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OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
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OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj

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Decrease the ever increasing cost of car insurance in NJ. Anyone visiting this site should discover some popular links, on my site in order anyone visiting this site compare a car insurance in New …

Decrease the ever increasing cost of car insurance in NJ. Anyone visiting this site should discover some popular links, on my site in order anyone visiting this site compare a car insurance in New Jersey online.

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  • 1. A N N U A L R OFFICE OF E PINSURANCE FRAUD O PROSECUTOR R T 2000 Office of Insurance Fraud Prosecutor Division of Criminal Justice Department of Law and Public Safety
  • 2. ANNUAL REPORT OF THE OFFICE OF INSURANCE FRAUD PROSECUTOR FOR CALENDAR YEAR 2000 (Pursuant to N.J.S.A. 17:33A-24d) Submitted March 1, 2001 John J. Farmer, Jr. Attorney General Kathryn Flicker John J. Smith, Jr.Director, Division of Criminal Justice Acting Insurance Fraud Prosecutor Prepared by: Office of Insurance Fraud Prosecutor Division of Criminal Justice Department of Law and Public Safety P.O. Box 094 Trenton, NJ 08625-0094 (609) 896-8888
  • 3. ACKNOWLEDGMENTS The Acting Prosecutor would like to thank the following people for their contributions to thepreparation of the 2000 Annual Report: DAG Stephen D. Moore, Liaison to County Prosecutors Judy Burton, Administrative Assistant Paul Loriquet, OAG Public Information Officer Paula A. Carter, Senior Analyst Michelle M. Apgar, Acting Civil Supervisor John Butchko, Liaison to Industry Mitzi Gross, Senior Management Information Systems Technician SDAG John R. Krayniak ASDAG Scott Patterson DAG Jennifer Fradel Charles A. Janousek, Liaison to Professional Boards Annie Meredith, Special Projects Coordinator Sgt. Thomas A. Semon, New Jersey State Police Patricia G. Miller, Administrative Assistant Patricia Walinski, Managing Assistant Shari Grace, DCJ Media Coordinator SSI Craig Perrelli SSI Martin Schwartz SSI Joseph Buttich SSI Walter L. Braxton, III Lynn Wasserman, Secretarial Assistant Helen D. Hager, Secretarial Assistant Gloria D. Tennesen, Secretarial Assistant AMDCI Quinton W. Collins, Sr. DCI Jules Mateo Nora Schaffener, Office Manager The Acting Prosecutor would also like to thank all Deputy Attorneys General, StateInvestigators and support staff assigned to the OIFP for their outstanding work, dedication andprofessionalism during calendar year 2000. The number and significance of OIFP’s criminalprosecutions continue to draw national recognition. The continued quality of OIFP’s civilinvestigations and the amount of monies collected as insurance fraud fines pursuant to consentorders have served to define the credibility and excellence of OIFP. The commitment andprofessionalism of each person assigned to OIFP are hereby acknowledged with pride and gratitude. Finally, the Acting Prosecutor wishes to thank former Insurance Fraud Prosecutor EdwardM. Neafsey, and acknowledge his leadership and guidance which served to provide a solid basisupon which the Office of Insurance Fraud Prosecutor could achieve all that it has. i
  • 4. PREFACE The Office of Insurance Fraud In accordance with the ReorganizationProsecutor (OIFP) was created pursuant to Plan, the Division of Insurance Fraudthe provisions of the Automobile Insurance Prevention in the Department of BankingCost Reduction Act (AICRA) P.L. 1998, c.21, and Insurance was transferred to, andon May 19, 1998. As observed by the officially became part of, the Office ofLegislature in the preamble to the Act, Insurance Fraud Prosecutor within thefraud, whether in the form of inappropriate Division of Criminal Justice, Department ofmedical treatments, inflated claims, staged Law and Public Safety, on August 24, 1998.accidents, falsification of records, or any Assistant Attorney General Edward Neafseyother form, must be uncovered and was sworn in as New Jersey’s firstvigorously prosecuted. According to the Insurance Fraud Prosecutor on October 28,Legislative statement accompanying the 1998. Upon the departure of InsuranceAct, OIFP was established to “provide for a Fraud Prosecutor Neafsey on July 1, 2000more effective investigation and prosecution to accept appointment as New Jersey’s firstof fraud than exists at the present time.” Inspector General, Assistant Attorney General John J. Smith, a career prosecutor As required by the Act, the OIFP was in the Division of Criminal Justice and theestablished in the Division of Criminal Office of Insurance Fraud Prosecutor, wasJustice in the Department of Law and appointed as Acting Insurance FraudPublic Safety under the direction of the Prosecutor.Insurance Fraud Prosecutor, who isappointed by the Governor, approved by the OIFP is charged under AICRA with theSenate, and subject to the supervision of investigation of all types of insurance fraud,the Attorney General. and serves as the focal point for criminal, civil and administrative investigations and In order to ensure the effective prosecutions of insurance and Medicaidcoordination of the anti-fraud efforts of fraud within New Jersey. OIFP is alsovarious state agencies charged with responsible for coordinating all insurancecombating insurance fraud, AICRA fraud programs and activities among staterequired, among other things, that certain and local departments and agencies tocivil enforcement functions of the Division ensure a well integrated, cohesive andof Insurance Fraud Prevention in the uniform statewide strategy for combatingDepartment of Banking and Insurance be insurance fraud. The following constitutestransferred to the Office of Insurance Fraud the second Annual Report of OIFP to theProsecutor pursuant to a plan of Governor and Legislature pursuant toreorganization (Reorganization Plan 0007- N.J.S.A. 17:33A-24d, which requires that98), which Governor Christine Todd OIFP annually provide a report of activitiesWhitman presented to the Legislature in conducted during the prior calendar year.June of 1998. ii
  • 5. STATEMENT OF THE PROSECUTOR The Office of Insurance Fraud Prosecutor insurance fraud enforcement policy.(OIFP) has completed two full years ofoperation. Like the Division of Criminal Criminal investigations and prosecutionsJustice of which OIFP is part, OIFP has serve to deter all those who might be inclinedcontinued to establish itself as a leading law to engage in insurance fraud conduct. I amenforcement agency, accepting the most pleased to report that OIFP has once againdifficult and complex fraud matters for achieved some extraordinary criminal caseinvestigation and prosecution. In its first two results. Those results are highlighted in thisyears of operation, OIFP resolved many of report.those investigations with results extremelyfavorable to the State of New Jersey. I am also extremely pleased to report that the County Prosecutors’ Offices, which play It is my firm belief that the wisdom and an integral role in OIFP’s statewide strategy,foresight of the New Jersey Legislature in have in calendar year 2000, with thecrafting the Automobile Insurance Cost assistance of the Office of Insurance FraudReduction Act (AICRA) and creating the OIFP Prosecutor, both in terms of resources andhas made New Jersey a leader in insurance training, also achieved extraordinary criminalfraud detection, investigation and enforcement. case results. Some of those criminal caseNew Jersey has the benefit of having three results are also highlighted in this report.effective enforcement options available toaddress insurance fraud: criminal The very nature of many insurance fraudinvestigations and prosecutions; civil matters dictates that civil insurance fraudinvestigations and a statutory mechanism to investigations and the imposition of statutoryimpose civil insurance fraud fines; as well as insurance fraud fines are a vital component ofprofessional licensing and other administrative New Jersey’s insurance fraud enforcementsanctions. These three enforcement options options. While criminal investigation andprovide the corner stones for successful prosecution is the preferred legal remedy forinsurance fraud enforcement. many insurance fraud matters, it is not always the most appropriate legal remedy. Matters As mandated by the Automobile Insurance involving small amounts of money stolen orCost Reduction Act (AICRA), the OIFP has attempted to be stolen, as well as facts andsuccessfully assisted in coordinating the evidence which may not support the extremelyconduct of other New Jersey state departments high burden of proof required for criminaland agencies having responsibility for these convictions, are oftentimes best addressedthree enforcement options. Through thorough either through the imposition of a civilOIFP case investigations to fully develop the insurance fraud penalty with the consent offacts and the evidence, a well informed the subject of the civil fraud investigation, ordecision can be made as to whether or not to through civil litigation to impose a civilproceed with one, two or all three of the above insurance fraud penalty. I am pleased toenforcement options with respect to a given report that OIFP has achieved significant civilinsurance fraud matter. In this way, OIFP can insurance fraud case results and some ofsuccessfully select the most appropriate legal those results are also highlighted in thisremedy and develop a comprehensive statewide report. iii
  • 6. It should be noted that OIFP has played a efforts have been featured in nationalsignificant role in the coordination of publications, its Public Awareness Mediaprofessional license sanctions, working closely Campaign has earned prestigious mediawith other state agencies having responsibility industry awards, and its staff have beenfor professional licensing matters. I am recognized for outstanding performance.therefore pleased to report the results ofprofessional licensing penalties and sanctions Finally, while it is appropriate to point outin this report. some of the successes and highlights of OIFP operations from the past year, I must also OIFP also continued to serve as a focal point out that insurance fraud is becoming nopoint for continued communications and easier to detect, investigate and prosecute.dialog with the insurance industry. Several The conduct of those who engage in fraud isworking groups were formed during calendar becoming increasingly more sophisticated.year 2000 consisting of representatives from Additionally, it is no easier prosecuting thesethe OIFP, other state agencies, and insurance often complex white collar criminal and civilcarriers to develop recommendations to cases in either criminal or civil courts whereimprove the flow of information required to crimes of violence and other cases frequentlysuccessfully investigate insurance fraud fill all too crowded court dockets, resulting inallegations and to improve the remedies the fact that insurance fraud cases may, atavailable to the State to address insurance times, be given less priority.fraud. Several of those recommendations areincluded at the conclusion of this report. Nevertheless, OIFP remains firmly committed and dedicated to advocating that In addition to civil and criminal case insurance fraud cases be addressed asinvestigations and prosecutions, AICRA significant civil and criminal cases, and thatimposed a host of other obligations upon OIFP. these cases yield results that continue to deterAmong those obligations is the responsibility to any person who would defraud the insuranceeducate the public about insurance fraud. industry and the citizens of the State of NewOIFP continued its Public Awareness Media Jersey through false insurance claims andCampaign with radio and TV ads designed to similar schemes. As OIFP looks to the future,broadcast a message of deterrence. These ads I believe the coming year promises continuedfollowed those public awareness messages significant criminal and civil case resultsbroadcast during OIFP’s first year of based on investigations that were opened andoperations, which sought assistance from the worked during calendar year 2000.public to report suspected insurance fraud. This report will begin with a brief As noted in this report, OIFP’s summary of some of the insurance fraud caseaccomplishments over the past two years have highlights achieved by the Office of Insurancenot gone unnoticed. In the year 2000 OIFP’s Fraud Prosecutor during 2000. John J. Smith, AAG Acting Insurance Fraud Prosecutor iv
  • 7. TABLE OF CONTENTSCRIMINAL CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1INSURANCE FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 HEALTH CARE CLAIMS FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Fraud by Licensed Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 “Slip and Fall” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Phony Medical Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 AUTO INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 False Auto Theft Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Fake Property Damage Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Jump In Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 “Give-Up” Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Staged Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Fake Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Using “Runners” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Phony Auto Insurance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PROPERTY INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 LIFE INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 INSURANCE AGENT FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 CONTRACTOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 PUBLIC ADJUSTER FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 LABOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Unemployment Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Workers’ Compensation Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12MEDICAID FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Medical Treatment Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Medicaid Laboratory Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Medicaid Drug Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
  • 8. Medicaid Transportation Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14OIFP-CRIMINAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 INSURANCE FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 MEDICAID FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 CRIMINAL INVESTIGATION AND PROSECUTION STATISTICS . . . . . . . . . . . . . . . . . . . 21OIFP-CIVIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 CIVIL INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Referrals of Suspected Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Dispositions by Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Dispositions by Division of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 CIVIL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Division of Law Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Civil Investigations Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 OIFP CIVIL STATISTICS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28COORDINATION OF LAW ENFORCEMENT, GOVERNMENT AND INDUSTRY . . . . . . . . . . 29 COUNTY PROSECUTORS’ OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Training of County Prosecutor Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Funding of County Prosecutors’ Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Highlights of Insurance Fraud Investigations by Counties . . . . . . . . . . . . . . . . . 31 STATE POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Insurance Fraud Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Auto Theft Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 MUNICIPAL POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 OTHER LAW ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
  • 9. Coordination with New Jersey Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Liaison and Continuing Communications Group . . . . . . . . . . . . . . . . . . . 40 Department of Banking and Insurance (DOBI) . . . . . . . . . . . . . . . . . . . 42 Department of Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Division of Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 INTERSTATE INSURANCE FRAUD COORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 National Association of Medicaid Fraud Control Units (NAMFCU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Mid-Atlantic States Insurance Fraud Association . . . . . . . . . . . . . . . . . . . . . . . . 43 State Fraud Directors’ Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 INSURANCE INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43OIFP TRAINING INITIATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Basic Course for Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Advanced Insurance Fraud Investigations Training Program (AIFITP) . . . . . . . . . . . . . . 46 Basic Insurance Fraud Training Program (BIFTP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Other OIFP In-Service Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Roll Call Training Videos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Regional Law Enforcement Coordination Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Offices of the County Prosecutor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Insurance Industry Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48OIFP SYSTEMS DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Case Management and Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 All Claims Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48PUBLIC AWARENESS ENDEAVORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49PUBLIC RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24 . . . . . . . . . . . . . . . . . . . . . . . . 52A P P E N D I X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
  • 10. CRIMINAL CASE HIGHLIGHTS O IFP o pe n e d 519 cri mi n al sentences obtained also required 110 yearsinvestigations of 746 subjects allegedly of probation, $1,130,630 in restitution, andinvolved in insurance or Medicaid fraud and $403,350 in criminal and civil penalties.obtained 75 convictions in the year 2000. The following case summaries demonstrateOIFP prosecutors also obtained sentences the continuing progress of OIFP’s efforts tofor 45 defendants. As the chart below investigate and prosecute insurance fraudreflects, 19 defendants were sentenced to in its second full year of operation.more than 34 years of incarceration. The Name of Defendant Date of Jail Time Type of Insurance Fraud Sentencing Spencer, Kevin 1/7/00 3 years Theft (false health care claims) Romero, Abigail 1/28/00 3 years Agent (bribery police accident reports) Baker, Sheree 2/25/00 30 days Theft (false health care claims) Anthony, Mark 5/9/00 5 years Medicaid fraud (false rx) Butler, Elaugh 6/23/00 3 years Theft (false health care claims) Lester, Lucy 6/30/00 4 years Theft (false health care claims) Newman, Willie 6/30/00 90 days VOP, conspiracy, theft, false health care claims Ivashenko, Alexander 7/7/00 180 days Theft (false health care claims) Hernandez, Fabian 7/7/00 4 years Possession of stolen cars used in phony insurance claims McDaniel, Darlene 7/28/00 180 days Theft (health care claims money from provider) Rampersad, Vernon 8/4/00 180 days Medicaid-inflating patient transportation mileage charges Alvarez, Samuel 10/6/00 94 days False PIP insurance claim Usarzewicz, Steven 11/3/00 3 years Agent fraud Milman, Boris 11/13/00 60 days Medicaid fraud (false transportation claims) Soyfer, Alexander 11/13/00 60 days Medicaid fraud (false transportation claims) Schultz, Anthony 12/1/00 364 days Added name to police report to make false insurance claim Carmona, Yolanda 12/1/00 162 days Medicaid, unlicensed practice of medicine, endangering welfare of a child 7Murry, Tommie 1/5/01 3 years Medicaid fraud (false drug and counseling claims) 7Fagan, John 1/12/01 3 years Writing a false police report for a stolen vehicle TOTAL 34 YEARS - 10 months 7As reflected above, the Murry and Fagan sentences were not imposed until after January 1, 2001. It is anticipated that these two sentences will also be reported in the 2001 Annual Report, however they are included here in as much as both Murry and Fagan entered guilty pleas as part of significant OIFP prosecutions during 2000. 1
  • 11. INSURANCE FRAUD UNIT - CASE HIGHLIGHTS HEALTH CARE CLAIMS FRAUD by deception and official misconduct. She was sentenced to three years state prisonFraud by Licensed Professionals and ordered to make restitution to the StateState v. Carl Lichtman, et al. As OIFP Health Benefits Program. Sheree Baker, apreviously reported, one of the largest lower level conspirator, was sentenced to 30insurance fraud cases in the State’s history days in the Bergen County Jail, restitutioncontinued to advance significantly during of $2,950 and insurance fraud fines in thethe past year. Carl Lichtman, a former amount of $2,500. Willie Newman waslicensed psychologist, conspired with nearly sentenced to 90 days in the Bergen County200 people to defraud the State Health Jail for violating probation based on hisBenefits Plan and approximately 35 other conspiracy with Dr. Lichtman. By the closeinsurance carriers or health care plans out of 2000, approximately 190 individuals hadof more than $3.5 million for no show been prosecuted for involvement in thetreatments for “neurotic depression.” Lichtman conspiracy. Cases against theLichtman pocketed the money he received remaining co-defendants are pending infor the bogus treatments and then kicked court.back 25 percent to those persons who hadprovided their insurance information to him State v. Alexander Ivashenko On July 7,to submit the fictitious claims. Lichtman 2000, Alexander Ivashenko, a formerlywas able to steal millions from the carriers licensed physical therapist and Chiefbecause he started a referral system in Operating Officer for a string of physicalorder to recruit new “patients” so he could therapy offices in New York and northeastfraudulently bill their carriers. Lichtman New Jersey, was sentenced for theft in hiswould typically pay $750 to a “recruiter” for "pocketing" of excess medical claimseach person brought into the scheme. payments which resulted in theSome of the conspirators recruited as many victimization of over 100 patients andas a dozen people into the scheme. insurance organizations. Ivashenko was sentenced to five years probation On February 18, 2000, Kevin Spencer, conditioned on serving 180 days in countyan active recruiter of “patients,” was jail, 200 hours of community service andsentenced to a three year state prison the payment of $75,000 in restitution. Thesentence, required to pay an insurance restitution payment, which Ivashenko madefraud fine of $10,000 and restitution of immediately following his sentencing, will$11,094. Lucy Lester was convicted be divided among as many as 48 patients,following trial of conspiracy, theft by and 58 insurance carriers and self-insureddeception and official misconduct. She was organizations.sentenced on June 30, 2000 to four yearsstate prison and ordered to make State v. Anthony B. Spain, D.M.D. Onrestitution of $7,965 to the State Health December 11, 2000, Anthony Spain pledBenefits Program. Elaugh Butler was also guilty to an Accusation charging him withconvicted following trial of conspiracy, theft falsifying records relating to orthodontic 2
  • 12. treatment he had provided to two minor Phony Medical Billschildren. He had received Medicaid and State v. Sharon DaCosta-Barrett, et al.direct payments from the children’s mother On February 25, 2000, Sharmaine Wilsonover a three year period, but in a sum less was sentenced, following her guilty plea tothan he normally would have been paid. a charge of theft from Blue Cross/BlueHe sought to make up the shortfall through Shield, to five years probation. Hera claim to a dental insurance plan (Delta husband, Edwin Wilson entered a plea andDental) in which the mother had recently was admitted to the Pre-Trial Interventionenrolled, misrepresenting the period of Program. Previously, co-defendant Sharontreatment and billing prospectively for work DaCosta-Barrett, a former Blue Cross/Bluealready completed and paid for. Spain Shield health insurance claims processor,voluntarily made restitution to the carrier was sentenced to four years in state prisonwhile the investigation was pending. This for causing the issuance of fraudulentcase was scheduled for sentencing on claims checks in excess of $97,000 to herFebruary 16, 2001. It will also be referred husband, Clive Barrett; her sister,to the dental Professional Licensing Board Sharmaine Wilson; and her brother-in-law,for appropriate professional licensing Edwin Wilson. As a condition of Ms.action. Wilson’s probation and Mr. Wilson’s admission into the Pre-Trial Intervention“Slip and Fall” Program, they agreed to be jointlyState v. Bruce Robert Tarlowe On April responsible for the payment of $32,562 in13, 2000, Bruce Robert Tarlowe, a licensed restitution, which represented one third ofinsurance agent in the State of New Jersey, the total dollar amount stolen. Clivewas charged by a State Grand Jury with Barrett pled guilty to theft on March 17,health care claims fraud and attempted 2000. On June 2, 2000, he was alsotheft by deception. It is alleged that sentenced to five years probationTarlowe staged a phony "slip and fall" conditioned upon the payment of $32,562accident, and claimed that he fell as the in restitution.result of lettuce lying on the floor of theproduce aisle in an A&P Supermarket. The State v. The Healing Clinic, Hudsonindictment further alleges that Tarlowe Neurological, Inc. Florida Medicalsubmitted more than 20 health insurance Supply and Mario Macias T h r e e n o wclaims, totaling more than $5,700 to United defunct corporations, The Healing ClinicStates Life Insurance Company for injuries Incorporated, Hudson Neurological, Inc.purportedly resulting from the accident. and Florida Medical Supply, and theirDuring the court proceedings, Tarlowe former manager and corporate officer, Mariochallenged the appropriateness of charging Macias, were previously indicted forhealth care claims fraud based on this defrauding numerous insurance carriers ofconduct, but the court denied his motion. more than $86,000. According to theThis case remains pending in court. indictment, the medical providers billed the health insurers for medical services that were never rendered and for medical equipment that was never provided. On March 17, 2000, the corporate defendants 3
  • 13. entered guilty pleas. The Healing Clinic sentenced to 180 days in the Union Countypled guilty to one count of attempted theft Jail as a condition of probation, ordered toby deception, and was later sentenced to make restitution of $33,500 and ordered topay an insurance fraud penalty of $10,000, perform 200 hours of community service.as well as other fines, and restitution in theamount of $48,041. Also on that date, State v. Joanne Panico O n M a y 2 6 ,Hudson Neurological pled guilty to one 2000, a former insurance adjuster, pledcount of attempted theft by deception, and guilty to an Accusation charging healthwas later sentenced to pay a civil care claims fraud. Joanne Panico, formerlyadministrative penalty in the amount of employed by Blue Cross/Blue Shield as a$10,000, as well as other fines and Team Service Representative, was chargedrestitution in the amount of $33,572. with defrauding her employer ofFlorida Medical Supply also pled guilty to approximately $3,500 by electronicallyone count of attempted theft by deception, manipulating claims in order to issueand was later sentenced to pay an checks in her husband’s name for servicesinsurance fraud penalty of $10,000, as well never rendered. Panico was sentenced toas other fines, and restitution in the four years probation and was ordered toamount of $5,283. The case against the pay restitution to Blue Cross, as well as aindividual defendant, Mario Macias, is still $5,000 civil insurance fraud fine.pending in court. State v. Barbara Moran On NovemberState v. Carrell Martin and Darlene 28, 2000, Barbara Moran pled guilty toMcDaniel On March 8, 2000, Carrell health care claims fraud and forgery arisingMartin and Darlene McDaniel were indicted out of her submission of several fraudulenton second degree charges of conspiracy and health care claims to Prudential Insurancetheft by deception. The indictment charged Company. Moran filed the fraudulentDarlene McDaniel, an employee of Family claims for reimbursement of medicalHealth Center (FHC), a subsidiary of Union services, which she claimed she receivedHospital, with diverting approximately and paid for, but were never actually$77,000 in checks issued by US Healthcare provided. Moran submitted receipts fromto FHC by portraying Martin as an various doctors, which she altered, toosteopathic physician entitled to the support her fraudulent claims. Under themoney. After being diverted by McDaniel, plea agreement, Moran is required to pay athe checks were ultimately deposited into $5,000 civil insurance fraud fine. HerCarrell Martin’s bank account and the sentencing was scheduled for January 19,proceeds split by McDaniel and Martin. 2001.The stolen money represented payments toFHC for medical services provided to State v. Charlene Vaughan a.k.a.various patients. On May 15, 2000, Carrell Charlene Jordan On June 16, 2000,Martin pled guilty to conspiracy charges Charlene Jordan was sentenced to threeand was sentenced to three years probation years probation and ordered to makeand restitution of $33,500. Defendant $9,015 in restitution after pleading guilty toMcDaniel pled guilty to conspiracy and theft by deception. Jordan, who then usedtheft by deception charges and was her married name of Charlene Vaughan, 4
  • 14. worked as a claims adjuster for GRE State v. Lorna Kitson On April 14, 2000,Insurance in Princeton. At GRE, she Lorna Kitson was indicted for attempteddefrauded her employer by issuing theft by deception stemming from herfraudulent payments to an outside alleged submission of health care bills inconsultant for fictitious services. Vaughan the name of herself and others to twoforged the consultant’s signature and insurance carriers. Between 1995 andcashed the checks. 1997, Kitson, who had worked for Hackensack University Medical Center,State v. Xun-Cheng Huang On February allegedly submitted bogus health insurance25, 2000, a State Grand Jury returned a claims to Connecticut General Lifeten count indictment against Xun-Cheng Insurance Company (CIGNA) and ProvidentHuang, a former professor of mathematics Life and Accident Insurance Companyat New Jersey Institute of Technology totaling more than $220,000 and received(NJIT). The Hudson County resident was approximately $146,000 from thosecharged with one count of health care carriers. CIGNA’s fraud unit referred theclaims fraud, three counts of theft by investigation to OIFP in March 1999.deception, falsification of records relating tomedical care, and three counts of forgery. AUTO INSURANCE FRAUD The indictment alleges that from False Auto Theft ClaimsJanuary, 1995 through September, 1996, State v. Tok Hwan Bae On September 6,while employed at NJIT, Huang submitted 2000, Tok Hwan Bae pled guilty to a oneover 100 false claims for medical services in count Accusation charging attempted theftexcess of $40,000 for reimbursement by deception for his role in the submissionthrough the State Health Benefits Program. of phony invoices to Allstate InsuranceUpon leaving his employment at NJIT, he is Company. In October 1998 Bae filed aalleged to have submitted an additional 20 stolen vehicle claim with Allstate for hisfraudulent claims in excess of $2,500 under 1990 Mercedes 300 SL, allegedly stoleninsurance coverage obtained by his from a restaurant in New York. Hedaughter while a student at the University submitted two invoices, later proven to beof Pennsylvania. For most claims, the bogus, in support of his $4,000 claim fornamed medical provider did not exist and custom wheels. Bae received a six monthwas allegedly a fictitious provider created by PTI term and paid a $3,000 civil fine.Huang. For those claims where themedical provider did exist, the claimed State v. John B. Fagan On October 12,services were never provided. Huang failed 2000, West Orange police officer John B.to appear for his arraignment and a warrant Fagan pled guilty to an Accusation chargingfor his arrest has been issued. one count of official misconduct based on his writing of a false West Orange Police automobile theft report stating that a Land Rover Discovery SUV had been stolen. Fagan also admitted that he had written a second false police report representing that his own vehicle, a Jeep Cherokee had been 5
  • 15. stolen. Automobile theft and related claims Protection (PIP) claim seeking more thantotaling approximately $40,000 were $2,500 from CNA Insurance Company forsubmitted to three separate insurance medical visits which he purportedlycompanies. On January 12, 2001 Fagan underwent as the result of the accident.was sentenced to three years in state Schultz had entered a guilty plea to anprison, a civil insurance fraud fine of Accusation charging health care claims$8,000 and restitution in the amount of fraud on September 9, 2000.$9,056. “Give-Up” SchemesFake Property Damage Claims State v. Pablo Cordero, et al. InState v. Fabian Hernandez On June 19, February 1999, New Jersey State Police2000, Fabian Hernandez pled guilty to a Auto Unit and OIFP investigators arrestedone count Accusation charging receiving Pablo Cordero and twelve other New Jerseystolen property. On July 7, 2000, Bergen residents for their roles in “giving up” theirCounty Superior Court Judge Meehan vehicles to a New York Police Departmentsentenced Hernandez to a four year state police officer posing as a “chop shop”prison sentence for his role in possessing operator. On January 28, 2000, Corderoseveral stolen vehicles utilized in a property was sentenced to three years probation fordamage insurance fraud scheme. Among his role in bringing vehicles to thethe stolen vehicles investigators found on undercover New York garage. Additionally,Hernandez’s North Bergen lot were a 1990 Cordero agreed to cooperate with NJSPBMW 535, a 1992 BMW 325i, a 1996 Auto Unit detectives and OIFP investigatorsNissan Maxima, a 1992 Lexus GS 400, and to pose as a tow truck driver who coulda 1995 Ford Thunderbird. Hernandez dispose of “give up” vehicles to developreceived the vehicles, valued at other cases. From February 1999 throughapproximately $82,000, between June 1995 Octo be r 2000, Cordero bro u ghtand November 1997 and then changed their investigators eleven vehicles with anvehicle identification numbers to file bogus approximate value of $105,000.property damage claims with the carriers. On February 10, 2000, NJSP Auto UnitJump In Claims detectives, in conjunction with OIFPState v. Anthony Schultz On December investigators, arrested 20 defendants as1, 2000, Anthony Schultz, was sentenced to part of this “sting” operation. The arrestedfive years probation conditioned on his defendants included eight middlemen andserving 364 days in the Camden County twelve owners, including two municipalJail for causing his name to be added to a police officers.Pennsauken Police automobile accidentreport. After being identified in the Each of the defendants was chargedPennsauken Police accident report as with conspiracy to commit theft byhaving been involved in the accident when deception. The owners allegedly filed falsein fact he was not, a fraudulent practice police reports and fraudulent affidavits ofknown as a “jump in,” Schultz then filed an vehicle theft to support their claims to theautomobile insurance Personal Injury carriers that their vehicles had been stolen. 6
  • 16. Six different insurance carriers were locations in the first large-scale, organizeddefrauded into paying stolen vehicle claims. auto insurance fraud ring prosecuted under the new Health Care Claims Fraud Act.State v. Mark Francekevich On February Arrest warrants were also obtained for two4, 2000, the Office of Insurance Fraud additional defendants who remain fugitives.Prosecutor filed an Accusation and The complaints charge Anhuar Bandy withaccepted a guilty plea from Mark being a leader of organized crime, and withFrancekevich to charges of attempted theft conspiracy to commit racketeering andby deception and false swearing. The health care claims fraud. Bandy is chargedcharges were based on Francekevich’s with paying people to stage automobilefraudulent insurance claim to Rutgers collisions in order to obtain patients forInsurance Company that his Mitsubishi numerous chiropractic clinics he allegedlyEclipse had been stolen when it was owned and operated, thereby generatingactually “given up,” and on the false billings under the Personal Injuryaffidavit of vehicle theft he submitted in Protection (PIP) portion of automobilesupport of that claim. On March 10, 2000, insurance policies. As a result, OIFP hasFrancekevich was sentenced to two years identified numerous allegedly fraudulentprobation and a civil insurance fraud fine of claims submitted to insurance carriers$4,000. throughout the state. Another target of this investigation, Alejandro Ventura, wasState v. Bruce Michael Garry On October charged with conspiracy to commit13, 2000, Bruce Michael Garry was racketeering and health care claims fraudsentenced to two years probation and for arranging the automobile collisions andpayment of a civil insurance fraud fine in recruiting the participants.the amount of $1,000. Garry wassentenced for his conduct in “giving up” a During the past year, six individualsNissan Pathfinder, and falsely reporting to involved in staged accidents, some stagedthe West New York Police Department that accidents also involving undercover Statethe Pathfinder had been stolen. After the Investigators, have entered guilty pleas.false report to the police, Garry submitted Five of the six individuals entered guiltya fraudulent insurance claim in the pleas to conspiracy to commit theft byapproximate sum of $27,725 to State Farm deception. Another entered a guilty plea toInsurance Company, falsely claiming that a charge of attempted theft by deception forthe Nissan Pathfinder had been stolen. causing claims in excess of $10,000 to be submitted to Selective Insurance CompanyStaged Accidents for treatment purportedly rendered to himState v. Anhuar Bandy, et al. The at a Bandy operated clinic, when in fact, heprosecution of this alleged large scale had not even been a passenger in thestaged accident ring advanced significantly vehicle involved in the staged accident.in 2000. Previously, ten people were Total insurance claims for the four stagedarrested and search warrants were accidents in which the arrested defendantsexecuted at eight chiropractic clinics and allegedly participated was in excess ofmedical offices in several New Jersey $108,000. The cases against several of 7
  • 17. those arrested, as well as against others indictment charging Campbell withidentified as the result of extensive conspiracy and bribery in official matters.investigation, is pending further The indictment was based on Campbell’sprosecution. payment of approximately $1,200 to an undercover Newark police officer to obtainFake Accidents Newark Police automobile accident reportsState v. Phillip Major, et al. This case in order for Campbell to solicit the personsalso significantly advanced as 18 identified in those reports for filingdefendants pled guilty to charges of theft or insurance claims. Campbell is due toattempted theft by deception during year return to court for sentencing later this2000 as part of the continuing investigation year.and prosecution of former East Orangepolice officer Phillip Major and others. State v. Abigail Romero On January 28,Major previously pled guilty to official 2000, Abigail Romero, a "runner" who paidmisconduct and related charges for approximately $1,800 in bribes to anfabricating police accident reports. The undercover Newark police officer topleas from these 18 defendants accounted purchase police reports for use in thefor some $167,000 of the $900,000 in solicitation of persons to make automobilefraudulent insurance claims which have insurance claims, was sentenced to threebeen tied to Major’s malfeasance. It is years in state prison. She had previouslyanticipated that, with the cooperation of been indicted by a State Grand Jury andthese defendants, as required under the charged with conspiracy, bribery in officialterms of their guilty pleas, additional matters, and official misconduct for payingsubjects will be charged in 2001. the undercover officer bribe money to obtain police automobile accident reports. In a related case, Mark Bendet (a Romero would then refer the personsdisbarred attorney), Imelda Toquero (a identified in those police accident reports tonurse and Bendet’s estranged wife) and receive chiropractic treatment and fileEddie Boyd (a suspected runner) were automobile insurance claims.indicted in 2000 on charges of seconddegree bribery and second degree State v. Jerome F. Bollettieri andconspiracy to commit bribery and official Thomas DiPatri On October 20, 2000,misconduct stemming from their alleged the Office of Insurance Fraud Prosecutorinvolvement with a medical practice known obtained and executed arrest warrants foras Metro Medical Services. On June 9, Lt. Jerome F. Bollettieri, the officer in2000, OIFP caused the arrests of Bendet charge of the Camden County Policeand Toquero in Texas and their return to Department Records Section, and retiredNew Jersey to face those charges. Camden Police Department Sergeant Thomas DiPatri. Bollettieri and DiPatriUsing “Runners” were arrested and charged with conspiracyState v. James Lee Campbell On to commit official misconduct and officialDecember 2, 2000, James Lee Campbell, a bribery. It is alleged that they acceptedrunner, pled guilty to a State Grand Jury money in return for providing Camden 8
  • 18. Police Department automobile accident made a claim worth $15,935 on herreports to other individuals in order for homeowners’ policy for vandalism andthose individuals to solicit the persons property allegedly damaged or stolen duringidentified in those police accident reports to a burglary. To support her claim, Tomassobecome patients and submit automobile allegedly provided false information to theinsurance claims. The OIFP’s investigation insurance carrier about the items that werein this matter is continuing and additional stolen or damaged. The false informationcharges are anticipated. included receipts for property that was returned to the seller before the burglary,Phony Auto Insurance Documents and forged receipts for nonexistentState v. Joann Sullivan On December 15, purchases. The carrier stopped payment on2000, Joann Sullivan waived indictment the claim after discovering the bogusand pled guilty to a one count Accusation receipts. The case is pending in Superiorcharging theft by deception in the third Court.degree. The indictment charged Sullivanwith obtaining $8,855 from First Trenton State v. Paul LoPapa On October 25,Indemnity by creating or reinforcing the 2000, Paul LoPapa was indicted by a Statefalse impression that she was entitled to Grand Jury on 15 counts charging him withcompensation for lost wages and essential theft and attempted theft by deception,services under the Personal Injury misconduct by a corporate official, failureProtection (PIP) component of her to file a New Jersey Income Tax-Residentautomobile policy as a result of an accident Return, failure to pay New Jersey Grossshe was involved in on July 23, 1997. The Income Tax with intent to evade, falsifyinginvestigation revealed that Sullivan falsified records and forgery. The investigationthree letters purportedly from her medical leading to the indictment was conductedproviders in order to collect lost wages and jointly by the New Jersey State Police andessential services from her automobile OIFP. In addition to a fraudulent realcarrier. Essential services include payment estate financing scheme, the indictmentby an insurance carrier for assistance with charges LoPapa with attempting to file ahousehold work, child care and other fraudulent insurance claim under hismiscellaneous chores which would have homeowners’ policy in the sum of $33,400normally been performed by the insured. for purported water damage. The case isThese payments were made directly to pending trial.Sullivan. Sullivan was scheduled to besentenced on February 16, 2000. LIFE INSURANCE FRAUD PROPERTY INSURANCE FRAUD State v. Lucille Dennis On October 16, 2000, the State Grand Jury returned a 14State v. Athena J. Tomasso On count indictment against Lucille Dennis forSeptember 15, 2000, Athena J. Tomasso allegedly attempting to collect accidentalwas indicted on attempted theft and forgery death benefits for her late husband andcharges in connection with a false brother, both of whom died natural deaths.homeowners’ claim. Tomasso allegedly Typically, these attempts were allegedly 9
  • 19. made by altering police reports and/or money. On January 12, 2001 Greenfielddeath certificates to reflect accidents which was sentenced to three years probation,never occurred. These attempts are alleged and restitution in the amount of $65,232.to have taken place between 1995 and 1998 Because he was a licensed insurance agent,against five different insurance companies. the OIFP referred Greenfield’s criminalThe most recent attempt involves an alleged conviction to the Department of Bankingeffort to collect on a $1 million accidental and Insurance for appropriate action withdeath policy. In that case, it is charged that respect to Greenfield’s insurance agent’sDennis enrolled her husband for the license.accidental death benefits three monthsafter he had already passed away. Dennis State v. Richard Leavitt On August 25,is currently a fugitive and a bench warrant 2000, a former licensed insurance producerhas been issued for her arrest. who operated an insurance agency in Somerville, NJ, pled guilty to theft by INSURANCE AGENT FRAUD deception and falsifying records for failing to remit $16,924 in premium funds to anState v. Steven M. Usarzewicz On insurance company on behalf of an insuredNovember 3, 2000, Steven M. Usarzewicz, a for an automobile policy. Leavittformerly licensed insurance producer and fraudulently collected the premium fundssecurities dealer, was sentenced to three from the insured, Atlantic Sportsyears in state prison after pleading guilty to Management, for coverage for seventhe looting of over $100,000 from the trust vehicles which were purportedly insured byfunds and insurance policies of a client’s New Hampshire Insurance Company, eventwo minor children. On December 8, 2000, though the policy had not been renewedthe sentencing court also ordered that and was no longer in effect. Leavitt keptUsarzewicz make payment of restitution in the premium money and used it forthe sum of $106,810. personal expenses. Leavitt also admitted to producing a fraudulent auto insuranceState v. Joseph Greenfield On November identification card for one of the vehicles9, 2000, Joseph Greenfield, a licensed purportedly insured under the policy. Oninsurance agent in New Jersey, pled guilty October 20, 2000, he was sentenced toto an Accusation charging theft by three years probation and was ordered todeception. The Accusation charged pay full restitution and a $5,000 insuranceGreenfield with theft of approximately fraud fine.$65,232 representing insurance premiumsfor a variety of insurance policies including CONTRACTOR FRAUDcommercial auto and multi-peril insurance,accident/sickness coverage and workers’ State v. Jeffrey Nemes On December 18,compensation, along with a “floater” for 2000, Jeffrey Nemes, a Hamilton Twp.equipment damaged or lost, which he sold police officer was charged with theft byto the Marlboro Township Board of Fire failure to make required disposition ofCommissioners, Fire District #2. Greenfield money in excess of $75,000. Thepurposely overcharged the fire district for indictment alleges that Nemes, whothe insurance coverage and kept the excess operated a construction business in 10
  • 20. addition to being a Hamilton Twp. police Unemployment Insurance Fraudofficer, stole in excess of $75,000 in State v. Renee Brown; State v. Zinainsurance claim money from several Shivers On August 29, 2000, two personspersons who suffered property damage to were separately indicted by a State Grandhomes or commercial businesses that they Jury for allegedly falsifying officialowned. This case remains pending in documents in order to obtain thousands ofcourt. dollars in unemployment insurance to which they were not entitled. Allegedly PUBLIC ADJUSTER FRAUD Brown received more than $15,000 and Shivers over $8,000.State v. Michael Winberg On September22, 2000, Michael Winberg, a licensed State v. Anthony Pagan; State v. Markpublic adjuster, was indicted for allegedly DiNacola; State v. Vanegas Wilborne;stealing over $15,000 which represented State v. Darnell Toliver; State v.the insurance proceeds settlement checks Bernard Wilson On September 29, 2000,from two clients. The indictment alleges five persons were separately indicted by athat Winberg, in his capacity as a licensed State Grand Jury for allegedly falsifyingpublic adjuster working for American official documents in order to obtainAdjustment Agency of Bordentown, New thousands of dollars in unemploymentJersey, was retained by two homeowners to insurance to which they were not entitled.negotiate settlements with Prudential Allegedly, Toliver received over $8,000,Insurance Company following damage to DiNacola received almost $12,000 andtheir homes from a storm. Prudential Pagan received over $8,500.issued five checks, each made payable toone of the homeowners and American State v. Walter Harris; State v.Adjustment Agency as co-payees. Winberg, Constance Odoemena-Henderson; Stateallegedly had each homeowner endorse the v. Pamela Mundy; State v. Andegdochecks, then cashed them and kept the Naccillo On December 4, 2000, fourmoney for his own personal use. The case persons were separately indicted by a Stateis pending in court. Grand Jury for allegedly falsifying official documents in order to obtain thousands of LABOR FRAUD1 dollars in unemployment insurance to As a result of a cooperative effort among which they were not entitled. AllegedlyOIFP, the Labor Prosecutions Unit of the Harris received more than $9,000 andDivision of Criminal Justice, and the New Odoemena-Henderson received overJersey Department of Labor, the following $7,000.unemployment insurance fraud cases andworkers’ compensation cases were filed: 1 All cases reported in the Labor Fraud sectionof OIFP’s Annual Report may also be reported elsewhereby the Division of Criminal Justice. 11
  • 21. State v. Johhny Medrano; State v. operated by the Division of Workers’Gregory K. Jones; State v. Denise Compensation within the New JerseyDinielli; State v. Charles Gosha; State v. Department of Labor. Huggins admittedCamille Buffa; State v. Frank Tarantino; that she forged the name of a deceasedState v. Deborah Brown On December associate, who had legitimately received the18, 2000, seven persons were separately benefit payments until his death inindicted by a State Grand Jury for allegedly September 1989. She also admitted tofalsifying official documents in order to fraudulently obtaining $63,784 in disabilityobtain thousands of dollars in benefits from New Jersey Manufacturersunemployment insurance to which they Insurance Company for the same timewere not entitled. Allegedly, Medrano period and same deceased associate.received more than $12,000, Tarantinoreceived over $12,000, Buffa received over State v. Leonard Lipman On September$9,000 and Jones received almost $9,000. 25, 2000, Leonard Lipman pled guilty to anThese cases are pending in Court in various Accusation charging failure to providestages of prosecution. workers’ compensation coverage. Lipman admitted that an employee was injuredWorkers’ Compensation Insurance Fraud while working for him at Serene RestaurantState v. Lawrence Ford, Sr. On Equipment Corporation and agreed to paySeptember 18, 2000, Lawrence Ford, Sr. $73,248 to the Uninsured Employer Fundwas sentenced pursuant to an indictment of the New Jersey Department of Labor.charging him with theft by deception andforgery for cashing more than $150,000 MEDICAID FRAUD UNIT - CASEworth of workers’ compensation checks HIGHLIGHTSissued to his deceased father. Ford wassentenced to five years probation and given Medical Treatment Fraudfive days jail credit. The case had been State v. Tommie Murry and The Excelreferred by the Division of Workers’ Center, Inc. On August 1, 2000,Compensation after new computer defendants Tommie Murry and The Exceltechnology designed to uncover workers’ Center, Inc., a subsidiary of Facilitiescompensation fraud revealed potential Management Associates, Inc., entered guiltyfraud. pleas in Superior Court, Mercer County, to the crime of theft by deception pursuant toState v. Maude E. Huggins On November the terms of a plea agreement negotiated8, 2000, Maude E. Huggins pled guilty to with OIFP. Murry, formerly the Executivean Accusation charging second degree theft Director of the Excel Center, together withby deception, third degree theft by that corporation, admitted to defrauding thedeception and two counts of fourth degree Medicaid Program of approximatelyforgery. The charges stem from her falsely $600,000 through the submission of falseendorsing $200,430 worth of benefit checks claims for group and individual therapyfrom New Jersey Manufacturers Insurance sessions which never occurred. The ExcelCompany and the State of New Jersey. By Center had operated as a substance abusepleading guilty, she admitted that she treatment center in Vineland, New Jersey.fraudulently obtained disability benefitsfrom the Second Injury Fund, a program As a result of these guilty pleas, on 12
  • 22. January 5, 2001, defendant Murry was State v. Alice Yolanda Carmona Onsentenced to three years in state prison and October 23, 2000, defendant Carmona pledthe corporation was sentenced to and paid guilty to a one count Accusation charginga fine of $10,000. Both defendants Medicaid fraud. Carmona was an employeeconsented to an order debarring them from of a mental health clinic and after theparticipation in the Medicaid Program and doctor left the clinic, Carmona, who was notwaived any claims to approximately $1.7 licensed as a medical care practitioner,million that had previously been forfeited in continued to provide mental healthconnection with the case. counseling to Medicaid patients.State v. Yogendra Sharma Yogendra On December 1, 2000, Carmona wasSharma, the sole owner and operator of sentenced to three years probation and 162Advanced Optical, previously pled guilty to days timed served in the Cumberlanda one count Accusation of health care County Jail. She was also debarred fromclaims fraud, for recklessly committing the Medicaid program for a minimumhealth care claims fraud in the course of period of five years. As indicated elsewhereproviding professional services. Sharma, an in this report, Carmona also pled guilty tooptometrist, billed Medicaid for services Cumberland County charges relating to thewhich were never prescribed by a physician unlicensed practice of medicine.and which were never provided by Sharmato Medicaid recipients. The majority of his Medicaid Laboratory Fraudpatients were elderly. On February 8, State v. Venditti Clinical Laboratory, et2000, Yogendra Sharma was sentenced in al. On August 1, 2000, Venditti ClinicalMercer County to four years probation, Laboratory of South Plainfield, Mohammedordered to pay restitution in the amount of Saleem, Iftikhar Hussain and Abdul Hafeez$2,951, and a criminal fine of $12,000, and Raja, owners and operators of Vendittito serve 100 hours of community service. Clinical Laboratory were indicted forAdditionally, he was debarred from conspiracy, Medicaid fraud and misconductMedicaid and any similar health insurance by a corporate official. The defendantsprograms for a minimum of five years. The allegedly paid almost $347,000 injudge ordered Sharma’s optometrist license kickbacks to encourage clinic owners toto be suspended for one year during which submit blood samples to the laboratory totime he is barred from the practice of the undergo an expensive panel of diagnosticprofession. tests. All the samples submitted were from Medicaid recipients and paid for by the Medicaid Program. The defendants allegedly attempted to hide the kickback payments by writing checks from the Venditti business account to fictitious business entities controlled by the various clinic owners. This case is pending trial in Middlesex County. 13
  • 23. State v. Janet Scarpitta On October 23, practitioner with one count of health care2000, Janet Scarpitta, the former manager claims fraud. Aly was also indicted for oneof Roseville Medical Center in Newark, and count of health care claims fraud as a non-Amad, Inc., also in Newark, was indicted for practitioner. The defendants owned andconspiracy, Medicaid fraud, and theft by operated Paterson Community Pharmacy indeception. Scarpitta was charged with Paterson. It is alleged that the defendantsfabricating blood requisition forms in purchased prescriptions for Serostim, anconnection with fraudulent blood tests expensive anti-AIDS medication. It is alsopurportedly performed by United Diagnostic alleged that the defendants did notLaboratory and causing Medicaid to be dispense the medication but submitted abilled approximately $129,991 for expenses claim for reimbursement to the Medicaidrelated to the purported blood testing. In Program, and received approximatelyaddition, while working as office manager of $170,000 in Medicaid payments. It isAmad, Inc., Scarpitta is alleged to have further alleged that in an attempt to coverdeposited into her bank account 17 checks up their crime, the defendants submittedtotaling $5,877 made payable to three false invoices to establish that theirdoctors, without the authorization of those inventory contained the amount of drugsdoctors. The case is pending trial in provided. This matter is pending in PassaicMonmouth County. County. Medicaid Drug Fraud Medicaid Transportation FraudState v. Mark Anthony On May 9, 2000, State v. I&I Invalid Coach, ImadAnthony was sentenced to five years in Elbashir and Imadelin Khair Onprison after he pled guilty to one count of November 29, 2000, Imad Elbashir,health care claims fraud. Anthony engaged Imadelin Khair and I&I Invalid Coach werein a scheme to defraud the Medicaid indicted for conspiracy, health care claimsProgram by forging prescriptions for high- fraud, theft by deception, Medicaid fraud,priced drugs. Using stolen or purchased and corporate misconduct. I&I was anMedicaid cards, he had these prescriptions invalid coach provider in Clifton, Newfilled at pharmacies which in turn billed the Jersey, owned by defendants Imad ElbashirMedicaid Program. Anthony then sold the and Imadelin Khair, that provided non-drugs on the street for a fraction of their emergency medical transportation tovalue. OIFP investigators from the Medicaid recipients. It is alleged that,Medicaid Fraud Section, were able to between November 15, 1995 and July 27,determine that Anthony was responsible for 1999, I&I inflated mileage on claimsover $250,000 in Medicaid billings before submitted to the Medicaid Program andhe was apprehended. received $90,000 more than it was entitled to for services rendered. In addition, theState v. Hanan Selim, Wail Aly and defendants are alleged to have paid cashPaterson Community Pharmacy On kickbacks to several Medicaid recipients inMarch 3, 2000, a State Grand Jury indicted exchange for their continued patronage.the defendants for conspiracy and Medicaid The matter is pending in Passaic County.fraud. Additionally, Hanan Selim, alicensed pharmacist, was charged as a 14
  • 24. State v. Lakshminarine Rampersad On with the furnishing of Medicaid services.August 4, 2000, Rampersad, the owner of Sentencing for Bilenkin was scheduled forFirst Invalid Coach Company in Landing, February 5, 2001.Morris County, was sentenced to 180 daysin the Morris County Jail and placed on State v. Alaa Baker and Ali Baker Onprobation for three years. Rampersad also April 28, 2000, Alaa and Ali Baker, ownerswas disqualified from participation as a of Royal International Trade and Services,transportation provider in the New Jersey Inc., were indicted by a State Grand JuryMedicaid Program for a minimum period of for conspiracy, theft by deception,eight years and relinquished all rights to misconduct by a corporate official and$172,400 in claims submitted by him that Medicaid fraud. The defendants, throughhad been held in abeyance until the their company, provided transportationconclusion of this case. This case was services to Medicaid recipients in thereferred to the Medicaid Fraud Section in Monmouth County area. They allegedlythe OIFP by the Division of Medical submitted approximately 1,902 fraudulentAssistance and Health Services. An audit claims for services not rendered andhad revealed unusually high mileage inflated mileage charges on other claimscharges which was confirmed by OIFP resulting in losses of approximatelyinvestigation. $138,380 to the Medicaid Program. Both defendants were arrested in Virginia and,State v. Genady Chulak; State v. Elana after an extradition hearing, ordered toBilenkin On December 14, 2000, a jury appear in Monmouth County Superiorfound Genady Chulak, owner of GGE Court. Both defendants failed to appearImpact Corp. t/a Medicall, guilty of theft by and arrest warrants were issued for them.deception, Medicaid fraud, and misconductby a corporate official. Chulak defrauded State v. Rafik Raziq On November 30,the Medicaid Program by submitting 2000, a State Grand Jury returned anapproximately $400,000 in false claims. He indictment charging Rafik Raziq with theftfalsely certified to the Medicaid agency the by deception, misconduct by a corporatemileage driven to transport Medicaid official and Medicaid fraud. Raziq was therecipients, which was greatly in excess of owner and manager of Absolute Transportthe mileage actually driven. Additionally, and Limousine Service in MonmouthChulak had provided illegal kickbacks to County. He is alleged to have unlawfullyMedicaid recipients in the form of cash, obtained more than $140,000 from thechecks and other valuable items. State Medicaid Program by submittingSentencing for Chulak was scheduled for claims for services that were not renderedFebruary 20, 2001. On December 5, 2000 and inflating mileage charges on otherElana Bilenkin, wife of Genady Chulak and claims. A warrant has been issued forco-owner of GGE Impact Corp. t/a Medicall Raziq’s arrest.pled guilty to one count of Medicaid fraud,for knowingly and willfully making falsestatements of material fact on Medicaidclaim forms, and one count of Medicaidfraud for offering kickbacks in connection 15
  • 25. State v. Alexander Soyfer, Boris Milman, alleged to have submitted false expenses onVadim Boguslavskiy and A&B Invalid cost reports to the Medicaid agency. TheCoach Company On March 29, 2000, the allegedly fraudulent expenses are related todefendants were indicted by a State Grand a bus that Stone Arch purportedly used forJury for conspiracy, theft, Medicaid fraud patient care but which was actuallyand misconduct by a corporate official. The inoperable. It is also alleged that Stonedefendants operated A&B Invalid Coach in Arch reported to Medicaid the salary andWoodbridge, New Jersey. They were health benefits of an alleged "no-show"charged with defrauding the Medicaid employee who was the daughter of theProgram by submitting approximately nursing home owner. The case is pending$141,000 in false claims, falsely certifying in Mercer County.to the Medicaid agency that recipients werein need of invalid coach services when they State v. M&G Livery and Transportation,were not. They also inflated mileage Inc., Gregory Sverdlov, Raisa Zeltser Oncharges on claims they submitted. June 21, 2000, the three defendants were indicted in connection with the operation of On October 2, 2000, defendants Milman a livery transportation company called M&Gand Soyfer pled guilty to Medicaid fraud. Livery and Transportation, Inc. TheOn November 13, 2000, the defendants indictment variously charged Gregorywere each sentenced to four years Sverdlov, Raisa Zeltser and the corporationprobation, ordered to spend 60 days in the with conspiracy, Medicaid fraud, theft byMiddlesex County Jail, and to pay $42,153 deception, and misconduct by a corporaterestitution, as well as to debarment from official.the Medicaid Program. On December 18,2000, defendant Boguslavskiy pled guilty to Sverdlov and Zeltser, who were married,one count of Medicaid fraud. His are alleged to have fraudulently operatedsentencing was scheduled for February 20, M&G Livery and Transportation, Inc. by2001. paying kickbacks to induce Medicaid recipients to use their company, by billingState v. Stone Arch Health Care Center, for people ineligible to receive Medicaid, byInc., Nancy Tofani and David Hofstetter transporting Medicaid recipients to On February 14, 2000, a State Grand destinations not allowable under MedicaidJury indicted David Hofstetter, Nancy regulations and by submitting falseTofani and Stone Arch Health Care Center information on Medicaid forms to avoidInc., for conspiracy, theft by deception, and Medicaid scrutiny. This matter is currentlyMedicaid fraud. David Hofstetter and pending trial in Union County.Nancy Tofani were also indicted formisconduct by a corporate official. StoneArch is a nursing home owned by defendantHofstetter. Nancy Tofani is theadministrator of Stone Arch. This caseinvolves approximately $104,566 in allegedMedicaid fraud. The defendants are 16
  • 26. OIFP-CRIMINAL OIFP’s criminal cases are investigated by health care providers, such as doctors,State Investigators within the Division of dentists, chiropractors, etc. or by individualCriminal Justice, Department of Law and patients, or by others providing health carePublic Safety, who are assigned to the OIFP. related services, such as medical billing andDeputy Attorneys General within the invalid transportation businesses. HealthDivision of Criminal Justice, also assigned care claims fraud occurs when a person orto OIFP, prosecute OIFP’s criminal cases. business makes a misrepresentation in aThese Deputy Attorneys General and health claim for benefits under a policy ofinvestigators are assigned to squads in the health insurance. See N.J.S.A. 2C:21-4.2.Insurance Fraud Unit or the Medicaid For example, health care claims fraud isFraud Unit of OIFP, which are each headed committed when a physician knowinglyby a Supervising Deputy Attorney General. submits bills for unnecessary medicalInvestigators within these units report to a procedures or for medical services that wereSupervising State Investigator, who, in not provided. Similarly, a patient commitsturn, reports to the Deputy Chief health care claims fraud when submitting aInvestigator in charge of OIFP -Criminal. claim for medical benefits for treatment ofThe Deputy Chief Investigators in charge of feigned injuries, when submitting falseOIFP-Criminal and OIFP-Civil are medical receipts for reimbursement or,supervised by OIFP’s top ranking when as an accomplice, a healthcareinvestigator, the Managing Deputy Chief provider submits a false or inflated claim forInvestigator, who oversees all OIFP shared benefits.investigators and investigations, both civiland criminal. Currently, the OIFP According to the United States GeneralManaging Deputy Chief Investigator Accounting Office, health care fraud lossesposition is vacant. The Deputy Chief may constitute as much as ten percent ofInvestigator-Criminal has been serving as our nation’s annual health careboth the Deputy Chief Investigator-Criminal expenditures. In addition to increasing ourand as the Managing Deputy Chief health care insurance premiums, healthInvestigator for OIFP, following the care claims fraud may also adversely affectdeparture of the former Managing Deputy the quality of medical care rendered byChief Investigator to join the Inspector those committing health care fraud andGeneral’s Office on August 11, 2000. diminish available funding for medical research. The Insurance Fraud Unit of OIFPinvestigates and prosecutes all types of Because false or inflated health careinsurance fraud, most of which involve claims frequently arise in the context ofeither health, automobile, homeowners, or automobile accidents, these claims alsocommercial insurance policies. Health impact the premiums charged for theinsurance fraud constitutes a significant Personal Injury Protection (PIP) componentsportion of cases handled by OIFP. Health of car insurance in New Jersey. OIFPcare claims fraud may be committed by places a high priority on the prosecution of 17
  • 27. individuals and practitioners engaging in screen” of law enforcement by the use ofhealth care claims fraud, as exemplified by aliases supported by phony credentials,its prosecutions of phony clinics and such as false social security numbers andmedical mills, often times associated with counterfeit drivers’ licenses. Because of thestaged accident rings. potential for serious injury to innocent victims, staged accidents pose a significant Staged accidents are among the crimes of threat to the safety of the public.most concern to OIFP because of the threatto the safety of the motoring public and OIFP has also committed to theinnocent bystanders. In this type of prosecution of fraudulent automobileinsurance fraud, the subjects plan and insurance theft claims resulting fromintentionally cause a motor vehicle staged auto thefts, sometimes referred to ascollision, often purposely involving “give-ups.” In these cases, an automobileunsuspecting motorists in the “accident.” owner or lessee purposely abandons orTypical staged accident scenarios involve disposes of the insured automobile in orderpassing an innocent motorist and abruptly to fraudulently collect the insurancebraking, causing the motorist to appear at proceeds, frequently turning the vehiclefault by causing him to crash into the rear over (the “give-up”) to an intermediary.of the subject’s vehicle; or waving an Often those who lease automobiles stageunsuspecting motorist from a stop sign or these vehicle thefts to avoid the substantialparking spot and then quickly proceeding to mileage or repair costs which mightcrash into the unsuspecting motorist, again otherwise have to be paid by the lesseein an attempt to make the unsuspecting upon the return of the vehicle to the leasingmotorist appear at fault. Other staged company at the conclusion of the lease. Inaccident scenarios involve an intentional other cases, a theft is staged to enable ansideswipe in which the driver in the inside owner to recover more than the ownerlane of a dual left turn lane intentionally would have received from the purchaser indrifts into the outer lane causing a a legitimate sale. Vehicles which are givencollision, and the “hit and run” when the to a middle man may be exported for foreignsubject drives a damaged vehicle to a public resale, quickly disassembled at a “choplocation and falsely reports that the shop” which sells the parts on the blacksubject’s vehicle had just been damaged by market or uses the parts in conjunctiona fleeing driver. with an auto body repair business, or may be simply destroyed or otherwise disposed Subjects who stage such events frequently of to prevent the insurance company fromplant coached “witnesses” at the scene of returning a recovered vehicle to the ownerthe alleged accident or as passengers in the or lessee. The search of lakes, rivers andpurported accident, and may subsequently ponds frequently reveals automobiles whichwork with unscrupulous doctors, lawyers, were the subject of “give-up” thefts. Asor auto repair facilities to fabricate or inflate explained elsewhere in this report, toclaims for injury or property damage. address the growing problem of fraudulentThose engaged in staging multiple accidents auto theft claims, OIFP-Civil has institutedsometimes attempt to “fly below the radar a program designated as the “Give-Up 18
  • 28. Initiative,” to focus and coordinate law Medicaid fraud also will have committedenforcement efforts in the detection, health care claims fraud.investigation and prosecution of thesephony auto theft claims. The New Jersey Medicaid Program is generous in its benefits in that it pays for Medicaid fraud investigations and non-emergency transportation for Medicaidprosecutions also comprise a significant recipients to and from their homes and theportion of the criminal case load of the place where a service reimbursed byOIFP. The Medicaid Program is a state and Medicaid is rendered. The programfederally-funded health insurance program provides different modes of transportationthat pays for the health care needs of the depending upon the Medicaid beneficiaries’disabled and economically disadvantaged of ability to ambulate without assistance.our state. In New Jersey, the state and Livery transportation is provided to thosefederal government equally share the cost of who can ambulate and do not needthe Medicaid Program. In 2000, OIFP’s assistance going between home andMedicaid Fraud Unit was responsible for medical services. Mobility assistedpolicing the state’s Medicaid Program which vehicles, in the past referred to as invalidexpended over $5.5 billion in medical coach services, are available to those whoassistance payments. The state’s share of are wheelchair bound or not able tothe Medicaid expenditures represents ambulate freely due to a medical or mentalapproximately fifteen percent of New condition. These transportation services,Jersey’s annual budget. while intended to assist the medical needs of patients, also present an inviting target The Medicaid Fraud Unit investigates and for providers intent upon committing fraud.prosecutes health care providers such as This fraud is also committed by inflatingdoctors, pharmacists, dentists and ancillary the mileage for patient transportationservice providers, who defraud the Medicaid claims, billing for services that were notProgram. As a general rule, the Unit does provided, and falsifying prior authorizationnot prosecute Medicaid patients who forms to qualify a recipient for mobilitydefraud the program. Rather, these matters assisted services. This service is paid at aare referred to the state’s Medicaid agency, higher rate than livery service.the Division of Medical Assistance andHealth Services in the Department of INSURANCE FRAUD UNITHuman Services. However, if a conspiracyexists between a Medicaid patient and The Insurance Fraud Unit (IFU) isprovider to defraud the program, the currently overseen by an Acting SupervisingMedicaid Fraud Unit will investigate and Deputy Attorney General, who has beenprosecute all parties in the conspiracy. assigned to the headquarters office of theMedicaid fraud occurs when a provider OIFP in Lawrenceville since the departure offraudulently receives medical assistance the former Supervising Deputy Attorneypayments to which he is not entitled or in a General on August 11, 2000. The Unit’sgreater amount than that to which he is staff of 22 Deputy Attorneys General and 57entitled. Effective January 15, 1998, with Criminal Investigators is divided into fivethe passage of the Health Care Claims squads. Squads one and two are housed inFraud Act, a provider who commits OIFP’s north office in Whippany; squads 19
  • 29. three and four in the Lawrenceville office; squad of investigators is headed by aand squad five in the Cherry Hill south Supervising State Investigator. Augmentingoffice. the staff are two Auditors, a Paralegal, a Senior Management Assistant and an A Deputy Attorney General in each squad Administrative Analyst who assist in caseserves as team leader of the other Deputy and financial analysis, legal research, caseAttorneys General in that squad, and the tracking, and other support andCriminal Investigators in each squad report administrative functions for the Medicaidto a Supervising State Investigator. The five Fraud Unit. The MFU is also charged withSupervising State Investigators report to the investigating fraud in the administration ofDeputy Chief Investigator in charge of the Medicaid Program. Changes in federalcriminal investigations. law allow the Unit to investigate and prosecute health care fraud in other IFU operations are supported by a team of federally-funded health care programs,three Analysts and three Technical such as Medicare, when the case involves aAssistants, supervised by a Senior Analyst. nexus to Medicaid fraud and theThis team provides professional assistance appropriate Inspector General of the federalin the analysis and organization of agency involved concurs.documents, records and data obtained inthe course of criminal investigations of The MFU functions under a strike forceinsurance fraud. configuration of Deputy Attorneys General, Auditors, Analysts, Investigators and a MEDICAID FRAUD UNIT Paralegal working together, full-time, to investigate and prosecute provider fraud in A Supervising Deputy Attorney General the Medicaid Program. The Unit includesheads the Medicaid Fraud Unit (MFU) attorneys experienced in the investigationwhich is also housed in OIFP’s and prosecution of criminal, as well as civilLawrenceville Office. In addition to the fraud cases, auditors capable of reviewingSupervising Deputy Attorney General, the financial records and cost reports and stateMFU currently has five other attorneys, investigators experienced in white-collarthree in Lawrenceville and two in the crime investigations.northern office of the Division of CriminalJustice in Whippany. The criminalinvestigative staff of 18 is assigned to theNorth and Central offices of OIFP and each 20
  • 30. CRIMINAL INVESTIGATION AND PROSECUTION STATISTICS OIFP Criminal Statistics Summary January 1, 2000 - December 31, 2000Cases Pending at end of 1999 329 Individual Subjects of Pending Cases 888New Cases Opened 519 Individual Subjects of New Cases 746Cases Investigated (pending plus opened during period) 848 Persons Investigated 1,634Indictments/Accusations Filed 86Convictions (Pleas/Trial Convictions) 75Total Fines (Includes Civil Penalties in Criminal Cases) $403,100Total Restitution $1,126,228 21
  • 31. Misc. Auto 61 OIFP 2000: Staged Accidents/ HealthCare /PIP/BI Criminal Cases Investigated Falsifying Records 37 119 by Fraud Type False Claims Auto Cases by 100 Fraud Type A g e nt F ra ud 2 8 D o c um e nt F ra ud/ F o rg e ry 8 M is c e lla ne o us 5 2 Medicaid Cases by Provider Type D is a bility/ W o rk e rs C o m p. A uto Ins ura nc e 84 317 Ot her 21 Pharm acy 32Nursing Home 7 P ro pe rty 3 5 Dental 5 Facility/Institut ion 10 T ransportat ion 17 Miscellaneous M e dic a id 1 4 0 Practitioners 19 Clinic 10 Durable Medical Equipment 3 Lab 9 Home Health 7 H e a lth C a re 1 8 4 All OIFP Criminal Cases by Fraud Type
  • 32. OIFP-CIVIL Civil insurance fraud occurs when a Insurance Fraud for litigation. There areperson violates the New Jersey Insurance presently 13 Deputy Attorneys GeneralFraud Prevention Act (Fraud Act), N.J.S.A. assigned to the Division of Law Insurance17:33A-1 et seq. The Fraud Act provides Fraud Unit. These attorneys are located inthat a person or practitioner violates the OIFP’s Lawrenceville Office, where they areAct if, among other things, he or she readily available to render legal advice andsubmits a false statement or makes a assistance as needed. Paralegals arematerial omission on an application for assigned to assist the Deputy Attorneysinsurance (application fraud) or submits a General.false statement in support of a claim forbenefits from an insurance carrier (claims Examples of automobile application fraudfraud). include the omission of information regarding motor vehicle violations, OIFP-Civil insurance fraud cases are accidents and licensed drivers residing ininvestigated by civil investigators in the the household and the use of a New JerseyDivision of Criminal Justice, Department of address by an out-of-state resident toLaw and Public Safety. The cases are obtain less expensive insurance, a practiceusually received as referrals from insurance referred to as “rate evasion.” Homeowners’carriers which suspect fraud. However, claims fraud typically involves thereferrals are also received from private submission of inflated claims and falsecitizens through the OIFP hotline and OIFP receipts arising from legitimate claims.web site, as well as from other law Examples of automobile claims fraudenforcement and administrative agencies. include staged automobile thefts and falseAt the conclusion of an investigation, if the or inflated claims for property damage.evidence tends to support the allegation offraud, the civil investigator assigned to the In the year 2000, OIFP has undertakenmatter attempts to resolve the case by efforts which “up the ante” for those whoissuing the subject of the investigation an would file a false auto theft report in Newadministrative consent order for an Jersey. To address the growing problem ofinsurance fraud fine. The consent order auto theft claims, OIFP-Civil established arequires admissions by the subject and new program designated as the “Give-Upincludes the amount of the fine. If the Initiative,” to coordinate law enforcementsubject holds a professional license efforts in the realm of phony auto theft(physician, attorney, nurse, auto body claims. Civil investigators with extensiveshop, etc.) the consent order also contains backgrounds in auto theft cases in OIFP’sa provision stating that the relevant three regional offices are assigned tolicensing authority will be notified that its identify and screen case referrals involvinglicensee entered into a consent order suspicious auto theft claims, to enter theseregarding an insurance fraud matter. cases into a special database, and to ascertain trends or patterns indicative of If the subject refuses to resolve the matter possible organized criminal involvement.at the conclusion of the investigation, the Investigators assigned to the “Give-Upcase is referred to the Division of Law, Initiative” work closely with municipal 23
  • 33. police departments, the New Jersey State investigations who, in turn, is supervisedPolice, County Prosecutors, federal law by OIFP’s highest ranking investigativeenforcement agencies and the private official, the Managing Deputy Chiefinsurance industry in the sharing of Investigator.information and resources to ensure thatthose submitting fraudulent auto theft Referrals of Suspected Insurance Fraudclaims are subjected to substantial civil In the year 2000, OIFP received 11,888fines, criminal prosecution, or both. reports of suspected insurance fraud, including 8,556 from insurance carriers, The Fraud Act provides for a stiff civil which are required by law to refer all suchmonetary penalty for each act of insurance matters to OIFP. 1,946 of the referrals camefraud. A civil insurance fraud fine for the from citizens, either through OIFP’s toll-freefirst violation can reach as high as $5,000, hotline, or through letters, e-mail, or thea second violation as high as $10,000, and on-line reporting form provided at the OIFPeach subsequent violation as high as web site www.njinsurancefraud.org.$15,000. Significantly, each falsestatement or omission submitted in support Approximately 241 of OIFP’s civil caseof a single claim or application constitutes referrals originated from the monthlya separate violation of the Fraud Act, reporting of criminal cases by Countythereby subjecting a violator to significant Prosecutors’ Offices. The balance ofpenalties for multiple false statements or approximately 1,145 civil cases came fromomissions made in the course of fraudulent a variety of sources including other sectionsconduct, even if in the context of a single of the Division of Criminal Justice; otherclaim. In addition to civil penalties, the government agencies such as the DivisionDivision of Law Insurance Fraud Unit also of Motor Vehicles, the Department ofseeks attorneys fees and restitution, where Banking and Insurance and theappropriate. Department of Labor; and OIFP initiated investigations. CIVIL INVESTIGATIONS Upon receipt, all referrals to OIFP areOrganization assigned a case number and logged into Civil investigations are conducted by OIFP’s civil case database. Approximatelyapproximately120 investigators assigned to twice a month all referrals are screened bythe OIFP-Civil Section. Investigators are an OIFP team comprised of civilassigned in equal numbers among the four investigators, Deputy Attorneys Generalregional units of OIFP located, respectively, and the OIFP County Prosecutor andat Whippany (North Unit), Lawrenceville Professional Boards Liaisons to determine(Central Units 1 & 2), and Cherry Hill the suitability of these matters as potential(South Unit). Each regional unit of 30 civil or criminal cases, or as referrals toinvestigators is headed by a Supervising other agencies such as offices of the CountyState Investigator and is divided into three Prosecutor, professional licensing boards orsquads of ten, headed by team leaders. The the Department of Banking and Insurance.Supervising State Investigators in charge ofthe four regional units report to a Deputy Of the referrals to OIFP in the year 2000,Chief Investigator in charge of 6,589 were forwarded to OIFP civil 24
  • 34. investigators for further investigative action violation(s) of the Act occurred but whereafter initial review. Those matters not the subject was unwilling to sign anwarranting assignment to civil insurance fraud consent order orinvestigators, most often because of agreement, or where a subject becameinadequate facts to clearly demonstrate that seriously delinquent in remitting paymenta violation of the Act occurred, are pursuant to a prior fraud settlement.maintained on file for purpose of futureinvestigative reference. While matters are Division of Law attorneys successfullyoccasionally screened for assignment concluded settlements or judgements indirectly to the criminal investigative section, 146 cases totaling $2,534,200 and obtainedOIFP-Civil often undertakes the initial an additional $944,121 throughinvestigation of referred matters, and enforcement actions. The State was alsosubsequently determines whether a matter awarded over $16,745 in counsel fees inwarrants forwarding for criminal action. litigated matters. The civil attorneysSome of the cases criminally prosecuted resolved a total of 390 matters whichsuccessfully by OIFP started as civil included enforcement actions with respectinvestigations conducted by OIFP-Civil. to previous settlements.Dispositions by Civil Investigators Collections OIFP civil investigators conducted The Department of Banking and Insuranceinvestigations resulting in the issuance of (DOBI) is responsible for the collection of889 insurance fraud consent orders and monies resulting from the successfulagreements totaling $2,441,545 in civil conclusion of civil matters through OIFPinsurance fraud fines. 367 matters, civil investigative actions or through theinvolving $830,762 were successfully efforts of the Division of Law Deputyconcluded through investigative action. The Attorneys General assigned to handle OIFPbalance of the consent orders and civil litigation. According to DOBI, itagreements remain pending. With the received $2,467,697.15 in payments inenactment of the Penalty Enforcement Act, 2000, and closed 560 accounts receivableN.J.S.A. 2A:58-10 et seq., OIFP, through as paid in full during the year.the Division of Law, may now docket itsconsent orders as judgements with the CIVIL HIGHLIGHTSSuperior Court clerk, enabling OIFP, inappropriate cases, to obtain a judgement Division of Law Highlightslien and/or proceed directly to execution State v. Annie M. Proctor On March 20,when necessary. 2000, the Division of Law obtained a default judgment awarding $60,000 in civilDispositions by Division of Law insurance fraud penalties against Annie Insurance Fraud Unit attorneys received a Proctor resulting from her false report thattotal of 639 matters for litigation, most of her 1991 Mercedes Benz automobile hadwhich were referred by OIFP’s civil been stolen. In fact, Proctor arranged toinvestigation section. These matters involve have the automobile stored in a garage incases where the facts demonstrated a Philadelphia. In addition to the civil 25
  • 35. penalties, Proctor was ordered to pay restitution to the insurance companies.restitution in the amount of $21,863 to OIFP referred this matter for considerationState Farm Insurance Company and of possible licensure action by the State$1, 883 to Allstate Insurance Company. Medical Board.State v. Joseph Giordano On September State v. Shoppe Publications On5, 2000, the Division of Law obtained a September 27, 2000, after a bench trial, adefault judgment against Joseph Giordano Cape May County Law Division Judgein the amount of $30,018 resulting from found the defendant liable for threefalse reports to the Ocean Township Police violations of the Act and assessed a penaltyDepartment and the Allstate Insurance of $1,000 for each violation. The matterCompany that his automobile had been arose out of a commercial fire loss afterstolen from the Seaview Square Mall. In which the defendant submitted false andfact, the day before the alleged theft, the inflated claims for damages.automobile had been involved in a hit andrun accident and the automobile was State v. Anthony White OIFP obtainedalready in the custody of the Newark Police a $90,000 default judgement against theDepartment at the time of the alleged theft. defendant, a Newark motorcycle police officer, for violations of the Insurance FraudState v. Nicholas Sottiriou On April 5, Prevention Act stemming from his false2000, a default judgment in the amount of claim that his personal use motorcycle had$70,030 was obtained against Nicholas been stolen. After paying off the loan onSottiriou. Sottiriou, a licensed chiropractor, the motorcycle with the proceeds of thepreviously entered into an insurance fraud insurance policy, White sold the motorcycleconsent agreement with the Department of together with a handwritten bill of saleBanking and Insurance to resolve containing a falsified VIN number. Theallegations regarding insurance claims for fraud was detected during a VIN check at aservices that were never rendered. Florida motocross event.Sottiriou failed to adhere to the paymentterms of the consent agreement and the Civil Investigations Highlightsjudgment was obtained. In the Matter of Mark Stewart On April 18, 2000, Mark Stewart signed a consentState v. Ashendorf On August 3, 2000, order requiring him to pay a $5,000Ashendorf, a physician, entered into a insurance fraud fine after investigationstipulation of settlement and consent revealed that he had created a fictitiousjudgement whereby he agreed to pay a civil employment group to qualify his companypenalty of $55,000 for billing insurance for entry into a group health plan operatedcompanies for treatment on dates on which by Blue Cross/ Blue Shield. Stewart’s wife,the patients did not appear for scheduled who was not an employee of the company,appointments. These billings and submitted more than $47,000 in medicalpayments occurred from 1988 to 1991 and claims to Blue Cross/Blue Shield before theinvolved at least 138 patient files, with fraud was discovered.respect to which Ashendorf made 26
  • 36. In the Matter of Richard Verdoni, M.D.;In the Matter of JoAnn Green InFebruary 2000, Dr. Richard Verdoni paid$4,000 in insurance fraud fines on behalf ofhimself and his sister, JoAnn Green, afterinvestigation of a hotline complaint againstVerdoni confirmed that Verdoni hadfraudulently represented Green to be anemployee of the medical practice with whichhe was associated for the purpose ofobtaining health insurance for Green.Twenty-five claims totaling over $1,500were submitted in Green’s name beforeOIFP was alerted by the hotline caller. Thecase was referred to the New Jersey MedicalLicensing Board. 27
  • 37. OIFP CIVIL STATISTICS SUMMARY January 1, 2000 - December 31, 2000CIVIL INVESTIGATIONS Number Dollar AmountNew Cases Opened 11,888 Number Forwarded for Investigation 6,589 No Investigation Warranted 5,299PRE-LITIGATION DISPOSITIONSConsent Orders/Agreements Issued 889 $2,441,545.75Consent Orders/Agreements Executed 367 $830,762.75LITIGATION (Division of Law)Number of Referrals Received by Division of 639LawNumber of Cases Resolved: 390 Enforcement Actions by Division of Law $944,121.03 Division of Law Original Settlements $2,534,200.96COLLECTIONS (Department of Banking and Insurance)*Total Amount Received $2,467,697.15Number of OIFP Accounts Paid in Full 560 *As reported to OIFP by DOBI 28
  • 38. COORDINATION OF LAW ENFORCEMENT, GOVERNMENT AND INDUSTRY In order to ensure the effective Those referrals encompassed the fullcoordination of public and private anti- spectrum of insurance fraud matters,insurance fraud efforts in New Jersey, ranging from auto theft and arson claimsAICRA requires that OIFP designate a fraud to health care claims fraud.section of the office to establish liaison and Including cases referred by OIFP, Offices ofcontinuing communications with the the County Prosecutor re portedinsurance industry, law enforcement and investigating or prosecuting 906 cases ofother public agencies. Consistent with this suspected insurance fraud in the yearlegislative mandate, OIFP has assigned 2000.experienced personnel with appropriatebackgrounds to act as liaisons to coordinate Training of County Prosecutor PersonnelOIFP’s programs with professional licensing In May of 2000, OIFP conducted a two dayboards, insurance carriers, County course of instruction for assistantProsecutors’ Offices and other law prosecutors and County Prosecutorenforcement agencies. investigative personnel, examining in detail actual insurance fraud cases investigatedCOUNTY PROSECUTORS’ OFFICES and prosecuted by OIFP involving staged accidents, alleged auto thefts, insurance AICRA provides that, with the assistance agent fraud, disability claims fraud,and support of OIFP, Offices of the County commercial casualty and health care claimsProsecutor assume and maintain a role of fraud. Actual case studies were presentedcritical importance in the detection, by the State Investigators and Deputyinvestigation and prosecution of insurance Attorneys General who originally handledfraud in New Jersey. As provided in AICRA, the cases on behalf of OIFP, and includedOIFP refers investigative leads and offers the review and analysis of court documentsother investigative assistance to County and investigative materials prepared byProsecutors’ Offices, conducts insurance OIFP in conjunction with those cases.fraud-related training for County Training was attended by 12 assistantProsecutor personnel, and affords funding prosecutors and 21 investigative personnelto those offices seeking to establish or representing 17 County Prosecutors’expand insurance fraud units. Offices, as well as by State Investigators and Deputy Attorneys General from OIFP. In the year 2000, OIFP’s Prosecutor OIFP also presented an insurance fraudLiaison implemented a protocol for roundtable for assistant prosecutors andidentifying, forwarding and tracking investigative staff at the New Jerseyinsurance fraud referrals to the State’s 21 Prosecutors Association Annual ConferenceCounty Prosecutors’ Offices. By the close of in Atlantic City in September 2000.the year, OIFP had referred more than 150 Chaired by the Acting Insurance Fraudmatters to County Prosecutors’ Offices for Prosecutor, the roundtable addressed ainvestigation and possible prosecution. variety of subjects ranging from recently 29
  • 39. enacted insurance fraud legislation to two year funding commitments totaling $5OIFP’s auto theft “Give-Up Initiative.” million. During 2000, the original two year funding commitments were extended in Throughout the year OIFP also provided several counties to allow for the use oftraining materials and instructors upon unexpended funds resulting fromrequest to County Prosecutors’ Offices and occasional unavoidable delays in hiring orpolice training academies throughout the procurement. This dedicated fundingstate, ranging from Cape May County in the source has enabled participatingsouth, to Bergen County in the north. Prosecutors’ Offices to add eight assistant prosecutors, 26 investigators and fiveFunding of County Prosecutors’ Offices clerical support positions, and to To encourage and assist County underwrite the purchase of essentialProsecutors with establishing or expanding equipment and other investigativeunits working on insurance fraud matters, expenses. It is anticipated that, in 2001,AICRA provides that the Attorney General funding commitments to the 16allocate monies from OIFP’s budget to a participating County Prosecutors’ Officesfund dedicated to reimbursing County will be renewed, and that several of theProsecutors’ efforts in combating insurance Prosecutors’ Offices which had notfraud. Previously, 16 of the State’s 21 participated in the initial funding, will applyCounty Prosecutors requested and received for funding for the next program funding period. COUNTY PROSECUTORS’ OFFICES SUBJECTS UNDER INVESTIGATION IN 2000 FOR SUSPECTED INSURANCE FRAUD Atlantic 35 Gloucester 45 Ocean 42 Bergen 41 Hudson 260 Passaic 212 Burlington 2 Hunterdon --- Salem 15 Camden 77 Mercer 35 Somerset 17 Cape May 12 Middlesex 12 Sussex --- Cumberland 4 Monmouth 31 Union 7 Essex 18 Morris 32 Warren 9 30
  • 40. Highlights of Insurance Fraud investigation by the Atlantic CountyInvestigations by Counties Prosecutor’s Office Insurance Fraud Task Force, Stanton was charged with “giving- up” his automobile to a friend who allegedly took it to a Philadelphia based chop shop. Atlantic County Prosecutor’s Office The case is pending trial.State v. Charles Walton On October 18, State v. Evelyn T. Brown On December2000, Charles Walton of Philadelphia, 1, 2000, members of the Atlantic CountyPennsylvania was indicted on charges of Prosecutor’s Office Insurance Fraud Taskaggravated arson, arson for insurance and Force arrested and charged Evelyn T. Brownconspiracy for his role in abandoning and with five counts of wrongful impersonationburning a vehicle on the Garden State for using another person’s identity andParkway on July 14, 2000 for purposes of credentials to procure auto insurancefiling a fraudulent auto theft claim. While coverage. AAA Mid-Atlantic Insuranceparked on the shoulder of the highway prior Company/Keystone Insurance Companyto the arson, Walton had been offered and had referred the matter to the Atlanticdeclined roadside assistance by New Jersey County Prosecutor’s Office after Brown hadState Troopers on patrol. The Troopers later been involved in a traffic accident infound the vehicle abandoned and charred. Brigantine in the spring of 1997. The caseSubsequent forensic examination of the is currently pending presentation to avehicle by the New Jersey State Police Arson Grand Jury.Unit resulted in the discovery ofphotographs of Walton in the vehicle’s glovecompartment. The case was investigated Bergen County Prosecutor’s Officejointly by the New Jersey State Police andthe Atlantic County Prosecutor’s Insurance State v. Cleveland Alexander On JuneFraud Task Force. The matter is pending 16, 2000, a Bergen County Grand Jurytrial. indicted Cleveland Alexander for distributing fraudulent New Jersey motorState v. Robert Stanton On November 14, vehicle documents including counterfeit2000, Robert Stanton was indicted on insurance cards, fictitious temporarycharges of theft by deception, conspiracy, registration tags and fake motor vehiclefalsifying records, false swearing and inspection stickers. Alexander wasunsworn falsification in conjunction with his sentenced on December 22, 2000 to 60report to police that his 1995 Dodge Intrepid days in the Bergen County Jail (SLAPhad been stolen and his subsequent auto Program) as a condition of long termtheft claim to the First Trenton Indemnity probation. This investigation, whichInsurance Company. After paying Stanton resulted in multiple undercover purchases$13,871 on his claim, the insurance carrier of original quality counterfeit documents,alerted the Atlantic County Prosecutor’s was conducted jointly by the Bergen CountyOffice of its suspicions of fraud associated Prosecutor’s Office Insurance Fraud Squadwith Stanton’s claim. After further and the New Jersey State Police. 31
  • 41. State v. Lori Mobio, et al. On June 16,2000, a Bergen County Grand Jury charged Camden County Prosecutor’s OfficeLori Mobio and Veronica Jackson in an eightcount indictment for manufacturing and State v. Mark Krauss On April 14, 2000,distributing fake State Farm and Allstate Mark Krauss was sentenced to a term ofinsurance cards. This joint investigation by three years probation with 150 hours ofthe Bergen County Prosecutor’s Office and community service after admitting to fakingthe New Jersey State Police resulted in two the burglary of his own home and the theftcriminal convictions in November, 2000. of over $15,000 worth of contents. Krauss admitted his deception and made fullState v. Nicholas Chrin On August 11, restitution to Allstate Insurance Company2000, a Bergen County Grand Jury indicted after being confronted by a GloucesterNicholas Chrin for four counts of theft by Township Police Detective with thedeception in an agent embezzlement numerous inconsistencies in his burglaryscheme. Chrin, a long time Northwestern report.Mutual Life Insurance Company agent,diverted several cash surrender values from State v. Joseph Shaw On October 11,a long time client’s life insurance policies. 2000, the Camden County Grand JuryHe pled guilty to two counts of theft by returned an indictment against Josephdeception, agreed to pay over $30,000 in Shaw charging second degree aggravatedcriminal restitution and was accepted for arson and second degree attempted theft byentry into the Pre-Trial Intervention Program deception for the destruction of hison January 2, 2001. residence by fire on February 17, 1998, and his alleged attempts to obtain more than $189,000 in insurance proceeds from Peerless Insurance Company. Although his Burlington County Prosecutor’s Office wife was not at home at the time and Mr. Shaw escaped unharmed, the couple’s three pet dogs perished in the fire. The residenceState v. Joseph Larkin On July 30, 2000, was a total loss and was determined to haveJoseph Larkin was indicted for aggravated been set by direct ignition of combustiblearson, insurance fraud arson, and theft by materials in the basement area. Thedeception in conjunction with a fire which extreme heat caused major portions of thehad destroyed Larkin’s house trailer the second floor of the dwelling to collapse andnight before he was to sell it for $16,000. A one firefighter sustained second degreelamp was suggested as the cause of the fire. burns fighting the blaze.Further investigation revealed that the firehad been caused by the direct ignition of State v. Ada Lebron; State v. Kennethcombustible materials rather than by the Carstarphen; State v. Jose Bouson Inlamp, and that Larkin had allegedly received its continuing efforts to halt the$31,000 from the insurance company on a proliferation of simulated automobileclaim he filed under his homeowners’ insurance identification cards in Camdeninsurance. The case is pending trial. County, the Camden County Prosecutor’s 32
  • 42. Office obtained three indictments in the year unlicensed person, and to an Accusation2000 against individuals who were engaged filed by the OIFP charging her within making and selling such cards, usually Medicaid fraud. Carmona had operatedfor $50 a piece. Ada Lebron pled guilty and Vineland Human Services where shewas sentenced to probation with 30 days provided counseling services and wrote andcommunity service. Kenneth Carstarphen altered prescriptions, despite the fact thatpled guilty on condition of a term of 12 she was not licensed to practice medicine.months in prison but is expected to be She also billed the Medicaid Program forsentenced to a term of 364 days in the rendering pharmacologic managementhouse arrest program due to his extremely services under guise of medical licensure.poor health. The indictment against Jose Carmona was sentenced on December 1,Bouson is still pending in Superior Court. 2000, to 162 days time served in jail, threeAll three arrests were made by the New years probation and forfeiture of $9,629 toJersey State Police Insurance Fraud Unit the Cumberland County Prosecutor’s Office.which works in cooperation with the The investigation was conducted jointly byCamden County Prosecutor’s Office on a the OIFP and the Cumberland Countyregular basis. Prosecutor’s Office. In the year 2000, the Camden CountyProsecutor’s Office Insurance Fraud Unit Gloucester County Prosecutor’s Officeopened more than 70 investigations,including approximately 40 which remainpending. State v. Edward D. Walker In March of 2000, Edward D. Walker was found guilty Cape May County Prosecutor’s Office by a Gloucester County Jury of purposely starting a fire in his 1992 Ford Explorer in order to collect insurance for theState v. Edward Jones On June 6, 2000, destruction of, or damage to, his vehicle.a Cape May County Grand Jury indicted On April 28, 2000 Walker, was sentenced toEdward Jones, the owner of C&E towing, for three and a half years in state prison.theft by deception. Jones allegedly billedSelective Insurance Company for the State v. Kevin Stokes On September 20,purported storage of a vehicle, which was 2000, Kevin Stokes was arrested by thebeing stored at the police impound lot. Gloucester County Prosecutor’s Office and charged with attempted theft by deception, falsifying documents and tampering with Cumberland County Prosecutor’s Office public records or information in connection with an automobile “give-up” scheme.State v. Alice Yolanda Carmona On Stokes allegedly reported his vehicle stolenOctober 23, 2000, Alice Yolanda Carmona and filed a theft claim under his automobilepled guilty to one count of a Cumberland insurance policy.County indictment charging her with thecrime of practice of medicine by an 33
  • 43. State v. Daniel Kerr On December 1,2000, Daniel H. Kerr, a six year veteran of Hudson County Prosecutor’s Officethe Gibbsboro Police Department, wasarrested at an auto shop he owns in State v. Bernardo Barreras On OctoberPaulsboro and charged with official 4, 2000, a Hudson County Grand Jurymisconduct and tampering with public indicted Bernardo Barreras on a charge ofrecords. Kerr is alleged to have illegally sold theft by deception. Barreras worked as antemporary license plates from his business insurance agent for the State Farmand unlawfully obtained drivers’ abstracts Insurance Company in Hoboken and isfrom police computers for his own use. The alleged, on at least six occasions, to havearrest followed several months of defrauded individuals of insuranceinvestigation by the Gloucester County application premiums after he took theirProsecutor’s Office and New Jersey State cash payments for new automobilePolice. insurance policies. The amount allegedly defrauded is in excess of $3,000.State v. Amarilis Flores and SantosMarrero Following a joint investigation by State v. Frank Munafo, et al. Onthe Gloucester County Prosecutor’s Office August 23, 2000, Frank J. Munafo wasand Woolwich Township Police Department, charged with theft in connection with aAmarilis Flores and Santos Marrero were suspected chop shop on 37th Street inarrested on October 17, 2000 and November Union City, Hudson County. The charges8, 2000 in connection with an automobile stem from a raid carried out by the“give-up” scheme. Flores and Marrero were Prosecutor’s Office detectives on a ten carcharged with conspiracy, aggravated arson, garage where three stolen vehicles wereattempt to commit theft by deception, recovered.falsifying documents and tampering withpublic records and information. It is alleged Staged Accidents The Hudson Countythat Flores conspired with Marrero to get rid Prosecutor’s is currently engaged in theof her 1994 Mazda, gave the car to Marrero investigation of over one hundred subjectsand other unknown conspirators, falsely suspected of staging accidents in the Northreported that her vehicle had been stolen, Hudson vicinity. In August 2000, a dozenand filed a fraudulent theft claim under her individuals targeted as the alleged ringautomobile insurance policy. leaders of those staged accidents were indicted in conjunction with the ongoing investigation, which is expected to result in dozens of arrests and convictions in the year 2001. 34
  • 44. deception in conjunction with their scheme Mercer County Prosecutor’s Office to stage the theft and destruction of Manno’s 1993 Honda Accord. TheState v. Sybil A. Francis On September defendants, employed together as stage5, 2000, Sybil A. Francis was indicted for hands at the Metropolitan Opera House inattempted theft by deception stemming Manhattan, plotted for Coonan to drivefrom her false report that her 1995 BMW Manno’s car to New Jersey and burn it,had been stolen from the front of a bar following which Manno would file anwhere she had purportedly left the car insurance claim. The car was taken andrunning. It is alleged that Francis made the destroyed, but the plan unraveled beforefalse report as a predicate to the filing of a Travelers Insurance Company madefraudulent insurance claim. payment on the phony claim. Both Coonan and Manno pled guilty to arson for starting a fire to collect insurance proceeds, and Middlesex County Prosecutor’s Office were sentenced to terms of probation. Morris County Prosecutor’s OfficeState v. Fred Rossi On August 12, 2000,a Middlesex County Grand Jury handed upan indictment of Fred Rossi, an State v. George Underhill, Gregoryindependent insurance broker in Carteret, Underhill and Underhill ExcavatingNew Jersey, charging him with the On January 18, 2000, George and Gregorypocketing of clients’ insurance premiums Underhill were arrested and charged withwithout actually placing insurance for those theft by deception, receiving stolen propertyclients over a period of approximately three and conspiracy in conjunction with anyears. Rossi pled guilty on November 27, insurance scam in which they fraudulently2000 to two counts of issuing a simulated sought to collect insurance proceeds onmotor vehicle insurance identification card heavy construction equipment which theyand one count of theft by deception and falsely claimed was stolen. Subsequently,was sentenced on January 16, 2001 to five seven Case backhoes were seized, includingyears probation conditioned upon three that had previously been reportedrestitution of $5,502 and forfeiture of his stolen by George Underhill Excavating. Ofinsurance agent’s license. the three backhoes that had been retained by Underhill, two were later traded in toward the purchase of new machines. OnMonmouth County Prosecutor’s Office September 14, 2000, George Underhill pled guilty to receiving stolen property; Gregory Underhill pled guilty to theft by deceptionState v. James Coonan and Anthony and the company pled guilty to tamperingManno On June 5, 2000, a Monmouth with public records. Over $400,000 worthCounty Grand Jury indicted both James of equipment was seized in thisCoonan and Anthony Manno on three investigation, enabling Zurich Insurancecounts of arson and one count of theft by Company to recoup losses of $114,103 and 35
  • 45. Selective Insurance Company to recoup indicted on March 29, 2000 in connectionlosses of $62,500. On January 12, 2001, with a scheme to file a phony vehicle theftGeorge Underhill was sentenced to three claim a week after selling their 1997 Fordyears probation and Gregory Underhill was F-150 pickup to a truck dealer on May 22,sentenced to five years state prison. In 1997. Rivera falsely swore on an affidavit ofaddition, their corporation was ordered to theft that she had last seen the vehicle,pay $15,000 in civil penalties. intact and in good condition, on May 28, 1997. Delgado subsequently pled guilty toState v. Wayne Stover On May 5, 2000, theft by deception and agreed to payWayne Stover was charged with theft by restitution and an insurance fraud civil finedeception, criminal attempt and the filing of of $5,000 as a condition of three yearsa false police report in conjunction with a probation. Rivera was accepted into thephony $5,000 burglary claim. Stover had Pre-Trial Intervention Program and alsofalsely reported to police that his car was agreed to pay restitution.burglarized while parked at his place ofemployment at St. Claire’s Hospital - Dover State v. Lawrence Nesser; State v. RenaeCampus. Under subsequent questioning by Nesser; State v. James Russo; State v.detectives from the Morris County Thomas Allen Palmarini In SeptemberProsecutor’s Office and the Dover County of 2000, Lawrence Nesser, Renae Nesser,Police Department, Stover admitted James Russo and Thomas Palmarini wereconcocting the story to make a fraudulent each charged with theft by deception, theftinsurance claim. Stover was accepted into by unlawful taking or disposition,the county’s Pre-Trial Intervention Program. defrauding secured creditors and conspiracy to defraud, in connection withState v. Raffael N. Melchione Raffael their alleged scheme to stage the theft ofMelchione was charged on October 31, Renae Nesser’s leased 1998 Chrysler2000 for staging the theft and arson of a Sebring as a predicate to the filing of a1999 Infiniti he had leased and which was fraudulent insurance claim. Facing the endsignificantly over the mileage permitted of a lease with substantial excess mileageunder the terms of the lease. Melchione charges, the Nessers allegedly sought theeventually admitted under questioning that assistance of Russo, who recruitedhe had committed the fraud to avoid paying Palmarini, to “steal” Nesser’s vehicle fromexcess mileage charges to the leasing the Nessers’ Bradley Beach residence.company when the vehicle was due to be Palmarini allegedly attempted to abandonreturned. Melchione pled guilty to theft by the vehicle in New York City, but detoureddeception as a condition of his entry into to a remote area of Ocean County nearthe Pre-Trial Intervention Program. Asarco Lake where the vehicle got stuck and Palmarini allegedly set it ablaze. The charges are pending presentation to a Ocean County Prosecutor’s Office Grand Jury.State v. Luis Delgado and Maritza Asarco Lake Recoveries WhileRivera The married defendants were investigating the Nesser case, the Ocean 36
  • 46. County Prosecutor’s Office turned its stemming from fraudulent auto insuranceattention to Asarco Lake, the site of a theft claims known as “give-ups.” Fifteen offormer mining operation in Manchester those charged entered guilty pleas beforeTownship reputed to have been the final year’s end.resting place of a number “abandoned”motor vehicles. While divers from theManchester Township Police Department Somerset County Prosecutor’s Officeidentified several vehicles by their VINnumbers, members of the Ocean County State v. Jason Narbonne; State v. StevenProsecutor’s Office organized a major Siegel On March 10, 2000, Jasonrecovery effort, ultimately yielding eleven Narbonne was arrested and charged withvehicles, including at least six of which the removal of motor vehicle ID numbers.were the subject of suspicious insurance Detectives recovered two stolen vehicles, aclaims. The Ocean County Prosecutor’s Ford Mustang and a Chevrolet Blazer, thatOffice anticipates the filing of criminal had been re-plated. A GMC Jimmy wascharges in conjunction with the illegal also recovered, parts of which had allegedlydisposal of several of these vehicles early in been used to alter the Blazer’s identity. The2001. The Ocean County Prosecutor’s investigation also determined that theOffice was assisted in the recovery effort by chassis of another vehicle, which VIN wasthe New Jersey State Police T.E.A.M.S. Unit, affixed to the stolen Mustang, had beenthe Vehicle Theft Investigators Association, destroyed by fire and sold to Steven Siegel,the Manchester Police Department, the the owner of a high performance auto shopOcean County Road Department and the called “5.0" in Maplewood, New Jersey. InOIFP. a separate investigation, detectives from the Maplewood Police Department executed a Passaic County Prosecutor’s Office search warrant at Siegel’s business and located a number of detached VIN plates, resulting in Siegel’s arrest. Both defendantsState v. Jose Siri, et al. A four year are awaiting trial.investigation into two distinct, yetoverlapping staged accident rings operatingin the Paterson and Passaic City areas has Union County Prosecutor’s Officeyielded 23 indictments charging 127subjects since December of 1999. To date, State v. Brian Horton On August 14,more than 30 of those charged have entered 2000, Horton, a Union County Probationguilty pleas, while others have agreed to Officer, was charged by the Union Countycooperate in the continuing investigation. Prosecutor’s Office with attempted theft by deception and false swearing afterPassaic County Auto Theft Task Force investigation determined that Horton hadIn the year 2000 the Passaic County Auto allegedly falsely reported his vehicle stolenTheft Task Force, a special unit within the while it remained in his possession.Passaic County Prosecutor’s Office, charged Because of a possible conflict relating to24 subjects with various theft charges Horton’s public employment as a Probation 37
  • 47. Officer in Union County, the matter was authorities in the identification andtransferred by the Criminal Presiding Judge investigation of fraudulent insurance cards,to Middlesex County where Horton was and to undertake its own investigations ofindicted in November of 2000. The case is subjects possessing or producingpending in court. fraudulent insurance cards with the intent to defeat New Jersey’s system of mandatoryState v. Kenneth Williams On September automobile insurance.21, 2000, Kenneth Williams, a Plainfieldfirefighter, was charged with attempted In 2000, the New Jersey State Policetheft by deception, tampering with records Insurance Fraud Unit conducted 128and false swearing. Mr. Williams reported investigations and arrested 100 individualshis vehicle stolen after it had been towed on 104 criminal charges. In addition, itand while in police custody. This case is issued 159 traffic summonses. While thepresently pending a Pre-Trial Intervention majority of the Unit’s investigationsappeal by the defendant after the State involved the presentation of fraudulentobjected to his entry into the Pre-Trial insurance documentation by motorists,Intervention Program. other investigations of the Unit involved the illegal sale of fraudulent cards by insuranceSTATE POLICE agents, the sale of “temporary registrations” by an off duty police officer through hisInsurance Fraud Unit used car dealership, and stolen vehicles. Previously, the New Jersey State Police The Unit also assisted OIFP, Prosecutors’established an Insurance Fraud Unit, Offices and municipal police departments infunded by OIFP, to address the widespread other investigations relating to medicalproblems presented by the use of fictitious fraud, stolen vehicles and other types ofauto insurance cards and related types of insurance fraud.automobile insurance fraud. In addition to its investigative In a reflection of the underlying problem of responsibilities during 2000, the Newuninsured motorists in New Jersey, an Jersey State Police Insurance Fraud Unitinformal New Jersey State Police survey in conducted substantial training, including1998 revealed that as many as 37 percent 18 seminars in which 800 law enforcementof the insurance cards presented by personnel received instruction in themotorists in the course of routine traffic detection and investigation of insurancestops were fraudulent. A fraudulent fraud. Members of the Unit also madeinsurance identification card reflects the substantial contributions to the productionfact that the motorist is driving without of OIFP’s roll call training videos addressinginsurance. fraudulent insurance cards, staged accidents and staged auto thefts. Working in close conjunction with OIFP,the mission of the New Jersey State Police Since its inception, the Unit has beenInsurance Fraud Unit is to train state, staffed by a Sergeant and five troopers, andcounty and municipal law enforcement is slated for expansion upon the graduation 38
  • 48. of several new classes of troopers from the and other assistance to, municipal andNew Jersey State Police Training Academy other law enforcement agencies with ain 2001. presence in New Jersey. Auto Theft Unit While urban police departments have OIFP has also jointly investigated and frequently encountered and investigatedprosecuted cases with the NJSP Auto Theft insurance fraud as resources permitted,Unit. In one case, OIFP and Auto Unit most municipal police departments in NewInvestigators developed a confidential Jersey have had little or no training orinformant who received automobile “give- experience in the investigation of insuranceups” from various individuals. In this fraud. To address the need for training ininvestigation the informant received this area, and to enable police departmentsvehicles from several middlemen who to capably detect, investigate and chargedisposed of the vehicles on behalf of the insurance cheats, OIFP has committed to avehicle owners. As a result of this program of comprehensive insurance fraudinvestigation, 18 individuals were arrested training throughout New Jersey, and to thein Hudson County. One arrest resulted in sharing of intelligence and expertisethe forfeiture of $23,000 cash, allegedly the through the sponsoring of periodic regionalproceeds of drug transactions. This case is meetings of law enforcement agencies incurrently scheduled for guilty pleas to different areas of the state.Accusations and possible presentation to aState Grand Jury. As indicated in the section of this report detailing OIFP’s training initiatives, OIFP In another investigation, the Auto Unit has produced a pair of roll call trainingdeveloped an informant who led them to a videos for distribution to police agencies“give-up” operation. The Auto Unit seized throughout New Jersey. The first of thesemore than $110,000 in “give-up” vehicles in training videos provided instruction in theone day from one garage. This matter is detection of staged accidents andcurrently scheduled for presentation to the fraudulent insurance cards, and wasGrand Jury. distributed, along with model “visor cards” and other training materials, to all policeMUNICIPAL POLICE departments in April, 2000. The second of these training videos concerns the Effective coordination among all law identification and investigation of stagedenforcement agencies in New Jersey is key automobile thefts, and is slated for similarto the success of OIFP’s mission to tackle distribution with supporting trainingthe challenges presented by those who materials in 2001.commit insurance fraud. To ensure the fullparticipation of New Jersey’s municipal To provide more formalized training inpolice departments in this effort, OIFP’s insurance fraud, either directly to policeLaw Enforcement Liaison has been charged departments, or through county policewith responsibility for establishing lines of training academies, OIFP has developed acommunication with, and offering training comprehensive insurance fraud curriculum 39
  • 49. encompassing ten subject areas ranging with the assistance of the Prosecutorfrom surveillance techniques to questioned Liaison, has undertaken an effort to identifydocument examination. OIFP has apprised as many New Jersey investigative agenciesall of the counties’ police academy directors and associations as possible for purposes ofof OIFP’s training capabilities through a establishing ongoing channels ofpresentation at a meeting of the Police communication and, in appropriate cases,Academy Directors’ Association, and sharing of investigative resources.through appropriate follow-upcorrespondence to each director. In 2000, GOVERNMENTOIFP provided training to both municipal Coordination with New Jersey Agenciespolice and New Jersey State Police officersat the New Jersey State Police Training Liaison and ContinuingAcademy in Sea Girt and at county training Communications Groupacademies across the state. One of the liaison functions required by AICRA is the coordination of OTHER LAW ENFORCEMENT communications with the professional/occupational Boards within The Law Enforcement Liaison has worked the Division of Consumer Affairs. Theclosely with OIFP’s regional Supervising number of professional/occupationalState Investigators and the Prosecutor Boards within the Division of ConsumerLiaison to schedule periodic regional Affairs has grown from 13 in 1976 to itsmeetings of municipal, county, state and current total of 38. Those 38 Boards nowfederal law enforcement agencies. Meetings regulate over 60 professions andare designed to facilitate the sharing of occupations.information and expertise, and typicallyinclude a presentation on a specific topic OIFP refers relevant insurance fraudsuch as the forensic examination of matters to the appropriatequestioned documents, the implementation professional/occupational Board eitherof a program to combat staged auto thefts directly or through the Division ofat shopping malls, and the emergence of Consumer Affairs Enforcement Bureaunew insurance fraud rings. which conducts investigations for all of the Boards. In some instances, the information Throughout the year OIFP established that OIFP provides to the Division ofcontacts with numerous law enforcement Consumer Affairs results in the initiation ofagencies and associations including the administrative disciplinary action againstNew Jersey State Police Traffic Bureau the professional/occupational licensee.command staff, the New Jersey Highway Conversely, information that is obtained byTraffic Officers Association, the Casino the Division of Consumer Affairs, throughInvestigators Association, the New Jersey either the professional Board itself or theState Chiefs of Police Association and law Enforcement Bureau, is submitted to OIFP,enforcement detective associations in which initiates an appropriate investigation,Burlington, Camden, and Hunterdon often resulting in the issuance of a consentcounties. The Law Enforcement Liaison, order including a civil insurance fraud 40
  • 50. penalty, or in the initiation of a criminalinvestigation leading to possible criminalcharges. Disciplinary licensure actionstaken by the professional/occupationalBoards within the Division of ConsumerAffairs during calendar year 2000 resultedin disciplinary action against 33individuals. The following represents the actions taken by each Board identified: Suspension Revocation Voluntary Reprimand TOTAL Surrender Chiropractors 1 1 0 0 2 Medical 3 8 1 2 14 Nursing 0 2 0 0 2 Dental 2 0 0 2 4 Pharmacy 1 6 0 0 7 Physical Therapy 0 0 1 0 1 Social Worker 1 1 0 0 2 Optician 1 0 0 0 1 TOTALS 9 18 2 4 33 The Professional Boards Liaison was insurance fraud, and provides those ininstrumental in establishing the OIFP attendance with an opportunity to reviewLiaison Group in October of 1998. Chaired and share updates, and offer insights intoby the OIFP Professional Boards Liaison, each active investigation. These monthlythe Group tracks active cases of meetings of the OIFP Liaison Group haveprofessional licensees under investigation proven invaluable in facilitating theby OIFP’s civil and criminal sections, as exchange of information among OIFP’s civilwell as by the Division of Consumer Affairs and criminal sections, the Division ofEnforcement Bureau, and has met on Consumer Affairs Enforcement Bureau, andalmost a monthly basis since its inception. other members of the Group.The Liaison Group strives to bring togetherrepresentative individuals from various At the end of 2000, the Liaison Group wassections of OIFP and the Division of monitoring 399 active cases, a substantialConsumer Affairs who share the common increase from the 306 active cases carriedresponsibility for investigating professional at the beginning of calendar year 1999.licensees suspected of committing From the inception of the Liaison Group 41
  • 51. through the end of 2000, 184 cases were will be forwarded by the Department ofreviewed and concluded, either because no Labor for prosecutorial review in a timelyfurther action was warranted, or because fashion. The revised protocol will furtherthe matter resulted in a final disposition by establish a procedure to refer cases to theOIFP or the appropriate professional appropriate prosecuting agency, whetherlicensing Board. OIFP, the Division of Criminal Justice’s Labor Prosecutions Unit or a County Department of Banking and Insurance Prosecutor’s Office, and to advise the (DOBI) Department of Labor of the matter’s status. A liaison group previously established and This revised protocol will further ensurecomprised of representatives from OIFP, the continuing communication among theDOBI Enforcement Division and the agencies responsible for workers’Division of Law in the Department of Law compensation enforcement matters. It isand Public Safety, continued in the year anticipated that the close working2000 to develop an effective protocol for the relationship between OIFP, the Laborcoordination of cases of suspected fraud by Prosecutions Unit and the Division oflicensed producers (insurance agents) and Workers’ Compensation in the Departmentpublic adjusters. The protocol addresses of Labor will continue.case tracking, sharing of investigativeinformation and the coordination necessary Division of Motor Vehiclesfor possible global case dispositions. In 2000, OIFP commenced a series of meetings with the Division of Motor Since the establishment of this liaison Vehicles (DMV) to address issues of mutualgroup, 72 cases have been identified for concern pertaining to the problem ofreview and possible joint action, including automobile insurance fraud in New Jersey.17 in which global or partial global At the request of the insurance industry,settlement is expected. Anticipated this series of meetings was initiated todispositions include a combination of discuss more effective ways for insurancecriminal convictions, civil fines, restitution companies to obtain information from DMVand professional license suspension or for Special Investigations Unit purposes.revocation. As a result of the protocol DMV has been receptive to industryestablished by the liaison group, OIFP has concerns and is currently seeking solutionsalso opened investigations of former to address these concerns. In November ofproducers who are no longer licensed. 2000 representatives from OIFP and the Division of Law in the Department of Law Department of Labor and Public Safety met with DMV officials to A protocol developed for the referral of plan the establishment of a liaison group tocases and exchange of information among coordinate matters involving licensed repairthe Labor Prosecutions Unit in the Division facilities suspected of engaging inof Criminal Justice, OIFP and the Division insurance fraud. This liaison group willof Workers’ Compensation in the focus on the imposition of appropriateDepartment of Labor has been undergoing licensing sanctions in addition to the levy offurther review. The anticipated revised insurance fraud fines, and is expected to beprotocol will further ensure that all matters fully functional early in 2001.in which any indicia of criminality exists 42
  • 52. INTERSTATE INSURANCE FRAUD Insurance and local insurance fraud andCOORDINATION law enforcement agencies from New York,National Association of Medicaid Pennsylvania, Maryland, Delaware, VirginiaFraud Control Units (NAMFCU) and Washington, D.C. as part of the Mid- The National Association of Medicaid Atlantic States Insurance FraudFraud Control Units is an Association of Association. This multi-state group meetsforty-seven Medicaid Fraud Control Units periodically to share information aboutwhose mission is to provide a coordinating insurance fraud trends, newly detectedpoint for the nationwide sharing of insurance fraud schemes, specificinformation on all matters relating to investigations and cases as may beMedicaid fraud investigations. NAMFCU appropriate, and to provide mutualprovides training which is accredited by the assistance with regard to investigations andFederal Law Enforcement Training Center, targets whose insurance fraud conduct hasfor investigators, auditors and attorneys crossed state lines.from each of the 47 state members.NAMFCU provides important coordination State Fraud Directors’ Conferencebetween the state Medicaid Programs, On October 11 through 13, 2000, seniorincluding New Jersey’s Program and the OIFP staff attended the State FraudUnited States Department of Justice with Directors’ Conference, a national conferencerespect to investigating, prosecuting, and of public agencies dedicated to thesettling both civil and criminal matters investigation and prosecution of insuranceagainst Medicaid providers who operate fraud. Attendees discussed currentnationwide. OIFP’s Medicaid Fraud Unit is insurance fraud trends that have beenan active participant in nationwide civil identified throughout the United States,Medicaid fraud settlements by NAMFCU including those involving staged accidentwhere the targeted providers have billed the rings, runners and the increasingNew Jersey Medicaid Program. participation of medical providers in these insurance schemes. OIFP representatives The Supervising Deputy Attorney General made a presentation at the conferenceof the Medicaid Fraud Unit has been a regarding OIFP’s public awarenessmember of NAMFCU’s Executive Committee campaign, which included showings offor the past six years. He also serves on the OIFP’s television spots and roll call trainingFinance Committee and represents video. Discussions at the conferenceNAMFCU in cases that have nationwide focused on the need for expansion ofimplications. interstate communications among member agencies in attendance.Mid-Atlantic States Insurance FraudAssociation INSURANCE INDUSTRY On February 2, 2000, May 9, 2000, andOctober 17, 2000 representatives of OIFP Led by the efforts of its Industry Liaison,variously met with representatives from the OIFP continued in 2000 to build upon itsNew Jersey Department of Banking and strong working relationship with the 43
  • 53. insurance industry. In the course of the anticipates an expansion of these workingpast year, the OIFP Industry Liaison worked groups to involve additional state agenciesclosely with the insurance industry on in the future.matters of shared concern, providedtraining and instruction to insurance Between February and November of 2000,industry professionals throughout New the OIFP Industry Liaison trained over 800Jersey, made numerous presentations to insurance industry professionals in 22insurance industry trade groups on behalf training sessions with regard to recentlyof OIFP, and frequently conferred and enacted requirements for referring cases tocoordinated his activities with agencies in OIFP. In October the OIFP Industry Liaisonand outside of New Jersey. A m o n g t h e conducted a workshop for insuranceOIFP Industry Liaison’s efforts to ensure industry personnel at the annual NJSIAeffective continuing communication Conference, highlighting initiativesbetween OIFP and the insurance industry undertaken by OIFP during 2000 includingwas the establishment of working groups OIFP’s roll call video and public awarenesscomprised of Special Investigations Unit campaign. The OIFP Industry Liaison alsoexecutives and the OIFP Industry Liaison. instructed attendees regarding completionThese working groups met regularly and submission of the new case reportingthroughout the year to identify and forms.articulate concerns of the insuranceindustry with respect to insurance fraud in In May the OIFP Industry Liaisonthe auto, health, and general insurance participated in a panel discussion regardingmarkets. current insurance fraud issues with the New Jersey Association of Health Working groups’ progress reports were Underwriters (NJAHU) at their annualpresented at quarterly mini-summit conference in Atlantic City, New Jersey.meetings with OIFP executive staff, and the The NJAHU is an organization with fivegroups’ final conclusions and local chapters, whose members haverecommendations were presented at the worked with state representativesAnnual Insurance Fraud Summit sponsored responsible for the Small Employer Healthby OIFP, the Insurance Council of New Benefits Plan and the Individual HealthJersey and the New Jersey Special Coverage Program, as well as the NewInvestigators Association (NJSIA) Annual Jersey KidCare Program.Conference held in Cherry Hill, New Jerseyon October 10, 2000. The efforts of these The OIFP Industry Liaison was a frequentworking groups constitute the foundation speaker and presenter at insurancefor several of the recommendations set forth industry meetings throughout the yearat the conclusion of this report. including appearances before the South Jersey Claims Association, the Atlantic OIFP is committed to maintaining a County Association of Insurance Women,productive dialog with the insurance the Cape May County Independent Agentsindustry about matters of shared concern Association, the Delaware Valley Claimsas they relate to insurance fraud, and Association, the Prudential Advisory 44
  • 54. Council on Investigation, the International Working Group for the Insurance FraudAssociation of Insurance Auditors, the Mid- Prevention Authority in the State ofAtlantic Region Health and Safety Expo Pennsylvania, which, with various2000, the Independent Insurance Agents of insurance carriers, is developingMonmouth County and the Liberty Mutual recommendations for legislative andand Atlantic Mutual Insurance Companies. regulatory reform to enable Pennsylvania authorities to more effectively investigate The Industry Liaison worked closely with and prosecute insurance fraud. The OIFPthe Division of Anti-Fraud Compliance in Industry Liaison continues to serve as athe Department of Banking and Insurance board member of the NJSIA and toto organize the review of fraud plans participate in the board’s monthlysubmitted by carriers regarding the referral meetings. The NJSIA is a trade groupcriteria outlined for monetary threshold comprised of law enforcement and industryproposals pursuant to N.J.A.C. 11:16- investigators responsible for handling6.6(b)3. OIFP’s Industry Liaison also insurance fraud matters in their respectiveactively participated in an Insurance Fraud agencies and companies. OIFP TRAINING INITIATIVES As the New Jersey agency charged with the year 2001 as OIFP’s Training Programleading the campaign against insurance expands into county police trainingfraud, OIFP has undertaken an ambitious academies and municipal policeprogram of insurance fraud training departments across the state.encompassing a wide variety of subjectsand incorporating several training formats. Basic Course for Civil InvestigatorsIn addition to providing for the training (BCCI)needs of its own staff of Deputy Attorneys All newly hired civil investigators withinGeneral, investigators and support staff, OIFP must successfully complete aOIFP has crafted training modules and comprehensive five week trainingdeveloped other training tools which afford curriculum designed to provide a commoninsurance fraud training opportunities for core foundation of the basic investigativeevery level of law enforcement and private skills required of every entry level OIFP civilindustry. OIFP training is sometimes investigator. The curriculum explains theprovided jointly with instructors from other most common types of insurance coverageagencies such as the New Jersey State and explores the fraud techniques typicallyPolice Insurance Fraud Unit or Offices of associated with each such type of coverage.the County Prosecutor, or solely by The curriculum also emphasizesinstructors from OIFP. investigative resources and case management techniques, and covers such In the year 2000 OIFP conducted, or diverse subjects as report writing,joined in conducting, insurance fraud interviewing techniques, rules of evidence,related training on at least 73 occasions, surveillance techniques, computer fraud,including many in which OIFP personnel insurance terminology and the developmentwere also enrolled as participants. These of informants.training efforts will continue to increase in 45
  • 55. All trainees participate in a “hands-on” appropriate investigative techniques.training exercise in which they are Although initially designed as a one weekpresented with one of several real case course of training, it has been expanded toscenarios, and are encouraged to apply the accommodate additional subject matter.investigative skills they have acquired inthe course of their training. At the Other OIFP In-Service Trainingconclusion of this exercise, trainees prepare In addition to OIFP’s Basic Course for Civila report of their investigative efforts, Investigators and Advanced Insuranceculminating in their testifying as witnesses Fraud Investigators Training Program, OIFPin a moot court setting. personnel are frequently afforded the opportunity to attend additional in-serviceAdvanced Insurance Fraud Investigations training designed to improve upon theirTraining Program (AIFITP) current level of investigative and This OIFP training program is designed to prosecutorial skills. As employees of theprovide experienced investigators with the Division of Criminal Justice, OIFP staff mayopportunity for advanced training in avail themselves of the same in-servicespecialized areas of insurance fraud such training opportunities that are open to allas auto theft and arson investigations, Division of Criminal Justice employees,public adjuster fraud and the imposition of ranging from trial advocacy, moneysanctions by professional licensing boards. laundering investigation techniques, andThe curriculum has enabled OIFP to financial investigative analysis to severalbroaden its own base of internal expertise levels of varying types of computer skills.while offering highly specialized training In addition, OIFP periodically offers OIFPsegments to sister law enforcement staff its own in-service trainingagencies throughout the state. The opportunities designed to sharpen skillscurriculum is comprised of discrete blocks specifically relating to insurance fraudof instruction of two to four hours each, investigations, such as training relating todepending upon the segment selected and the investigation of public adjusters,the agency’s particular training needs. The Medicaid fraud and fraudulent providerblocks of instruction have been designed so billing practices.that the curriculum may be presented toboth civil and criminal law enforcement at Roll Call Training Videosthe local, county or state levels. Roll call training videos are an important component of OIFP’s overall program ofBasic Insurance Fraud Training Program training for municipal police officers.(BIFTP) Because training videos may be viewed at OIFP developed the Basic Insurance Fraud any time, either individually or in groups,Training Program for personnel of County their use as training tools can minimizeProsecutors’ Offices. The program mirrors otherwise difficult scheduling issues withinthe Basic Course for Civil Investigators in police departments. The use of trainingsuch subject areas as types of insurance videos also ensures the delivery of uniformcoverage, commonly encountered frauds, content and quality while reducingand the selection and employment of demands on the time otherwise required of 46
  • 56. the OIFP personnel who conduct insurance agencies with an opportunity to establishfraud training in addition to their primary contacts and to share intelligence andresponsibilities of investigation and expertise, each meeting also includes anprosecution. instructional presentation relating to insurance fraud. Topics in 2000 ranged By the close of 2000, OIFP had completed from the emergence of non-traditionalproduction of two roll call training videos. organized crime rings to the manner inThe first training video, addressing the which a law enforcement agency maydetection and investigation of fraudulent design and implement a program to steminsurance cards and staged accidents, was fraudulent auto theft claims at majordistributed with complementary training shopping malls. Meetings are typicallymaterials to over 700 local and county law attended by members of federal, state,enforcement agencies in April of 2000. The county and local law enforcement agencies,complementary training materials included as well as by key OIFP personnel. It ismodel visor and wallet reference cards for estimated that in 2000, over 50 differentpatrol officers, setting forth “red flag” law enforcement agencies benefitted byindicators of motorist fraud, as well as a their participation in these regionalmaster list of insurance company “hot-line” meetings.telephone numbers for use by policedispatchers in verifying insurance coverage. Offices of the County Prosecutor Because of the County Prosecutor’s status The second roll call training video as chief law enforcement officer in eachconcerning the detection and investigation county, Offices of the County Prosecutorof staged auto thefts, or “give-ups,” is throughout New Jersey play a critical roleundergoing editing and is scheduled for in the State’s response to insurance fraud.similar distribution with complementary The partnerships forged between OIFP andvisor and wallet cards and other Prosecutors’ Offices extend beyond thesupplemental training materials early in sharing of investigative resources and2001. This training video is an important reciprocal referrals of cases and intelligencepart of the implementation of OIFP’s “Give- to the partnering of insurance fraudUp Initiative,” which represents a concerted training efforts. As indicated elsewhere ineffort by OIFP, with the support and this report, OIFP conducted a two daycooperation of other law enforcement course of instruction for assistantagencies, to address the growing problem of prosecutors and County Prosecutorfraudulent vehicular theft claims. investigative personnel in May of 2000, followed by an insurance fraud roundtableRegional Law Enforcement Coordination at the prosecutors’ annual conference inMeetings September of 2000. Throughout the course Each of OIFP’s three regional offices of the year, OIFP and Offices of the Countyperiodically hosts regional law enforcement Prosecutor frequently sought mutualcoordination meetings of law enforcement assistance conducting the joint training ofagencies involved in the detection and local law enforcement personnel. It isinvestigation of insurance fraud. While anticipated that this partnership willthose meetings provide participating continue to grow as OIFP’s training 47
  • 57. initiative expands into New Jersey’s county success of our collective efforts to combatpolice training academies in 2001. insurance fraud. The OIFP Industry Liaison conducts an active program of Insurance Industry Professionals presentations and instruction to members The training of insurance industry of the insurance industry throughout theprofessionals in the operations of OIFP and year. In 2000, in addition to his otherthe manner in which the industry can most responsibilities, the OIFP Industry Liaisoneffectively coordinate its insurance fraud offered training or instruction on 51investigations with OIFP is crucial to the occasions, reaching over 2500 individuals. OIFP SYSTEMS DEVELOPMENTCase Management and Tracking All Claims Database The initial phase of the Law Manager In 2000, OIFP advanced towardintegrated computerized case tracking establishment of the comprehensivesystem is on schedule for implementation database of insurance claims requiredby the end of the first quarter of 2001. under AICRA as set forth at N.J.S.A.When completed, all historical case related 17:33A-22. After extensive researchdata currently found on the various case commencing in 1999, and the subsequenttracking systems used by the Division of appointment of a project manager in 2000,Criminal Justice will reside on a single a Request for Proposal (RFP) was issued fordatabase, and will be accessible to potential vendors on November 16, 2000.authorized users through a customized The RFP solicited proposals for thesoftware application developed by an development and implementation of aoutside legal software vendor. Phase one comprehensive database to include claimswill enable users to refer to a single source information on stolen vehicles, bodily injuryfor both civil and criminal case information, claimants and property damage inand to conduct searches through historical automobile accidents, and PIP and otherand current case data using one centralized health care insurance claims. Following acomputer system. Planning is underway for bidder’s conference on December 5, 2000,further customization which will provide an addendum to the RFP was transmittedeven more sophisticated and to prospective contractors on December 18,comprehensive searching and reporting 2000. Bid submissions were due oncapabilities. January 23, 2001 vendor selection by the evaluation committee is scheduled for completion by February 28, 2001 and work by the successful contractor is scheduled to begin within 20 days of contract award. 48
  • 58. PUBLIC AWARENESS ENDEAVORS The message of deterrence resulting from as well as with several alternative methodsOIFP’s record of successful prosecutions is of reporting suspected insurance fraud toamplified by OIFP’s program of public OIFP, including an e-mail link to OIFP, anawareness initiatives. The focal point of on-line reporting form and OIFP’s hotlineOIFP’s public information program over the telephone number. The OIFP web site alsopast year and a half has been the OIFP posts insurance industry reporting formsPublic Awareness Media Campaign and Fraud Prevention Detection Planconsisting of radio and television spots, and requirements, OIFP’s most recent Annualprint ads appearing on billboards and Report and a compendium of OIFP’s newsbuses on major transportation routes in releases.New Jersey. The first phase of the MediaCampaign, which ran from October of 1999 To keep the public apprised of its efforts,through April of 2000, was designed to and to emphasize the criminalfocus the public’s attention on the problem consequences of insurance fraud, OIFPof insurance fraud, to inform the public of routinely issues news releases chroniclingOIFP’s mission and to encourage the significant public developments in thepublic’s assistance in the reporting of course of its criminal prosecutions.instances of suspected insurance fraud. In addition to its web site, news releases This phase featured two sets of ads and continuing Media Campaign, OIFPportraying, respectively, an affluent conducts an active program of outreach to“professional” named Richard who has public agencies and private organizations.accumulated his wealth by committing OIFP’s Industry Liaison, for example, is ainsurance fraud, and a youthful female founding member of the New Jersey Specialinjury claimant who is sufficiently healthy Investigators Association and plays ato nimbly dance the night away at a lively significant role in organizing, andnight spot. The second phase of the Media establishing the agenda for its annualCampaign, which runs from October of conference which is attended by over 8002000 through the spring of 2001, shifts members of the insurance industry who arefrom a “call to action,” to a strong message responsible for investigating insuranceof deterrence, by following Richard as he is fraud. The Law Enforcement andarrested, convicted and jailed for his Prosecutor Liaisons have, similarly, soughtcrimes. Both phases of the Media opportunities to address appropriateCampaign prominently feature the OIFP toll agencies and organizations regardingfree telephone hotline number for reporting insurance fraud, most recently appearinginsurance fraud, as well as the OIFP web before the New Jersey Chiefs of Policesite address. Association and the Municipal Court Administrators Association of New Jersey at OIFP’s interactive web site provides the its annual meeting at the New Jerseypublic with general information regarding League of Municipalities Conference. Thesethe most common types of insurance fraud, outreach efforts are designed to identify 49
  • 59. agencies and organizations that may makea contribution to combating insurancefraud, and to provide them with theinformation and tools necessary to providethat assistance. PUBLIC RECOGNITION In calendar year 2000, OIFP was honoredto have been recognized as a leader in thefight against insurance fraud. In March of2000, OIFP was featured nationally in boththe Fraud Report of the Coalition AgainstInsurance Fraud and the Health CareFraud Report published by the NationalAssociation of Attorneys General. OIFP staff were called upon to provideguidance and assistance to organizationssuch as the National White Collar CrimeCenter, the National Association ofMedicaid Fraud Control Units, thePennsylvania Fraud Prevention Authority,the Mid-Atlantic States Insurance FraudAssociation and the State Fraud Directors’Conference. OIFP staff were alsoindividually honored by variousorganizations, such as the New JerseySpecial Investigators Association, for theircontributions in combating insurancefraud. OIFP’s Public Awareness Media Campaignwas recognized by leaders in the marketingand advertising community which awardedthe campaign top honors for effectivenessand creativity. First place trophies weregiven to the OIFP television and radiocommercials by the New Jersey BusinessMarketing Association, the New JerseyAdvertising Club and the New JerseyCommunications and MarketingAssociation. 50
  • 60. RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24 N.J.S.A. 17:33A-24 requires the OIFP to make appropriate legislative and regulatoryrecommendations. Among them are:1. Criteria are set forth at N.J.S.A. Automobile Insurance Workgroup 17:33B-13 pursuant to which an which identified this statutory gap applicant for automobile insurance and suggested that the current may be denied status as an “eligible statute be amended with language person” to be afforded coverage in the that would, in effect, make any person voluntary automobile insurance who violates the Insurance Fraud market. Persons who are not eligible Prevention Act ineligible for insurance for coverage in the voluntary market coverage in the voluntary automobile are placed in the Personal Automobile insurance market. Insurance Plan (PAIP) pursuant to N.J.S.A. 17:29D-1. The criteria for 2. The authority to suspend or revoke eligible persons currently provide that the license of a person or business those who have been convicted of an who has engaged in insurance fraud insurance fraud offense, or have been is one of the State’s most effective successfully denied an automobile tools in combating insurance fraud, insurance claim in excess of $1,000 both in limiting the offending party’s on grounds of fraud, may be excluded ability to continue its fraudulent from eligibility for insurance in the conduct, and in deterring others from voluntary market. It is possible, engaging in insurance fraud. As the however, that a person who has head of the New Jersey agency violated the Insurance Fraud responsible for regulatory oversight of Prevention Act may qualify as an the State’s automotive businesses, the “eligible person” for voluntary Director of the Division of Motor insurance market coverage because Vehicles is expressly empowered by that civil violation did not result in a statute to suspend or revoke the criminal conviction or in the denial of license of a motor vehicle dealer or an automobile insurance claim in auto body repair facility under excess of $1,000. This gap in the specified circumstances. However, criteria relating to the definition of an neither of the statutes providing such “eligible person” may be rectified by authority, N.J.S.A. 39:10-20 and amendment of the statute adding, as N.J.S.A. 39:13-4 respectively, an additional ground for exclusion for includes violation of the Insurance eligibility, that the applicant for Fraud Prevention Act as grounds for automobile insurance “admitted such licensure action by the Director. violating, or has been adjudicated to OIFP would recommend that these have violated,” the Insurance Fraud statutes be amended to add, as Prevention Act. This recommendation grounds for licensure sanctions by the is based upon the findings of the OIFP Director of the Division of Motor 52
  • 61. Vehicles, that a motor vehicle dealer the policy holder one full policy cycle or auto body repair facility has been prior to the issuance of the notice of convicted of a crime or offense related non-renewal. This notice requirement to insurance fraud, or that such effectively mandates that insurers business has admitted to, or been maintain insurance policies for adjudicated of, violating the Insurance extended periods despite the Fraud Prevention Act. insured’s failure to cooperate in providing current underwriting3. Insurance carriers are severely limited information, which may have changed in their ability to promptly terminate significantly since the policy’s an automobile insurance policy or inception. OIFP recommends that application where underwriting fraud legislation be enacted to rectify this has been discovered. Current New problem by reducing the notice period Jersey law and regulations would from a full policy cycle to 30 days seem to limit insurers’ recourse under and/or by adding, as grounds for such circumstances to non-renewal of cancellation, the insured’s failure to the insurance policy until after it return a fully completed renewal expires. (See N.J.S.A. 17:29C-7.1.f) It questionnaire within 30 days of its is recommended that this problem be due date. rectified by amending the current statute providing authority for auto 5. Undisclosed drivers in a household insurance policy cancellations, to add, frequently avoid detection because the as grounds for cancellation, that the current regulation requires that an insured has been determined to have applicant for an automobile insurance made a material misrepresentation in policy disclose only information the application for the current “regarding each resident licensed insurance policy, or that, during the driver who is to be a named insured.” current policy term, the insured has The identification of other possible admitted to violating, or has been drivers within an insured household adjudicated to have violated, the would enable insurance carriers to Insurance Fraud Prevention Act. This more accurately determine the recommendation is based upon applicant’s underwriting risk and to identification of this gap in the calculate appropriate premiums regulations by the OIFP Automobile commensurate with that risk. OIFP Insurance Workgroup and its recommends that the regulations proposal for appropriate legislative setting forth information required of amendments. applicants for automobile insurance be amended to authorize the inclusion4. Insurers are currently precluded from on an automobile insurance non-re n e wing an automobile application of information regarding insurance policy on grounds of an any resident of the household who insurer’s failure to complete and has reached his or her seventeenth return a renewal questionnaire birthday. without first giving written notice to 53
  • 62. 6. A court is required to award 7. Magnetic Resonance Imaging (MRI) is reasonable attorneys fees and costs to a commonly used imaging technique the State under N.J.S.A. 17:33A-5 in for producing images of the inside of an action by the State to recover civil the human body and is used to insurance fraud penalties for identify and diagnose traumatic violations of the Insurance Fraud injuries such as those that may result Prevention Act. Similarly, N.J.S.A. from automobile accidents. Recent 17:33A-7a requires the award of experience has shown that the high reasonable attorneys fees and costs to fees commanded by MRI facilities, an insurance company which which can average as much as $1,000 successfully sues to recover per scan, and the lack of thorough compensatory damages from a party background checks of MRI licensees, that has defrauded the company. makes the MRI industry vulnerable to However, in an apparent infiltration by persons suspected of inconsistency within the Act, an harboring criminal purposes and award of attorneys fees and costs to other unscrupulous operators. To the State is only discretionary (and ensure the integrity of those who not mandatory) by the Court when the operate MRI facilities, OIFP State’s action to recover civil penalties recommends the implementation of a is by way of intervention in the comprehensive system of background insurance company’s pending suit. checks of prospective MRI licensees N.J.S.A. 17:33A-7d. This similar to those employed in the inconsistency can produce casino, check cashing and alcoholic anomalous, and OIFP believes beverage industries. unintended, results, as in one recent case where the State intervened and 8. Current New Jersey law appears to prevailed in an insurance company allow virtually unfettered access to lawsuit, but was denied an award of police department motor vehicle attorneys fees. After the State accident reports for “runners” and intervened, presented its case, and others seeking to solicit those listed prevailed on the merits, the insurance on an accident report to file insurance company successfully filed a claims. Such unrestricted access summary judgement motion based on often encroaches upon the privacy the Court’s findings in the State’s interests of those listed on the reports case, and was awarded $18,000 in when they are subjected to unwanted fees. We recommend that N.J.S.A. solicitations to file personal injury 17:33A-7d be amended to bring it into claims, sometimes only hours after conformity with the other provisions the accident has occurred. Such of the Insurance Fraud Prevention Act unrestricted access also subjects requiring the award of attorneys fees those listed on the reports to the by making the award of attorneys fees release of sensitive personal mandatory in cases where the State information, such as home address, successfully intervenes in a pending date of birth and driver’s license insurance company lawsuit. number, to any individual, leaving 54
  • 63. those listed on the reports vulnerableto identity theft, or targeting at theirhomes for burglary or crimes ofviolence. Additionally, New Jerseylaw with respect to policedepartmental motor vehicle accidentreports currently, in effect, reducespolice departments to the status of“clerks” who gather and copy theaccident reports for private businessenterprises which more frequentlymake blanket requests for thoseaccident reports. OIFP wouldrecommend that the Legislature givecareful consideration to theenactment of reasonable standards forauthorizing the release of accidentreports to those with a legitimate needfor the information which accidentreports contain. 55
  • 64. APPENDIX

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