Insurance Industry

Auto Insurance Companies Made

Windfall Profits During Pandemic

Advocates call for policy change to better protect customers

    Illinois (PIRG) - 7/13/2022 - Auto insurance companies’ profits soared during the first year of the COVID-19 pandemic, as many Illinoisans were driving less and “sheltering in place.” The risks associated with driving plummeted but insurers did not lower premiums or offer rebates in proportion to the reduction in risk, according to new data released by the Illinois Department of Insurance recently.

    According to preliminary analysis, the new data is in line with previous estimates that insurance companies could still owe Illinois car insurance customers $896 million in pandemic relief. For example, the top four auto-insurance companies by Illinois market share – State Farm, Geico, Progressive and Allstate – charged customers $280 million more than needed to maintain their 2019 profitability, even after accounting for the $220 million they refunded customers in 2020.

    After overcharging customers, Illinois’ major insurance companies rewarded top executives with generous bonuses.

    “Moments of crisis are revealing. Auto insurers took the opportunity provided by the pandemic to charge their customers excessive rates and make windfall profits,” said Abe Scarr, director of Illinois PIRG Education Fund. “The General Assembly should give the Department of Insurance authority to review rate hikes and protect Illinois consumers.”

    While auto insurance companies were slow to reduce rates or provide rebates to customers because of the pandemic -- and those reductions and rebates proved inadequate -- they have been aggressively increasing rates in recent months, claiming that an uptick in crashes and inflationary pressure requires immediate price hikes. State Farm recently raised rates by 3%, only two weeks after a 5% increase. In January, Allstate hiked rates by 12%.

    Illinois regulators have no power to block or modify insurance rate hikes -- or to mandate reductions or refunds -- as regulators do in other states. California regulators, for example, ordered insurance companies to “close the gap” after initial pandemic rebates fell short. In March 2021, State Farm announced that it was sending its California customers an additional $400 million dollars in pandemic refunds “due to better than anticipated claims results” during the second half of 2020.

    Illinois state legislators say insurers need to do better.

    “I am appalled that these companies overcharged families sheltering at home and call on the insurers to issue additional refunds promptly,” said Illinois state Sen. Jacqueline Collins. “This is particularly important in Black communities like those I represent, where auto insurers indiscriminately charge higher rates."

    The new data is the result of a March Illinois Department of Insurance call for information documenting insurer profits, losses, and refunds given to consumers between 2019 and 2021. The call for information came in response to a January letter from nine advocacy organizations and 16 state senators asking the Department to take action. In May, the auto insurance industry challenged the Department’s authority to collect and publish such information, but the vast majority of insurers, including all the major ones, complied.

    Illinois PIRG Education Fund will perform more detailed analysis of the new data over the summer.

Medical Malpractice

Report: Medical Malpractice is Not

A 'Frivolous' Matter

Accusations of Lawsuit Abuse Fall Flat

By Steve Rensberry
RP News

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    EDWARDSVILLE, Ill. - (RP NEWS) - 7/21/2021 - Nearly 10 percent of patients with symptoms caused by major vascular events, infections or cancers will be misdiagnosed in the United States, with more than half of those suffering death or permanent disability as a result. That's the conclusion of a 2020 study by John Hopkins University School of Medicine Director Professor David E. Newman-Toker, along with others involved with the analysis. (1)

    It's a sobering statistic, as are a long list of others involving medical malpractice cited in the latest report by the national consumer organization, Center for Justice and Democracy (CJ&D). See: Medical Malpractice Briefing Book.

    "Among the 15 diseases analyzed, spinal abscesses was the disease most often missed (62.1%). More than one-on-four aortic aneurysms and dissections have a critical delay in diagnosis (27.9%) and more than one in five (22.5%) lung cancer diagnoses are also meaningfully delayed," the John Hopkins study notes.

    Research by the Emergency Care Research Institute (ECRI) in 2020 points to similar results, concluding that "missed and delayed diagnosis" were a top patient safety concern. Diagnostic errors contributing to death were found in about 10 percent of autopsies, they said, leading to 40,000-80,000 deaths annually. Based on outpatient studies, approximately 1 in 20 adults experience a diagnostic error. (2)

More insights from the CJ&D's briefing book:

• Despite the Emergency Medical Treatment and Labor Act (EMTALA), which requires emergency departments to treat emergency patients regardless of ability to pay, hundreds of violations of the Act are seen each year. An analysis of 10 years of EMTALA violations (2008-2018), showed more than 4,300 violations involving 1,682 hospitals, roughly 1/3 of the nation's hospitals. (3)
  

• Approximately 1 in 12 errors involved women who were pregnant or in labor, while 1 in 7 involved people who were having a mental health crisis, including thoughts of suicide. "Yet experts say the raw numbers belie both the scope and severity of the problem they see. That's because enforcement of the law depends on someone filing a complaint. Although anyone can file a complaint, it's most often a doctor, nurse, or hospital administrator," the report notes.

•  A study by Professor Ziad Obermeyer of Harvard Medical School, et al, of early death after discharges from emergency departments, using U.S. insurance claims data, shows a significant number of deaths from people on Medicare soon after discharge. "In this national analysis, we found over 10,000 Medicare beneficiaries each year died within seven days after being discharged from emergency departments, despite mean age of 69 and no obvious life limiting illnesses," the report stated. (4)

•  A 2019 study by University of Michigan School of Public Health candidate Jun Li et al, looked at the amount of data available made available by the U.S. Centers for Medicare and Medicaid Services on 1 million U.S. doctors. Its conclusions: Three quarters of clinicians had no information about their quality of care, 99 percent had no data tied to individual job performance, and lax reporting requirements do not require that every outcome be considered, meaning clinicians may be selective in which cases to submit information on. (5)

• Diagnostic errors are the most common and costly errors, according to an 2020 analysis by Coverys Inc. of data from 2010-2019, with death and high-severity injury making up approximately 52 percent of events and 74 percent of indemnity paid; emergency department-related events accounts for 66 percent of indemnity paid.

    The bottom line, as stated in Part I of the CJ&D's briefing book, is that medical malpractice litigation, and the cases that are filed on account of it, are not fundamentally "frivolous," despite the allegations.

    As stated in the book: "According to averages calculated from the most recent data release by the National Center for State Courts (2019): 1) Medical malpractice cases represented only 0.15 percent of state civil caseloads in 2019. This rate is consistent with NCSC data from the previous seven years. 2) Medical malpractice cases represented only 3.9 percent of state tort caseloads in 2019. This rate is consistent with NCSC data from the previous seven years."

    A 2014 study, "Medical Harm: Patient Perceptions and Follow-up Action," by Johns Hopkins University School of Medicine Professor of Surgery Martin A. Makary and others, showed lawsuits being filed following patient harms in just 1 out of every 5 cases, or 19.9 percent. "This is similar to the Harvard Medical Practice Study, which reported an estimated ratio of adverse event to malpractice claim of 7.6 to 1. Other studies have estimated that as few as 2% - 3 % of patients pursue litigation. These findings all suggest that the vast majority of patient harms never result in a lawsuit." (6)

    The argument that patient lawsuit increase medical and insurance costs also is weak, given the data.

    According to the group Americans for Insurance Reform, claims per physician were at their lowest level in four decades in 2016, when adjusted for medical care inflation. When adjusted according to the Consumer Price Index, claims are at their lowest since 1982. (7)

    “Even aside from COVID-19, the briefing book includes a number of new studies that undercut the medical industry’s principal argument for so-called ‘tort reform’ laws: cost savings. It is clear that health care and insurance costs fail to decrease when ‘tort reforms’ are enacted, meaning there is no reason for patients to lose their legal rights.” CJ&D Executive Director Joanne Doroshow stated in a March 2021 press release.

Citations

1) Medical Liability Monitor (Feb. 2021) "Rate of diagnostic errors and serious misdiagnosis-related harms for major vascular events, infections, and cancers: toward a national incidence estimate using the 'Big Three.'" ECRI Executive Brief, "Top 10 Patient Safety Concerns 2020 (March 2020).

2) ECRI, "Diagnostic Errors: Why Do They Matter, and What Can You Do?" (2019).

3) Brenda Goodman and Andy Miller, "Deprived of Care: When ERs Break the Law," WebMD and Georgia Health News, Nov. 29, 2018.

4) Ziad Obermeyer et al, "Early death after discharge from emergency departments: analysis of national US insurance claim data," BMJ, Feb. 2, 2017.

5) Lena M. Chen, Anup Das and Jun Li, "Assessing the Qualithy of Public Reporting of US Physician Performance," Jame Intern. Med, May 6, 2019; University of Michigan, "System Grading Doctors is Inefficient, Needs Revisions," May 7, 2019; Lisa Rapaport, "U.S. government website for comparing doctors lacks data on most MDs," Reuters, May 6, 2019.

6) Heather G. Lye et al, "Medical Harm: Patient Perceptions and Follow-up Actions," Journal of Patient Safety, November 13, 2014.

7) Americans for Insurance Reform, "Stable Losses/Unstable Rates 2016" (November 2016).

Medical Malpractice

CJ&D Releases Update

On Medical Malpractice Trends

 

   EDWARDSVILLE - (RP News) - 10/4/2020 - The Center for Justice & Democracy at New York Law School (CJ&D) released an update to its Medical Malpractice: By The Numbers briefing book in March of this year, a publication that may not have received as much attention as usual given the pandemic and related events.

   The fully-sourced 172-page volume includes the latest statistics and research on issues related to medical malpractice, including over 500 footnotes linking to original sources.

   As in prior editions, topics include: medical malpractice litigation, health care costs and “defensive medicine,” physician supply and access to health care, medical malpractice insurance, patient safety, and special problems for vets and military families.

   There are several new sections including sexual assault by doctors, misdiagnoses (the most prevalent and costly type of medical error), childbirth negligence, plastic surgery, how physician stress and burnout leading to errors, and the real cause of insurance spikes for doctors.

   Among the new findings since CJ&D’s December 2019 update:

• Between 2007-2016, the number (frequency) of medical malpractice cases dropped more than 25%. For ob/gyns, the drop was 44%.

• 90 percent of doctors with at least five medical malpractice claims are still in practice.

• There is no “quality of care” information available for 75% of doctors treating Medicare patients.

• The federal government doesn’t require hospitals to tell the public how often mothers die or suffer from childbirth complications.

• When Texas enacted severe “tort reform” measures in 2003, access to medical care grew by “close to zero.”

• When a state caps damages, rates for cardiac stress tests and other imaging tests, Medicare Part B lab and radiology spending, all rise.

   
•  When it comes to preventing deaths from medical errors, out of 195 countries in the world, the U.S. ranks below the top 50.

   “Organized medicine continues to push laws that would reduce the accountability of unsafe hospitals and incompetent physicians. Yet hundreds of thousands of patients die each year due to preventable medical errors at the same time insurance claims and lawsuits are dropping,” CJ&D Executive Director Joanne Doroshow stated in a press release announcing the book. “We have an enormous patient safety problem in this nation. Even sexual misconduct by physicians is going largely unchecked. The last thing we should do is try to solve these problems by increasing the obstacles harmed patients face in the already difficult process of bringing a case against the person or institution that harmed them.”

   A copy of the full briefing book can be found here:http://centerjd.org/content/briefing-book-medical-malpractice-numbers

U.S. Health Insurers Eye Bigger Profits In 2016

By Steve Rensberry 

srensberry@rensberrypublishing.com
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   (RPC) - 2/12/2016 - The Affordable Care Act not withstanding, health insurance companies across the United States have been seeking to raise their rates. Some companies, such as Blue Cross and Blue Shield of Minnesota, have sought increases of more than 50 percent in recent months. (1)
   In a Jan. 26 commentary written by CIGNA executive Wendell Porter and published by the Center for Public Integrity, that author notes that the nation's largest health insurer, UnitedHeathCare, posted profits of $10.3 billion in 2014, against revenues of $130.5 billion -- pushing its share price to $113.85. This is in sharp contract to a price of $30.40 in March of 2010.
   UnitedHealthCare isn't alone.
   “Every one of the big six saw their shares reach or come close to reaching historic highs. Although they haven’t done quite as well as United, the other five have seen the price of their stock more than double or triple. Health Net’s share price has increased 224 percent since March 2010. Anthem’s is up 238 percent over the same time period. Aetna’s 290 percent. Cigna’s 305 percent. And Humana’s 309 percent,” Porter writes. He cites the industry practice of purging unprofitable accounts--in particular small business accounts--as a contributing factor. (2)
   A Jan. 21 story by Paul R. La Monica, published by CNN and entitled “Thanks, Obamacare! Health insurer stocks soar,” cites the same record highs. “Many health care companies have yields that are significantly higher than the puny yields investors get from buying long-term U.S. Treasury bonds,” La Monica writes. (3)
   Kevin McCoy of USA Today suggests in a February 2 story that Aetna's fourth-quarter profits beat Wall Street forecasts, in part, because of an increase in the number of Medicare and Medicaid health plans it sells. (4)
   “The company said net income for the October -December quarter rose 38 percent to $320.8 million, or 91 cents a share,” McCoy writes. “That was up from $232 million, or 65 cents a share, for the same period last year.”
   New profits from Cigna Corp, meanwhile, were down 9 percent in the first quarter of 2015 (Mara Lee, Hartford Courant, Feb. 4), with the company citing higher costs associated with individual health insurance plans as one reason for the drop. A $48 million purchase by Anthem, announced last summer, is pending.
   Bob Herman, writing for Modern Healthcare, highlights other movements in the industry after years of uncertainty toward government programs and other types of investments, apart from traditional health plans. He cites data from Securities and Exchange Commission filings which show the percentage of UnitedHealthCare revenue from Medicare and Medicaid in 2009 at 49 percent, and it's share of commercial plan revenue at 50 percent, compared to 2014 revenues of 59 percent and 36 percent respectively. Aetna derived 24 percent of its profits from Medicare and Medicaid in 2009, and 76 percent from commercial accounts, compared to 42 percent and 58 percent in 2014 respectively. (5)
   “Federal spending on healthcare surpassed Social Security for the first time in 2015, thanks in large part to Medicaid expansion and the ACA's public exchanges, according to the Congressional Budget Office. Investor-owned HMOs that focus almost exclusively on outsourced Medicaid—such as Centene Corp. and Molina Healthcare—have thrived,” Heman states. “Medicare Advantage, perhaps more than any other federal program, has attracted the most interest because of the substantial revenue prospects from the growing numbers of baby boomers becoming Medicare-eligible. Almost 18 million people have a private Medicare Advantage plan, up from 10.5 million in 2009.”
   An analysis of 2016 premium changes and insurer participation in the Affordable Care Act's Health Insurance Marketplace, conducted by the Kaiser Family Foundation, looked at changes in the two lowest-priced Silver Plans for 11 major metropolitan areas and found an average, pre-tax credit increase of 4.4 percent. Those cities were: Portland, Oregon; Albuquerque, New Mexico; Richmond, Virginia; Burlington, Vermont; Baltimore, Maryland; Portland, Maine; Washington D.C.; Hartford, Connecticut; New York City, NY; Detroit, Michigan; and Seattle, Washington.
   “Our analysis is based on the 10 states plus the District of Columbia where we were able to find comprehensive filings or other information about the rates of the lowest-cost plans. Other states have released summary information, but not sufficient detail to identify the lowest-cost silver plans. In many cases, premiums are still under review by insurance departments and may change prior to the start of open enrollment,” the KFF report stated.

1) Health Insurers Seek Premium Hikes (Star Tribune)

2) Health Insurers Watch Profits Soar at They Dump Small Business Customers (Public Integrity)

3) Thanks Obama! Health Insurer Profits Soar! (CNN Money)

4) Aetna Reports Higher Than Expected Profit (USA Today)

5) The Health Insurance Industry's Identity Crisis (Modern Healthcare)

Medical Data Theft: Is There an End in Sight?

By Steve Rensberry
srensberry@rensberrypublishing.com

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   (RPC) – 4/7/2015 - Details continue to emerge about the data breach reported last month by Premera Blue Cross, a breach which involved the personal medical records of roughly 11 million people. Some of those records go back more than 14 years. Premera's plight, unfortunately, is emblematic of a much broader crisis in health care data theft that has been building ever since the push toward digital health care record began – a situation which more than just a few of us in the media had raised questions about at the time.
   In February, 2015, insurance giant Anthem, Inc., reported the theft of data in December of 2014 involving an estimated 80 million current and former members, putting at lifetime risk anyone who has ever been a customer of Empire Blue Cross and Blue Shield, Caremore, Amerigroup, Unicare, Healthline, DeCare, Anthem Blue Cross and Blue Shield, and Blue Shield of Georgia.
   The Anthem theft is widely seen as one of the largest data thefts in U.S. history.
   While there is speculation on precisely what data was taken in the Premera Blue Cross case, the company cites Social Security numbers, clinical information, bank account information, birthdays, the names of applicants and their family members, and other contact and identification numbers as among the type of information that was stolen. Anthem said it does not have a reason to believe bank or credit card information was stolen, but does site income information, birth dates, Social Security numbers, email and address information.
   Premera is currently facing at last five separate class action suits. Anthem is facing numerous lawsuits as well, including one filed by St. Louis County in Missouri against Blue Cross Blue Shield. Three suits were filed against Anthem within a day after the breach was made public.
How sophisticated were the attacks? Not a sophisticated as they would have you believe, experts say.  In the Anthem incident, the company altogether avoided the encryption of sensitive customer data, with data thieves apparently making us of simple email “phishing” attacks, aimed at several employees which network access.
   In both cases, thieves were able to steal some of the most valuable data there is – people's Social Security numbers, birth dates, and addresses – data that rarely if ever changes and which can be used to commit fraud for many years to come.
   According to the Fifth Annual Study on Medical Identity Theft, the medical identify theft problem grew by approximately 22 percent this past year. The massive Anthem and Premera breaches will likely bump the percentage higher yet again this year. 
   The Secretary of the U.S. Health and Human Services Office for Civil Right is required by section 13402(w)(4) of the HITECH Act to post a lit of security breaching involving “unsecured protected health information affecting 500 or more individuals.
   A summary of the largest breaches since 2010, by name of covered entity and individuals affected, is as follows:

• Anthem Inc. Affiliated Covered Entity (78,800,000).
• Premera Blue Cross (11,000,000)
• Science Applications International Corporation (4,900,000)
• Community Health Systems Professional Services Corp. (4,500,000)
• Advocate Health and Hospitals Corporation, d/b/a Advocate Medical Group (4,029,530)
• Xerox State Healthcare, LLC (2,000,000)
• IBM (1,900,000)
• GRM Information Management Services (1,700,000)
• AvMed, Inc. (1,220,000)
• Montana Department of Public Health and Human Services (1,062,509)
• Blue Cross Blue Shield of Tennesseek Inc. (1,023, 209)
• Sulter Medical Foundation (943,434)
• Horizon Healthcare Services, Inc., doing business as Horizon Blue Cross Blue Shield of New Jersey and its affiliates (839,711)
• Iron Mountain Data Products, Inc. (800,000)
• Utah Department of Technology Services (780,000)
• AHMC Healthcare Inc. and affiliated hospitals (729,000)
• Eisenhower Medical Center (514,330)
• Triple-S Management, Corp; Triple-S Salud, Inc. (475,000)
• Affinity Health Plan, Inc. (344,579)
• Southerland Healthcare Solutions (342,197)
• Emory Healthcare (315,000)
• Touchtone Medical Imaging (307,528)
• Shred-It International Incorporation (277,014)
• Seacoast Radiology, PA (231,400)
• Southern California Department of Health and Human Services (228,435)
• Indian Health Service (214,000)
• Digital Archive Management (189,489)
• RCR Technology Corporation (187,533)
• Millennium Medical Management Resources, Inc. (180,111)
• Walgreen Co. (160,000)

   Of the top 100 largest data theft incidents to date, a quick count suggests that approximately 29 involved a compromised network server, eight involved computer desktops, 19 involved laptop computers, 23 involved some other type of portable device, 12 involved paper/films, three involved email, and seven involved some other type of electronic medical records.
   What do thieves want with your medical records? The answer is apparent in at least one other troubling trend this year, that being tax refund fraud, which has been reported at escalating levels nationwide. In addition to filing fraudulent tax returns,the U.S. Federal Trade Commission warns: “A thief may use your name or health insurance numbers to see a doctor, get prescription drugs, file claims with your insurance provider, or get other care. If the thief’s health information is mixed with yours, your treatment, insurance and payment records, and credit report may be affected.”
   Is there an end in sight to the health care and medical data theft trend, or has Pandora's Box been forever opened? Only time will tell.
   For further reference, see:  U.S. Department of Health and Human Services Office of Civil Rights Breach Portal; or the Federal Trade Commission - Medical Identity Theft.

Cadiologist Sentenced to 78 Months for Fraud

Patients Given Treatments Deemed to be Unnecessary
   NEWARK, N.J. – 11/30/2013 - A well-known cardiologist and the founder, CEO and sole owner of two large medical services companies in New Jersey and New York was sentenced on Nov. 20 to 78 months in prison and ordered to pay $19 million in restitution for conspiring in a multimillion-dollar health care fraud scheme that subjected thousands of patients to unnecessary tests and potentially life-threatening, unneeded treatment, as well as treatment by unlicensed or untrained personnel.
   The sentence was announced by New Jersey U.S. Attorney Paul J. Fishman.
   Jose Katz, 69, of Closter, N.J., previously pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiracy to commit health care fraud and one count of Social Security fraud arising from a separate scheme to give his wife a “no show” job and make her eligible for Social Security benefits. Judge Linares imposed the sentence in Newark federal court.
   “Katz prized illegal profits over patients to a staggering degree, committing record-breaking fraud and compromising care,” Fishman said. “Prison is an appropriate consequence for ripping off the government and insurance companies through the shocking exposure of patients to unneeded or untrained treatment.”
   As part of his plea agreement with the government, Katz agreed that the loss amount sustained by Medicare, Medicaid and other insurers victimized by the fraudulent billings was $19 million. U.S. Department of Health and Human Services, Office of Inspector General and FBI records indicate the loss amount suffered by the victims is the largest recorded in New Jersey, New York and Connecticut for an individual practitioner convicted of health care fraud.
   According to documents filed in this case and statements made in court:
   Katz was the founder, CEO and sole equity-holder of Cardio-Med Services LLC (Cardio-Med), and Comprehensive Healthcare & Medical Services LLC (Comprehensive Healthcare). From 2004 through 2012, Cardio-Med had offices in Union City, Paterson and West New York, N.J., and Comprehensive Healthcare had offices in Manhattan and Queens, N.Y. Both Cardio-Med and Comprehensive Healthcare provided cardiology, internal medicine and other medical services to individual patients. During that time period, Katz conspired to bill Medicare Part B, Medicaid, Empire BCBS, Aetna and others for unnecessary tests and unnecessary procedures based on false diagnoses and for medical services rendered by unlicensed practitioners.
   Between July 2006 and February, 2009, Katz spent more than $6 million for advertising on Spanish-language television and radio stations. The ads attracted hundreds of patients to Cardio-Med and Comprehensive Healthcare every day. Overall, Katz was able to bill Medicare and Medicaid more than $75 million for his services from 2005 through 2012.
   Over the course of the conspiracy, Katz ordered and performed essentially the same battery of diagnostic tests for nearly all the patients he treated, regardless of their symptoms. Katz also instructed his non-physician employees to order and perform diagnostic tests for patients of other doctors working at his offices, even though he had not examined those patients and the other physicians had not ordered the tests.
   Most significantly, Katz admitted that he falsified patient charts with fictitious and boilerplate symptoms and falsely diagnosed a majority of his Medicare and Medicaid patients with coronary artery disease and debilitating and inoperable angina. He also admitted to making the diagnoses to justify prescribing and administering an unnecessary treatment for those patients called enhanced external counter pulsation, or EECP. Katz even prescribed EECP treatments for some patients with contraindications for the treatment, therefore subjecting those patients to a substantial risk of serious injury or death.
   From 2005 through 2012, Medicare and Medicaid paid Katz more than $15.6 million just for his EECP treatments, most of which were fraudulent.
   In addition, Katz ordered conspirator Mario Roncal, 62, of Woodland Park, N.J. – who had a medical degree from San Juan Bautista School of Medicine in San Juan, Puerto Rico, but did not have a license to practice medicine in any of the 50 states – to treat patients, knowing he was not licensed. At Katz’s direction, Roncal held himself out to fellow employees and to patients as “Dr. Roncal,” examined new patients as well as Katz’s follow-up patients, ordered diagnostic tests, diagnosed patients with medical conditions and diseases and recommended and prescribed courses of treatment and surgery – including falsely diagnosing patients with angina and prescribing EECP treatments for those patients.
   To conceal this illegal and unlicensed practice of medicine, Roncal forged Katz’s signature on paperwork associated with Roncal’s unlawful medical services, including on patient charts. During the conspiracy, Katz used his own billing numbers to bill Medicare Part B and Medicaid for the illegal services Roncal provided as though they were provided by Katz.
   Roncal was indicted on March 2, 2012, for conspiracy to commit health care fraud. He entered a guilty plea on Jan. 4 and awaits sentencing.
   Katz also admitted to a Social Security fraud scheme in which, from 2005 through 2012, he kept his wife on Cardio-Med’s payroll though she performed little or no work. During the course of the scheme, Katz sent false W-2 forms for calendar years 2005 through 2011 to the U.S. Social Security Administration purportedly reflecting $1,251,604 in earnings for his wife, making her eligible for an estimated $263,000 in Social Security benefits to which she was not entitled.
    In addition to the prison term and restitution, Judge Linares sentenced Katz to serve three years of supervised release.
   U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates; the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and criminal and civil investigators with the U.S. Attorney’s Office for the investigation leading to today’s sentence. He also thanked the Medicaid Fraud Division of the Office of the New Jersey State Comptroller for its assistance.
   The government is represented by Assistant U.S. Attorney Scott B. McBride of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
   Source: U.S. Department of Health and Human Services; U.S. Department of Justice

HHS: Consumers saved $3.9 billion on premiums

   (HHS) - 6/20/2013 - The U.S. Department of Health and Human Services (HHS) said on June 20 that nationwide, 77.8 million consumers saved $3.4 billion up front on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $500 million in rebates, with 8.5 million enrollees due to receive an average rebate of around $100 per family.

   The report includes the 2012 health insurer data required under the Affordable Care Act’s Medical Loss Ratio, or “80/20 rule.” The report shows that, compared to 2011, more insurers are meeting this standard and spending more of their premium dollars directly toward patient care and quality, and not red tape and bonuses.
   Created through the Affordable Care Act, the rule requires insurers to spend at least 80 cents of every premium dollar on patient care and quality improvement. If they spend a higher amount on other expenses like profits and red tape, they owe rebates back to consumers. For many consumers, the report found that the law motivated their plans to lower prices or improve their coverage to meet the standard. This new standard and other Affordable Care Act policies contributed to consumers saving approximately $3.9 billion on premiums in 2012, for a total of $5 billion in savings since the program’s inception.
   “The health care law is providing consumers value for their premium dollars and ensuring the money they pay every month to insurance companies goes toward patient care,” HHS Secretary Kathleen Sebelius said. “Thanks to the law, 8.5 million Americans will receive $500 million back in their pockets and purses.”
   If an insurer did not spend enough premium dollars on patient care and quality improvement, rebates will be paid in one of the following ways: a rebate check in the mail; a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card; a reduction in their future premiums; or their employer providing one of the above, or applying the rebate in another manner that benefits its employees, such as more generous benefits.
   Insurance companies that do not meet the standard will send consumers a notice informing them of this new rule. The notice will also let consumers know how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate.
   The 80/20 rule, along with the required review of proposed double-digit premium increases, works to stabilize and moderate premium rates. And, with the new market reforms, including the guaranteed availability protections and prohibition of the use of factors such as health status, medical history, gender and industry of employment to set premiums rates, this policy helps ensure every American has access to quality, affordable health insurance.
   To access the report, visit: http://www.cms.gov/cciio/Resources/Forms-Reports-and-Other-Resources/index.html#Medical Loss Ratio
   For more information on MLR, visit: http://www.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html

   Source: U.S. Department of Health and Human Services

Insurance Executive Indicted for Insider Trading

   DENVER – 11/2/2012 - Insurance executive Michael Van Gilder, age 45, of Denver, was indicted by a federal grand jury in Denver on five counts of insider trading, U.S. Attorney for the District of Colorado John Walsh and FBI Denver Special Agent in Charge James Yacone announced.

   The case is being prosecuted in conjunction with the U.S. Attorney’s Office for the Southern District of New York. The U.S. Securities and Exchange Commission (SEC), which has filed a complaint charging Van Gilder with civil insider trading violations, conducted a parallel civil investigation and substantially contributed to the criminal investigation of the case as well. The defendant allegedly traded based on inside information regarding a Denver oil and natural gas company called Delta Petroleum Corp. Van Gilder surrendered to the FBI this morning at the U.S. Marshals’ Office, and will appear in U.S. District Court in Denver this afternoon for an initial appearance.
   According to the indictment, Van Gilder was the CEO and a member of the board of directors of Van Gilder Insurance Company, an insurance business owned by the defendant’s family. Van Gilder was a close personal friend of an executive at Delta Petroleum. Delta Petroleum was a Denver-based oil and gas exploration and development company whose core area of operations was in the Gulf Coast and Rocky Mountain regions. The company’s stock was traded on NASDAQ under the ticker symbol “DPTR.” Van Gilder at times arranged for and provided insurance policies covering certain of Delta’s business operations.
   From Nov. 5, 2007, and continuing until at least Jan. 9, 2008, Van Gilder allegedly committed securities fraud by trading in securities based on material, non-public information.
   Specifically, on Nov. 8, 2007, Delta publicly announced and filed with the SEC a quarterly report disclosing its operational performance, revenues, earnings and other financial performance for its quarterly period which ended Sept. 30, 2007. Three days prior to the disclosure, the financial publication Barron’s disseminated an article entitled “Day of Reckoning” focusing on Delta, expressing pessimism about the company and its stock. Following the publication of the article, the price of Delta’s common stock dropped $1.49 per share. Van Gilder was, at the time, a shareholder of Delta and held shares of its common stock and long-term call options to purchase Delta common stock in a brokerage account with Merrill Lynch and Company.
   The Barron’s article was brought to Van Gilder’s attention. Based on the article, Van Gilder called his stockbroker and asked whether he should sell his shares of Delta. Later that day, Van Gilder spoke with a Delta executive. According to the indictment’s allegations, the executive conveyed to Van Gilder that Delta planned on announcing figures in its third quarter financial report that would not miss its third quarter forecasts and projections for its financial and operational performance, a first in a number of quarters that Delta would meet its projected numbers. At the time Van Gilder received this information, the financial and operational performance had not yet been publicly released and was not generally known to the investing public.
   Based on this confidential material, Van Gilder decided not to sell his Delta investment but instead instructed his stockbroker to buy more Delta common stock on his behalf. As a result, the stockbroker purchased an additional 1,250 shares of Delta common stock at $15.55 per share. Several hours after he purchased the additional stock, Van Gilder emailed two friends and told them that the Barron’s article was “bogus” and that they should buy Delta stock because Delta “will hit their numbers.” In the Nov. 8, 2007, third quarter results Delta disclosed earnings and other financial figures that were in line with or exceeding previous forecasts and predictions of its performance for the quarter.
   In late November 2007, discussions also began for Delta to get a large cash infusion from a privately held investment company called Tracinda, owned by California resident Kirk Kerkorian, through a large equity investment by Tracinda in the oil and gas company. The indictment alleges that the Delta executive shared confidential information about the possible investment with Van Gilder, and that, on Nov. 26, 2007, following a series of calls and other communications, Van Gilder contacted his stockbroker and purchased an additional 1,750 shares of Delta common stock at $13.87 and $13.88 per share.
   As the indictment further relates, the Delta executive continued to share information about the confidential discussions about the contemplated Tracinda equity investment in Delta with defendant Van Gilder, as the confidential discussions progressed over the course of early December 2007. As result, according to the indictment, on Dec. 8, 2007, Van Gilder, in turn, emailed his stockbroker to advise him that he “wanted to purchase as much Delta stock as possible” and two days later arranged through the stockbroker to purchase an additional 4,000 shares of Delta common stock at $17.64 per share. Within minutes of execution of these purchases, Van Gilder spoke by phone with a family member, who, several minutes later, instructed his own stockbroker to purchase Delta common stock.
   On Dec. 17, 2007, the Delta executive advised its board of directors of his discussions with Tracinda. The board authorized the executive to proceed with negotiations with Tracinda. That evening, the executive exchanged a series of text messages with the defendant regarding the board’s decision. Several hours later, Van Gilder directed that $40,000 be wire transferred from a bank account to his Merrill Lynch brokerage account.
   On Dec. 19, 2007, a representative of Tracinda contacted the Delta executive and made an offer for Tracinda to purchase a one-third interest in Delta through a purchase of Delta’s common stock at $17 per share. At the time, Delta’s stock was trading at approximately $14.65 per share. Tracinda’s overture remained confidential. Van Gilder, knowing about the overture, purchased 200 call options, entitling him to purchase up to 20,000 shares of Delta common stock at $20 per share. Delta continued negotiations with Tracinda, and on Dec. 22, 2007, Tracinda agreed to increase its stock purchase to $19 per share. The indictment alleges that in a series of calls Van Gilder was informed of the progress of the confidential negotiations. Immediately following one of these conversations between Van Gilder and the Delta executive, Van Gilder sent an email to two of his family members, with the subject line entitled “Xmas present.” In the email, he advised the family members to purchase Delta stock because “something significant will happen in the next 2-4 weeks.”
   On Dec. 24, 2007, Van Gilder, through his stockbroker, purchased 3,000 more shares of Delta common stock at prices ranging between $15.63 and $15.65 per share, and 90 more call options to purchase up to 9,000 additional shares at $20 per share. On Dec. 28, 2007, during the course of working to finalize the Tracinda stock purchase, the Delta executive exchanged a series of cell phone text messages with Van Gilder. As a result, Van Gilder caused $272,212 from a bank account to be wire transferred into his Merrill Lynch brokerage account. The following day Van Gilder emailed his stockbroker, requesting the broker to “get it on Delta asap.”
   On Dec. 29, 2007, Delta’s board of directors approved a finalized stock purchase agreement for Tracinda to purchase approximately 35 percent of Delta’s common stock for $19 per share. On Monday, Dec. 31, 2007, before the commencement of NASDAQ’s regular trading hours, Delta and Tracinda issued a press release announcing the stock purchase agreement. Within an hour of the commencement of regular trading hours that day, Van Gilder’s stockbroker purchased an additional 4,000 shares of Delta common stock at prices ranging from $19.28 to $19.33 per share, and 114 additional call options. By the close of regular hours trading that day, Delta’s common stock price had risen $3.34 from its previous close of $15.51. Over the course of the next three trading days, Delta’s stock price continued to rise, closing at $22.82 per share by Jan. 4, 2008. On Jan. 9, 2008, Van Gilder sold the 290 call options that he had purchased between Dec. 19 and Dec. 24, 2007, realizing a profit of approximately $86,100 on the transaction.
   The indictment charges Van Gilder with five counts of securities fraud, reflecting five transactions between Nov. 6, 2007 and Dec. 24, 2007 where Van Gilder purchased Delta common stock based on confidential insider information. If convicted on all counts, the defendant faces up to 100 years in federal prison, and up to $25 million in fines.
   “Trading on inside information undercuts the fairness and transparency of our financial markets,” said U.S. Attorney Walsh. “This case demonstrates that in the highly networked world we now live in, insider trading knows no geographic boundaries. This office, and U.S. Attorney’s Offices around the country, will continue to target insider trading wherever it may occur. Thanks to the hard work of this office, the U.S. Attorney’s Office in the Southern District of New York, the SEC and the FBI, a Denver insurance executive has been charged for profiting using confidential information.”
   Thr case was investigated by the FBI, New York and Denver Divisions, with the assistance of and working with the SEC.
   Van Gilder is being prosecuted by Assistant U.S. Attorney Ken Harmon and Special Assistant U.S. Attorney Michael Levy from the Southern District of New York.
   The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

   Source: Financial Fraud Enforcement Task Force

High Crop Prices, Subsidies Called Destructive

  Washington, D.C. - (EWG) - 8/30/2012 - Responding to high crop prices and unlimited insurance, growers plowed under more than 23 million acres of grassland, shrub land and wetlands in order to plant commodity crops between 2008 and 2011, a new report by Environmental Working Group and Defenders of Wildlife shows.
   The analysis, titled “Plowed Under,” uses U.S. Department of Agriculture satellite data to produce the most accurate estimate currently available of the rate of habitat conversion in the farm belt. It shows that more than 8.4 million acres were converted to plant corn, more than 5.6 million to raise soybeans and nearly 5.2 million to grow winter wheat. Most of the destroyed habitat was in states in the Great Plains and Upper Midwest, but some of the highest rates of habitat conversion to grow crops were in drought-plagued portions of West Texas and Oklahoma.
   “Policymakers are right to attend to the short term crisis created by the current drought, but what we’ve lost sight of in recent years is the long term crisis,” said Ken Cook, president of EWG. “A generation of conservation gains has been wiped out because costly, misguided government policies have caused ten of millions of acres of fragile land and wildlife habitat to be plowed under."
   Using a sophisticated mapping technique, “Plowed Under” found that 11 states had habitat losses of at least 1 million acres each over the three-year period, and a total of 147 counties lost at least 30,000 acres each. The losses were greatest in counties that received the largest amounts of crop insurance subsidies.
   According to USDA, widespread destruction of grassland is threatening habitats for important wildlife species such as the swift fox, as well as putting at risk sage grouse, the lesser prairie chicken, whooping cranes and mountain plover.
   The comprehensive analysis underscores the need for Congress to fully fund conservation programs designed to mitigate the devastating effects of severe weather and restore wildlife habitat, and to reject proposals to extend unlimited insurance subsidies without environmental protections. The full Senate and the House Agriculture Committee have each approved competing 2012 farm bill versions, and both would expand insurance subsidies, while cutting conservation programs by more than $6 billion over 10 years.
   Extravagant crop insurance subsidies are not only a threat to wildlife and the environment, but they also take a heavy toll on American taxpayers. Today, USDA pays, on average, 62 percent of farmers’ premiums for crop insurance and lavishes $1.3 billion a year on the insurance companies and agents that sell the policies. At current rates, taxpayers can expect to send another $90 billion to farmers and insurance companies over the next decade.
   “When Congress returns from recess and considers the 2012 farm bill, it should pass reasonable reforms to crop insurance subsidies, such as payment limits, and require every recipient to carry out basic conservation practices to protect the health of our land, water and soil, as the Senate version does,” said Scott Faber, EWG’s vice president of government affairs. (Read the full report)
   Source: EWG release of August 6, 2012

Legislation Called Violation of Patients' Rights

   Manchester, NH - 5/27/2012 -  Joanne Doroshow, Executive Director of the Center for Justice & Democracy, testified on April 26 before the New Hampshire Judiciary Committee on legislation that would strip patients of the legal rights is a way that is “so dismissive of constitutional rights and potentially calamitous for injured patients” that no other state in the country has considered it. Calling this “early offer” legislation, S.B. 406, an “experiment,” Doroshow said, “This experiment, as proposed, is unethical. It violates the legal rights of patients. It flouts basic notions of fairness. It would tilt the legal playing field so dramatically in favor of insurers as to essentially eviscerate patients’ rights to adequate compensation.”
  According to Doroshow, under this scheme, a patient injured by medical malpractice, or their family, would be offered compensation by the medical provider that caused the injuries or death. For many patients, this offer would come before the patient has any idea what their injuries are or their cause. Yet to agree to this “early offer,” the patient would be required to immediately sign away their legal rights.
  “Once they’ve signed away their rights, the injured patients’ ability to collect economic compensation, like medical costs and lost wages, would be infected by conflicts of interest at every single step, beginning with allowing the medical provider to choose its own doctor to decide a patient’s damages," Doroshow said. "Then, in order to receive any future medical expenses in the case of a catastrophic injury, this experiment would condemn a patients – or their injured child – to a lifetime of fighting medical providers just to get their bills paid.
   “As to non-economic damages, under this experiment, patients completely lose all ability to be compensated for those losses. And because the medical provider has so much discretion and cost-cutting motivation to reject portions of a patient’s claim, the patient may have no option but to reject the hospital’s ‘early offer’ for compensation and go to court. However, if they do, the patient is penalized by having to prove their case under a burden that is almost impossible to meet.
   “I want to be clear that this experiment is unethical. While its proponents argue that participation in this experiment is voluntary, the actual ‘consent’ process violates even the most basic precepts of what constitutes a voluntary program. Patients who ‘opt in’ to this program must sign a waiver of their rights, written in legalese and understandable only to lawyers, before the patient even knows specifically what compensation and courtroom rights they are relinquishing. Patients could be extremely harmed by this experiment. This is highly unethical, and New Hampshire legislators should reject it.”
   A copy of the written testimony can be found here.

   Note: For an update of the status of this bill, visit http://legiscan.com/gaits/view/397114 

Health Reform Law Extends Coverage for 50,000

   WASHINGTON - (BUSINESS WIRE) - 2/25/2012 - Health and Human Services Secretary Kathleen Sebelius announced on February 23 that the new health care law’s Pre-Existing Condition Insurance Plan (PCIP) program is providing insurance to nearly 50,000 people with high-risk pre-existing conditions nationwide. The Department released a new report demonstrating how PCIP is helping to fill a void in the insurance market for consumers with pre-existing conditions who are denied insurance coverage and are ineligible for Medicare or Medicaid coverage.
   “For too long, Americans with pre-existing conditions were locked out of the health care system and their health suffered,” HHS Secretary Kathleen Sebelius said. “Thanks to health reform, our most vulnerable Americans across the country have the care they need.”
   Under the Affordable Care Act, in 2014, insurers will be prohibited from denying coverage to any American with a pre-existing condition. Until then, the PCIP program will continue to provide enrollees with affordable insurance coverage.
    PCIP is helping individuals like:
    Gail O’Brien of Keene, New Hampshire who is now getting help with non-Hodgkin’s lymphoma treatments and is responding very well.
    James Howard of Katy, Texas who is grateful for the coverage the PCIP program is providing to treat cancer and says that without it, he would not have been able to continue receiving care.
    In many cases, PCIP participants have been diagnosed with and need treatment for serious health care conditions such as cancer, ischemic heart disease, degenerative bone diseases and hemophilia. As a result of the new law, PCIP enrollees are receiving health services for their conditions on the first day their insurance coverage begins. Their critical need for treatment, combined with their lack of prior health coverage has led to higher overall per-member claims costs in state-based PCIPs of approximately $29,000 per year, which is more than double the per member cost that traditional State High Risk Pools have experienced in recent years.
    Enrollment in PCIP has seen a nearly 400 percent increase from November 2010 to November 2011. PCIP enrollment is anticipated to trend upwards of 50,000 enrollees within the coming month.
    People who enroll in the PCIP program are not charged a higher premium because of their medical condition. Program participants pay comparable premium rates to healthy people in the individual insurance market. By law, premiums may vary only on the basis of age, geographic area and tobacco use.
    PCIP provides comprehensive health coverage, including primary and specialty care, hospital care, prescription drugs, home health and hospice care, skilled nursing care, preventive health and maternity care. The program is available in 50 states and the District of Columbia and open to U.S. citizens and people who reside in the U.S. legally (regardless of income) who have been without insurance coverage for at least six months, and have a pre-existing condition, or have been denied health insurance coverage because of a health condition.
    The Affordable Care Act directed the Secretary of HHS to carry out PCIP either directly or through a contract with a state or nonprofit entity. In 27 states, a state or nonprofit entity elected to administer PCIP, while HHS operates the program in the remaining 23 states and the District of Columbia.
    The new report can be found at: http://www.cciio.cms.gov/resources/files/Files2/02242012/pcip-annual-report.pdf
    For more information, including eligibility, plan benefits and rates, as well as information on how to apply, visit www.pcip.gov and click on “Find Your State.” Then select your state from a map of the United States or from the drop-down menu.
    The PCIP call center is open from 8 a.m. to 11 p.m. Eastern Time. Call toll-free 1-866-717-582.

Estate Planning CEO, Employee Face Charges

Indictment Alleges Defrauding of Terminally-ill and Elderly
   PROVIDENCE, R.I. - 11/26/2011 - A Rhode Island attorney and an employee of his Cranston, R.I., estate planning company were charged in a 66-count federal grand jury indictment returned November 17 alleging that they conspired to steal and to use the identities of terminally-ill patients and elderly individuals to obtain more than $25 million in illicit profits from insurance companies and bond issuers.
   Attorney Joseph A. Caramadre, 49, president, CEO and majority owner of Estate Planning Resources, and Raymour Radhakrishnan, 27, an employee of Estate Planning Resources, are charged with conspiracy and multiple counts of mail fraud; wire fraud; identity theft; aggravated identity theft; and money laundering. Caramadre is also charged with one count of witness tampering.
   The two-year investigation and indictment were announced by Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Robert Bethel, Inspector in Charge of the Postal Inspection Service (USPIS), Boston Division; and William P. Offord, Special Agent in Charge of the Boston Office of the Internal Revenue Service – Criminal Investigation (IRS-CI).
   The indictment alleges that Caramadre and Radhakrishnan made misrepresentations to terminally-ill and elderly patients and their family members in order to obtain their personal identity information. It is alleged they used the information, including names; dates of birth; and social security numbers, to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase “death-put” bonds in the victims’ names without their knowledge and consent. It is alleged that the defendants either forged the signatures of terminally-ill people on account documents or obtained the signatures by means of misrepresentations. When the terminally- ill person died, it is alleged that Caramadre and others reaped substantial profits by exercising death benefits associated with the investments. The scheme allegedly generated more than $25 million in illicit profits.
   It is alleged that Caramadre launched the scheme in 1995. Radhakrishnan is alleged to have begun participating in the scheme when he was hired by Caramadre in 2007.
   According to the indictment, one means by which the defendants undertook their alleged scheme was to regularly place advertisements in the Rhode Island Catholic newspaper, offering a $2,000 charitable gift to people suffering from a terminal illness. It is alleged that Radhakrishnan met with individuals and their family members who responded to the advertisement and gave them money on Caramadre’s behalf, while, at the same time, making an assessment as to the life expectancy of the person. It is alleged that if Radhakrishnan believed the person was likely to die in the near future, he would tell them Caramadre had more money available for them. Radhakrishnan and Caramadre then allegedly either forged the terminally-ill person’s signatures or obtained their signatures on account opening documents by making misrepresentations and omissions about the nature of the documents.
   The indictment alleges that some terminally-ill people were misled when they were told their signatures were needed for receipts documenting Caramadre’s charitable gift.
   Others were allegedly misled when they were told that an account would be opened to benefit the terminally-ill person’s surviving family members, or that an account would be opened to benefit other families suffering from terminal illness. The indictment alleges that Caramadre and Radhakrishnan concealed from the terminally-ill people, their families and care givers that Caramadre and his investors stood to make a substantial profit from their deaths.
   In addition, the indictment alleges that Caramadre and Radhakrishnan made numerous misrepresentations to insurance companies, brokerage houses and other corporate entities. It is alleged that they falsely claimed that the terminally-ill people were clients of Caramadre’s law practice and that the terminally-ill people were not paid or given money to become annuitants. It is also alleged that the defendants misrepresented the financial assets and investment experience of the terminally-ill people; misrepresented the relationship between the terminally-ill people and Caramadre or his clients; that the proceeds of the accounts would go to the terminally-ill; falsely claimed that Caramadre paid for the terminally-ill people’s burial expenses at the request of the Catholic Church; and concealed Caramadre’s ownership interest in many of the investments.
   According to the indictment, Caramadre attracted capital from wealthy and prominent individuals and corporations as investors by telling them that he discovered a “loophole” which permitted the use of terminally-ill persons on variable annuities and as co-owners on joint brokerage accounts to be used to purchase death-put bonds. Caramadre allegedly entered into profit-sharing agreements with some of these outside investors, through which Caramadre allegedly received a significant percentage of all profits earned.
The indictment seeks the forfeiture by Caramadre of property derived from the scheme.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
   The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams of the District of Rhode Island.
   Source: Financial Fraud Enforcement Task Force

Prosecutors Charge 91 With Medicare Fraud

False billings by medical professionals allegedly total $295 million
   WASHINGTON, D.C. - 9/18/2011 - Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced on Sept. 7 that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.
   Attorney General Holder and Secretary Sebelius were joined in the announcement by FBI Executive Assistant Director Shawn Henry, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and HHS Inspector General Daniel R. Levinson.
   As part of a coordinated action, 70 individuals were charged by Strike Force prosecutors in indictments unsealed on Sept. 6 and on Sept. 7 in six cities alleging a variety of Medicare fraud schemes involving approximately $263.6 million in false billings. As part of takedown operations, 18 additional defendants were charged in Detroit and one defendant was charged in Miami in cases unsealed on Sept. 1 for their alleged roles in Medicare fraud schemes involving approximately $29.4 million in fraudulent claims.
   Additionally, two individuals were scheduled to appear in court on Sept. 7 on charges filed on Aug. 24  for their roles in a separate $2 million health care fraud scheme. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.
  The joint Department of Justice-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Over the course of the previous week, approximately 400 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 18 search warrants in connection with ongoing strike force investigations.
   “The defendants charged in this takedown are accused of stealing precious taxpayer resources and defrauding Medicare – jeopardizing the integrity of our health care system and our nation’s most critical health care program for personal gain,” Holder said. “Our highly coordinated, nationwide Strike Force operations are working aggressively to combat Medicare fraud and our anti-health care fraud efforts have never been more innovative, collaborative, aggressive – or effective. We will continue to work with our law enforcement partners and partners across government to fight against health care fraud.”
   The defendants charged are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, mental health services, psychotherapy, and durable medical equipment (DME).
   According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, indictments and complaints allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, medical professionals, health care company owners and others charged in the indictments and complaints are accused of conspiring to submit a total of approximately $295 million in fraudulent billing.
   “As charged in these indictments, the defendants cover nearly the entire spectrum of health care providers, and perpetrated a variety of fraudulent schemes,” said Assistant Attorney General Breuer. “From Brooklyn to Miami to Los Angeles, the defendants allegedly treated the Medicare program like a personal piggy bank. Today’s Strike Force operations should serve as a wake-up call to would-be fraudsters nationwide. With Strike Force teams now in nine cities across the country, and employing sophisticated, data-driven law enforcement methods, we are determined to hold criminally responsible those who defraud Medicare.”
   In Miami, 45 defendants, including one doctor and one nurse, were charged Sept. 6-7 for their participation in various fraud schemes involving a total of $159 million in false billings for home health care, mental health services, occupational and physical therapy, DME, and HIV infusion. Another defendant in Miami was charged on Sept. 1 for a $1 million Medicare fraud scheme. In one case, 24 defendants are charged for participating in a community mental health center fraud scheme involving more than $50 million in fraudulent billing. According to court documents, the defendants allegedly paid patient recruiters to refer ineligible beneficiaries to the mental health center. In some instances, beneficiaries who were residents of halfway houses were allegedly threatened with eviction if they did not agree to attend the mental health center.
   “The warning should be unambiguously clear by now,” said HHS Inspector General Levinson. “We will continue using the combined law enforcement might of Strike Forces around the country to combat health care fraud.”
   In Houston, two individuals were charged today with fraud schemes involving $62 million in false billings for home health care and DME. According to an indictment, one defendant allegedly sold beneficiary information to 100 different Houston-area home health care agencies in exchange for illegal payments. The indictment alleges that the home agencies then used the beneficiary information to bill Medicare for services that were unnecessary or never provided.
   Ten defendants were charged in Baton Rouge, La., for participating in schemes involving more than $24 million related to false claims for home health care and DME. According to one indictment, a doctor, nurse, and five other co-conspirators participated in a scheme to bill Medicare for more than $19 million in skilled nursing and other home health services that were medically unnecessary or never provided.
   Six defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of more than $10.7 million. In Brooklyn, three defendants, including two doctors, were charged for a fraud scheme involving more than $3.4 million in false claims for medically unnecessary physical therapy. Two defendants, including a doctor, are making initial appearances today in U.S. federal court in Dallas after being charged for a scheme to defraud Medicare of approximately $2.1 million.
   In Detroit, 18 defendants, including three doctors, were charged last week for schemes to defraud Medicare of more than $28 million. According to an indictment, 14 of the defendants participated in a home health care scheme that submitted more than $14 million in false claims to Medicare.
   Finally, four defendants including one doctor, were charged in Chicago for their alleged roles in schemes to defraud Medicare of more than $4.4 million.
   The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
   Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
   The cases announced on Sept. 7 are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana; the Northern District of Illinois, and the Northern District of Texas; and agents from the FBI, HHS-OIG, and state Medicaid Fraud Control Units.
   Source: U.S. Federal Bureau of Investigation release. For more information, see www.stopmedicarefraud.gov.

Survey: Employee health benefit costs on the rise

   CHICAGO - (BUSINESS WIRE) - 4/28/2011 - The cost of claims in employer-sponsored health plans continues to increase, according to a recent trend survey by Wells Fargo Insurance Services. Although the rate is slightly lower than six months ago, the survey found overall claim cost will continue to increase in the low double-digits.
    “Our survey results show that employers continue to seek sophisticated ways to manage employee health risk, stretch their employee benefit dollars and minimize costs”
   With more than 60 insurance companies participating, the nationwide survey was conducted between February and March 2011. Reflecting claim activity over a six-month period, projected increases in the national average cost of claims include:

• Health maintenance organizations (HMO) and point-of-sale plans (POS) - 9.6 percent increase
• Preferred provider organizations (PPO) and consumer driven health plans (CDHP) - 10 percent increase
• Exclusive provider organizations (EPO) – 10.6 percent increase
• Indemnity plans – 11.1 percent increase
• Prescription plans - 8.7 increase

   Dan Gowen, senior vice president of Wells Fargo Insurance Services, said the continued cost increase suggests employer premiums will rise at a similar rate, as insurance companies anticipate costs based on claim trends.
   “Our survey results show that employers continue to seek sophisticated ways to manage employee health risk, stretch their employee benefit dollars and minimize costs,” said Gowen. “That’s especially true as insurers expect higher claim costs as a result of market changes brought on by federal healthcare reform.”
   The survey found that, in addition to healthcare reform provisions, claim cost is influenced by increased use of healthcare services, aging U.S. population, improvements in medical technology and drug therapies, use of specialty drugs to treat complex diseases, changes in provider treatment patterns, and inflation. Finally, in comparison to the prior six months, the survey also showed dental and vision benefit products remain stable.
   Wells Fargo Insurance services has conducted this biannual survey since 2008. The company will open its next survey in late summer 2011.

Fed: Company Sold $670,000 in Fraudulent Bonds

Reinsurance company, executives face multiple-count indictment
  RICHMOND, Va. – 1/20/2011 - The president and the auditor of a Costa Rican company selling reinsurance bonds to life settlement companies were arrested and charged, along with the company itself, in a seven-count indictment unsealed on Jan. 19 for their alleged role in a $670 million fraud scheme involving victims throughout the United States and abroad.
   The indictment charges Costa Rica-based Provident Capital Indemnity Ltd. (PCI), Minor Vargas Calvo, 59, and Jorge Castillo, 55, each with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of wire fraud. It also seeks forfeiture of more than $40 million from all three defendants. Vargas was arrested on Jan. 18, 2011, at the John F. Kennedy International Airport, and Castillo was arrested on Jan. 19 in New Jersey.
   Charges were announced by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
   “PCI is accused of lying to investors across the globe to sell more than half a billion dollars worth of ‘guaranteed’ bonds which turned out to be worthless,” MacBride said.
   According to the indictment, Vargas, a citizen and resident of Costa Rica, is the president and majority owner of PCI, an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. Castillo, a resident of New Jersey, is the purported independent auditor for PCI. If convicted, Vargas and Castillo face up to 20 years in prison on each count.
   The defendants allegedly engaged in a scheme to defraud clients and investors by making misrepresentations about PCI’s reinsurers, PCI’s financial statements and PCI’s Dun and Bradstreet rating, in connection with PCI’s marketing and sale of “financial guarantee bonds” to companies that sold life settlements or securities backed by life settlements to investors.
   PCI’s bonds were allegedly marketed as a way to eliminate one of the primary risks of investing in life settlements, namely the possibility that the individual insured by the underlying life insurance policy will live beyond his or her life expectancy.
   “This case is another example of how the members of the Virginia Financial and Securities Fraud Task Force are working to detect, deter and punish financial fraudsters who target investors throughout Virginia, the nation and the world.”
   “These defendants allegedly sold $670 million in bonds by making numerous false representations, which were disseminated to thousands of investors. They stand accused of defrauding victims at home and abroad.
  As these charges show, the Justice Department is committed to rooting out investment fraud wherever we find it,” Breuer said.
   The indictment alleges that from 2004 through 2010, PCI sold approximately $670 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to pay up-front payments of 6 to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds.
   This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board, and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica A. Brumberg of the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr. of the Criminal Division’s Fraud Section.
   In a parallel investigation, the U.S. Securities and Exchange Commission announced its filing on Jan. 19 of a parallel emergency enforcement action against PCI, Vargas and Castillo.
   An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
   The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force.
   Source: http://www.stopfraud.gov

Former Insurance Broker Pleads Guilty in Scheme

    NEWARK, N.J. – 10/7/10 - A former partner of the New Jersey-based insurance brokerage firm Smith Gatta Gelok pleaded guilty today to a $20 million fraudulent loan scheme, U.S. Attorney Paul J. Fishman announced.
    Gavin Gatta, 48, of Wayside, N.J., pleaded guilty before U.S. District Court Judge Dennis M. Cavanaugh to criminal information charging him with wire fraud.
    According to the information to which Gatta pleaded guilty and statements made in court, Gatta is a former partner at Smith Gatta Gelok (SGG), an insurance brokerage firm based in Monmouth County, N.J., which assisted businesses in purchasing commercial insurance. When businesses could not pay the entire insurance premium up front, SGG also would assist them in obtaining financing for the premium from one of several premium finance companies (PFCs).
   Gatta admitted that in 2003, he began preparing fake applications for premium financing on behalf of customers who did not need or request such financing and, in fact, previously had paid the full premium to the insurance carrier. Gatta would submit these fake applications to one of several PFCs and ask that the loan funds be sent back to SGG on behalf of the customer.
    Gatta used these fake applications for financing to steal more than $20 million in illicit proceeds, which he used to fund extravagant personal expenses such as jewelry and luxury automobiles – including a Mercedes, a Porsche, an Aston Martin and several Ferraris.
    “Even with his name on the company letterhead, Gavin Gatta wasn’t satisfied with an honest living,” Fishman said. “Instead, he traded it all for quick, stolen millions. The fake deals he made put big money in his account and high-end cars in his garage. But like so many others, his life built on lies couldn’t last. Whether your victims are individuals or institutions, we are working to uncover your crimes and take the proceeds of your sham success.”
    “This has become a far too familiar story,” said Michael Ward, special agent in charge of the FBI’s Newark divisiod Michael Ward said. “An individual commits a white collar crime, surrounds him or herself with the trappings of success, quickly squanders the ill-gotten proceeds trying to support an extravagant lifestyle, and in the end is exposed and held accountable. Gavin Gatta followed this script from inception to epilogue, and despite the expensive jewelry and numerous luxury automobiles, is simply the latest to plead guilty in this pattern of activity.”
    The wire fraud count to which Gatta pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for Jan. 24, 2011.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark, with the investigation that resulted in today’s guilty plea.
   The case is being prosecuted by Assistant U.S. Attorney Christopher J. Kelly of the U.S. Attorney’s Office Economic Crimes Unit in Newark. It was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force.
   Source: Financial Fraud Enforcement Task Force