theft by the other vehicle, which was insured a/k/a Abdul Sawab deception. The Court sentenced Mayes to three years probation on February by NJ CURE. The State alleged in the Sentencing continued in 2004 for 27, 2004, conditioned upon performing indictment that Middleton, who was individuals caught in a staged accident 75 hours of community service and pay- not in either vehicle and was not in- ring masterminded by Eric Boyer. ing a $3,000 civil insurance fraud fine. volved in the accident, submitted false Boyer pled guilty to health care claims On the same day, the Court admitted PIP insurance claims with NJ CURE. fraud, and the Court sentenced him on McClaurin into the PTI Program for one She allegedly claimed she was an in- June 11, 2004, to four years in State year conditioned upon performing 50 jured passenger in the insured’s car. prison. The State named 22 people in hours of community service. The Court NJ CURE denied the PIP claims that four State Grand Jury indictments that admitted Hamilton into the PTI Program totaled $16,000 for medial treatment charged them with conspiracy, health on March 5, 2004, for one year, condi- purportedly provided to Middleton. NJ care claims fraud, and attempted theft tioned upon his continued cooperation CURE referred the matter to OIFP for by deception. Boyer masterminded the with the State’s investigation. investigation and prosecution. three staged accidents involving 21 al- Boyer also orchestrated a staged leged co-conspirators that resulted in accident on November 1, 1998, in the submission of multiple fictitious West Orange. Tamika Sutton allegedly PIP insurance claims to several insur- drove a van in this phony accident that ance companies. OIFP alleged in the collided with a vehicle driven by indictments that Boyer planned and or- Valentino White. Defendants allegedly chestrated the three phony automobile claimed that the passengers in accidents between October of 1998 Sutton’s van were Sakinah Hill, and October of 1999. The other defen- Shinaka Hill, Louis McKenzie, Kevin dants allegedly posed as passengers Douglas, and Emilio Mayes. The pas- in the accidents. The three phony ac- sengers allegedly in White’s vehicle cidents resulted in defendants alleg- were Vanessa Miller, Raphael McCray, edly submitting over $204,378 in

106 and another person not identified in the Jones pled guilty to attempted theft by $4,181 for the claim. For another indictment. The occupants of both ve- deception and the Court sentenced staged accident, Christopher’s girl- hicles were allegedly treated for pur- Jones to three years probation with friend allegedly leased a truck from ported injuries sustained in the staged credit for 67 days of time served. On Penske Trucks under the fictitious accident. They allegedly submitted November 5, 2004, Henderson was name of “Lisa Palmerri.” Penske PIP insurance claims to Progressive sentenced to two years probation with Trucks’ insurance carrier, Fast Track Insurance and State Farm Mutual In- credit for 74 days of time served. Auto, paid a $4,254 insurance claim to surance Company for approximately The charges as to the remaining “Mark Alexander,” another alias used $62,865, of which the carriers paid defendants are pending trial. by Mark Christopher. For yet another $5,389. McCray pled guilty to at- staged accident, Christopher allegedly tempted theft by deception and the State v. used the alias “Mark Palmerri,” and Court sentenced him on February 27, Mark Christopher claimed his car was struck by a truck 2004, to five years probation condi- The Court sentenced Mark Chris- rented from Ryder Rent-a-Truck, oper- tioned upon performing 125 hours of topher on March 19, 2004, to six years ated by “Mark Valentine,” still another community service and paying a in State prison and ordered him to pay alias of Christopher. In this case, Spe- $3,000 civil insurance fraud fine. restitution in the amounts of $4,254 to cialty National Insurance Company paid McKenzie pled guilty to attempted Fast Track Auto Claims, $12,705 to Christopher’s $2,550 insurance claim theft by deception and the Court sen- Republic Western Insurance Com- under his “Mark Palmerri” alias. Similar tenced him on March 26, 2004, to pany, and $3,324 to Specialty National claims for $2,931 and $773 were paid three years probation conditioned upon Insurance Company. Christopher, a/k/a by Republic Western Insurance Com- performing 50 hours of community ser- Mark Valentine, Mark Palmerri, Mark pany for accidents purportedly involving vice. The Court admitted Miller into the Alexander, and Eric Self, pled guilty on rented U-Haul trucks for which Christo- PTI Program on May 17, 2004, for one January 21, 2004, to an Accusation pher allegedly submitted insurance year. Douglas and Shinaka Hill pled charging him with health care claims claims under various aliases. Republic guilty on December 9, 2004, to at- fraud and theft by deception. Christo- Western Insurance also paid $4,089 to tempted theft by deception. Both are pher admitted that, with his girlfriend’s various health care providers for treat- scheduled for sentencing in 2005. assistance, he used a variety of ment of injuries Christopher allegedly Boyer allegedly arranged yet an- aliases to orchestrate and participate claimed to have sustained in one of other staged accident on December 1, in eight staged accidents in the the purported auto accidents. 1998, in Irvington. In this accident, Camden County and Burlington Christopher also admitted to a Boyer allegedly arranged for Tamika County areas between December charge of credit card fraud. Christopher Sutton to report that a hit-and-run ve- 11,1997, and April 14, 2001. Christo- allegedly retrieved receipts and credit hicle struck her rented van. The defen- pher submitted over $17,000 in fraudu- card information from the trash at the dants allegedly claimed that the pas- lent property damage claims and, in U-Haul offices and wrongfully used the sengers in Sutton’s van were Sheri one instance, a $4,000 fraudulent credit card information to purchase Brown, Robert Henderson, Ona Jones, bodily injury PIP claim. various items over the internet. Ali Sawab, Shonique Carney, and In several of the staged accidents, Sareesah Houston. As with the other Christopher allegedly operated a State v. phony accidents, the occupants in the rented truck to hit other vehicles and Abdullah “Wali” Islam, rented van allegedly claimed they sus- subsequently filed fraudulent insurance Leon Harris, Glenn Johnson tained injuries that required treatment, claims. To stage one accident, Chris- and Rodney Hammock and they allegedly submitted PIP in- topher rented a truck from U-Haul in A State Grand Jury returned an insurance claims totaling $75,460 to the name of “Mark Valentine” and al- dictment on January 6, 2004, that Alamo-National Union Fire Insurance legedly placed his girlfriend in another charged Abdullah Islam, Leon Harris, Company. Brown pled guilty to at- car he owned under the name “Mark Glenn Johnson, and Rodney Ham- tempted theft by deception, and the Palmerri.” They allegedly falsely mock with conspiracy, health care Court admitted her into the PTI Pro- claimed to Republic Western Insur- claims fraud, and attempted theft. Ac- gram on June 7, 2004, for one year ance that the U-Haul truck struck the cording to the indictment, Islam alleg- conditioned upon performing 50 hours car in which Christopher’s girlfriend of community service. Henderson and was riding. Republic Western paid

107 OIFP Criminal Case Notes – Insurance Fraud

edly masterminded a scheme in which cover law enforcement officers posing or attempted theft by deception. Hec- he and the other defendants created as participants in the illegal scheme. tor Bonilla pled guilty to conspiracy the impression that an automobile ac- Allstate Insurance Company received and the Court sentenced him to four cident occurred on July 25, 1998, in PIP claims totaling $567,940 from the years in State prison to run concurrent Newark. The defendants allegedly staged accident scheme. OIFP’s in- with a county jail sentence stemming claimed the accident involved a 1984 vestigation revealed that the defen- from an unrelated matter, in addition to Ford Bronco and a 1994 Hyundai. De- dants would allegedly stage the fake payment of restitution and civil insur- fendants allegedly submitted PIP in- automobile accidents by purposely ance fines. David Gonzalez pled guilty surance claims for approximately crashing cars into one another or into to conspiracy and the Court sentenced $60,250 to GSA Insurance Company. fixed objects. The defendants allegedly him to three years probation condi- GSA denied the claims because it reported the motor vehicle accidents to tioned upon performing 150 hours of suspected fraud and referred the mat- area police departments, principally community service and paying a $1,500 ter to OIFP for investigation. Islam and the Camden and Pennsauken Police civil insurance fraud fine. Ileana Hammock pled guilty on March 22, Departments. The “victims” then alleg- Gonzalez pled guilty to conspiracy 2004, to attempted theft by deception. edly sought and obtained treatment for and was sentenced to two years pro- The Court sentenced Hammock on the reported injures sustained as a re- bation conditioned upon performing July 6, 2004, to two years probation; sult of the staged accidents. Ulti- 100 hours of community service. Miguel and on September 13, 2004, Islam mately, defendants allegedly filed Roman and Elba Soto pled guilty to was sentenced to four years probation fraudulent PIP claims with the Allstate conspiracy. The Court sentenced Ro- and ordered to pay a $200 criminal Insurance Company for payment or re- man to three years probation condi- fine. The Court issued bench warrants imbursement of medical expenses and tioned upon performing 150 hours of for the arrest of Johnson and Harris. “pain and suffering” costs. community service and paying a $1,500 Both are currently fugitives with cases The principal indictment identified civil insurance fraud fine. Soto was pending trial. Iris Salkauski as the leader of the con- sentenced to two years probation conspiracy and the coordinator of each of ditioned upon paying a $1,500 civil in- State v. the ten staged accidents. Salkauski surance fraud fine. Many of the other Iris Salkauski, et al. allegedly orchestrated the staged acci- defendants received similar sentences The Court handed down another dents, recruited the participants or “vic- and any remaining defendants sentence for a defendant caught in a tims” for each of the staged accidents, await trial. staged accident ring that involved 48 paid the “victims” for their participation defendants. Omar Montes pled guilty in the staged accidents, and directed State v. to conspiracy, and on May 14, 2004, the “injured victims” to obtain medical Neil Arruda he was sentenced to three years in care and legal services. The State and Simone Fernandes State prison and ordered to pay a charged Salkauski with conspiracy A State Grand Jury returned two $1,500 civil insurance fraud fine and and attempted theft by deception. separate indictments against Neil restitution in an amount to be deter- Salkauski remained a fugitive from the Arruda and his girlfriend, Simone mined at a later date. time of the indictment until her arrest Fernandes. The first indictment A State Grand Jury returned ten on March 5, 2003. Police arrested charged Arruda with conspiracy, theft separate indictments against 48 Salkauski cowering in a bedroom by deception, and one count of false people. The defendants were charged closet inside a residence in incrimination. The State charged with conspiracy, theft by deception, Kissimmee, Florida. Police held Fernandes in the second indictment and attempted theft by deception for Salkauski in the Osceola County jail with conspiracy, theft by deception, their participation in a staged accident without bail until her extradition to New and hindering apprehension or pros- ring. The State alleged that the 48 de- Jersey. Salkauski ultimately pled guilty ecution. The State alleged in the indict- fendants planned or participated in at to conspiracy and was sentenced to ments that Arruda orchestrated five least ten staged automobile accidents five years State prison and ordered to staged accidents between March of over a two- and-a-half year period, pay a $235,000 civil insurance fraud fine. 1998 and February of 2000 with the most frequently in the City of Camden The State Grand Jury indictments help of nine alleged co-conspirators. and Pennsauken Township. At least charged the remaining 47 defendants The defendants allegedly submitted one staged accident involved under- with conspiracy and theft by deception fraudulent automobile insurance claims

108 that led to payment of over $80,000 by State v. sengers in a car struck by a hit-and- numerous insurance companies. Gladys Roman, run vehicle that ran a stop sign. The Fernandes pled guilty to theft by Manuel Hernandez, State alleged in the indictment that the deception, and on February 20, 2004, accident never occurred and that the the Court sentenced her to three years Yaneris Diaz, Hernando Nhar defendants treated at an East Orange in State prison and ordered her to pay and Claudia Quiroz Mazo chiropractic clinic for injuries they restitution in the amount of $45,316. In connection with the Bula investi- falsely claimed to have sustained in On January 8, 2004, Arruda pled guilty gation, a Passaic County Grand Jury the phony accident so they could sub- to conspiracy, and on April 12, 2004, returned an indictment on December mit bodily injury and PIP claims to he was sentenced to four years proba- 13, 2004, charging Gladys Roman, State Farm Insurance. State Farm de- tion conditioned upon serving 364 days Manuel Hernandez, Yaneris Diaz, nied the claims and referred the case in county jail, performing 75 hours of Hernando Nhar, and Claudia Quiroz to OIFP for investigation. community service, and paying Mazo with conspiracy. Diaz, Quiroz Bailey pled guilty to attempted $74,905 in restitution and a $60,000 Mazo, and Nhar were also charged theft by deception, and on October 22, civil insurance fraud fine. OIFP already with theft by deception. Mazo allegedly 2004, the Court sentenced him to charged seven of the co-conspirators drove a car that rear-ended Roman’s three years probation with credit for 87 in three separate indictments returned car on October 13, 1998. Nhar and days served in county jail and ordered by Essex County and Union County Bula were alleged passengers in him to perform 150 hours of commu- Grand Juries. An eighth co-conspirator Mazo’s car; Hernandez and Diaz were nity service. Harvey pled guilty to an was previously charged by a State alleged passengers in Roman’s car. Accusation charging him with con- Grand Jury. The State alleged in the indictment spiracy and was admitted into the PTI that the defendants staged the acci- Program conditioned upon performing State v. dent in order to submit fictitious PIP 50 hours of community service. Smith Erik Bula claims and bodily injury claims to Lib- pled guilty to conspiracy and at- Erik Bula pled guilty on July 21, erty Mutual Insurance Company and tempted theft by deception and was 2004, to an Accusation that charged ELCO Administrative Service. Claims sentenced to two years probation con- him with health care claims fraud and were paid in the following amounts: ditioned upon completing 100 hours of theft by deception. Bula admitted that Gladys Roman - $2,619 (PIP) community service. he staged an automobile accident on Manuel Hernandez - $6,323 (PIP) October 13, 1998, in Union City, New Yaneris Diaz - $3,571 (PIP); State v. Jersey, involving two cars and five other $1,200 (bodily injury) John Groff, et al. persons. Bula and the people involved Claudia Quiroz Mazo - $967 (PIP); John Groff pled guilty to attempted in the accident allegedly received treat- $7,000 (bodily injury) theft by deception admitting that he ment for injuries they alleged were Hernando Nhar - $572 (PIP); conspired with 28 other defendants to sustained as a result of the accident. $3,275 (bodily injury) stage phony accidents and on Sep- The defendants also allegedly sought Erik Bula - $712 (PIP); tember 19, 2003, was sentenced to bodily injury settlements from Liberty $4,725 (bodily injury) seven years in State prison with three- Mutual Insurance Company. Bula ad- The defendants await trial. and-a-half years parole ineligibility. Fol- mitted that, as a result of the staged lowing an appeal of his sentence, Groff accident, Liberty Mutual paid approxi- State v. was resentenced on November 3, mately $5,437 to him or on his behalf. Ali Harvey, Roy Bailey 2004, to five years probation after he In total, Liberty Mutual paid approxi- and Irene Smith served 414 days in jail as part of his mately $28,500 in PIP benefits and An Essex County Grand Jury re- original sentence. bodily injury settlements in claims turned an indictment charging Roy A State Grand Jury returned the from this staged automobile accident. Bailey and Irene Smith with conspiracy indictment that charged Groff and Luis Bula is scheduled to be sentenced to commit theft by deception and at- Ruiz with conspiracy and attempted early in 2005. tempted theft by deception. According theft by deception. Groff and Ruiz, who to the indictment, Ali Harvey, Bailey, acted as “runners,” allegedly conspired and Smith reported to the Newark Po- with 27 other defendants to stage a to- lice Department that they were pas- tal of seven automobile accidents in

109 OIFP Criminal Case Notes – Insurance Fraud

and around Camden County. As a re- State v. State v. sult of these phony accidents, ficti- Waddell A. Tidwell Jorge Luis Velasquez tious PIP claims for nearly $97,000 Waddell A. Tidwell was sentenced Jorge Luis Velasquez was admit- were allegedly submitted to Allstate In- on March 12, 2004, to probation for one ted into the PTI Program on February surance Company, State Farm Insur- year. Tidwell pled guilty to an Accusa- 20, 2004. Velasquez pled guilty to an ance Company, Liberty Mutual Insur- tion that charged him with simulating a Accusation that charged him with ance Company, Prudential Insurance motor vehicle insurance identification simulating a motor vehicle insurance Company, and Material Damage Ad- card. Tidwell admitted that on three dif- identification card. Velasquez admitted justment Corp. False police reports ferent occasions he sold fictitious in- that, during a traffic stop in South were allegedly submitted to the police surance identification cards to an un- Plainfield, he knowingly presented a departments of Pennsauken, dercover New Jersey State Trooper. South Plainfield police officer with a Voorhees, Cherry Hill, Bellmawr, counterfeit Liberty Mutual motor ve- Camden, and Gloucester Township. State v. hicle insurance identification card. The carriers refused payment of the Boyd Robinson claims because of their suspicions Boyd Robinson pled guilty to the State v. and referred the case to OIFP for fur- sale of a simulated document and on Lakisha L. Williams ther investigation. Ruiz pled guilty to January 23, 2004, the Court sentenced On April 27, 2004, Lakisha L. conspiracy to commit theft by decep- him to five years probation conditioned Williams was admitted into the PTI tion and was sentenced to three years upon serving 364 days in county jail. Program, conditioned upon perform- in State prison with one year of parole A State Grand Jury returned an indict- ing 40 hours of community service. ineligibility and ordered to pay a ment that charged Robinson with Williams pled guilty to an Accusation $20,000 civil insurance fraud fine. The simulating a motor vehicle insurance that charged her with simulating a other defendants were admitted into identification card, sale of a simulated motor vehicle insurance identification the PTI Program conditioned upon document, and forgery. According to card. Williams admitted that while their paying a $1,000 civil insurance the indictment, between July of 2001 having her vehicle inspected at a fraud fine and their continued coopera- and August of 2001, Robinson alleg- Cumberland County MVC inspection tion with the State. edly sold a fictitious State Farm In- facility, she presented a counterfeit demnity Company automobile insur- Camden Fire Insurance Company Uninsured Motorists (Ficti- ance identification card, a fictitious motor vehicle insurance identification tious Insurance Identification New Jersey driver’s license, and three card to a MVC inspector. fictitious motor vehicle inspection stick- Cards and Motor Vehicle ers to an undercover OIFP investigator. State v. Documents) Tyshon Phipps State v. Tyshon Phipps pled guilty to simu- State v. Darren Ragin lating a motor vehicle insurance identi- Jose Ramon Bouson A Camden County Grand Jury re- fication card and on April 30, 2004, the Jose Ramon Bouson was sen- turned an indictment on January 8, Court sentenced him to two years pro- tenced on February 20, 2004, to three 2004, that charged Darren Ragin with bation. An Essex County Grand Jury years probation conditioned upon his simulating a motor vehicle insurance returned an indictment charging serving 180 days in county jail. identification card for a 1988 Ford Tau- Phipps with simulating a motor vehicle Bouson pled guilty to an Accusation rus. According to the indictment, insurance identification card. Phipps that charged him with simulating a Ragin allegedly presented a fictitious allegedly presented a fraudulent Pro- motor vehicle insurance identification Allstate insurance identification card to gressive Insurance Company automo- card. Bouson admitted that, while on a Motor Vehicle Commission (MVC) bile insurance identification card to a probation for an unrelated conviction, inspector at the Cherry Hill MVC in- police officer during a traffic stop. he manufactured and sold a counterfeit spection station. Ragin’s case is motor vehicle insurance identification pending trial. card to a person acting in an undercover capacity for OIFP.

110 State v. State v. State v. Mike Dinari Lamar Sturdivant Rafael Gadea Mike Dinari pled guilty to simulat- The Court admitted Lamar The Court sentenced Rafael ing a motor vehicle insurance identifi- Sturdivant into the PTI Program on Gadea on April 2, 2004, to three years cation card and was sentenced on March 22, 2004. Sturdivant pled guilty probation. Gadea pled guilty to an Ac- October 22, 2004, to two years proba- to an Accusation that charged him cusation that charged him with simu- tion and ordered to pay a $500 crimi- with simulating a motor vehicle insur- lating a motor vehicle insurance identi- nal fine. A Bergen County Grand Jury ance identification card. Sturdivant ad- fication card. Gadea admitted that he returned an indictment that charged mitted that he presented a counterfeit presented a counterfeit Allstate auto- Dinari with simulating a motor vehicle Camden Fire Insurance Company mo- mobile insurance identification card to insurance identification card. Follow- tor vehicle insurance identification card a New Jersey State Trooper after being ing a motor vehicle stop in Ridgefield to a MVC inspector. stopped for a motor vehicle violation in Park, Dinari allegedly presented a po- Camden. Gadea admitted that he lice officer with a fraudulent First Tren- State v. bought the card “on the street,” that ton Insurance Company motor vehicle Clarence Shambry, Sr. the card was counterfeit, and that he insurance identification card knowing Clarence Shambry, Sr., pled guilty did not possess automobile insurance. that the insurance identification card to simulating a motor vehicle insurance was counterfeit. identification card and was sentenced State v. on March 26, 2004, to five years pro- Belinda Weedon State v. bation and ordered to perform 100 On April 23, 2004, OIFP filed an Angel L. Miranda hours of community service. A Accusation that charged Belinda The Court sentenced Angel L. Camden County Grand Jury returned Weedon with forgery; and on the same Miranda on March 26, 2004, to one an indictment that charged Shambry date, the Court accepted her into the year probation. Miranda pled guilty to with simulating a motor vehicle insur- PTI Program for one year. The State an Accusation that charged him with ance identification card. According to alleged that while entering into a lease simulating a motor vehicle insurance the indictment, Shambry sold a coun- contract with Somerset Auto for a identification card. Miranda admitted terfeit Allstate Insurance Company mo- 2001 Dodge Stratus, Weedon pre- that, to prevent having his parked, un- tor vehicle insurance identification card sented Somerset Auto with a fictitious registered vehicle towed for a parking to a New Jersey State Trooper. Liberty Mutual insurance declaration. violation, he presented a fictitious Lib- erty Mutual insurance identification State v. State v. card to a New Jersey State Trooper. Kasandra Hall Angel M. Leon The Court admitted Kasandra Hall The Court admitted Angel M. Leon State v. into the PTI Program on June 25, into the PTI Program on July 12, 2004. Nimer Elsamna 2004, for a period of one year condi- The State charged Leon in an Accusa- Nimer Elsamna pled guilty to forg- tioned upon her performing 60 hours of tion with simulating a motor vehicle in- ery and was sentenced on March 12, community service. A Union County surance identification card and falsify- 2004, to one year probation. An Essex Grand Jury returned an indictment that ing records. Leon, who operated a County Grand Jury returned an indict- charged Hall with simulating a motor taxicab company in the Camden area, ment charging Elsamna with forgery. vehicle insurance identification card. admitted that he knowingly presented According to the indictment, Elsamna According to the indictment, Hall alleg- a counterfeit New Hampshire Insur- allegedly sold a fictitious MVC tempo- edly presented a false Liberty Mutual ance Company motor vehicle insur- rary registration tag to an undercover insurance identification card to a MVC ance identification card for one of his OIFP investigator. inspector while having her 1999 KIA taxicabs to a police officer. Leon also Sephia inspected at the Rahway MVC admitted that he falsified a State of inspection station. New Jersey vehicle registration application by falsely providing New Hamp- shire Insurance Company as the insurer of a taxicab.

111 OIFP Criminal Case Notes – Insurance Fraud

State v. legedly presented a counterfeit auto- State v. Emiled R. Herrera mobile State Farm Insurance Com- Taleatha L. Thomas The Court admitted Emiled R. pany insurance identification card to a A Mercer County Grand Jury re- Herrera into the PTI Program on May MVC inspector while having his 1995 turned an indictment on November 19, 14, 2004, for one year conditioned Nissan truck inspected at the Rahway 2004, that charged Taleatha L. Tho- upon his performing 60 hours of com- MVC inspection station. mas with simulating a motor vehicle in- munity service. A Union County Grand State v. surance identification card. According Jury returned an indictment charging to the indictment, Thomas allegedly Herrera with simulating a motor vehicle Yvette R. Williams presented a counterfeit Liberty Mutual insurance identification card. Accord- Yvette R. Williams pled guilty to Insurance Company motor vehicle in- ing to the indictment, Herrera allegedly simulating a motor vehicle insurance surance identification card to a MVC presented a fictitious New Jersey identification card and was sentenced inspector while having her 1997 Geo Manufacturers Insurance Company au- on July 23, 2004, to probation for one Prism inspected at the Lawrenceville tomobile insurance identification card year. A Cumberland County Grand Jury MVC inspection facility. Thomas’ case to a motor vehicle inspector while hav- charged Williams with simulating a is pending trial. ing his 1995 Toyota pick-up truck in- motor vehicle insurance identification spected at the Plainfield MVC facility. card. According to the indictment, Will- State v. iams allegedly presented a fictitious Jorge Fonseca State v. Liberty Mutual Insurance Company and Joe Abel Hojas-Bravo Elexis N. Dantzler motor vehicle insurance identification card to a MVC inspector while having Joe Abel Hojas-Bravo pled guilty The Court admitted Elexis N. to official misconduct and the Court Dantzler into the PTI Program on July her vehicle inspected at the Millville inspection station. sentenced him on December 3, 2004, 6, 2004. Dantzler pled guilty to an Ac- to 180 days in county jail as a condi- cusation that charged her with the sale State v. tion of 30 months probation. Jorge of a simulated motor vehicle insurance Raul Garcia Fonseca pled guilty on October 18, identification card and tampering with 2004, to conspiracy and is scheduled Raul Garcia was admitted into the public records. Dantzler admitted that to be sentenced in early 2005. PTI Program on November 15, 2004, she sold a fictitious State Farm Indem- A State Grand Jury returned an in- following his guilty plea on the same nity motor vehicle insurance identifica- dictment that charged Fonseca with date to simulating a motor vehicle in- tion card to an undercover New Jersey conspiracy, forgery, and sale of simu- surance identification card. A Mercer State Trooper. She also admitted pre- lated documents. The State Grand County Grand Jury returned an indict- senting a fictitious motor vehicle insur- Jury also returned a second indictment ment that charged Garcia with falsify- ance identification card to the NJ MVC. that charged Hojas-Bravo with con- ing records and simulating a motor ve- spiracy, official misconduct, and trans- hicle insurance identification card. Ac- State v. fer of a simulated document. Accord- cording to the indictment, Garcia alleg- Denar R. Sandoval ing to the first indictment, between edly presented a counterfeit Allstate In- On October 29, 2004, the Court June 28, 2002, and July 9, 2002, surance Company motor vehicle insur- admitted Denar R. Sandoval into the Fonseca allegedly conspired with an ance identification card to a MVC in- PTI Program conditioned upon per- employee of the Irvington MVC to spector while having his 1990 Honda forming 60 hours of community ser- make fictitious drivers’ licenses, driving Prelude inspected at the Lawrenceville vice. A Union County Grand Jury re- permits, and automobile titles. The MVC inspection facility. turned an indictment that charged second indictment alleged that Hojas- Sandoval with simulating a motor ve- Bravo, an employee of the Rahway MVC hicle insurance identification card. Ac- facility, conspired with another person cording to the indictment, Sandoval al- to create and transfer a fictitious New Jersey motor vehicle driver’s license.

112 Note: The following two cases are mu- “FIX-DMV-1” Wayne MVC office located on Route nicipal court matters. Offenses pros- State v. 23, allegedly presented a fictitious ecuted in municipal court are not crimes Rita Okolo, Josefina Martinez driver’s license to the police officer. A and these defendants were not charged MVC lookup revealed that MVC had with any crime in these matters. and Fermin Capellan suspended Swinney’s driver’s license. A State Grand Jury returned an in- State v. dictment that charged Rita Okolo, a “Fix-DMV-13” Emilio Lebron MVC employee, with multiple counts State v. Emilio Lebron pled guilty on May of conspiracy, official misconduct, and Stacey Chestnut bribery in official matters. The State 17, 2004, in Upper Deerfield Township A State Grand Jury returned an in- also charged her with one count of Municipal Court to a disorderly per- dictment on March 4, 2004, that sale of a simulated document. A second sons offense for possession of a ficti- charged Stacey Chestnut with official indictment charged Josefina Martinez tious motor vehicle insurance identifi- misconduct. According to the indict- and Fermin Capellan each with con- cation card. The Court sentenced him ment, Chestnut, in her capacity as an spiracy and bribery in official matters. to a fine of $300 and court costs. employee of the Wayne MVC facility According to the first indictment, located on Route 23, allegedly created Okolo, in her official capacity as an State v. two fictitious motor vehicle forms for Exam Technician at the Wayne MVC two people who were not named in the Jose Sandoval office located on Route 23, allegedly indictment. The State alleged that Jose Sandoval pled guilty on De- sold fictitious commercial drivers’ li- Chestnut created and processed an cember 1, 2004, to a disorderly per- censes for $300 to undercover OIFP application for a duplicate non-photo sons charge for possession of a false investigators between November of driver’s license and an application for a motor vehicle insurance identification 2002 and January of 2003. According driver’s examination permit for a com- card. He was ordered to pay a $250 fine. to the second indictment, between mercial driver’s license (CDL). February of 2003 and May of 2003, Chestnut’s case is pending trial. Motor Vehicle Okolo allegedly accepted a $500 bribe Commission Initiative from Capellan to provide him with a fic- “Fix-MVC-16” titious commercial driver’s license in State v. “FIX-DMV” the name of Josefina Martinez. The “FIX-DMV” is OIFP’s continuing in- State alleged in the indictment that Karina Noelia Vallego, vestigation into official misconduct and Martinez was issued a commercial Monica Morelli, Luis Lagos fraud at the State’s Motor Vehicle driver’s license without taking the com- and Betty E. Doering Commission (MVC), as well as the mercial driver’s license exam. The OIFP investigators arrested and procurement of fictitious identification Okolo, Martinez, and Capellan cases charged Karina Noelia Vallego, her to include drivers’ licenses, commer- are pending trial. mother Monica Morelli, Luis Lagos, cial drivers’ licenses, and other MVC- and Betty E. Doering with conspiracy related documents. OIFP has learned “FIX-DMV-2” to commit a sale of a simulated docu- by investigating and prosecuting insur- State v. ment and tampering with public ance fraud that false identification, in- Tiffany Swinney records related to obtaining false iden- cluding fictitious drivers’ licenses, is Tiffany Swinney pled guilty on No- tification documents. A State Grand frequently used by persons to commit vember 30, 2004, to tampering with Jury returned an indictment on May insurance fraud. For example, false public records or information and is 24, 2004, that charged the defendants identification is used in staged acci- scheduled to be sentenced in early with conspiracy and tampering with dents for submitting false PIP auto- 2005. A State Grand Jury charged public records. mobile insurance claims. Many Swinney with tampering with public people file false insurance claims uti- records or information and sale of a lizing several different false identities. simulated document. A Wayne police Fictitious drivers’ licenses facilitate officer stopped Swinney for a motor ve- The State alleged that Vallego, this illegal conduct. hicle violation. According to the indict- Morelli, Lagos, and Doering assisted ment, Swinney, an employee of the

113 OIFP Criminal Case Notes – Insurance Fraud

another person to identify people in- Mutual Insurance Company, Prudential ing to the indictment, Green allegedly volved in the sale of fictitious MVC Insurance Company, and State Farm presented a counterfeit Liberty Mutual documents including drivers’ licenses, Insurance Company motor vehicle in- automobile insurance identification registrations, and other related public surance identification cards. Delgato card to an inspector at the Lawrenceville records. Additionally, the State alleged awaits trial. MVC inspection station. that Morelli, Lagos, and Doering provided an undercover OIFP investigator State v. Health with a fictitious birth certificate, pay- Wesley M. Jordan check stub, and Union County identifi- Wesley M. Jordan pled guilty on and Disability Fraud cation card in order to facilitate obtain- November 29, 2004, to an Accusation ing a fictitious New Jersey driver’s li- that charged him with exhibiting and/or Fraudulent Health cense. Doering, Morelli, and Lagos pled displaying a simulated motor vehicle and Disability Claims guilty to conspiracy on October 6, 2004, insurance identification card to a law by Doctors, Chiropractors, and are scheduled to be sentenced in enforcement officer. Jordan, a former 2005. Vallejo’s case is pending trial. Cumberland County corrections officer, and Other Health Care admitted that he presented a fictitious Providers State v. New Jersey Skylands automobile in- Kamillah Ali and Julia Ali surance identification card to an in- State v. Following the arrests of Kamillah spector while having his car inspected Richard Finder Ali and Julia Ali, a State Grand Jury re- at the Millville MVC inspection facility. On January 22, 2004, the Court turned an indictment on October 15, He later presented the same fictitious sentenced Richard Finder to three 2004, that charged Kamillah Ali with card to a State Trooper. Jordan is sched- years probation conditioned upon his simulating a motor vehicle insurance uled to be sentenced in early 2005. serving 180 days in county jail, ordered identification card, conspiracy, and him to perform 350 hours of commu- sale of simulated documents. The State v. nity service, and to pay restitution in Grand Jury also charged Ali’s mother, Jazzmia Green the amount of $201 and a $15,000 civil Julia Ali, in the indictment with sale of The Court admitted Jazzmia insurance fraud fine. Finder, a former a simulated document. According to Green into the PTI Program on De- licensed chiropractor, pled guilty to an the indictment, Kamillah and Julia Ali cember 15, 2004, conditioned upon Accusation that charged him with allegedly sold fictitious motor vehicle- performing 50 hours of community ser- health care claims fraud. Finder admit- related documents including drivers’ li- vice. A Mercer County Grand Jury re- ted that, from January of 2000 through censes, automobile titles, a temporary turned an indictment that charged August of 2000, he submitted over registration tag, a fictitious insurance Green with simulating a motor vehicle $1,260 in fraudulent bills to the Cigna identification card, a phony birth certifi- insurance identification card. Accord- Insurance Company for chiropractic cate, and a phony Social Security ing to the indictment, Green allegedly treatments that were never rendered to card. The State alleged that the docu- presented a counterfeit State Farm au- patients. Finder formerly operated The ments were sold to an OIFP under- tomobile insurance identification card Family Chiropractic Clinic located in cover investigator as part of an investi- to an inspector at the Lawrenceville Fort Lee. gation into the source of fictitious MVC inspection station. documents. The case is pending trial. State v. State v. Paul Anodide State v. Florine Vereen Michael Delgato A State Grand Jury returned an in- The Court admitted Florine dictment on January 22, 2004, that An Essex County Grand Jury re- Vereen into the PTI Program on De- charged Paul Anodide with health care turned an indictment on November 12, cember 15, 2004, conditioned upon claims fraud, theft by deception, and 2004, that charged Michael Delgato performing 50 hours of community ser- falsifying records. According to the in- with simulating a motor vehicle insur- vice. A Mercer County Grand Jury re- dictment, Anodide, a licensed dentist ance identification card. According to turned an indictment that charged with an office in Trenton, allegedly sub- the indictment, on four occasions Vereen with simulating a motor vehicle mitted bills to three insurance carriers Delgato allegedly sold fictitious Liberty insurance identification card. Accord-

114 regarding approximately 28 patients inconsistent with their patients’ ail- five years probation. A Middlesex with more than 75 allegedly fraudulent ments. The State also alleged that al- County Grand Jury returned an indict- dental insurance claims. The claims though the patients had insufficient car- ment that charged Fink with health allegedly totaled approximately diac symptoms to justify the adminis- care claims fraud. According to the in- $85,914 and the carriers paid approxi- tration of stress tests and electrocardio- dictment, the Court previously placed mately $62,846 on the claims. The al- grams, the doctors administered stress Fink on probation and ordered him not legedly fraudulent claims included tests and electrocardiograms; and they to practice psychology as part of a claims for root canals, crowns, and fill- allegedly gave questionable cardiac-re- sentence imposed on August 13, ings. All of the services were billed to lated diagnoses in order to bill insur- 2002, for health care claims fraud. De- the carriers, but allegedly were not ren- ance companies for the cardiac-related spite the previous Court Order, and in dered to the patients. The State also medical tests at a higher specialist violation of his probation, Fink alleg- alleged that Anodide submitted claims rate. The doctors allegedly submitted edly continued to render psychological for Sunday dental services when the fraudulent bills to multiple insurance counseling. He allegedly billed three dental office was closed. According to companies including Prudential Insur- insurance companies, Oxford Health the indictment, Anodide also allegedly ance Company and Aetna Insurance Plan, New Jersey Manufacturers, and submitted claims for crowns and root Company. The insurance companies United Health Group Insurance, for canals that were performed twice on received at least $35,000 in allegedly treating 34 patients. Fink’s 2002 sen- the same tooth. Anodide allegedly false bills. This case is pending trial. tence required him to pay approxi- submitted fraudulent claims to insur- mately $6,000 in civil fines and penal- ance carriers including Prudential ties. A licensing action has been taken Health Care of New Jersey, Aetna US against Fink by the New Jersey Board Healthcare, and Delta Dental Insur- of Psychological Examiners regarding ance Company. Prudential was the his continued practice, and he has been third party claims administrator for the ordered to pay $39,409 in penalties. New Jersey State Health Dental Plan that provides dental services to State State v. employees. Prudential processed den- Nicola Amato tal insurance claims that were paid The Court sentenced Nicola with State money. Anodide awaits trial. Amato on July 9, 2004, to three years probation conditioned upon payment State v. of a $20,000 civil insurance fraud fine. William Burke Amato, a licensed chiropractor, pled and guilty to an Accusation that charged A State Grand Jury returned an him with theft by deception. Amato ad- indictment on December 6, 2004, mitted that while operating a chiroprac- charging William Burke and tic practice in Waretown, he submitted , both licensed cardiologists, fictitious insurance bills pertaining to with conspiracy, health care claims approximately 28 patients between fraud, and attempted theft by decep- April of 1997 and October of 1999. tion. According to the indictment, Amato also admitted that the chiro- Burke and practiced at Or- practic insurance claims were fraudu- ange Mountain Medical Associates lent because he performed three or which had offices located in West Or- four chiropractic area manipulations, ange, Berkeley Heights, and Millburn. but billed the insurance companies for five chiropractic area manipulations. They allegedly submitted false insur- By overbilling, Amato stole approxi- ance claims to insurance companies State v. mately $27,348 based on the approxi- between January 1, 1997, and Febru- David M. Fink mately 1,784 bills submitted for five chi- ary 5, 2002. The State alleged that the David M. Fink pled guilty to health ropractic area manipulations when he doctors agreed to prescribe unneces- care claims fraud and the Court sen- performed less than five manipulations. sary cardiac diagnostic tests that were tenced him on October 15, 2004, to

115 OIFP Criminal Case Notes – Insurance Fraud

State v. insurance fraud fine. Manze’s medical Brookhim’s alleged continued practice Alphonso Smith license was also suspended for a pe- of dentistry although he was previously and Daniel Catanzaro riod of one year. The Court admitted suspended from the practice of den- Maglione into the PTI Program condi- tistry by the Board of Dentistry, which Alphonso Smith and Daniel tioned upon her performing 50 hours of regulates licensed dentists in New Jer- Catanzaro pled guilty to reckless community service and paying a sey. Brookhim also allegedly contin- health care claims fraud and on Au- $5,000 civil insurance fraud fine. ued to bill insurance companies for gust 6, 2004, they were both sen- Maglione admitted that she solic- dental treatments even though he had tenced to one year probation and or- ited health insurance information from no license to practice at the time. dered to pay restitution in the amount a friend so insurance claims could be OIFP alleged that Brookhim concealed of $9,400 each. The Court also ordered submitted under the pretense that the his continued practice of dentistry by Catanzaro to perform 200 hours of friend planned to become a patient of having his nephew’s name, Rony community service. A State Grand Jury Manze at a later date. The friend, who Elyahouzadeh, who was also a li- returned an indictment that charged was not charged, provided the informa- censed dentist, appear on various Smith and Catanzaro with reckless tion, but indicated that she presently records relating to Brookhim’s treat- health care claims fraud, attempted had no reason to see the doctor. ment of dental patients, including in- theft by deception, and theft by decep- Manze admitted that he utilized the surance bills and claim forms. tion. Smith, a licensed medical doctor, health insurance information solicited Elyahouzadeh was also jointly and and Catanzaro, a licensed chiroprac- by Maglione to submit two fraudulent severally liable for the civil insurance tor, operated a medical practice in health insurance claims to Horizon fraud fines and professional licensing Wayne known as Quality Care Physi- Blue Cross Blue Shield for approxi- fines. Elyahouzadeh was not criminally cians, or Physicians Plus. The doctors mately $2,625. Manze allegedly sub- prosecuted; however, he received a allegedly submitted bills between July mitted false bills for an office examina- six-month active suspension of his of 1997 and March of 1999 in the tion and diagnostic tests including a dental license with an additional 30- amount of $36,000 for anesthesia ad- cystoscopy, a cystometrogram, and month suspension to be stayed. ministered by needle injection when for two ultrasound studies. The bills they provided electrical stimulation were denied by the insurance com- State v. therapy that did not involve injected an- pany because it suspected the bills esthesia. Ordinarily, licensed medical Virginia Fatato were fraudulent. The friend detected service providers can bill more money Virginia Fatato pled guilty to falsi- the alleged fraudulent scheme when for needle injected anesthesia than fying records and the Court sentenced she received an Explanation of Benefits electrical stimulation. The false claims her on August 20, 2004, to two years Form for tests she knew were not were allegedly submitted to several in- probation and performance of 600 performed by the doctor. She immedi- surance companies for both health and hours of community service. Fatato ately contacted Horizon to report the automobile insurance including Oxford will serve her sentence in Florida, fraudulent bills. Health Care, New Jersey Manufacturers where she currently resides. A State Grand Jury returned an indictment that Insurance Company, United Health State v. Care, and Allstate Insurance Company. charged Fatato with attempted theft Roben Brookhim by deception and falsifying records. State v. The State charged Roben Fatato was convicted in 1999 of theft Patrick Manze Brookhim with health care claims by deception and falsifying records for fraud, and on November 19, 2004, the submitting fictitious PIP insurance and Michelle Maglione Court admitted him into the Union claims to insurance companies from Patrick Manze, a medical doctor, County PTI Program conditioned upon her Hammonton chiropractic practice. and Michelle Maglione, Manze’s fiancé paying a $90,000 civil insurance fraud The Chiropractic Board suspended and office manager, pled guilty to two fine and a penalty in the amount of Fatato’s chiropractic license for a pe- separate Accusations charging them $20,000 to the Board of Dentistry rep- riod of five years for her earlier crimes. with health care claims fraud. The resenting fines and costs. Brookhim According to the indictment, after her Court sentenced Manze on July 16, also surrendered his dental license 1999 criminal conviction, Fatato alleg- 2004, to two years probation condi- which has been deemed to be a revo- edly submitted a disability claim to tioned upon his paying a $5,000 civil cation. The charge stemmed from Massachusetts Mutual Life Insurance

116 Company for $14,982 in disability pay- riod. The second indictment charged therapist, allegedly fraudulently billed ments per month for a two-year period. Kollmer with theft by deception. The insurance carriers for therapy and She allegedly decreased the requested State alleged that Kollmer falsely counseling treatments by misrepre- amounts as time progressed. Fatato claimed he was totally disabled; and, senting that the treatments were per- allegedly told the insurance company pursuant to a contract between himself formed by licensed doctors. she was unable to work as a chiro- and Unum Provident Corporation, he practor following an injury suffered in was entitled to $9,000 in life insurance False Health Care Claims a 1994 automobile accident. OIFP’s without having to pay any insurance investigation revealed that not only did premiums. Kollmer’s cases are State v. Fatato work out regularly at a pending trial. Hammonton gym, but she also ob- Paul Scrudato tained employment as a chiropractor State v. Paul Scrudato pled guilty to theft at another gym located in Turnersville. Barry Vogel by deception and the Court sentenced him on July 23, 2004, to two years Barry Vogel pled guilty to health probation conditioned upon paying State v. care claims fraud, and on October 22, $7,047 in restitution to Hunterdon Re- W. Lance Kollmer 2004, the Court sentenced him to five gional High School, Delta Dental, Hori- A State Grand Jury returned a third years probation, conditioned upon zon Blue Cross Blue Shield, and the indictment on October 12, 2004, that serving 180 days in county jail. His New Jersey Division of Pensions and charged W. Lance Kollmer, a board- medical license was also permanently Benefits; a $1,500 civil insurance fraud certified plastic surgeon, with theft by revoked. A State Grand Jury returned fine; and a $5,000 criminal fine. deception and attempted theft by dean indictment that charged Vogel, a A State Grand Jury returned an inception. The State alleged that Kollmer neurologist, with health care claims dictment that charged Scrudato with submitted false claims between August fraud and theft by deception. Accord- health care claims fraud and theft by of 2001 and March 2, 2004, to U.S. ing to the indictment, Vogel allegedly deception. According to the indict- Life/American General Insurance Com- submitted fraudulent bills for more than ment, McManus Middle School, lo- pany and the Hartford Insurance Com- $54,000 to Prudential Property and cated in Linden, employed Scrudato pany claiming he was totally disabled, Casualty Insurance Company of New as an Information Systems Administra- unable to practice medicine, and en- Jersey for diagnostic services he failed tor. Although he was entitled to enroll- titled to be reimbursed for office over- to render or failed to render properly. ment in the State Health Benefits Pro- head expenses and other disability in- The State alleged that Vogel submitted gram, Scrudato allegedly caused surance claims payments. The State fraudulent health insurance claims for fraudulent health insurance claims to alleged that U.S. Life/American Gen- electro-diagnostic tests, known as be submitted to Delta Dental and Hori- eral Insurance Company and the Hart- nerve conduction velocity (NCV) tests, zon Blue Cross Blue Shield in the ap- ford Insurance Company paid approxi- he allegedly performed on victims in proximate amount of $21,916. The mately $614,825 for these claims automobile accidents. The State also State alleged that the claims were through January of 2004. alleged that Vogel fraudulently submit- fraudulent because Scrudato claimed The first indictment charged ted the same diagnostic test results a woman he lived with and her children Kollmer with submitting false disability for multiple patients. from a previous marriage were entitled insurance claims to Sentry Insurance to health and dental benefits as his Company and American General Insur- Fraudulent Billing lawful dependants under the State ance Company. The State alleged that by Health Care Providers Health Benefits Program. The State al- Kollmer obtained more than $300,000 leged that they were not entitled to the in fraudulent insurance claim money benefits because neither the woman from Sentry Insurance Company and State v. nor her children were the lawful American General Insurance Company John Marrone dependants of Scrudato. More than by falsely claiming he was totally dis- The Court admitted John Marrone $11,000 was paid for health insurance- abled from practicing as a plastic sur- into the PTI Program on November 3, related claims. geon. Kollmer allegedly performed, 2004. An Accusation charged Marrone Delta Dental and Horizon Blue however, dozens of surgical proce- with falsifying or tampering with Cross Blue Shield administer dental dures during the claimed disability pe- records. Marrone, a licensed family

117 OIFP Criminal Case Notes – Insurance Fraud

and health insurance claims as third Fraud Committed Jury returned an indictment that party administrators for the New Jer- by Pharmacists charged Dickens with theft by decep- sey State Health Benefits Program. tion and falsifying records. According State tax dollars pay the health and to the indictment, Dickens allegedly dental claims for State employees and State v. represented to CIGNA Insurance Com- their dependants as a benefit of em- John D. Wylie pany that she did not maintain employment with the State of New Jersey. The Court sentenced John D. ployment because she was totally dis- Wylie to two years probation on March abled between April of 1997 and Janu- State v. 26, 2004, and ordered him to pay ary of 1999. CIGNA Insurance paid Barry Cohen $1,050 in restitution to Horizon Blue Dickens a total of $25,305 in disability A State Grand Jury returned an in- Cross Blue Shield, $17,477 in restitu- insurance benefits. OIFP’s investiga- dictment on September 8, 2004, that tion to Aetna Insurance Company, and tion showed that Dickens was continu- charged Barry Cohen with health care a $135,000 civil insurance fraud fine. ously employed and ineligible to re- claims fraud, theft by deception, and Wylie pled guilty to an Accusation that ceive disability insurance benefits. misconduct by a corporate official. charged him with theft by deception. Cohen, a Certified Public Accountant, Wylie admitted he submitted approxi- State v. operated a family-owned corporation mately 136 false claims to Horizon Suzanne Shenk known as Headways, Inc. The corpora- Blue Cross Blue Shield of New Jersey Suzanne Shenk pled guilty to theft tion provided health care services, in- and Aetna Life Insurance Company. by deception and was sentenced on cluding therapy, to patients who had Wylie, a licensed pharmacist, prac- April 2, 2004, to five years probation suffered brain injuries. According to the ticed holistic medicine at the Center and ordered to pay $1,247 in restitu- indictment, Cohen allegedly caused for Health Education Research, Inc., tion to Aetna Insurance Company and Headways to submit more than (CHER) in Cherry Hill. Wylie was li- a $5,000 civil insurance fraud fine. A $350,000 in fraudulent health insur- censed to perform various non-reim- Passaic County Grand Jury returned ance claims to several insurance com- bursable, non-medical treatments to an indictment that charged Shenk with panies and self-funded health benefits include electric stimulation, neuromus- theft by deception, forgery, and falsify- plans. Among the insurance compa- cular reeducation, manual manipula- ing documents. According to the in- nies and health benefits plans that al- tion, and body fluid analysis including dictment, Shenk allegedly wrongfully legedly received the false claims were blood, saliva, and urine. He admitted collected disability insurance pay- Allstate Insurance Company, Horizon that, by submitting the claims to insur- ments from Aetna Insurance Company Blue Cross Blue Shield of New Jersey, ance carriers on behalf of insured pa- by concealing she worked at a State Farm Insurance Company, tients, he wrongfully represented that physician’s office. The State alleged in Proformance Mutual Insurance Com- these procedures were covered medi- the indictment that Shenk forged a let- pany, the New Jersey Automobile Full cal procedures done pursuant to ter and falsified another letter to support Insurance Underwriting Association, doctor’s orders. The investigation re- her disability claims to Aetna Insurance. and Key Benefit Administrators, a third vealed that Wylie fraudulently billed party claims administration company Aetna for $16,426, and Horizon Blue State v. that administered health insurance for Cross Blue Shield for $1,051. Jasmine Gomez the Teamsters Union Local 560 Benefit On September 13, 2004, a State Fund. The State alleged in the indict- Fraudulent Disability Claims Grand Jury returned an indictment that ment the claims were for services that charged Jasmine Gomez with theft by were not rendered by Cohen. Cohen’s State v. deception and uttering a forged docu- case is pending trial. Barbara D. Dickens ment. According to the indictment, Gomez allegedly wrongfully collected Barbara D. Dickens pled guilty on approximately $5,100 in disability in- January 12, 2004, to theft by decep- surance claims from Trustmark Insur- tion. The Court sentenced her to three ance Company. The State alleged that years in State prison and ordered her Gomez began to receive disability in- to pay $25,308 in restitution to CIGNA surance claims money from Trustmark Insurance Company. A State Grand

118 after a November of 2001 automobile mitted he falsely obtained employer- years in State prison and ordered pay- accident. The State further alleged sponsored group health insurance by ment of $573,700 in restitution. A State Gomez forged physician statements to falsely representing he was an em- Grand Jury indicted Binczak for theft falsely indicate that she was still in- ployee of a real estate management by deception and falsifying records. jured and unable to return to work in company known as Hill Parking. The Ukranian National Association order to continue receiving the disabil- (UNA) employed Binczak as an insur- ity insurance payments. Gomez’ case State v. ance sales manager responsible for is pending trial. Michael S. Sorbello maintaining life insurance annuity ac- Michael Sorbello was sentenced counts for UNA members. He allegedly Health Insurance on December 2, 2004, to five years wrongfully withdrew over $600,000 from Underwriting/Application probation, ordered to pay $18,000 in the annuity accounts of seven members of UNA, deposited the money into Fraud restitution and a $2,500 civil insurance fraud fine. Sorbello pled guilty to an his own bank accounts, and used the Accusation that charged him with theft money for his own purposes. Binczak State v. by deception. Sorbello admitted he also allegedly falsified a letter authoriz- Barry W. Kallenberg stole $38,299 from New Jersey Manu- ing him to withdraw $30,000 from an The Court sentenced Barry W. facturers Insurance Company. Sorbello insured’s annuity account held at Kallenberg on March 26, 2004, to180 falsely represented to New Jersey UNA, and he falsified another docu- days in county jail as a condition of Manufacturers that he was enrolled as ment authorizing him to withdraw one year probation and ordered him to a full-time student at Gloucester $45,000 from another insured’s annuity pay Horizon Blue Cross Blue Shield County Community College and, there- account held at UNA. $64,980 in restitution. Kallenberg pled fore, entitled to collect approximately guilty to an Accusation that charged $568 per week in workers’ compensa- State v. him with theft by deception. Kallenberg tion insurance benefits. The insurance Vito Gruppuso admitted that he created a fictitious benefits were provided pursuant to a Vito Gruppuso pled guilty on real estate management business in workers’ compensation insurance January 30, 2004, to an Accusation order to purchase group health insur- policy that provided coverage for that charged him with theft by failure ance and that he applied to Horizon Sorbello based on the death of this fa- to make required disposition of property Blue Cross Blue Shield of New Jersey ther. The policy permitted Sorbello to received. OIFP investigators arrested for a small employer health benefits collect the $568 per week as long as Gruppuso, a licensed insurance agent policy in order to provide health cover- he was enrolled as a full-time student. and charged him with three counts of age at a lower premium employee New Jersey Manufacturers’ investiga- theft by failure to make required dispo- group rate for five people who were not tion revealed that Sorbello was not en- sition of insurance premiums obtained entitled to the coverage because they rolled anywhere as a full-time student. from various insurance customers. The were not bona fide employees of a New Jersey Manufacturers referred the State alleged that Gruppuso wrongfully bona fide business. OIFP’s investiga- matter to OIFP for further investigation engaged in insurance premium financing tion revealed that Kallenberg submitted and prosecution. transactions and he embezzled employee health insurance claims to- insurance premiums entrusted to taling approximately $111,500 to Hori- Insurance him by insureds. Gruppuso is zon Blue Cross Blue Shield. pending sentencing. Professional Fraud State v. State v. Robert Bloch Insurance Agent Fraud Kirti S. Shah As part of the Barry Kallenberg On May 17, 2004, Kirti S. Shah case, Robert Bloch pled guilty on May State v. pled guilty to uttering a forged writing. 10, 2004, to an Accusation that charged The Court admitted him into the PTI him with theft by deception, and the Joseph Binczak Program for one year conditioned upon Court admitted him into the PTI Pro- Joseph Binczak pled guilty to theft paying a civil insurance fraud fine in gram conditioned upon performing 40 by deception, and on January 7, 2004, the amount of $5,000 and performing hours of community service. Bloch ad- the Court sentenced him to three 50 hours of community service. An

119 OIFP Criminal Case Notes – Insurance Fraud

Essex County Grand Jury returned an ING USA Annuity & Life Insurance State v. indictment that charged Shah with at- Company - $44,603; Jeffrey Hall tempted theft by deception, uttering a Midland National Life-Annuity A Union County Grand Jury re- forged writing, and falsifying records. Division - $15,961 turned an indictment on May 19, 2004, According to the indictment, Shah, a North American Company Life that charged Jeffrey Hall with theft by licensed insurance agent who worked & Health Insurance - $9,948 failure to make required disposition. for Prudential Insurance Company, al- Clark also admitted that he de- According to the indictment, Hall alleg- legedly falsified receipts in connection frauded approximately ten persons by edly accepted insurance premiums with an automobile property damage convincing them to invest a lump sum from four insurance customers but insurance claim, and he submitted the of money in a fictitious investment he failed to obtain their insurance cover- falsified receipts to Prudential Insur- promised would pay the investor 12 age. The State alleged that Hall stole ance Company in order to wrongfully percent interest. Clark repaid six of the the insurance premium money and inflate the amount of the insurance victims but owes four victims approxi- used it for his own purposes. The claim for damage to a 1997 BMW. mately $169,000. State further alleged that the Valvano State v. State v. Insurance Agency in Linden employed Hall as an insurance agent. While em- Peter Clark Joseph Birnie ployed at Valvano, Hall allegedly ac- On August 6, 2004, the Court sen- and Michael Delisi cepted insurance premiums of approxi- tenced Peter Clark to four years in A State Grand Jury returned an in- mately $6,963 from Congruent Ma- State prison and ordered him to pay dictment on April 30, 2004, that chine, Inc.; $4,200 from John and $385,944 in restitution. He also for- charged Joseph Birnie and Michael Elaine Rafanello; $1,800 from VSI Dis- feited his insurance agent’s license. Delisi with conspiracy and theft by fail- tributors, Inc.; and $3,664 from PAC Clark, an independent licensed insur- ure to make required disposition of Tool & Supply Company. The State al- ance agent, purchased several ficti- property received. The State also leged that none of these customers re- tious insurance-based annuities for charged Birnie with a separate count ceived insurance coverage. Hall’s case himself and family members in order of theft by failure to make required dis- is pending trial. to collect commissions for the sales. position of property received. Accord- OIFP’s investigation revealed that pre- ing to the indictment, Birnie allegedly State v. mium payment checks were returned received residential insurance property Robert Stone for insufficient funds, while Clark col- damage claim money from insureds Robert Stone, a licensed insur- lected over $100,000 in commissions who suffered either fire losses or who ance agent in the State of New Jersey for the sale of fictitious annuities. were building modular homes. He al- who was the owner/operator of Stone Clark pled guilty to an Accusation legedly stole the money and used it for Insurance Company located in that charged him with theft by failure to his own purposes. The State alleged Camden, pled guilty on November 15, make required disposition of property that Birnie did very little or no work for 2004, to failure to make required dispo- received and theft by deception. Clark the insureds, but he retained all the in- sition of property received. He is admitted he purchased several annuity surance claim and other money. The scheduled to be sentenced in early policies for himself and family mem- State alleged in a separate count of 2005. A State Grand Jury returned an bers in order to receive the commis- the indictment that Birnie conspired indictment that charged Stone with fail- sions for the sales. Clark admitted with co-defendant Delisi, a licensed ure to make required disposition of stealing commissions from the follow- public insurance adjuster who did busi- property received. According to the in- ing insurance companies: ness as Anton Adjustment, Inc., and a dictment, Stone allegedly stole ap- American National Insurance building contractor. The State alleged proximately $22,585 in premium Company - $56,034; in the indictment that Birnie and Delisi money from insurance customers or Allianz Life Insurance Company - obtained insurance claim money from from the Standard Funding Corporation $36,125; an insured for restoration of a home (SFC), a company in the business of Conseco Services LLC - $38,500; damaged by fire. They allegedly stole lending insurance premium money to American Equity Investment Life over $185,000 from the victim insureds people for the purchase of insurance Insurance Company - $9,400, and used the money for their own pur- policies. The State alleged that Stone, American Investors Life - $6,717; poses. The case is pending trial.

120 rather than using the insurance cus- State alleged that Chamberlain stole worthless. Fidelity advanced Malek tomers’ money or SFC’s money to $300,000 from a 78-year-old victim by his insurance agent sales commis- purchase insurance policies, stole the forging documents related to three an- sion of $35,773. money and used it for his own benefit. nuity accounts in connection with the Malek allegedly stole approxi- American Skandia/Prudential com- mately $43,648 from Fidelity and State v. pany. The Prudential Insurance Com- Guaranty Life Insurance Company by Stanley Span pany reported the matter to OIFP for sending worthless insurance premium and Paul Kaplan further investigation. At OIFP’s re- checks and insurance applications Paul Kaplan pled guilty on August quest, the Marion County, Florida containing fraudulent information in or- 2, 2004, to theft by deception and theft Sheriff’s Department assisted in the ar- der to receive unearned insurance by failure to make required disposition rest of Michael Chamberlain. OIFP ex- sales commissions. of property received. The Court sen- tradited Chamberlain from Florida to tenced him to three years probation New Jersey on August 4, 2004. State v. conditioned upon paying restitution in Chamberlain’s case is pending trial. Louis Polite (Polite Insurance Agency) the amount of $7,740. Stanley Span State v. pled guilty to theft by deception and OIFP investigators executed a was sentenced to three years proba- Ralph Malek search warrant on November 22, 2004, tion and ordered to pay $6,740 in resti- a/k/a Raafat Abdel Malek at the offices of the Polite Insurance tution. Both defendants are licensed Ralph Malek was sentenced on Agency in Burlington County. Louis insurance agents and officers of the December 17, 2004, to five years pro- Polite, who owned and operated Polite now defunct Span Associates Insur- bation and ordered to pay restitution Insurance Agency and who was an in- ance Agency located in Springfield. in the amount of $43,648. Malek, a li- surance agent licensed in the State of Span and Kaplan were charged in a censed insurance agent, pled guilty to New Jersey at the time of the search State Grand Jury indictment with steal- an Accusation that charged him with warrant, was suspected of theft of in- ing approximately $20,000. They alleg- theft by deception. Malek, who was surance premiums. It is alleged that edly sold fictitious insurance policies, also known as Raafat Abdel Malek, Polite accepted premium money but collected insurance premium monies admitted he stole $43,648 from Fidel- failed to forward the money to the in- from the purchasers, and failed to re- ity and Guaranty Life Insurance Com- surance company which may have left mit the monies to the insurance company (Fidelity). Malek admitted he the insurance customers of the Polite panies. Span also allegedly distributed submitted an annuity insurance appli- Insurance Agency without insurance fictitious New Jersey Personal Auto- cation using the name of a fictitious coverage. OIFP and the Philadelphia mobile Insurance Plan (NJPAIP) auto- applicant to Fidelity. Malek also alleg- Police Department arrested Polite on mobile insurance identification cards. edly submitted to Fidelity a worthless November 23, 2004, and charged him Kaplan also allegedly knowingly check in the amount of $87,500 drawn with theft by deception and issuing cashed a $4,000 check drawn on a on the bank account of a business he fraudulent motor vehicle insurance iden- closed account in November of 2000. formerly owned known as Contaldo’s tification cards. Polite waived extradi- Specialties. Fidelity advanced Malek tion from Pennsylvania and was re- State v. his insurance agent commissions in turned to New Jersey on November 24, Michael Chamberlain the amount of $7,875, but the bank 2004. The investigation is continuing. A State Grand Jury returned an in- dishonored the premium check used dictment on November 5, 2004, that to purchase the annuity insurance Insurance Carrier charged Michael Chamberlain with and Fidelity cancelled the policy. Employee Fraud theft by unlawful taking, forgery, and Malek also allegedly submitted an an- misapplication of entrusted property. nuity application to Fidelity with a pre- State v. Chamberlain was a licensed securities mium payment check in the amount dealer selling investments for a com- of $436,487 using the name of a sec- Rosemarie Padilla pany known as American Skandia. ond fictitious applicant. The premium The Court sentenced Rosemarie Prudential Insurance Company later payment check and replacement Padilla to five years probation on Octo- purchased American Skandia. The check from a third business formerly ber 15, 2004, conditioned upon serving operated by Malek turned out to be 60 days in county jail and ordered her

121 OIFP Criminal Case Notes – Insurance Fraud

to pay $12,000 in restitution to Pruden- T. Baskerville was sentenced on the tion that she had been called to active tial Insurance Company. Padilla pled same day to five years in State prison military duty by the United States Army. guilty to an Accusation that charged and ordered to pay $25,000 in restitu- Clark allegedly submitted a forged her with theft by deception. Padilla ad- tion. Reeves and Baskerville had previ- copy of Army active duty military orders mitted she used the identification and ously pled guilty to theft by deception. to support her claim. A joint investiga- password of a co-worker to enter the A State Grand Jury returned an indict- tion by OIFP and Palisades revealed, Prudential Insurance employee over- ment that charged Reeves and however, that Clark had commenced time computer system and fraudulently Baskerville with conspiracy and theft employment at AIG Insurance Com- entered overtime hours between Janu- by deception. According to the indict- pany and her fraud enabled her to re- ary of 2001 and May of 2003. Based ment, the Robert Plan Corporation in ceive salaries from both companies. on her fraud over a three-year period, Edison employed Reeves as a claims Clark stole approximately $12,678 Padilla stole approximately $34,040 in adjuster/processor. The Robert Plan from Palisades. overtime pay from the Prudential Corporation owns several insurance Insurance Company. companies that included Eagle Insur- State v. ance Company, GSA Insurance Com- Linda Clements-Wright, State v. pany, and Newark Insurance Com- Neville L. Holder, Lisa Givens, Lola Ruth Byrd pany. The Robert Plan audited Reeves’ George Givens, Bruce Alston, A State Grand Jury returned an in- claims processing work and deter- dictment on March 31, 2004, that mined that Reeves allegedly issued Neville Louis Holder, Marsha charged Lola Ruth Byrd with theft by eight fraudulent insurance claims Alston Walker and Michael deception. According to the indict- checks to either herself and/or McCormick ment, Byrd allegedly used her position Baskerville in the approximate amount Following a three-week trial, a jury at State Farm Insurance to generate of $25,000 so they could cash the convicted Linda Clements-Wright on ten State Farm Insurance drafts pay- checks and steal the money. December 16, 2004, of conspiracy, able to Sherman McNeil. The State al- Additionally, a Morris County theft by unlawful taking, and money leged that Byrd used closed insurance Grand Jury returned an indictment laundering. She is scheduled to be sen- claim files and generated insurance charging both Reeves and Baskerville tenced in 2005. claim checks as if McNeil had sus- with theft of approximately $120,000 According to a State Grand Jury in- tained property losses and was en- from Cambridge Integrated Services dictment, for almost three-and-a-half titled to insurance claim money. located in Whippany. Cambridge also years, Clements-Wright issued approxi- McNeil had no connection to any of employed Reeves as a claims adjuster mately 150 Allstate insurance claim the old property loss files that Byrd al- and, similar to her conduct at the checks totaling approximately legedly used to create the fictitious Robert Plan Corporation, she allegedly $594,369 to 11 persons with whom she claims checks. State Farm became issued fraudulent claims checks to was acquainted, but who allegedly were aware of the fraud when McNeil alleg- Baskerville so they could cash the not entitled to the insurance claim edly attempted to cash the fraudulently checks and steal the money. money. The State alleged that issued claims checks. It then con- Clements-Wright conspired with her ac- ducted an internal investigation, con- State v. quaintances to cash the checks, keep tacted OIFP, and fully cooperated with Rashonda Clark 10 percent for themselves, and return the continuing criminal investigation. Rashonda Clark pled guilty to theft the remaining money to her. Clements- Byrd’s case is pending trial. by deception, and the Court sentenced Wright worked for Allstate in Burlington her on November 5, 2004, to two years County as a claims processing special- State v. probation and ordered her to pay resti- ist. The State charged Clements-Wright Wanda Reeves tution in the amount of $12,678. A with conspiracy, theft by unlawful tak- and Clifford T. Baskerville Union County Grand Jury returned an ing, and money laundering. Wanda Reeves was sentenced on indictment that charged Clark with October 29, 2004, to three years in theft by deception and forgery. Accord- State v. State prison and ordered to pay restitu- ing to the indictment, Clark allegedly Bruce Baez and Eddie Perez tion in the amount of $25,000. Clifford falsely certified to Palisades Safety A State Grand Jury returned an in- and Insurance Management Corpora- dictment on September 13, 2004, that

122 charged Bruce Baez and Eddie Perez ception, forgery, and falsifying records. Siligato on February 17, 2004, with with conspiracy and theft by decep- Four other defendants were also theft by deception, attempted theft by tion. The State also charged Baez with charged in separate indictments. Ac- deception, and conspiracy. According uttering a forged document. According cording to one indictment, Rossi, to the indictment, Siligato allegedly to the indictment, Perez and Baez al- president of Rossi Adjustment Ser- conspired to submit false insurance legedly conspired to steal six disability vices, allegedly conspired with and claims in connection with a suspicious checks issued by New Jersey Manu- paid several of his employees to com- arson fire at a commercial building he facturers Insurance Company to Juan mit arson fires or acts of vandalism owned in Hammonton. The commer- “Marcial” Perez, who died on March causing property damage so he could cial building contained office space, 15, 2000. Juan “Marcial” Perez had obtain commissions through Rossi Ad- retail space, and apartments. Siligato been receiving insurance disability justment Services by adjusting the ar- allegedly submitted several insurance checks pursuant to a workers’ com- son and vandalism insurance claims. claims as the result of the fire. First pensation insurance policy from New In some cases, the owners of the Trenton Insurance Company paid a Jersey Manufacturers Insurance Com- properties allegedly were aware of the $15,000 insurance claim for the pany. New Jersey Manufacturers, un- fraudulent nature of the insurance building’s contents and $165,000 for aware that Juan “Marcial” Perez died, claims. In other cases, the owners did the building itself. The State alleged continued to send checks to his not know the properties were pur- that Samuel Siligato also submitted a Millville home. The State alleged the posely damaged. Rossi pled guilty to $206,900 claim to the Farmers Mutual defendants stole the disability checks, arson, conspiracy to commit arson, Insurance Company for the contents of forged them, and cashed them. The bribery, theft, and theft by deception. the building. Siligato allegedly retained case is pending trial. Marc Rossi’s Rossi Adjustment Ser- State v. vices company to adjust the insurance Public Insurance Fire Chief claims. Siligato’s case is pending trial. Adjuster Fraud The Court admitted the fire chief of a Hamilton Township fire company, im- State v. plicated in the Jeffrey Nemes/Marc Jeffrey Nemes State v. Rossi investigation, into the Mercer and John Fiore Marc Rossi County PTI Program conditioned upon A State Grand Jury returned an in- The Court sentenced Marc Rossi his continued cooperation with the dictment on June 9, 2004, that on March 19, 2004, to eight years in State. The fire chief pled guilty to a charged Jeffrey Nemes and John Fiore State prison for his role in a conspiracy charge of obstructing the administra- with conspiracy and bribery in official that involved arson and vandalism and tion of law for giving false statements and political matters. Fiore, the Execu- enabled Rossi to earn commissions to law enforcement during the Nemes/ tive Vice President of the East through his insurance adjusting busi- Rossi investigation. Nemes and Rossi Windsor Police Athletic League (PAL) ness. The Court also ordered Rossi to were allegedly paying bribes to and and a former East Windsor police de- pay restitution in the amount of soliciting fire chiefs to allow fires to tective, was also charged with misap- $306,209 to Providence Washington; burn longer and do more damage. plication of entrusted property and offi- $90,318 to Zurich Insurance Company; Nemes allegedly would benefit in that cial misconduct. The State named $31,176 to Penn Millers Insurance his home repair contracting business Marc Rossi as an unindicted co-con- Company; $2,054 to Farmers Mutual (Nemes Enterprises) would have the spirator in this case. Insurance Company; $59,201 to NJUI; potential for bigger contracts and According to the indictment, $48,895 to Liberty Mutual Insurance Rossi’s public adjusting insurance Nemes and Fiore allegedly conspired Company; and $5,000 to East business would be awarded bigger with Rossi to defraud the East Windsor Windsor PAL. Finally, the Court or- fees based on higher insurance claims. PAL. The State alleged in the indict- dered Rossi to pay a $50,000 civil in- Nemes’ case is pending trial. ment that Fiore used his position as surance fraud fine. Executive Vice President of the East A State Grand Jury returned an in- State v. Windsor PAL to contract with Nemes dictment that charged Rossi, a li- Samuel Siligato to build a concession stand/adminis- censed public insurance adjuster, with The Rossi investigation also led to tration building in East Windsor. conspiracy, arson for hire, theft by de- a State Grand Jury charging Samuel Nemes operated a construction com-

123 OIFP Criminal Case Notes – Insurance Fraud

6. Eagle Affiliates of Harrison, Harrison, NJ, $52,860; 7. King Limousine, King of Prussia, PA, $30,942; 8. Rodento Management, Wilmington, DE, $11,465; and 9. Young Volkswagen, Easton, PA, $20,289. pany known as Nemes Enterprises. stance, Medina allegedly stole $5,700 The State alleged that the East by falsely creating the impression that A State Grand Jury charged Windsor PAL paid Nemes approxi- he was entitled to 15 percent of the McKeaney with financial facilitation of mately $274,046 for construction of a claimant’s bodily injury insurance criminal activity (money laundering), building, which at most should have settlement money as a Liberty Mutual theft by failure to make required dispo- cost $224,900 to erect. The State also Group claims adjuster. sition of property received, and theft by alleged that in return for Fiore’s influ- deception. McKeaney operated encing the PAL Board of Directors to Insurance Premiums Fraud Haddon National Companies, Inc. contract with Nemes for an inflated (HNC), a corporation that served as a price to construct the building, Fiore State v. third party health insurance administra- received construction of a deck on his tor. Third party health insurance admin- home free of charge. The State intends Philip A. McKeaney istrators receive money from employ- to show that Rossi received $5,000 for Philip A. McKeaney pled guilty to ers, corporations, and sometimes gov- his role in arranging the alleged deal theft by failure to make required dispo- ernment entities that self-fund and self- between Fiore and Nemes Enterprises. sition of property received and to a re- insure employee health insurance The case is pending trial. lated but separate charge of misapplication of entrusted property. On May plans. HNC contracted with the com- State v. 21, 2004, the Court sentenced panies to receive money for health in- McKeaney to seven years in State surance benefits, to deposit that money, Oscar Medina and to pay the health insurance claims The Court sentenced Oscar prison and ordered him to pay a total of $1,163,831 in restitution to nine of its clients. HNC earned fees based Medina on July 23, 2004, to three on paid health insurance claims. HNC years probation and ordered him to companies he deceived by stealing and laundering money. OIFP’s investi- also received money from its clients to perform 50 hours of community ser- purchase special re-insurance policies vice. Medina was also required to sur- gation revealed that McKeaney allegedly defrauded the following companies: to provide health insurance coverage. render his insurance license. Medina According to the indictment, previously pled guilty to theft by decep- 1. Memorial Hospital of Salem County, $541,737; McKeaney allegedly stole in excess tion. A State Grand Jury returned an in- of $1 million from nine clients that dictment that charged Medina with 2. Christiana Health Care Services, Wilmington, DE, should have been used to pay health theft by deception and commercial insurance claims or purchase re-in- bribery for accepting a $5,700 bribe to $32,612; 3. Goodwill Industries of Southern surance policies. McKeaney allegedly provide advice, services, and assis- used some of the stolen money to tance in connection with the adjust- New Jersey, $185,775; 4. New Jersey American, Inc. pay personal debts and expenses. He ment and settling of an automobile in- also allegedly transferred money to surance claim. Medina was an insur- (NJA), Blackwood, NJ, $180,912; Cambria Corporation, a business in ance claims adjuster employed by Lib- which McKeaney had an interest. erty Mutual Insurance Company. 5. Concord Engineering Group, Inc., Voorhees, NJ, $70,615; McKeaney also allegedly laundered Medina allegedly contacted insurance money earmarked for health care claimants involved in automobile acci- claims on policies by transferring ap- dents and advised them that they proximately $494,188 from HNC to would be able to obtain a larger claim Cambria Corporation. settlement by paying him a fee rather than hiring an attorney. In one in-

124 Miscellaneous pay a $5,000 civil insurance fraud fine. theft by deception and the Court sen- The Court sentenced his co-conspira- tenced him on April 27, 2004, to five Insurance Fraud tor Solomon Bouzaglou on February 6, years probation conditioned upon serv- 2004, to five years probation and or- ing 180 days in county jail and paying False Homeowners dered him to pay a $5,000 civil insur- a $10,000 civil insurance fraud fine. ance fraud fine and perform 150 hours was also required to perma- Insurance Claims of community service. Bouzaglou and nently surrender his public adjuster’s Benlolo previously pled guilty to sepa- license in New Jersey and New York. State v. rate Accusations that charged each of Zaltz, Berger, Sam Nisser, and David Barsis Asaad them with conspiracy and attempted Nisser all pled guilty to attempted theft Barsis Asaad pled guilty on March theft by deception. Bouzaglou and by deception. The Court sentenced 8, 2004, to an Accusation that charged Benlolo admitted they conspired with Zaltz and Berger on August 6, 2004, her with attempted theft by deception. others, including a public insurance to three years probation and ordered The Court admitted her into the PTI adjuster, to intentionally cause water each to pay a $2,500 criminal fine and Program for three years conditioned damage to costume jewelry stored in a $5,000 civil insurance fraud fine. The upon payment of a $5,000 civil insur- an Irvington warehouse. Fireman’s Court sentenced Sam Nisser to three ance fraud fine. Asaad submitted a Fund Insurance Company insured the years probation on August 2, 2004, homeowners insurance claim for ap- jewelry for $1 million. The defendants and ordered him to pay a criminal fine proximately $33,000 to New Jersey admitted they submitted an insurance in the amount of $5,000 and a civil in- Manufacturers Insurance Company for claim to Fireman’s Fund for approxi- surance fraud fine in the amount of flood damages at her condominium mately $973,638, knowing they inten- $5,000. The Court admitted David Nisser caused by her neighbor’s pipe or hot tionally damaged the jewelry. Fireman’s into the PTI Program on August 2, water heater bursting. Asaad admitted Fund, suspecting the claim was fraudu- 2004, conditioned upon his perform- that she inflated her claim by submit- lent, denied the claim and referred the ing 50 hours of community service ting fraudulent receipts to New Jersey matter to OIFP for investigation. and ordered him to pay a $2,500 civil Manufacturers Insurance Company. insurance fraud fine. State v. State v. Sol Zaltz, State v. Crystal Sims Yehudah Berger, Sam Nisser Jill Ravitz Crystal Sims pled guilty on De- and David Nisser The Court admitted Jill Ravitz into the PTI Program on February 6, 2004, cember 13, 2004, to insurance fraud. As part of the Bouzaglou and for a period of one year. Ravitz pled Sims admitted to submitting a false Benlolo investigation, guilty to an Accusation charging her property damage claim to Germantown Sol Zaltz, Yehudah Berger, with attempted theft by deception. Insurance Company/The Philadelphia Sam Nisser, and David Nisser, who Ravitz submitted a homeowners insur- Contributionship Insurance Company were charged in a State Grand Jury ance claim falsely claiming a $10,000 for a damaged skylight after she had indictment with conspiracy and at- diamond ring was missing. Ravitz sub- already been reimbursed by the insur- tempted theft by deception, pled guilty mitted the claim after she received an ance company for the damage. Sims in 2004 to theft by deception. The de- appraisal for the diamond ring, which is scheduled to be sentenced in 2005. fendants allegedly conspired to pur- she falsely claimed she purchased. chase 20,000 pieces of inexpensive The carrier denied the claim and re- Fraudulent Stolen/Damaged costume jewelry, produce phony referred the matter to OIFP for investiga- ceipts, store the jewelry in a ware- Property Claims tion and prosecution. house, and purposely damage the jew- State v. elry in order to collect on the insurance State v. policy. a licensed public in- Solomon Bouzaglou surance adjuster, allegedly conspired Lorraine DeMauro and Joseph Benlolo with Bouzaglou and Benlolo and sub- The Court admitted Lorraine The Court sentenced Joseph mitted an inflated insurance claim in the DeMauro into the PTI Program on Sep- Benlolo on January 16, 2004, to five amount of $973,638 to Fireman’s Fund. tember 27, 2004, conditioned upon her years probation and ordered him to pled guilty to attempted paying a $3,000 civil insurance fraud

125 OIFP Criminal Case Notes – Insurance Fraud

fine and performing 50 hours of com- portedly been damaged by lightning. his claim, he submitted false receipts munity service. DeMauro pled guilty to DiCristofalo was pending admission in reflecting the purchase of various tools an Accusation that charged her with 2005 into the PTI Program. and other equipment for which he forgery. DeMauro admitted she submit- sought reimbursement from Harleysville ted a fraudulent receipt from Nation- State v. as the result of an alleged theft. wide Computers & Electronics in sup- Dean Marletta port of her property damage insurance Dean Marletta was admitted into Life Insurance Fraud claim to Selective Insurance Company the PTI Program on December 1, that her computer had been damaged 2004, and ordered to pay a $15,000 State v. by lightning. civil insurance fraud fine. Marletta pled Mary Ann McCue guilty to an Accusation charging him The Court sentenced Mary Ann State v. with attempted theft by deception. McCue on March 18, 2004, to two Jack DiCristofalo Marletta admitted that he submitted a years probation conditioned upon her Jack DiCristofalo was charged in fraudulent property loss claim to paying $2,628 in restitution to an Accusation on December 15, 2004, Harleysville Insurance Company. The Wachovia Bank, $312 in restitution to with attempted theft by deception. It is claim Marletta submitted to Kamy Dental, and a civil insurance alleged that DiCristofalo, the owner of Harleysville was for property loss con- fraud penalty in the amount of $1,500. a security monitoring company known sisting of approximately $24,000 to McCue pled guilty to an Accusation as IDS Security, submitted inflated $27,000 worth of tools and equipment that charged her with health care and false invoices to Merchants Insur- Marletta used in his business as a claims fraud, theft by deception, and ance Group in connection with an in- self-employed general contractor. uttering a forged instrument. McCue surance claim for repairs to his Marletta traded as Master Craftsmen. admitted she used a false identity, company’s computers, which had pur- Marletta admitted that, in support of claiming to be the widow of a man who had died in February of 1999, to submit a fraudulent life insurance claim to Metropolitan Life Insurance. Metropoli- tan Life sent McCue a check in the amount of $2,628 to satisfy the life insurance claim. McCue admitted she forged the widow’s name when she endorsed the claim check. McCue also admitted she used her roommate’s name without permission on a patient information form and dental insurance card to have dental work done at Kamy Dental in Toms River. Kamy Dental submitted a bill in the amount of $312 to Horizon Blue Cross for payment of McCue’s dental treatment. State v. Michelle Kush Michelle Kush pled guilty to an Accusation on March 26, 2004, that charged her with theft by deception. The Court admitted her into the PTI Program. Kush admitted she fraudulently used her mother’s name to collect her father’s death benefits. Kush’s mother was the legal beneficiary of her

126 father’s death benefits that were to be leged the defendants obtained the life ker, Tompkins allegedly overcharged terminated upon the death of her mother. insurance policies for Kofi Boakye and Monument for the surety insurance Kush admitted that, in her capacity as Irene Addai by falsifying their identities, bond and stole approximately $6,000 Attorney-in-fact pursuant to a Power of Social Security numbers, and income due to Cumberland Casualty and Attorney, she endorsed and cashed the levels on the policy applications. The Surety that Monument paid Tompkins checks from CIGNA Insurance Company State also alleged that Boakye and for the bond. payable to her deceased mother. The “Jane Doe” submitted a false life in- checks totaled $7,921. surance claim to Massachusetts Mu- State v. tual misrepresenting that James George Shampanore State v. Boachie, one of the persons whose George Shampanore pled guilty to Kofi Boakye, life was insured, died in Ghana, Af- an Accusation that charged him with Irene Addai and “Jane Doe” rica, on March 12, 2001. Boakye’s forgery and on March 25, 2004, the Irene Addai pled guilty on August case is pending trial. Court admitted him into the PTI Pro- 31, 2004, to theft by deception and fal- gram. Shampanore, who owns and sifying documents. The Court sen- Phony Certificates operates a siding and roofing busi- tenced her to two years probation and of Insurance ness, presented a forged Certificate of ordered her to pay a $5,000 civil insur- Insurance from The Hartford Insurance Company to a potential customer ance fraud fine. A State Grand Jury re- State v. turned an indictment that charged Kofi while bidding on a roofing job in Lin- Boakye and Irene Addai with con- William Tompkins den. Contractors often must present spiracy, attempted theft by deception, William Tompkins pled guilty to proof of insurance when bidding on theft of identity, theft by deception, theft by deception and the Court sen- projects. Shampanore’s Certificate hindering prosecution, and falsifying tenced him on November 8, 2004, to of Insurance had been cancelled in records. “Jane Doe” was charged with two years probation, ordered him to March 2001. conspiracy, attempted theft by decep- pay restitution in the amount of $6,000 tion, theft of identity, and falsifying to Monument Contractors, Inc., and State v. records.According to the indictment, $3,141 to Global Risk Management Michael Serghides Boakye who allegedly used the Services, Inc. An Essex County Grand Michael Serghides pled guilty to aliases Kofi Boachie and James Jury returned an indictment that forgery and the Court admitted him Boachie, Irene Addai, and another charged Tompkins with theft by decep- into the PTI Program on August 6, woman identified simply as “Jane tion and theft of services. Tompkins, 2004, for one year conditioned upon Doe,” allegedly conspired to falsify a the owner of DMT Consultants, Inc., performing 75 hours of community life insurance application to obtain a allegedly fraudulently obtained a surety service. A Morris County Grand Jury life insurance policy, submit a false insurance bond for Newark building returned an indictment that charged death claim, and steal the claim contractor, Monument Contractors, by Serghides with forgery. According to money. The State also alleged that fraudulently representing himself as a the indictment, Serghides allegedly Boakye and Irene Addai falsified stu- licensed insurance broker to Global presented a forged Zurich North dent loan applications in order to steal Risk Management, a retail surety bond America Insurance Company Certifi- approximately $38,000 in student loan agency. Monument Contractors con- cate of Insurance to Framan Mechani- money from ITT Skills Company by tracted with Bernards Township to cal, Inc., in an attempt to secure a falsely indicating that Irene Addai, Kofi build park pavilions in Harry Dunham subcontracting job through a contract Boakye, Alberta Addai, and James Park. Contractors, such as Monument, with Lakeland High School. Contrac- Addai were students at Bloomfield Col- must provide a performance insurance tors are frequently required to provide lege. The State alleged that after the bond in order to do construction work proof of insurance when working on defendants obtained student loan for local governments. Cumberland Ca- public contracts. money from ITT Skills Company, they sualty and Surety/The Saint Paul used some of it to pay for $500,000 Company issued the surety bond to Massachusetts Mutual life insurance Global Risk Management. In addition policies on the lives of Kofi Boakye to allegedly fraudulently representing and Irene Addai. The State further al- himself as a licensed insurance bro-

127 OIFP Criminal Case Notes – Insurance Fraud

State v. State v. Keith Corliss with forgery. According to the indict- William Cheney The Court admitted Keith Corliss ment, Stewart allegedly issued an al- The Court sentenced William into the PTI Program on August 16, tered Certificate of Insurance to Con- Cheney on December 10, 2004, to 18 2004, conditioned upon performing 50 temporary Environmental Management months probation and ordered him to hours of community service. In an Ac- of Bedford Hills, New York. Boyarin pay a $1,000 criminal fine. Cheney cusation filed charging him with forg- Hourigan Blundell Insurance Agency of pled guilty to an Accusation that ery, the State alleged that Corliss pre- Toms River properly issued the Certifi- charged him with forgery. Cheney, who sented a fraudulent Highlands Insur- cate of Insurance, but Stewart alleg- operated Painting and Home Improve- ance Company Certificate of Insurance edly altered it to show that he had in- ments, admitted he presented a phony falsely showing he had insurance cov- surance coverage provided by Ohio Ohio Casualty and Legion Insurance erage for performing boat repairs at Casualty Insurance Company, which Company Certificate of Insurance to Lentze Marina in West Keansburg. was no longer represented by Boyarin Hometown Builders. Hometown Build- Hourigan Blundell. Stewart’s case is ers hired Cheney’s company as a State v. pending trial. painting subcontractor. Frank Costello A Camden County Grand Jury re- State v. State v. turned an indictment on July 29, 2004, Robert Huber Nicholas Barbella that charged Frank Costello with forg- Robert Huber pled guilty on No- An Essex County Grand Jury re- ery. According to the indictment, vember 12, 2004, to forgery. He is turned an indictment on November 15, Costello, the owner of a roofing com- scheduled to be sentenced in 2005. A 2004, that charged Nicholas Barbella pany, allegedly knowingly provided a Hunterdon County Grand Jury returned with forgery. According to the indict- fraudulent Northwestern Mutual Certifi- an indictment that charged Huber with ment, Barbella, a roofing contractor cate of Insurance to a client for whom forgery. According to the indictment, who did business as Dr. Frank-n-Stein, he was repairing a roof. Costello’s Huber allegedly provided a phony Cer- Inc., allegedly issued a phony case is pending trial. tificate of Insurance in connection with Cumberland Mutual Fire Insurance the lease of rental property. Landlords Company Certificate of Insurance. State v. sometimes require persons to offer The State alleged that Barbella issued Troy McMahon proof of insurance before they rent the phony Certificate of Insurance to Troy McMahon was sentenced on property. In this case, the State al- the management of and mortgage December 17, 2004, to one year pro- leged that Huber falsified a Vreeland holder of the Lawton Arms Apartments bation and ordered to perform 50 hours Insurance Agency Certificate of Insur- located in West Orange. Barbella’s of community service. McMahon pled ance that allegedly indicated it pro- case is pending trial. guilty to an Accusation that charged vided insurance to Huber by Selective him with forgery. McMahon, the owner Insurance Company. State v. of McMahon Sanitation, Inc., admitted - Wayne Kellum he presented a forged Certificate of In- A State Grand Jury returned an insurance to Crown Hearth and Patio, - dictment on November 5, 2004, that Inc., who had hired McMahon for - charged Wayne Kellum with forgery. demolition and removal of debris on its - According to the indictment, Kellum, property. Contractors are frequently re- - who owned and operated WK Truck- quired to present proof of insurance be- - ing, a subcontractor, allegedly pre- fore starting contracting work. - sented a fraudulent Certificate of Insur- - ance to general contractor Marone State v. - Contracting. Frequently, subcontrac- - tors have to prove they have the appro- Rueben Stewart - An Atlantic County Grand Jury re- priate insurance when working for gen- - turned an indictment on August 11, eral contractors. The State alleged that - 2004, that charged Rueben Stewart the fraudulent Certificate of Insurance -

128 falsely indicated WK Trucking had with intent to evade. A State Grand general liability and automobile insur- Jury returned an indictment that ance from Selective Insurance Com- charged Nardone and Januik, his sis- pany. Kellum’s case is pending trial. ter, with conspiracy, filing false and fraudulent New Jersey Income Tax re- State v. turns, filing false and fraudulent New Joseph Curto Jersey Corporate Tax returns, and fail- The Court sentenced Joseph Curto ure to pay New Jersey Gross Income on December 20, 2004, to an 18- Tax with intent to evade. The State month suspended sentence. Curto also charged Nardone with misconduct pled guilty on the same date to an Ac- by a corporate official. cusation that charged him with forgery. According to the indictment, to Curto admitted he presented Merit De- avoid paying New Jersey corporate velopers with a phony Certificate of In- business and income taxes, Nardone surance indicating he had purchased and Januik allegedly transferred and general liability and workers’ compen- withdrew large sums of money from sation insurance. The Certificate of In- Nardone’s chiropractic business and surance reflected Curto had commer- from related medical treatment, diag- cial general liability insurance coverage nostic, or rehabilitation facilities from Freemont Insurance Company owned, operated, and controlled by and workers’ compensation insurance Nardone. Furthermore, Nardone and from Pawtucket Mutual Insurance Januik allegedly created three fictitious Company. Both Pawtucket and employees identified as Brian Taylor, Freemont Insurance Companies no Jeanne Pierre, and Mark Wallace for longer do business in New Jersey. The issuing at least 144 corporate checks case was referred to OIFP for investi- exceeding $400,000. Nardone then al- gation and prosecution after Abnet, legedly instructed an employee to en- Inc., Insurance Company of Piscataway dorse and cash the checks at an unli- was contacted by Travelers Insurance censed check cashing business in Company who was auditing insurance Irvington. The employee allegedly re- coverage for Merit Developers. turned the cash to Nardone. Nardone and Januik also allegedly utilized corporate accounts to pay for more than Insurance-Related $180,000 in personal expenses with- Tax Cases out reporting the funds as income. Nardone’s chiropractic office was State v. located in Orange. Nardone’s related businesses were identified as: Profes- Richard Nardone sional Medical Technologies, Inc. and Donna M. Januik (PMT), located in Mountainside; Richard Nardone pled guilty on Camino Rehabilitation, Inc., located in October 4, 2004, to filing false and Springfield; Hermosa Medical Services, fraudulent New Jersey Income Tax re- Inc., located in Mountainside; Ad- turns, failure to pay New Jersey Gross vanced Diagnostic, Inc., located in Income Tax with intent to evade, and Roselle Park; and Medical Diagnostic, misconduct by a corporate official. On Inc., located in Mountainside. Januik the same date, Donna M. Januik pled also operated a billing and collection guilty to filing false and fraudulent New agency known as ZNS Billing. The chi- Jersey Income Tax returns and failure ropractic practice and the related busi- to pay New Jersey Gross Income Tax nesses ceased operations.

129 OIFP Criminal Case Notes – Insurance Fraud

OIFP Criminal and Civil Monetary Sanctions and Restitution Summary 2000–2004

$18,000,000 Total Criminal and Civil Sanctions Imposed $16,000,000 Total Criminal and Civil Restitution $14,000,000

$12,000,000

$10,000,000 $16,222,153

$8,000,000 $6,187,955

$6,000,000 $5,148,250 $4,295,810

$4,000,000 $3,371,905 $2,454,336 $8,028,595 $7,217,043 $1,146,938

$2,000,000 $6,843,476

0 2000 2001 2002 2003 2004 OIFP Defendants Sentenced to Jail Time and Total Number of Jail Term Years 2000–2004 199 200 Total Defendants Sentenced to Jail Total Number of Jail Term Years 150 134 121 117 108 100

46 50 46 35 17 22

0 2000 2001 2002 2003 2004

130 Criminal Cases Investigated in 2004 by Fraud or Provider Type

■ Staged Thefts/Give-Up Schemes 102 ■ Fraudulent Insurance Cards 82 ■ Other 41 ■ ■ False Documents 41 False Claims 38 ■ ■ Agent Fraud 34 Staged Accidents 28 ■ ■ Miscellaneous 18 False Documents 26 ■ ■ Premium Theft 15 Health Care/PIP/BI 25 ■ ■ Homeowners Insurance 14 Theft 22 ■ ■ Liability Insurance 14 Fraudulent Drivers’ Licenses 17 ■ False Claims 13 ■ Property 8

Property & Casualty 157 Auto Fraud 381 Medicaid 224

Health & Life 311

■ Medical Support Other 46 ■ Pharmacy 33 ■ Patient Abuse 29 ■ Practitioners 25 ■ Health Care Claims Fraud 158 ■ Facility Other 22 ■ Disability Insurance/ ■ Transportation 18 - Workers’ Compensation 57 ■ Program Other 18 ■ Other 35 ■ Clinic 11 ■ Misappropriation/Embezzlement 17 ■ Facility/Institution 11 ■ False Claims 16 ■ Laboratory 6 ■ Agent Fraud 12 ■ Home Health 5 ■ Application Fraud 9 ■ Life Insurance 7

131 OIFP Case Notes – Medicaid Fraud

Criminal for health care claims fraud. Imadelin State v. A. Khair and the corporation, I&I Invalid Case Summaries Michael Stavitski, Wall Coach, previously pled guilty to health Pharmacy, Avon Pharmacy care claims fraud. The Court sen- State v. tenced Khair to three years in State and Belmar Pharmacy Michael Stavitski was sentenced Cristino Morales prison. Khair and the corporation were ordered to pay $103,235 in restitution, on June 18, 2004, to seven years and Maria Carmen Cruz and the corporation was dissolved and State prison, ordered to pay restitution The Court sentenced Cristino ordered to refrain from doing business and penalties in the amount of $1.1 Morales for health care claims fraud in the State of New Jersey. million, and received a seven-year sus- on January 23, 2004, to three years in The State had charged Elbashir, pension of his Medicaid privileges and State prison, ordered him to pay resti- Khair, and I&I Invalid Coach with con- suspension of his pharmacy license tution in the amount of $10,000, and spiracy, health care claims fraud, theft for one year. debarred him from participating in the by deception, Medicaid fraud, and cor- A State Grand Jury charged Medicaid Program for a minimum pe- porate misconduct. I&I, Elbashir, and Stavitski, a licensed pharmacist and riod of five years. A State Grand Jury Khair owned an invalid coach provider the operator of four pharmacy corpora- had charged Morales and Maria that provided non-emergency medical tions located in Monmouth County, Carmen Cruz with health care claims transportation to Medicaid recipients. with health care claims fraud, corpo- fraud and Medicaid fraud. According The State showed that I&I inflated mile- rate misconduct, and Medicaid fraud. to the indictment, Morales and Cruz, age on claims submitted to the Medic- The grand jury charged three of the the owner/operators of a Camden aid Program. I&I received $90,000 in four pharmacy corporations with health clinic known as “New Hopes of New undeserved payments based on the care claims fraud and Medicaid fraud. Jersey,” allegedly billed the Medicaid false mileage claims. Between May of 1996 and February of Program, between May of 1999 and 2002, Stavitski and the three pharmacies October of 1999, for mental health State v. allegedly submitted numerous claims for counseling and psychological services Manuprasad Parikh payment which reflected that medica- that were not rendered or not rendered The Court sentenced Manuprasad tions or refills of medications were pro- as billed. The State alleged that more Parikh on January 9, 2004, to three vided to Medicaid and privately insured than $13,000 was stolen from the years probation. The Court also or- patients when, in fact, such medications Medicaid Program based on fraudu- dered $180,000 in restitution, were never provided. Additionally, in lent billings. Morales was the Execu- $180,000 in civil fines, and 300 hours many instances, Stavitski allegedly tive Director of the clinic and Cruz of community service. Parikh was also billed for providing medications that were served as the clinic’s administrator. debarred from participating in the Med- never prescribed by physicians. Previously, Cruz pled guilty to icaid Program for 12 years. Stavitski, Wall Pharmacy, Avon Phar- Medicaid fraud and was sentenced to Parikh, the owner of Irving Phar- macy, and Belmar Pharmacy all pled three years probation conditioned upon macy, pled guilty to an Accusation guilty to health care claims fraud. performing 150 hours of community charging him with Medicaid fraud. The Medicaid Fraud Section referred service. In addition, she was debarred Parikh, through Irving Pharmacy, this case to the Board of Pharmacy; and from participating in the Medicaid Pro- fraudulently billed the Medicaid Pro- in November of 2004, the Board revoked gram for a period of five years. gram for expensive prescriptions Stavitski’s pharmacy license. State v. (Serostim) used in HIV treatment val- State v. ued at approximately $180,000 even I&I Transportation, Imad though they were never dispensed to Eliezer Martinez, et al. Elbashir and Imadelin A. Khair Medicaid recipients. Following a five-week jury trial, Imad Elbashir was sentenced on The Medicaid Fraud Section re- on October 27, 2004, Eliezer Martinez, February 6, 2004, to three years in ferred the matter to the Board of Phar- owner and operator of a drug and al- State prison, ordered to pay $103,000 macy for appropriate licensing action. cohol counseling center, was con- in restitution and penalties, and de- victed of health care claims fraud and barred from participating in the Medic- Medicaid fraud. He is scheduled to be aid Program for a period of five years sentenced in early 2005.

132 Previously, a State Grand Jury returned an indictment charging Eliezer Martinez, Olga Marquez, Olga Bonett, Juanita Melendez, Jose Jimenez, Bartolo Moreno, and Luz Senquiz with health care claims fraud and Medicaid fraud. Hispanic Counsel- ing and Family Services of New Jersey, Inc., was a drug and alcohol counseling center owned and operated by Eliezer Martinez. According to the in- Supervising Deputy Attorney General John Krayniak, Chief of OIFP’s Medicaid Fraud Section dictment, Martinez, Marquez, discusses emerging Medicaid fraud issues. Bonett, Melendez, Jimenez, Moreno, and Senquiz, counselors employed at the center on behalf of Hispanic Coun- Moreno was admitted into the PTI Pro- State v. seling and Family Services of New gram on December 23, 2004. Steven Aberbach Jersey, Inc., allegedly submitted Steven Aberbach, a licensed phar- fraudulent health care claims to the State v. macist who pled guilty to health care Medicaid Program seeking reim- claims fraud, was sentenced on March bursement for medical services pro- Azam Khan, Shahid Khawaja, 12, 2004, to three years in State prison vided to Medicaid recipients when, in Milton Barasch and Axat Jani and ordered to pay a $10,000 fine. Be- fact, the health care services had not Axat Jani pled guilty to health care fore sentencing, he had paid $200,000 been provided. claims fraud. Jani was sentenced on in restitution and fines. Aberbach, who Olga Marquez was accepted into October 15, 2004, to four years in was the owner/pharmacist of Spring- the Camden County PTI Program con- State prison and ordered to pay a field Pharmacy in Springfield, admitted ditioned upon completion of 50 hours criminal fine of $10,000. Jani’s Medic- that, between August of 2001 and June of community service and her coop- aid Program privileges were suspended of 2003, he filled legitimate prescrip- eration with the State. Bonett and for a period of five years and his medi- tions for medicines on doctors’ orders Melendez pled guilty to health care cal license was suspended for one year. for a Medicaid patient, then added sev- claims fraud; and on October 5, 2004, Milton Barasch, a licensed pharma- eral false prescriptions for the same the Court sentenced Melendez to one cist, pled guilty to health care claims patient so that he could bill the Medic- year probation conditioned upon her fraud. Shahud Khawaja, owner of S aid Program. This case was referred to continued cooperation with OIFP’s Brothers Pharmacy, pled guilty on the New Jersey Board of Pharmacy. investigation. Jimenez pled guilty to February 17, 2004, to money launder- health care claims fraud; and on ing. Azam Khan pled guilty to health State v. October 7, 2004, the Court sentenced care claims fraud. Adebowale Oyenusi Jiminez to one year probation condi- OIFP’s Medicaid Fraud Unit un- and Quick Script Pharmacy tioned upon continued cooperation covered that the defendants allegedly Adebowale Oyenusi was sen- with OIFP’s investigation. The Court billed the Medicaid Program approxi- tenced on January 26, 2004, to five sentenced Bonet on October 22, mately $293,815 for medications either years State prison, ordered to pay 2004, to one year probation also con- never dispensed or dispensed to per- $152,215 in restitution, and a $75,000 ditioned upon her cooperation with sons using another person’s Medicaid fine. The corporate defendant, T&N OIFP’s investigation. Senquiz pled recipient number. Some bills were al- Pharmaceutical Co., was sentenced guilty to health care claims fraud and legedly submitted to the Medicaid Pro- on April 24, 2004, to pay a $75,000 on October 22, 2004, the Court sen- gram for medications prescribed for fine. After an investigation by the Divi- tenced Senquiz to one year probation Medicaid recipients who had died sion of Criminal Justice’s Major Nar- conditioned upon continued coopera- years before. cotics Unit and the Medicaid Fraud tion with OIFP’s investigation. Bartolo These matters will also be referred Section of OIFP, a jury convicted to the respective professional licensing Oyenusi and T&N Pharmaceutical Co., boards for action as may be appropriate.

133 OIFP Case Notes – Medicaid Fraud

trading as Quick Script Pharmacy, of claims fraud; and Bernice Bellamy, benefits they were not qualified for conspiracy, Medicaid fraud, and theft who was in charge of billing, pled guilty under the Program. Between July 1, by deception. Oyenusi, through Quick to Medicaid fraud. Harvey Lee Bellamy 2000, and December 26, 2001, Script, submitted false claims for pay- was sentenced on June 11, 2004, to McCaskill and her children wrongfully ment for fraudulent prescriptions. three years State prison and received received Medicaid benefits of approxi- a five-year debarment order from the mately $33,215. State v. Medicaid Program. Bernice Bellamy McCaskill also admitted that she Recovery Services, Inc. was sentenced on June 11, 2004, to sold fictitious Medicaid cards to friends State v. five years probation and received a five- who did not qualify for Medicaid in re- Bennie M. Martin year debarment order from the Medic- turn for money and other gifts. aid Program. Restitution for both will After being extradited and returned be ordered in an amount to be deter- State v. to New Jersey from Texas by OIFP, mined by the Court. Ashokkuma Patel Bennie M. Martin, a substance abuse H&B was a mobility assistance Ashokkuma Patel pled guilty to an counselor, pled guilty to health care patient transportation service located Accusation on October 25, 2004, claims fraud, Medicaid fraud, and mis- in Magnolia, Camden County, that pro- charging him with health care claims conduct by a corporate official. The vided transportation to Medicaid pa- fraud and Medicaid fraud. The Accusa- Court sentenced Martin on April 8, tients who require transportation to and tion charged that Patel’s repurchase of 2004, to seven years State prison and from their medical treatment appoint- drugs resulted in $7,717 being fraudu- ordered him to pay $587,290 in restitu- ments. According to a State Grand lently billed to the Medicaid Program. tion to the Medicaid Program and to Jury indictment, Harvey and Bernice Patel admitted that between July 8, Passaic County. Martin also agreed to Bellamy, through H&B, allegedly com- 2003, and February 17, 2004, at the forfeit $333,754 which had been frozen mitted health care claims fraud and instruction of another, he bought pre- in Recovery Services, Inc., bank ac- Medicaid fraud by billing the Medicaid scription drugs from Medicaid recipi- counts. This money will be applied to- Program for extra crew members who ents by paying them $20 to $50 per ward restitution in addition to the purportedly provided assistance to prescription. The prescriptions were $587,290 ordered by the Court. Medicaid recipients during the vehicle then returned to the MLK Pharmacy According to a State Grand Jury transports, even though extra crew inventory to be resold. Unbeknownst indictment, between February of 2001 members had not been provided during to Patel, the drugs were repurchased and September of 2002, Martin alleg- the transports. The Bellamys’ false from OIFP investigators and cooperat- edly fraudulently obtained the names bills to Medicaid amounted to $22,860. ing witnesses acting in an undercover and Medicaid recipient numbers of capacity posing as Medicaid recipients. Medicaid recipients who were not State v. OIFP’s investigation revealed that counseled at Recovery Services, Inc. Jacqueline McCaskill Patel filled prescriptions for Medicaid Using the recipients’ names and num- recipients, billed the Medicaid Pro- bers, Martin allegedly falsely billed the Jacqueline McCaskill was sen- gram for the drugs, purchased the Medicaid Program, falsely claiming he tenced on May 20, 2004, to two drugs back from the Medicaid recipi- had provided the counseling services years probation. McCaskill pled guilty ents at greatly reduced prices, re- to those Medicaid recipients. Martin to an Accusation charging her with turned the drugs to the pharmacy’s in- and Recovery Services, Inc., allegedly Medicaid fraud. McCaskill worked as a ventory, and billed Medicaid again for fraudulently submitted claims to Med- clerk for the Passaic County Medicaid resold drugs. In essence, MLK Phar- icaid totaling over $900,000 for coun- Assistance Center. She was respon- macy created a “black market” by sell- seling sessions that never took place. sible for assigning Medicaid numbers and cards to persons who qualified for ing and repurchasing prescription State v. the Medicaid Program and who were drugs, while billing multiple claims to Harvey Lee Bellamy eligible for Medicaid health care and the Medicaid Program for the drugs. prescription benefits. McCaskill admit- Patel is scheduled to be sen- and Bernice Bellamy ted that she fraudulently assigned her- tenced early in 2005. Harvey Lee Bellamy, the owner of self and her four children Medicaid re- H&B Medical Transportation Services, cipient numbers so that she and her Inc. (H&B), pled guilty to health care children would qualify for Medicaid

134 State v. GlaxoSmithKline allegedly violated the tution. Greater Trenton, a mental Mary Villone federal Medicaid drug rebate statute health clinic, allegedly billed for two or more intake evaluations per year in vio- A State Grand Jury returned an in- by failing to accurately report statuto- lation of Medicaid regulations. dictment on December 7, 2004, charg- rily mandated “best price” information on the drugs. GlaxoSmithKline’s ac- ing Mary Villone with health care Schering Plough claims fraud and Medicaid fraud. Mary tions allegedly decreased the rebate The New Jersey Medicaid Pro- Villone, the administrator of PE Medi- amount owed to the State. In addition gram reached a settlement agree- cal Transport, Inc., allegedly submitted to the Medicaid settlement, the Medic- ment with Schering Plough through false transportation claims to the Med- aid Fraud Section recovered $850,608 the National Association of Medicaid icaid Program between January of in restitution and penalties for the Fraud Control Units. Schering Plough 2002 and February of 2004. PE Medi- PAAD and Senior Gold State programs. makes Claritin, an allergy medica- cal Transport provided mobility assis- Bayer Corporation tion. A citizen’s qui tam lawsuit al- tance vehicles and transportation as- The New Jersey Medicaid Pro- leged Schering Plough manipulated sistance to Medicaid patients who re- gram has reached a settlement agree- the average wholesale price to the quired transportation to and from ment, through the National Association detriment of the Medicaid Program. health care providers. of Medicaid Fraud Control Units, with Schering Plough paid $6,265,819 in The State alleged that Villone falsi- Bayer Corporation, the maker of Cipro, restitution and penalties. fied prior authorization requests, certifi- an anti-infective, and Adalat, a calcium cates of medical necessity, and trans- channel blocker. Bayer allegedly Walmart Pharmacies portation trip certifications which misreported the “best price” informa- The New Jersey Medicaid Pro- Villone submitted in support of claims tion on these drugs, thereby decreas- gram reached a settlement agreement for transportation services not rendered ing the rebate amount owed to the with Walmart Pharmacies through the and for patients who did not require State of New Jersey. The amount of National Association of Medicaid Fraud transportation. The State alleged that, restitution and penalties for the Medic- Control Units. Walmart paid the State in total, Villone submitted approxi- aid portion of these drugs is $6,797,685. of New Jersey $8,773 in restitution and mately 2,080 false claims totaling The Medicaid Fraud Section is penalties for allegedly not refunding or $51,500 to the Medicaid Program. investigating the impact of Bayer’s crediting the Medicaid Program if a ben- During the investigation, PE conduct on New Jersey PAAD eficiary failed to pick up a medication. Medical Transport settled the case Program claims. with the State by paying $204,000 in PE Medical Transport, Inc. restitution and $204,000 in civil pen- Rite Aid Pharmacies PE Medical Transport, Inc., alties. An additional $42,000 was for- Rite Aid Pharmacies reached a reached a settlement with the Medic- feited to the State. The Medicaid national global settlement with the aid Fraud Section and the Division of Fraud Section “froze” PE Medical Medicaid Program through the Na- Medical Assistance and Health Ser- Transport’s bank accounts which tional Association of Medicaid Fraud vices. The Medicaid Fraud Section al- totaled approximately $400,000. Control Units. Rite Aid has paid restitu- leged that PE Medical Transport sub- tion to the State of New Jersey in the mitted false claims for transportation Medicaid Civil amount of $235,375. The Medicaid services it failed to render. PE Medical Case Settlements Fraud Control Unit alleged that Rite Transport signed a Consent Order on Aid failed to reverse payments for December 21, 2004, and it paid unfilled prescriptions. $204,000 in restitution, $204,000 in GlaxoSmithKline, Inc. penalties and/or fines, and forfeited The State of New Jersey Medicaid Greater Trenton $42,000 to the Civil Remedies Program and the National Association Behavioral Health and Forfeiture Bureau. of Medicaid Fraud Control Units Greater Trenton Behavior Health reached a settlement agreement with settled with the State of New Jersey’s GlaxoSmithKline, Inc., makers of Medicaid Program for $16,245 in resti- Flonase, a nasal spray, and Paxil, an anti-depressant medication.

135 OIFP Civil Case Notes

Auto Fraud In the Matter of State Farm Insurance Company for the Carlos Grullon theft of an automobile he operated. Lamancusa was also prosecuted for Criminal Use of “Runners” Carlos Grullon executed a Consent Order for $5,000 on January 14, 2004. the fraudulent activity and sentenced to probation in Camden County. In the Matter of Grullon conspired with others to report his vehicle was carjacked when it was Glenn Poller actually “given up” to OIFP investigators Staged Accidents Glenn Poller executed a Consent in a sting operation. Grullon pled guilty Order on January 16, 2004, requiring to theft by deception and was sen- In the Matter of him to pay a $5,000 civil penalty. Pol- tenced to four years probation, ordered Iris Salkauski ler employed “runners” to refer individu- to pay $16,520 in restitution, and per- On January 8, 2004, Iris Salkauski als to his treatment facility. Poller pled form 200 hours of community service. executed a Consent Order for guilty to employing a “runner” in a $235,000. Salkauski led a staged ac- criminal case prosecuted by the In the Matter of cident ring in Camden County. An in- Hudson County Prosecutor’s Office. Katrina Johnson vestigation by OIFP and Allstate Insur- In the Matter of Katrina Johnson executed a Con- ance Company’s SIU uncovered a consent Order for $5,000 on July 23, 2004. spiracy involving individuals who Craig Klein Johnson submitted a false claim for the staged car accidents and filed fraudu- Craig Klein executed a $25,000 theft of her automobile. Johnson was lent Personal Injury Protection (PIP) Consent Order on October 13, 2004. prosecuted criminally by OIFP and was claims totaling $567,940 for fictitious Klein used a “runner” to have patients placed into the PTI Program and or- injuries. Undercover law enforcement unlawfully referred to his medical facil- dered to pay $15,845 in restitution. This officers ultimately infiltrated the ring by ity enabling him to seek reimburse- case was referred by New Jersey posing as participants in one of the ments for insurance claims to which Manufacturers Insurance Company. staged accidents. Salkauski has been he was not entitled. Klein pled guilty sentenced to five years in State prison. to criminal use of a runner. In the Matter of Michael Ruggiero In the Matter of Fraudulent Michael Ruggiero executed a Sumara Ahmad Automobile Claims $5,000 Consent Order on August 18, and Vishwas Soni 2004. Ruggiero falsely reported his ve- Sumara Ahmad and Vishwas Soni “Give Up” hicle stolen in an effort to obtain an in- each executed $5,000 Consent Orders surance settlement from Liberty Mu- on October 13, 2004. Ahmad and Soni In the Matter of tual Insurance Company. However, the conspired to stage the theft of Ahmad’s Constance White vehicle had been burned in Philadel- vehicle in order to file a false claim with Constance White executed a Con- phia prior to the time Ruggiero indi- First Trenton Indemnity Company. sent Order for $5,000 on January 14, cated he last saw it. Ruggiero was 2004. White reported the theft of her prosecuted by the Gloucester County Application Fraud motorcycle to the police and to Fore- Prosecutor’s Office and was admitted most Insurance Company. She initially into the PTI Program. In the Matter of accused her estranged boyfriend of the Stanley Dubin theft but later admitted filing a false po- In the Matter of Stanley Dubin executed a $5,000 lice report. White pled guilty in munici- Santo Lamancusa Consent Order on October 13, 2004. pal court. This offense was White’s Santo Lamancusa executed a Dubin obtained insurance coverage second violation of the New Jersey In- $5,000 Consent Order on August 18, from Liberty Mutual Insurance Com- surance Fraud Prevention Act. She 2004. Lamancusa conspired with oth- pany for his vehicle under the name of previously executed a $1,500 Consent ers to file a false insurance claim with his deceased mother. Dubin had an- Order for application fraud.

136 other individual pose as his mother In the Matter of and sign the insurance documents. Lisa Givens Dubin was prosecuted by the Atlantic Lisa Givens executed a Consent County Prosecutor’s Office and was Order for $15,000 on August 18, 2004. sentenced to probation and ordered to Givens conspired with former Allstate pay $1,141 in restitution. Insurance Company employee Linda Clemens-Wright to wrongfully receive Licensed Insurance and cash 32 claim checks totaling Provider Fraud $112,980. In the Matter of In the Matter of Carol Cappuccio Marc Rossi Carol Cappuccio executed a Con- Marc Rossi executed a $50,000 sent Order on January 14, 2004, for Consent Order on October 4, 2004. $8,000. Cappuccio knowingly re- Rossi, a licensed Public Adjuster oper- ceived a fraudulent check from the ating under Rossi Adjustment Ser- Allmerica Insurance Company and vices, operated an “arson-for-profit” and solicited three others who also re- Administrative Assistant Karen Chin insurance fraud scheme responsible ceived fraudulent checks to partici- opening OIFP civil investigation files. for at least six burned buildings. Rossi pate in the fraud scheme. pled guilty to various charges and was sentenced to eight years in prison. He and was sentenced to two years pro- was also ordered to pay $537,673 in Health, Life, bation and ordered to pay $1,050 in restitution to six insurance companies. and Disability Fraud restitution to Horizon Blue Cross Blue Shield and $17,477 in restitution to In the Matter of Aetna Insurance Company. Michael Winberg Provider Fraud In the Matter of Michael Winberg executed a $5,000 In the Matter of Consent Order on March 29, 2004. Roben Brookhim John Douglas Wylie Winberg conspired with others to com- and Rony Elyahouzadeh John Douglas Wylie, a licensed mit arson on the Country Barrel Inn in Roben Brookhim and Rony pharmacist, executed a Consent Order Mercer County. This case was referred Elyahouzadeh jointly executed a in the amount of $135,000 on Decem- by State Farm Insurance Company. $90,000 Consent Order on November ber 1, 2004. Wylie practiced holistic 29, 2004. Brookhim and Elyahouzadeh medicine at the Center for Health Edu- allegedly billed Aetna Insurance Com- Fraudulent cation Research, Inc., in Cherry Hill. pany under the name of Elyahouzadeh He admitted that he represented on Claim Checks for treatment rendered by Brookhim health care claims that he was appro- when Brookhim’s dental license was priately licensed to perform various In the Matter of suspended. Brookhim was charged non-reimbursable, non-medical treat- with health care claims fraud and en- George Givens ments to include electric stimulation, tered the PTI Program. Brookhim’s On August 18, 2004, George Giv- neuromuscular reeducation, manual dental license was surrendered and ens executed a Consent Order for manipulation, and body fluid analysis. deemed a revocation by the Board of $15,000. Givens conspired with former He submitted claims to insurance car- Dentistry. The Board of Dentistry sus- Allstate Insurance Company em- riers on behalf of insured patients, mis- pended Elyahouzadeh’s dental license ployee Linda Clemens-Wright to representing that these procedures for 36 months, with the first six months wrongfully receive and cash 38 claim were covered medical procedures per- active and the remainder stayed to be- checks totaling $146,748. formed pursuant to doctor’s orders. come a period of probation. Wylie pled guilty to theft by deception

137 OIFP Civil Case Notes

In the Matter of Alphonso Smith Alphonso Smith executed a $10,000 Consent Order on June 22, 2004. Smith allegedly prepared statements on numerous insurance health care claims presented to insurance companies which contained false and misleading information. Smith’s license was suspended for five years. In the Matter of Patrick Manze and Michelle Maglione Patrick Manze and Michelle Maglione each executed Consent Orders requiring them to pay a $5,000 penalty on June 8, 2004. Manze allegedly conspired with Maglione, his office manager, to falsify records for two claims totaling $2,625 for a patient Supervising State Investigator In the Matter of who was never treated in his office. Joan Rudderow instructs OIFP civil Roland Evans The case was referred by Horizon investigators in fraud detection techniques. Blue Cross Blue Shield of New Jersey. Roland Evans executed a $15,000 and a $5,000 Consent Order on March In the Matter of 17, 2004. Allegedly, Evans billed for services not rendered to the Guardian/ Nicola Amato PHS Health Plans and Aetna Insur- Nicola Amato executed a Consent ance Companies and falsified informa- Order in the amount of $20,000 on tion on an application for disability in- June 8, 2004. Amato, a licensed chiro- surance with Berkshire Life Insurance practor, allegedly billed for services he Company of America. did not perform, billing for “five” region chiropractic manipulations. An audit by In the Matter of Horizon Blue Cross Blue Shield uncov- Roberto Piccolo ered the false billing. Amato pled guilty to theft by deception. Roberto Piccolo executed a Consent Order requiring him to pay a $30,000 fine In the Matter of on March 10, 2004. Piccolo allegedly billed Delta Dental Insurance Company Andrew Rosenfarb for services not rendered or for billing for Andrew Rosenfarb executed a the same services more than once. $10,000 Consent Order on June 22, 2004. Rosenfarb allegedly submitted bills to Encompass Insurance Com- pany for treatment of a patient while the patient was out of state on vacation.

138 In the Matter of False Health Care Claims In the Matter of Samuel Kaplowitz Cindy J. Marco Samuel Kaplowitz executed a Con- In the Matter of On February 18, 2004, Cindy J. sent Order on July 23, 2004, requiring Andrea Wahlig Marco executed a Consent Order re- him to pay a penalty of $30,250. Andrea Wahlig executed a $5,000 quiring her to pay a $5,000 penalty. Kaplowitz allegedly prepared state- Consent Order on April 26, 2004. Marco was collecting disability ben- ments on insurance health care claims Wahlig fraudulently inflated prescription efits after a work-related accident. forms presented to Horizon Blue Cross receipts in a claim filed with New Jer- However, Marco was employed as a Blue Shield containing false and mis- sey Manufacturers Insurance Company. receptionist while collecting the ben- leading information, specifically efits and representing herself to be improper billing. In the Matter of unable to return to work. This case Owen Tracey was referred by New Jersey Manufac- In the Matter of Owen Tracey executed a Consent turers Insurance Company. Daniel Cantanzaro Order for $5,000 on July 23, 2004. Daniel Cantanzaro executed a Tracey filed a personal injury claim with In the Matter of $17,500 Consent Order on August 18, Rutgers Casualty Insurance Company Suzanne Shenk 2004. Cantanzaro allegedly prepared as a result of an automobile accident Suzanne Shenk executed a $5,000 statements on health insurance although he was not a passenger in the Consent Order on April 26, 2004. Shenk claims forms presented to several car- vehicle at the time of the accident. provided false information to Aetna Life riers containing false and misleading Insurance Company in pursuit of a claim information, specifically improper bill- In the Matter of for disability benefits. She certified that ing and manipulation of CPT codes. Wanda Middleton she had no other income although she This case was referred to OIFP by the Wanda Middleton executed a was working at another job. Division of Consumer Affairs Board of $5,000 Consent Order on October 13, In the Matter of Medical Examiners. 2004. Middleton filed a false health care claim for $15,000 with NJ CURE Kumar Hathiramani In the Matter of Insurance Company for personal inju- Kumar Hathiramani executed a Richard Finder ries arising from an accident. $15,000 Consent Order on May 13, Richard Finder executed a Middleton was not a passenger in the 2004. Hathiramani pursued a claim $15,000 Consent Order on September vehicle. Middleton pled guilty to health with Northwestern Mutual Life Insur- 22, 2004. Finder pursued a disability care claims fraud. ance Company for total disability al- claim with Prudential Insurance Com- though he was not disabled. pany when he was not disabled. He Fraudulent Disability Claims Hathiramani also pled guilty to theft also submitted false bills to CIGNA In- by deception and falsifying or tamper- surance Company for services not pro- In the Matter of ing with records. vided to a patient. Finder pled guilty to Phillip Rello health care claims fraud. In the Matter of On January 14, 2004, Phillip Rello Jorge Santiago executed a $40,000 Consent Order. Jorge Santiago executed a Rello paid $60,000 in restitution to $5,000 Consent Order on June 22, UNUM Provident Insurance Company. 2004. Santiago collected total per- Rello, a licensed electrician and owner manent disability benefits while of Rello Electric, was working while gainfully employed. Santiago used collecting workers’ compensation ben- a different Social Security number to efits, performing tasks inconsistent obtain employment. with the physical limitations reported to the carrier.

139 OIFP Civil Case Notes

In the Matter of In the Matter of In the Matter of Linda Rostron Kaiser Daouda Traore Grigory Levyash Linda Rostron Kaiser executed a Daouda Traore executed two Grigory Levyash executed a $5,000 $5,000 Consent Order on July 23, $5,000 Consent Orders on June 8, Consent Order on August 18, 2004. 2004. Kaiser inflated the extent of her 2004. Traore submitted a fraudulent Levyash submitted false receipts to injuries received from a bicycle acci- claim to Mutual of Omaha Insurance State Farm Fire and Casualty Company dent, claiming she was totally disabled Company for accidental death and life in pursuit of a homeowners claim. and unable to continue her work as a insurance benefits claiming his pur- hairdresser. An investigation uncovered ported wife and child were fatally in- In the Matter of that Kaiser was still employed at a dif- jured in a motor vehicle accident in Af- Dean Marletta ferent salon cutting and styling hair. rica. He submitted an additional fraudu- Dean Marletta executed a $15,000 Kaiser was prosecuted by the lent claim for the same benefits to the Consent Order on December 15, 2004. Monmouth County Prosecutor’s Office American International Group (AIG) Life Marletta submitted fictitious or altered and was admitted into the PTI Program. Insurance Company. He attempted to receipts to Harleysville Insurance obtain $232,000 in benefits from the Company in support of a homeowners In the Matter of Mutual of Omaha Insurance Company claim. Marletta was admitted into the Surinder Aggarwal and $175,000 in benefits from AIG. PTI Program. Surinder Aggarwal executed a Traore also pled guilty to an Accusation $15,000 Consent Order on July 23, charging him with theft by deception. False Commercial Claims 2004. Aggarwal pursued a claim with Northwestern Mutual Insurance Com- In the Matter of In the Matter of pany, claiming he was totally disabled Patricia West when he was not. Aggarwal was pros- Patricia West executed a $7,500 executed a ecuted by OIFP and pled guilty to theft Consent Order on November 8, 2004. $10,000 Consent Order on November by deception and falsifying or tamper- West submitted false statements to 8, 2004. conspired with ing with records. receive benefit checks on a Prudential other individuals to purposely damage life insurance policy. and destroy inventory in order to col- Life Insurance Fraud lect benefits from a Fireman’s Fund In- Property and surance Company commercial policy. In the Matter of pled guilty to attempted Nada and Nasir Alharmoosh Casualty Fraud theft by deception. Nada and Nasir Alharmoosh each executed $5,000 Consent Orders on False Homeowners Claims March 10, 2004. The Alharmooshes conspired to defraud Provident Mutual In the Matter of Life Insurance Company, Banner Life Barsis Asaad Insurance Company, Nacola Life Insur- Barsis Asaad executed a $5,000 ance Company, CNA Insurance Com- Consent Order on March 10, 2004. pany, and Great American Life Insur- Asaad had filed a false homeowners ance Company by providing false and property damage claim totaling misleading information relating to life $32,495, providing $27,602 worth insurance claims. Nada Alharmoosh of false receipts. falsely reported that Nasir Alharmoosh had died. OIFP prosecuted the case and the Alharmooshes pled guilty to theft by deception.

140 Intersection of Master Street and Chelton Street Camden, NJNew • January Jersey 26, 1997 January 26, 1997 Iris Salkauski Ring Leader

Vehicle 1 Vehicle 2

Matilda Velez Operator Unknown Operator Sonia Vicky Soto Bonilla Passenger Passenger

Hector Juvenile Bonilla Passenger Passenger

! ! Vehicle 1 Operator and Passengers Did Not Treat Treat at Various Salkauski Recommended Providers

Allstate Billed for: Allstate Paid: ■ Matilda Velez $6,866.00 ■ Matilda Velez $22,729.70 ■ Sonia Soto $8,576.99 ■ Sonia Soto $26,120.00 Total Paid: ■ Hector Bonilla $7,486.83 ■ Hector Bonilla $24,813.76 $35,694.93 ■ Vicky Bonilla $3,339.71 ■ Vicky Bonilla $27,320.00 ■ Juvenile $9,425.40 ■ Juvenile $16,012.25

141 DOL Civil Litigation Case Notes

State v. State v. State v. Kevin R. Milner Pamela Connant Milton Milan On January 14, 2004, the Consent and Steven Hughes and Joseph Darakshan Order signed by Kevin Milner On October 28, 2004, the State On November 19, 2004, the Court was fully executed in the amount of was granted summary judgment and entered summary judgment against $10,000. Milner presented false and awarded civil penalties of $4,000 former Camden Mayor Milton Milan. misleading information in support of against Pamela Connant and $15,000 The Court ordered Milan to pay a a disability claim. in civil penalties against Steven $10,000 civil penalty and $2,176 in at- Hughes. The defendants were found to torneys’ fees and costs for violating the State v. have violated the Fraud Act by provid- Fraud Act. Milan made a false property Roberto Piccolo ing false invoices and information in loss report on the day he was sworn in On January 28, 2004, Roberto support of three claims for coverage as Camden City Council President. Piccolo signed a Consent Order submitted to Connant’s auto insurer. Milan and co-defendant Joseph agreeing to pay a civil penalty of Darakshan reported computer equip- $30,000 for submitting statements in State v. ment stolen in order to avoid paying an support of insurance claims which Stacey Randolph outstanding business equipment contained false information. On April 23, 2004, the Court en- lease. Milan kept one of the comput- tered a $10,000 Stipulation of Settle- ers and used it in his City Hall office. State v. ment and Consent Judgment against On October 1, 2004, Darakshan en- David Harris Stacey Randolph, a licensed insur- tered into a Stipulation of Settlement On May 24, 2004, David Harris, a ance producer, for providing false in- with the State and agreed to a $7,500 chiropractor, signed a Consent Order formation to State Farm Insurance civil penalty. Darakshan also paid resti- agreeing to pay a civil penalty of Company regarding insurance policies tution to the Selective Insurance Com- $15,000 for indirectly soliciting other and automobile theft claims. Civil pen- pany and leasing company. persons to make claims for personal alties under the Fraud Act were also injury protection benefits. imposed against co-conspirators State v. Maurice Jacobs, Betty Mure, and Peter Ladas State v. Tamara Biamby. On April 4, 2004, Peter Ladas, Charles H. Weatherby a licensed insurance producer, entered On October 18, 2004, summary State v. into a Stipulation of Settlement to pay judgment was entered against Charles Thomas Wickham, III a $15,000 civil Fraud Act penalty. H. Weatherby for a civil penalty of On June 23, 2004, the Court Ladas made false or misleading state- $7,500 and attorneys’ fees of $3,765. entered a Stipulation of Settlement ments to Prudential Life Insurance Weatherby submitted false and mis- with Thomas Wickham, III. Wickham Company regarding the health status leading information in support of a agreed to pay a $20,000 penalty and of an insured. The Department of property loss claim. attorneys’ fees in the amount of Banking and Insurance filed a separate $7,500 for making false or misleading administrative action against Ladas, statements in support of claims for revoking his producer license. Ladas workers’ compensation benefits. was also ordered to pay a $5,000 Wickham also made restitution to his penalty and to make restitution to the employer, Clayton Block Company. Prudential Life Insurance Company.

142 Division of Law Deputy Attorneys General discuss litigation issues. (l. to r.) Robert A. Storino, Steven Smith, Jeffrey Caccese, Jennifer M. Blum, John C. Grady, and Barbara C. Zimmerman.

143 County Prosecutors’ Offices – Criminal Case Notes

Atlantic County Bergen County Affairs Division revealed that Sparta falsely reported to Liberty Mutual that Prosecutor’s Office Prosecutor’s Office his vehicle was stolen when, in fact, it had been abandoned in Jersey City. State v. State v. Ronald Rogers Arcel Gaskin Burlington County On July 2, 2004, Ronald Rogers On January 30, 2004, Arcel was sentenced to three years in State Gaskin was sentenced to one year in Prosecutor’s Office prison after pleading guilty to receiving State prison for exhibiting a fictitious stolen property. An investigation by the motor vehicle insurance identification State v. Atlantic County Prosecutor’s Office In- card following a joint investigation con- April Hines surance Fraud Task Force into the ducted by the Bergen County On July 2, 2004, April Hines was stripped and burned shell of a 1994 Prosecutor’s Office and the Bergen sentenced to two years probation and Cadillac Deville, with the assistance of County Police Department. ordered to pay a $1,000 fine after the National Insurance Crime Bureau pleading guilty to charges of attempted (NICB), located a valid VIN tracing the State v. theft by deception. Hines falsely re- vehicle’s ownership to Rogers. The ex- Yerushah Gonzalez ported her 1999 Lexus RX300 stolen ecution of a search warrant found a/k/a Rosemary Suarez and filed a fraudulent insurance claim Rogers in possession of a stolen 1997 On May 29, 2004, Yerushah with Liberty Mutual. The fraud was dis- Cadillac Deville bearing the VIN plate Gonzalez a/k/a Rosemary Suarez was covered when the vehicle was stopped from the torched vehicle and more than sentenced to 110 days in county jail for a motor vehicle violation and the $1,000 in stolen goods in its trunk. as a condition of three years probation. driver informed police that Hines had paid him to dispose of the vehicle. Hines State v. On April 19, 2004, Gonzalez pled guilty to hindering apprehension and posses- admitted that she fraudulently attempted Peter Quarelli sion of various fraudulent driving creden- to collect on her insurance policy; how- and Debra Cornell tials following a cooperative investigation ever, no payment was made by Liberty On July 15, 2004, Peter Quarelli by the Bergen County Prosecutor’s Of- Mutual on the fraudulent claim. and Debra Cornell, his former wife, fice Insurance Fraud Squad and the State v. were indicted for insurance fraud, at- North Arlington Police Department. tempted theft by deception, conspiracy Rene Lundborn to commit theft by deception, unsworn State v. On April 30, 2004, Rene Lundborn falsification, and false swearing for al- Peter Sparta was sentenced to three years proba- legedly filing a fraudulent insurance On February 24, 2004, Peter tion and ordered to pay a $250 fine af- claim with First Trenton Insurance Sparta was admitted into the PTI Pro- ter pleading guilty to health care Company reporting the theft of $10,000 gram, after pleading guilty to attempted claims fraud. Lundborn altered a pre- in jewelry from Quarelli’s home. He also theft by deception, on condition that he scription issued by her physician by allegedly filed an official police report re- forfeit his public office pursuant to changing the number of refills from garding the purported loss. An investiga- N.J.S.A. 2C:51-2 and be permanently zero to two and then used her Aetna tion by the Atlantic County Prosecutor’s barred from future employment in law U.S. Healthcare insurance card to pay Office Insurance Fraud Task Force re- enforcement. Sparta, a career Bergen for the two refills. vealed alleged discrepancies in state- County Sheriff’s Officer, had reported ments made by Quarelli to his insurance his 2002 Audi stolen from the Garden company and to the police. Cornell was State Plaza Mall. A joint investigation admitted into the PTI Program on No- by the Bergen County Prosecutor’s vember 16, 2004. The charges against Office Insurance Fraud Task Force and Quarelli are pending trial. the Bergen County Sheriff’s Internal

144 Camden County $1,629 and cancelled payment on the first one. Although well aware that Prosecutor’s Office State Farm had stopped payment on the first check, Lorena Lee proceeded State v. to cash the check at Ben’s Store and Santo Lamancusa then cashed the second check at an- On July 23, 2004, Santo other check cashing agency. Lee ad- Lamancusa was sentenced to four mitted to law enforcement authorities years probation conditioned on 90 that she knew her vehicle was only days in the Sheriff’s Labor Assistance worth $1,629 and that she was not en- Program (SLAP) after pleading guilty titled to the double payment. to one count of theft by deception. State v. Lamancusa falsely reported his 1995 Ford Mustang stolen from the parking Vasilios Patouhas lot of a Cherry Hill restaurant when, in On April 12, 2004, Vasilios fact, the vehicle was found torched in Patouhas was admitted into the PTI in the approximate amount of $76,000. Millville. An investigation revealed Program after being charged with at- Quinn had been previously indicted on calls made from Lamancusa’s cell tempted theft. Patouhas was alleged two counts of theft by deception for al- phone from the Millville area though to have attempted to enlist a friend’s legedly taking deductions from employ- he claimed to be at the Cherry Hill assistance in a scheme to have ees for health insurance and failing to restaurant where the alleged theft oc- Patouhas’ boat “disappear” while remit those premiums to the employ- curred. As part of his plea agreement, Patouhas and his family were on vaca- ees’ health insurer, thus leaving the em- Lamancusa consented to pay a civil tion with the intent to thereafter report the boat stolen to law enforcement and ployees without health insurance from insurance fraud fine in the amount of August of 2000 to February of 2001. $5,000; and his girlfriend, who alleg- his insurance company. Unbeknownst edly corroborated his false state- to Patouhas, his friend contacted the State v. State Police which resulted in an un- ments, consented to a $3,000 civil Claudia Delacruz insurance fraud fine. dercover State Trooper proceeding to the Patouhas home, connecting the On October 26, 2004, Claudia State v. subject boat to his undercover vehicle, Delacruz was indicted on charges of Lorena Lee then removing it to State Police Head- attempted theft by deception and hindering apprehension. Delacruz alleg- On May 21, 2004, Lorena Lee was quarters for safekeeping. A summons was issued for Patouhas’ arrest after edly falsely reported that her 2004 sentenced to three years probation, leased vehicle had been stolen in conditioned on serving 90 days in the he contacted his insurance company to report the boat stolen. Patouhas’ in- Wildwood Crest. The State intends to Sheriff’s Labor Assistance Program prove that the vehicle was not stolen (SLAP), and ordered to pay restitution surance claim in the amount of $21,430 was denied and the Camden County as reported, but that Delacruz wanted in the amount of $1,629 to Ben’s Store to terminate her lease. following her guilty plea on charges of Insurance Fraud Unit contacted the lien holder who then repossessed the boat. theft by deception. Lee’s parked ve- State v. hicle had been struck by a State Farm Debra Williams insured driver. State Farm settled the Cape May County and Laverne Williams claim by issuing Lee a check in the Prosecutor’s Office amount of $1,629 to cover the replace- On October 26, 2004, a Cape May ment cost of her totaled vehicle. Lee County Grand Jury returned an indict- did, in fact, receive this first check; State v. ment charging Debra Williams with ut- however, she contacted State Farm Michael Quinn tering a forged instrument and Laverne advising that she did not receive it. Re- On October 21, 2004, Michael Williams with forgery. Debra Williams lying on Lee’s representations, State Quinn, president of Quinn-Woodbine, filed a worker’s compensation claim for Farm issued her a second check for Inc., was admitted into the PTI Pro- an alleged injury suffered while em- gram and ordered to make restitution ployed by the County of Cape May.

145 County Prosecutors’ Offices – Criminal Case Notes

County Prosecutor Insurance Fraud Contacts Atlantic County Chief Asst. Pros. James McClain 609-909-7816 Sgt. George Rochelle 609-909-7800 Bergen County Asst. Pros. Liliana Silebi 201-226-5750 Det. Sylvia Presto 201-226-5537 Burlington County Asst. Pros. Rose Marie Mesa 609-265-5779 Det. Jack Walker 609-265-3147 Camden County Asst. Pros. Robin Hamett 856-580-6069 Inv. David Baldino 856-580-6068 Cape May County Inv. George Hallet 609-465-1135 Cumberland County Det. Sandra Silvestri 856-453-0486 Ext. 001 Essex County Asst. Pros. Jeffrey Cartwright 973-266-7226 Robert Larsen, Vehicle Fire Coordinator 973-266-7227 Gloucester County Asst. Pros. Margaret Cipparrone 856-384-5684 Det. William Perna 856-384-5645 Hudson County Asst. Pros. Michael Zevits 201-795-6529 Det. John Bigger 201-795-6959 Hunterdon County Det. Kristen Larsen 908-788-1556 Mercer County Asst. Pros. Al Garcia 609-278-4863 Middlesex County Asst. Pros. Ronald Abramowitz 732-745-4108 Monmouth County Asst. Pros. Edward Quigley 732-431-7160 Morris County Det. Daniel McNamara 973-285-6271 Asst. Pros. Gerard Britton 973-631-5193 Ocean County Asst. Pros. Martin Anton 732-929-2027 Inv. Steven Budelman 732-929-2027 Ext. 3446 Passaic County Asst. Pros. Robert Holmsen 973-881-4966 Inv. George Wall 973-881-4957 Salem County Inv. James Gillespie 856-935-7510 Ext. 8521 Somerset County Det. Jorge Ramos 908-575-3337 Sussex County Det. Doug Porter 973-383-1570 Union County Asst. Pros. Eleanor Beaumont 908-527-4670 Sgt. Steven Siegel 908-527-4619 Warren County Det. Clement Mezzanotte 908-475-6631

Subsequent to filing the claim, Debra question, that the hospital slips were Essex County Williams took time off from work and fraudulent, and that Debra’s mother, allegedly submitted fraudulent leave Laverne Williams, a cleaning service Prosecutor’s Office excuse slips to her supervisor, purport- employee at BTMH, had stolen the edly signed by physicians at Burdette hospital slips in question and forged State v. Tomlin Memorial Hospital (BTMH), for the doctors’ signatures. Anthony Perkosky medical treatment rendered for the al- On March 26, 2004, Anthony leged injury. The State intends to prove Perkosky was sentenced to four years that Debra Williams did not receive probation and ordered to pay $27,498 medical treatment on the dates in in restitution to State Farm Insurance Company for his role in having his 2002 Acura TL burned. He was also ordered to pay fines and perform 100 hours of community service.

146 State v. Union County Prosecutor Theodore Romankow joins Insurance Fraud Prosecutor Greta Gooden Dennis Brown Brown and DAG Jennifer Fradel for a panel discussion of insurance fraud law enforcement efforts On June 7, 2004, Dennis Brown, a at the Annual Symposium of the Insurance Council of New Jersey. former Montclair firefighter, was admit- Gloucester County Gold was arrested by the Gloucester ted into the PTI Program after pleading County Prosecutor’s Office Insurance guilty to an Accusation charging him Prosecutor’s Office Fraud Unit on March 15, 2004, and was with arson for his role in the burning of indicted in May of 2004. This case was a 2002 Nissan Maxima. In addition to State v. consolidated with others and ultimately resigning from his position as a Nicole Pfund prosecuted by the Camden County firefighter, Brown was fined and ordered Prosecutor’s Office. Gold pled guilty and by the Court to pay restitution. On July 8, 2004, Nicole Pfund was indicted by a Gloucester County Grand is currently in the Camden County Jail State v. Jury for criminal attempt and theft by awaiting sentencing. Yelitza Martinez deception stemming from an allegedly On August 4, 2004, an Essex staged “slip and fall” incident at a motel Hudson County County Grand Jury indicted Yelitza in West Deptford, New Jersey. Prosecutor’s Office Martinez, an employee of State Farm State v. Insurance Company, on charges of ag- State v. gravated arson, conspiracy, and at- Regina Toppi tempted theft by deception. Martinez Regina Toppi, a nurse for Dr. Dora Barrueco allegedly falsely reported her 1998 Gottleib at Tenant Hospital, was in- and Anabela Jaco-Fuentes Toyota Camry stolen in West New dicted on March 24, 2004, for allegedly On August 16, 2004, Dora York, New Jersey. The vehicle was stealing a prescription pad and writing Barrueco and Anabela Jaco-Fuentes subsequently found burning in Newark, more than fifty prescriptions for pled guilty to charges of insurance New Jersey, at a time Martinez alleges Oxycodone and Percocet in the name fraud and were admitted into the PTI she was driving the vehicle. The State of her mother. Program. Barrueco, owner of Sandra’s intends to prove the vehicle was inten- Car Service and New Way Car Ser- tionally burned and that Martinez had Insurance Card vice, admitted she did not pay the full a role in both its alleged theft and sub- Ride-Along Program premiums for her fleet auto insurance sequent burning. The Gloucester County and that she provided fraudulent insur- Prosecutor’s Office Insurance Fraud ance documentation to her drivers, in State v. Unit initiated an “Insurance Card Ride- addition to presenting fraudulent docu- Louis Trabucco Along Program” with various local po- mentation to the City of West New On September 27, 2004, an lice departments in Gloucester York when applying for the licenses to Essex County Grand Jury returned an County. The program trains and as- operate her car services. Jaco- indictment charging Louis Trabucco sists local police officers in detecting Fuentes admitted her complicity in with arson for hire, aggravated arson, fraudulent and counterfeit insurance providing Barrueco with the fraudulent conspiracy to commit aggravated ar- cards. The Program resulted in 74 insurance documents. As a result of son, and theft by deception. investigations in 2004. the plea agreement, Barrueco agreed Trabucco’s 2002 Jeep Cherokee was On another front, the Gloucester to cease operation of her two found burning by the Newark Fire De- County Prosecutor’s Office Insurance limousine car services. partment after he allegedly falsely re- Fraud Unit also initiated an investigation ported it as having been stolen. The into a fraudulent contractor scheme al- State v. State intends to prove that Trabucco legedly perpetrated in four southern New Victor Barrezueta had a role in both the alleged theft and Jersey counties. The contractor, Joel and Anika Barrezueta subsequent burning of the vehicle. Gold, contracted with 52 homeowners On May 7, 2004, Victor for repairs to their homes, many of which Barrezueta was sentenced to three were paid by their respective years probation and ordered to pay homeowners insurance companies. restitution in the amount of $28,006

147 County Prosecutors’ Offices – Criminal Case Notes

OIFP Industry Contacts Insurance Fraud Prosecutor Greta Gooden Brown 609-896-8779 Lawrenceville InsuranceFirst Assistant Prosecutor FraudJohn J. Smith, Contacts Jr. 609-896-8767 Lawrenceville Managing Deputy Chief Investigator Vincent Matulewich 609-896-8894 Lawrenceville Deputy Chief Investigator Richard Falcone 609-896-8718 Lawrenceville Deputy Chief Investigator Sheila Brown 609-896-8725 Lawrenceville Liaison Section County Prosecutor Liaison/ Stephen Moore 609-896-8906 Lawrenceville Supervising Deputy Attorney General Law Enforcement Liaison, SSI Barry Riley 609-896-8854 Lawrenceville Industry Liaison, Special Assistant John Butchko 609-896-8747 Lawrenceville Assistant Industry Liaison Carol Naar 609-896-8712 Lawrenceville Professional Boards Liaison, Charles Janousek 609-896-8748 Lawrenceville Special Assistant Case Screening, Litigation and Analytical Support Section Supervising State Investigator Barry Riley 609-896-8854 Lawrenceville

OIFP Regional Offices Central Office South Office North Office 3131 Princeton Pike 5 Executive Campus 1 Apollo Drive Bldg. 3, Suite 100 Cherry Hill, NJ 08002 Whippany, NJ 07981 Lawrenceville, NJ 08648 856-486-3900 • fax 856-486-2960 973-599-5800 • fax 973-599-5971 609-896-8888 • fax 609-896-8694 Contact for Criminal Bureau Contact for Criminal Bureau Contact for Criminal Bureau SSI Brian Harshman SSI Paul Castellvi SSI Ciro Sebasco Contact for Civil Bureau Contact for Civil Bureau Contact for Civil Bureau SSI Joseph Abrams Manager Ronald Dellanno Manager Michael Palumbo Mailing address for Central: Hotline: 877-55-FRAUD (37283) P.O. Box 094, Trenton, NJ 08625 www.NJInsuranceFraud.org to AIG Insurance Company after State v. dicted on charges of insurance fraud, pleading guilty to an Accusation Cristian Mendoza Munoz, conspiracy, theft by deception, and for charging him with arson. In pleading Federick Amor his role as alleged leader of the auto guilty, Barrezueta admitted sole re- theft trafficking network which Munoz sponsibility for the burning of a 2001 and Maria Torres attempted to use in “giving-up” his ve- Acura, owned by his mother Anika On November 19, 2004, Cristian hicle. Maria Torres was also indicted Barrezueta, for purposes of avoiding Mendoza Munoz was sentenced to on June 15, 2004, for insurance fraud, monthly car payments. Charges two years probation and restitution of conspiracy, and theft by deception for against Anika Barrenzueta $12,336 for attempting to dispose of allegedly attempting to dispose of her were dismissed. his 1997 Ford Expedition, insured by 2003 Toyota Corolla, insured by IFA In- GEICO Insurance Company, and file a surance Company, through Amor. As a fraudulent theft claim. Previously, on result of the investigation by the Jersey June 15, 2004, Frederick Amor, owner City Police Department, with the as- of Two Brothers Auto Body, was in- sistance of the Hudson County

148 Prosecutor’s Office, both Munoz’ and Monmouth County Morris County Torres’ vehicles were recovered without sustaining any damages. Prosecutor’s Office Prosecutor’s Office Mercer County State v. State v. Prosecutor’s Office Lawrence Nowell Wanda Reeves On December 10, 2004, Lawrence and Clifton Baskerville Nowell was sentenced to three years State v. On October 29, 2004, Clifton probation for conspiracy and simulat- Baskerville was sentenced to five Al Elk ing motor vehicle insurance identifica- years State prison, and his wife, On January 30, 2004, Al Elk was tion cards. Based on information pro- Wanda Reeves, was sentenced to sentenced to three years probation vided by a local insurance agency al- three years State prison with a recom- conditioned upon serving 180 days in leging fraudulent insurance identifica- mendation for admission into the Inten- county jail for his role in tampering with tion cards were being presented for re- sive Supervision Program (ISP), on evidence in an auto “give-up” scheme. newal, as well as information obtained charges of theft by deception. Upon presenting forged repossession from an individual attempting to renew Baskerville and Reeves admitted that paperwork, Elk retrieved a vehicle from an insurance policy, an investigation they had stolen over $115,000 from an the Trenton Police Department after revealed that Nowell either rented ve- insurance brokerage firm where that vehicle had been falsely reported hicles to members of the Red Bank Reeves was employed. stolen. Elk attempted to dispose of the community and/or sold them fraudulent vehicle before the police could link it to government-issued documents which State v. the “give-up” scheme. were presented to law enforcement dur- Michael Fimognari ing motor vehicle stops. A search of the State v. On February 18, 2004, Michael NJMVC database revealed that at one Fimognari pled guilty to insurance Anne Marie Roberts time Nowell had registered as many as fraud and theft by deception. On January 30, 2004, Anne Marie 19 vehicles in his name and had pro- Fimognari was subsequently sen- Roberts was sentenced on charges of vided fraudulent insurance company tenced to 90 days S.L.A.P., three theft by deception to three years incar- policy numbers on vehicle registration years probation, and ordered to pay ceration in State prison conditioned documents presented to NJMVC. $719 in restitution to State Farm Insur- upon 10 months parole ineligibility. As State v. ance. Fimognari, whose own license a result of a childhood accident, Eliza- had been suspended, admitted that he beth Roberts, Anne Marie’s daughter, William Shomo had obtained a license and insurance was entitled to a settlement award On or about December 17, 2004, by fraudulently assuming a false iden- with interest. At 20 years of age, Eliza- William Shomo was sentenced to tity, and submitted an accident claim beth attempted to claim the settlement three years probation on charges of under the acquired policy for damage award but was informed the money conspiracy and simulating motor ve- he caused to another vehicle. had already been disbursed. Anne hicle insurance identification cards. Marie Roberts had fraudulently as- A cooperative investigation by the State v. sumed her daughter’s identity for the Monmouth County Prosecutor’s Office Suzanne Elsmore purpose of obtaining the $14,534 and Red Bank Police Department re- On January 13, 2004, Suzanne settlement check that had been is- vealed Shomo was producing and/or Elsmore pled guilty to one count of sued for Elizabeth’s benefit by the selling fraudulent insurance identification health care claims fraud and was sen- County Surrogate’s Office. In July of cards, drivers’ licenses, and other gov- tenced to 100 hours community ser- 2001, a warrant of indictment was is- ernment-issued documents. As a result vice, three years probation, and or- sued for Anne Marie Roberts. It was of this investigation, a search warrant dered to pay $3,500 in restitution to subsequently served upon her in 2003 was issued and executed on Shomo’s the Medicaid Program. Elsmore admit- when she attempted to enter Canada Neptune, New Jersey, residence. ted to fraudulently obtaining Medicaid from the northwest United States. benefits in excess of $3,000.

149 County Prosecutors’ Offices – Criminal Case Notes

State v. Insurance Company, as well as a civil State v. Christine Rotundo insurance fraud fine in the amount of Vernon Cannon $5,000. In August of 2003, Blackwell On January 27, 2004, Christine On May 7, 2004, Vernon Cannon reported the theft of his 1998 BMW Rotundo pled guilty to health care was sentenced to five years probation from the Scores Gentlemen’s Club, his claims fraud and was subsequently after pleading guilty to selling a simu- place of employment, to the New York sentenced to 25 hours community ser- lated motor vehicle insurance identifi- Police Department when, in fact, the vice, five years probation, and agreed cation card. In October of 2002, an un- vehicle had been recovered badly to pay $1,100 in restitution to U.S. dercover Prosecutor’s Office detective burned and submerged in a Manches- Healthcare. Rotundo admitted that she purchased a fraudulent Hartford Insur- ter Township lake three days prior to had submitted fraudulent prescriptions ance Company insurance identification the date it was reported stolen. During for drugs under the name of another card from Cannon for $120. an extensive interview, Blackwell pro- person insured by U.S. Healthcare. vided detailed information concerning State v. State v. the alleged theft. He also indicated Francis Baccaro that he leased the vehicle for $650 a Lindsey Richmond On October 22, 2004, Francis month and it had approximately On April 12, 2004, Lindsey Rich- Baccaro was sentenced to three years 68,000 miles on the odometer. When mond pleaded guilty to health care probation for committing insurance questioned about the discrepancy in claims fraud. Richmond was subse- fraud by submitting a fraudulent auto dates of the reported theft and recovery quently sentenced to three years of theft claim to Liberty Mutual Insurance of the vehicle, Blackwell terminated the probation, restitution of $106 to Paid Company. On June 6, 2003, Baccaro interview; and he was subsequently Prescription Plan, and agreed to par- reported to the Wayne Police Depart- charged with insurance fraud. ticipate in a drug rehabilitation pro- ment that his 1999 Toyota 4-Runner gram. Richmond admitted that she had been stolen from the Willowbrook had submitted fraudulent prescriptions Passaic County Mall; and, as a result of the alleged for prescription drugs. theft, in August of 2003, Liberty Mutual Prosecutor’s Office paid $24,876 to Toyota Motor Credit to State v. satisfy the claim for the stolen vehicle. Kevin Briggs State v. In November of 2003, the vehicle was On June 4, 2004, Kevin Briggs Anthony Mancini recovered in a New York City parking pled guilty to simulating a motor ve- and Lisbeth Delgado garage. A review of the parking garage hicle insurance identification card. Anthony Mancini, owner of Total records revealed that Baccaro’s ve- Briggs was facing up to 90 days jail Care Chiropractic Center in Clifton, NJ, hicle had been parked there since and three years probation. Prior to and Lisbeth Delgado, Total Care’s of- June 5, 2003, the day prior to it being sentencing, Briggs was arrested and fice manager, each pled guilty to one reported stolen. charged with murder in Essex County. count of criminal use of a “runner” in January of 2004 and were subse- Salem County quently admitted into the PTI Program. Ocean County An investigation by the Passaic Prosecutor’s Office Prosecutor’s Office County Prosecutor’s Office revealed that, early in 2001, a confidential infor- State v. State v. mant referred an undercover Kim Sheehan Prosecutor’s Office detective to the To- On December 1, 2004, Kim Xavier Blackwell tal Care Chiropractic Center; and, in On October 8, 2004, Xavier Sheehan was indicted on charges of return for the referral, Mancini paid the insurance fraud, theft by deception, Blackwell pled guilty to charges of in- informant $1,300. After several months surance fraud resulting from an auto and unsworn falsification to authorities of treatment, the undercover detective for allegedly committing premium fraud “give-up” scheme and was sentenced referred a second undercover detective to 180 days in county jail as a condi- to Total Care. Delgado paid $1,100 for tion of probation, ordered to pay this second referral. $23,538 in restitution to the Highpoint

150 against her automobile insurer by in- vehicles when, in fact, the vehicles cohol, struck and killed a pedestrian. tentionally misrepresenting the resi- were taxis. By doing so, the company Because of the alleged application dency of her brother, who allegedly allegedly avoided paying an additional fraud, the victim’s surviving widow and resided with her and was a driver of $92,000 in insurance premiums. young children could only sue for the a vehicle insured under her policy. On December 21, 2004, David and Pennsylvania minimum commercial li- Gerald Pohida were charged by com- ability coverage of $100,000, rather Somerset County plaint with theft by deception for alleg- than the New Jersey minimum com- edly obtaining in excess of $150,000 mercial tow truck liability coverage of Prosecutor’s Office in financing under the pretense of us- $750,000, which would have pertained ing the funds for financing an allegedly had the vehicle been legally insured in State v. non-existent insurance policy. New Jersey. A detainer was placed on Kodja Z. Zarlug Campbell, who is presently incarcer- State v. ated in the Warren County Correctional On September 13, 2004, Kodja Z. Center after pleading guilty to the Zarlug pled guilty to possession of a Tulio Martins vehicular homicide. fictitious insurance identification card. On June 10, 2004, Tulio Martins was charged with theft by deception for allegedly falsely reporting his 2001 State v. Union County Toyota Camry stolen to the Elizabeth Georgeann Pludowski Prosecutor’s Office Police Department and Amica Insur- and Victor S. Pludowski, Sr. ance Co. when, in fact, he had ar- On August 31, 2004, Georgeann State v. ranged for another individual to dispose Pludowski and Victor S. Pludowski, of the vehicle. Martins was accepted David Pohida, Sr., were charged by summons and into the PTI Program on August 26, complaint with theft by failure to make Gerald Pohida and Cheri Jolley 2004, and required to pay restitution of required disposition of property, theft (URM Insurance Inc.) $5,981 to Amica. by unlawful taking or disposition, and In May of 2004, David Pohida and conspiracy. The complaint alleged that Gerald Pohida, principals of United Warren County Georgeann Pludowski, as Executrix Risk Management Insurance Agency, for the estate of her cousin, Frank were indicted for theft by failure to Prosecutor’s Office Kozare, conspired with Victor S. make required disposition of property Pludowski, Sr., to divert in excess of received, theft by deception, misappli- State v. $70,000 from the estate, which in- cation of entrusted property, and mis- Eben Campbell cluded, among other items, more than conduct by a corporate official. Cheri On October 13, 2004, as the re- $31,000 in death benefits from the New Jolley, United Risk Management’s of- sult of a cooperative investigation with Jersey Teacher’s Pension Fund and fice manager, was charged with theft the Warren County Prosecutor’s Office the New York Life Insurance Company. by deception and theft by failure to Insurance Fraud Unit, the Lehigh make required disposition of property County, Pennsylvania, Insurance received. David and Gerald Pohida al- Fraud Task Force obtained an arrest legedly retained $84,000 in insurance warrant for New Jersey resident Eben premiums for their personal use while Campbell, charging him with applica- issuing and reissuing fictitious tempo- tion fraud. Pennsylvania authorities rary insurance cards to at least 40 charged that Campbell registered and identified victims to conceal the thefts. insured his light-duty tow truck in Additionally, David Pohida, Gerald Pennsylvania, using his daughter’s Pohida, and Cheri Jolley were charged Pennsylvania address, to avoid paying with insurance fraud for allegedly filing a higher commercial liability coverage an application for insurance coverage premium. Campbell, while operating for their livery company, Executive his tow truck under the influence of al- Transport, wherein they purported to list the vehicles as “medical transport”

151 Professional Licensing Proceedings

Medical In the Matter of negligent conduct involving the perfor- Bububhaa Patel, M.D. mance of a medical procedure as well In the Matter of On February 1, 2004, the State as allegations of professional miscon- Juan Carlos Fischberg, M.D. Board of Medical Examiners permitted duct for possession of marijuana, loaded and illegal weapons, and for improperly On January 15, 2004, the State the surrender, to be deemed a volun- maintained CDS in his medical office. Board of Medical Examiners accepted tary permanent retirement, of the medi- the representation from Juan Carlos cal license of Bububhaa Patel, M.D. In the Matter of Fischberg, M.D., that he shall refrain Robert L. Fink, D.P.M. from practicing medicine and surgery in In the Matter of On June 8, 2004, the State Board New Jersey until further order of the Martin Weinstein, D.P.M. of Medical Examiners suspended the Board. The Attorney General expects to On March 5, 2004, the State Board podiatric license of Robert L. Fink, allege negligent and/or fraudulent con- of Medical Examiners revoked the podi- D.P.M., said suspension stayed as a duct involving physical examinations of atric license of Martin Weinstein, period of probation, following charges of patients; performance or subsequent D.P.M., for fraudulent insurance billing fraudulent insurance billing for a proce- reporting of electro-diagnostic testing; in excess of $56,000 as well as for dure he never performed in addition to preparation of test reports containing fraudulently diverting more than unbundling his fees for the procedure. data, diagnoses, and interpretations of $200,000 in insurance payments to his said tests; and billing procedures. post office box by altering the mailing addresses of patients and policyholders. Dental In the Matter of Anne Kublin, M.D. In the Matter of In the Matter of On January 15, 2004, the State Elliott Heller, M.D. Robert Poli, D.M.D. Board of Medical Examiners sus- On April 7, 2004, the State Board On December 17, 2003, the State pended the license of Anne Kublin, of Medical Examiners suspended the Board of Dentistry reprimanded Robert M.D., for three years, retroactive to medical license of Elliott Heller, M.D., Poli, D.M.D., based upon a Consent January 2, 2003, with the first six for six years retroactive to November 8, Order he executed for knowingly pre- months active and the remainder 2002, with the first five years active paring and submitting a false and mis- stayed as a period of probation, for al- and the remainder stayed as a period leading insurance claim. leged health care claims fraud, theft of probation, based upon his guilty by deception, and forgery. plea to theft by deception. In the Matter of In the Matter of In the Matter of Terrance Stradford, D.D.S. On February 22, 2004, the State Erlinda Del Rosario, M.D. Patrick Manze, M.D. Board of Dentistry suspended the den- On February 1, 2004, the State On May 1, 2004, the State Board tal license of Terrance Stradford, Board of Medical Examiners revoked of Medical Examners accepted the vol- D.D.S., for 90 days and pending a the license of Erlinda Del Rosario, untary surrender of the medical license Board determination of his fitness to M.D., based upon her having unlawfully of Patrick Manze, M.D., to be deemed resume practice in compliance with a been employed by a business which a revocation, following his guilty plea to Board investigation based upon his fail- administered electro-diagnostic testing health care claims fraud. ure to allow an inspection of his pre- to patients. Del Rosario engaged in de- mises, failure to provide patient ceptive billing practices by allowing her In the Matter of records, and failure to comply with a name to be affixed to billing for medical Alan Ottenstein, M.D. Board subpoena to appear and pro- procedures which she did not authorize On June 25, 2004, the State Board duce patient records. or supervise. In addition, Del Rosario or- of Medical Examiners accepted the sur- dered or condoned medically unneces- render of the medical license of Alan sary testing, said testing purportedly Ottenstein, M.D., to be deemed a revo- performed in a grossly incompetent cation, based upon allegations of re- and/or fraudulent manner. peated acts of negligence and gross

152 In the Matter of Francis O’Malley, D.D.S. On August 25, 2004, the State Board of Dentistry suspended the li- OIFP and representatives from the licensing boards meet to discuss pending cases. (l. to r.) OIFP First Assistant Prosecutor John J. Smith; DAG Paul Kenny, DOL Prosecutions Section cense of Francis O’Malley, D.D.S., for Chief; OIFP Special Assistant Charles Janousek; Supervising State Investigator Brian Harshman. one year, with the first 30 days active and the remainder stayed as a period In the Matter of In the Matter of of probation, based upon his acknowl- edgment of submitting false and mis- Rony Elyahouzadeh, D.D.S. Michael Gardiner, D.C. leading insurance claims. On December 2, 2004, the State On May 5, 2004, the Board of Chi- Board of Dentistry suspended the li- ropractic Examiners suspended the li- In the Matter of cense of Rony Elyahouzadeh, D.D.S., cense of Michael Gardiner, D.C., for John Hunter, D.D.S. for a period of 36 months retroactive to five years retroactive to July 24, 2003, November 24, 2004, with the first six with the first two years active and the On September 10, 2004, the State months active and the remainder stayed remainder stayed as a period of proba- Board of Dentistry reprimanded John as a period of probation, based upon his tion, based upon his guilty plea to Hunter, D.D.S., based upon a Consent having knowingly aided and abetted the health care claims fraud and use Order he executed for knowingly billing unlicensed practice of Roben Brookhim, of a “runner.” for and receiving insurance payments D.D.S., while Brookhim’s dental license for dental services he never provided. was actively suspended. In the Matter of In the Matter of Scott Schemanski, D.C. Roberto Piccolo, D.M.D. Chiropractic On October 7, 2004, the Board of Chiropractic Examiners revoked the li- On September 15, 2004, the cense of Scott Schemanski, D.C., for State Board of Dentistry suspended aiding and abetting the unlicensed prac- the dental license of Roberto Piccolo, tice of chiropractic and billing for those D.M.D., for two years, with the first 75 services as well as allowing unlicensed days active and the remainder stayed personnel to administer physical mo- to be a period of probation, based dalities without proper supervision. upon a Consent Order he executed for knowingly submitting multiple claims to a dental insurance carrier contain- Pharmacy ing misleading information. In the Matter of In the Matter of In the Matter of Steven Aberbach, R.P. Roben Brookhim, D.D.S. William Ittner, D.C. On December 31, 2003, the New On December 2, 2004, the State On April 1, 2004, the Board of Chi- Jersey Board of Pharmacy revoked the Board of Dentistry accepted the surren- ropractic Examiners suspended the li- license of Steven Aberbach, R.P., der of the dental license of Roben cense of William Ittner, D.C., for five based upon his guilty plea to health Brookhim, D.D.S., to be deemed a re- years, with the first 18 months active care claims fraud. vocation, based upon his having know- and the remainder stayed as a period ingly provided dental treatment and sub- of probation, based upon his use and In the Matter of mitted bills to insurance companies for payment of a “runner.” Jennifer Kim, R.P. approximately 30 patients while his li- On January 2, 2004, the New Jer- cense was actively suspended. sey Board of Pharmacy revoked the license of Jennifer Kim, R.P., based upon her guilty plea to health care claims fraud.

153 Professional Licensing Proceedings

2004 OIFP Licensing Board Statistics Suspension Revocation Voluntary Reprimand TOTAL Surrender

Chiropractic 31004

Dental 41027

Medical 442010

Mortuary Science 01001

Nursing 21003

Pharmacy 05005

Social Worker 20013

TOTAL 15 13 2 3 33

In the Matter of In the Matter of In the Matter of Kwadwo Agyemang, R.P. Matthew Faenza, R.P. Robert Cohen, R.N., C.R.N.A On January 14, 2004, the New On February 12, 2004, the New On May 21, 2004, the Board of Jersey Board of Pharmacy revoked the Jersey Board of Pharmacy revoked the Nursing suspended the license of Rob- license of Kwadwo Agyemang, R.P., pharmacy license of Matthew Faenza, ert Cohen, R.N., C.R.N.A., for two following his conviction for health care R.P., based upon his conviction for years, with the first year active and the claims fraud. health care claims fraud. remainder stayed as a period of probation, based upon his guilty plea to con- In the Matter of Nursing spiracy to commit theft by deception Michael Stavitski, R.P. and theft by deception. On February 12, 2004, the New In the Matter of Jersey Board of Pharmacy revoked the In the Matter of pharmacy license of Michael Stavitski, John C. Quinn, R.N., C.R.N.A. Faith Penalver, R.N. R.P., based upon his conviction for On May 17, 2004, the Board of On September 10, 2004, the health care claims fraud. Nursing suspended the license of John Board of Nursing revoked the license C. Quinn, R.N., C.R.N.A., for a period of Faith Penalver, R.N., based upon of five years based upon his having en- her conviction for arson, conspiracy to gaged in the use or employment of commit aggravated arson, theft by de- dishonesty, fraud, deception, misrepre- ception, and conspiracy to commit sentation, false promise or false pre- theft by deception. tense, and professional misconduct.

154 Social Work

In the Matter of Tommi Murry, C.S.W. On November 20, 2003, the Board of Social Work Examiners suspended the license of Tommi Murry, C.S.W., for three years based upon his conviction for theft by deception. In the Matter of Paul Steffens, C.S.W. On January 23, 2004, the Board of Social Work Examiners suspended the license of Paul Steffens, C.S.W., for three years based upon his guilty plea to Medicaid fraud. In the Matter of Lisa Mulroony, C.S.W. On January 23, 2004, the Board of Social Work Examiners reprimanded Lisa Mulroony, C.S.W., based upon a Consent Order she executed for knowingly filing a false homeowners property damage claim. Mortuary Science

In the Matter of William Conyers, Funeral Director On June 1, 2004, the State Board of Mortuary Science of New Jersey revoked the funeral director license of William Conyers based upon his conviction for attempted theft by deception, witness tampering, falsifying records, and forgery.

155 Closing the Loopholes on Fraud Closing the Loopholes on Fraud OIFP’s Recommendations for Legislative and Regulatory Reform

Pursuant to N.J.S.A. 17:33A-24, the Other recommendations include: Office of the Insurance Fraud Prosecutor (OIFP) is required to evaluate and formu- Criminal Use of late proposals for legislative, administrative, and judicial initiatives to strengthen Runners Statute insurance fraud enforcement. Statement of the Problem: Some of the recommendations The Criminal Use of Runners stat- made by OIFP in prior Annual Reports ute, N.J.S.A. 2C:21-22.1, currently have been implemented through the does not apply to schemes which tar- enactment of legislation, or by the get the Medicaid, Pharmaceutical As- adoption of regulations. sistance to the Aged and Disabled One important regulatory Program (PAAD), and Senior Gold recommendation proposed by OIFP Prescription Discount Program (SG). last year involved the regulation of These programs are not “contracts of towing companies.1 insurance” and the Medicaid program This proposal was directed toward is not an insurance carrier as defined unscrupulous towing companies which in the “Runners” statute. The State artificially inflate fees for the towing spent approximately $1 billion in calen- and storing of automobiles which have dar year 2004 on these programs. In been involved in accidents or which addition, the definition of “provider” have been towed and stored after re- does not currently include “practi- trieval as abandoned or stolen prop- tioners” as defined in the Health Care erty. This conduct greatly impacts au- Claims Fraud statute. tomobile insurance claims. Two legislative initiatives are under Proposed Solution: 2 review by the State Legislature. Amend the definition of “provider” These bills require the Department of in N.J.S.A. 2C:21-22.1(a) to include Banking and Insurance to promulgate “practitioner” as defined in N.J.S.A. regional fee schedules addressing the 2C:21-24.2. The inclusion of “practi- recovery, towing, and storage of auto- tioner” within the definition of “provider” mobiles. Additional legislative action conforms this statute to our Health with respect to these bills is antici- Care Claims Fraud statute, N.J.S.A. pated during calendar year 2005. 2C:21-4.2. This inclusion is appropriate

1 2003 Annual Report, Office of the Insurance Fraud Prosecutor, p.178. 2 Assembly Bill 2829 and Senate Bill 1497.

157 Closing the Loopholes on Fraud

because the “Runners” statute is Proposed Solution: designed to deter Health Care Claims N.J.S.A. 17:33A-4a should be Fraud schemes. Amend the definition amended to include a section 4a(6) of “runner” in N.J.S.A. 2C:21-22.1(a) to as follows: include any State or federally-funded A person or practitioner health insurance or prescription assis- violates this Act if he: tance plan. Since the “Runners” stat- A. Produces, sells, offers, or ex- ute carries a penalty of five years State poses for sale a document, prison with a presumption of imprison- printed form, or other writing ment and a $15,000 fine, enforcement which simulates a motor vehicle efforts would be enhanced by the pas- insurance identification card; sage of this amendment and greater B. Exhibits or displays to a law en- protection would be given to taxpayer- forcement officer or a person funded programs. conducting a motor vehicle inspection pursuant to Chapter 8 Fictitious Insurance or Title 39 of the Revised Stat- utes, a falsely made, forged, al- Identification Cards tered, counterfeited, or simulated Statement of the Problem: motor vehicle insurance identifi- The conduct of issuing, selling, of- cation card, knowing that the in- fering for sale, possession, creating, or surance identification card was displaying a fictitious insurance identi- falsely made, forged, altered, fication card is not expressly action- counterfeited, or simulated. able pursuant to the Insurance Fraud C. Possesses a falsely made, Prevention Act. It is not actionable be- forged, altered, counterfeited, or cause this conduct does not involve a simulated motor vehicle insur- policy of insurance, but rather a pur- ance identification card, know- ported policy of insurance. ing that the insurance card was falsely made, forged, altered, counterfeited, or simulated. OIFP intends to provide updates on these and other statutory and regulatory recommendations in the near future.

158 OIFP Expenditures for Fiscal Year 2001 – 2004

FY 2001 FY 2002 FY 2003 FY 2004 Resources

Resources $29,771,000 $29,771,000 $29,771,000 $29,771,000

Carry Forward $37,225 $282,960 $95,445 $189,600

Total Resources Available1 $29,808,225 $30,053,960 $29,866,445 $29,960,600

FY 2001 FY 2002 FY 2003 FY 2004 Expenditures

Salaries $14,998,761 $16,321,577 $16,689,972 $17,580,358

Fringe Benefits $3,659,287 $3,839,786 $3,971,668 $5,194,421

Non-Salary $4,760,995 $2,808,513 $2,594,686 $2,830,986

Division of Law Payment $1,294,544 $1,561,695 $1,711,597 $1,665,474

Public Awareness $2,197,970 $1,858,186 $1,900,000 $300,000

County Prosecutor Program $2,884,225 $3,024,438 $2,998,521 $2,389,361

Total Expenditures2 $29,795,782 $29,414,195 $29,866,444 $29,960,600

1 These figures represent total funding available to support OIFP operations in a given fiscal year. Unencumbered funds are not billed to the insurance industry. 2 These figures represent the total expenditures for OIFP operations in the given fiscal year. Fiscal Year = July 1 through June 30

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