Annual Report - 2010

Letter

Performing with a Purpose

T he unsteady economy hung with a purpose seen nowhere Heartless marauders hawked
like a smog cloud over much else in America: Unite consumer worthless health insurance to
of America last year. Many forms groups, insurance companies and thousands of Americans. The
of insurance fraud remained government agencies against this Coalition struck back with an
at unhealthy pollution levels as crime. outreach campaign that earned
people’s stressed finances bred more coast-to-coast headlines. The
swindles, and victims. This union has earned the effort empowered untold numbers
Coalition unmatched credibility. of consumers to escape being
Fraud fighters responded America’s trust in the Coalition plundered.
vigorously, but the air quality could came to bear throughout 2010.
stay noxious for awhile. At the same HHS Secretary Kathleen Sebelius
time, pressure to cut resources is Membership reached an all- sought the Coalition’s support
filtering down to more anti-fraud time high, with more than 90 when she announced important
agencies. organizations now united under new Medicare and Medicaid fraud
the Coalition banner. Among the regulations. The Coalition shared
So to maintain the hunt for prestigious organizations that joined the dais with Secretary Sebelius,
swindlers at highest impact, fraud in 2010 were Geico, the National intently backing more anti-fraud
fighters must stretch our skills, Consumers League and SAS resources.
leadership and resources to their Institute.
farthest frontiers. Fraud fighters bring immense
The Coalition also provided resolve to a shared mission —
Just consider...This year’s annual sought-after backing of state fraud whether the economy is up, down
report theme is Performing With a bills around the U.S., helping pass or just holding steady. We’re
Purpose. It reflects the Coalition’s several laws that better safeguard relentlessly protecting the public
ceaseless pursuit of solutions to consumers and insurers alike. wellbeing. It’s how we perform...it’s
America’s fraud challenges in 2010. our purpose.
A major national crime trend was
The Coalition was founded exposed as well...

“Things gained through unjust fraud are never secure.” — Sophocles

2

On Board

Insider briefings incite fresh thinking, debate
and answers to priority issues

Incubating insight and debate willing to defraud insurers, warns “Claims resources are
about leading-edge fraud issues the latest national consumer
is a defining tradition of Coalition attitude research. overwhelmed, and consumers
board meetings.
But many consumers also are don’t trust insurers,
Call it business as unusual. concerned about fraud — and say
Influential thinkers from they are willing to step up and take now more than ever.”
government, private industry action.
and academia gave exclusive issue say they know someone who has
briefings at the Coalition’s two Such leadership-to-leadership idea inflated a claim.
exchanges are helping shape the
Do you believe that poor service from an debates over priority fraud issues. “Claims resources are
insurance company might make a person more And they’re opening the turnstiles overwhelmed, and consumers don’t
to fresh thinking about strategies for trust insurers, now more than ever,”
likely to commit fraud against that company? turning the corner on this crime. Constonis said.

Yes, that would Study: Poor service can cause But encouragingly, the number of
make fraud more people to bilk insurers people who say padding a claim was
likely unacceptable rose to 84 percent, up
Memo to insurers: Treat people from 74 percent in 2003. Slightly
55% really, really well. more than half say they would
report fraud.
No, quality of ser- 24% More than half of adult
vice is not a factor consumers believe poor service can AARP members willing to
push policyholders and claimants act against health cons
Don’t know 21% over the edge to defraud insurers,
2010 Mike Costonis, executive director of Most AARP members believe
Accenture’s insurance practice, said health fraud is a big problem and
board meetings last year. at the December board meeting. drain on America’s economy. But
One prominent theme: Large many members also agree they must
This is especially true of males, do something about fraud.
numbers of consumers appear younger people and consumers in
low-income brackets, Costonis said Thus spake a new survey that
in presenting the consulting firm’s AARP presented at the December
newly released consumer study. board meeting.

About one of 10 consumers also

3

On Board

Medicare and Medicaid fraud are Strike forces also will expand whistleblower
major causes of rising health-care highly focused fraud investigations laws around
costs and a financial drag on U.S. to ramp up the heat in as many as the nation are
prosperity, agree six of 10 AARP 20 new cities over the next several exaggerated and
members age 50 or above. years. the lawsuits can
be unfair to
About the same number believe These initiatives, plus enhanced health providers
health fraud is increasing, Lance partnerships with the private sector, that make
Kilpatrick and Teresa Keenan said could save taxpayers billions of honest mistakes, Thomas Russell
in the presentation. dollars, Smolonsky predicted. countered Jessica Ellsworth, with
the D.C.-based law firm Hogan
But tellingly, four of five AARP Successful lawsuits Lovells.
members say they’d turn in their blow down schemes
doctor or other medical provider if Whistleblower laws also harm the
they suspected fraud. State whistleblower laws business climate, Ellsworth said.
encourage insiders at dishonest
Feds quickly retooling health providers to come forward “These initiatives...
healthcare fraud fighting with vital evidence that can expose
the cons and lead to large recoveries could save taxpayers
Medicare and Medicaid are of stolen money, Thomas Russell,
rapidly retooling to stem anti-fraud Maryland’s inspector general, billions of dollars.”
argued in a strong defense of the
operations that laws. But the claimed successes of
admittedly
have allowed
swindlers to
exploit gaps in
the taxpayer-
funded health
programs,
said Marc
Marc Smolonsky Smolonsky,
assistant deputy director of the U.S.
Department of Health and Human
Services.
New budget funds will help meet
a mandate that the feds install
more-sophisticated technology to
better detect and prevent schemes,
Smolonsky said.

4

Public Outreach

Exposing phony health plans, wiring public outreach

Rx for sick health plans: peddlers delivered nearly worthless stories covering 31 distinct fraud
pieces of paper. topics.
Adose of public exposure
Colorado woman bought The Coalition continually scans As for those worthless health
reliable health insurance. So for breaking fraud trends. We plans...more than 200 news outlets
she believed. Then a hit-and-run car uncovered this national outbreak that covered the Coalition’s urgent
crash sent a gravely injured family early last year, and took the warnings. Among them: The New
member to the hospital. He story public with a coast-to-coast York Times, USA Today, Washington
incurred $43,000 in medical bills consumer-alert campaign. Post, Wall Street Journal (blog), U.S.
before dying. But the luckless News & World Report, Good Morning
woman’s so-called health plan was News outlets throughout the U.S. America, CNN and PBS.
fake. She faced painfully large debts, repeatedly turned to the Coalition
on top of her grief. as one of the nation’s most-informed “There’s high unemployment,
experts. The Coalition educated health premiums are expensive and
Fake health plans like that one consumers how avoid entrapment by tens of millions of people have no
metastasized throughout the U.S. smooth cons: health coverage. This is an ideal
breeding ground for scams,” the
“There’s high unemployment, Beware of health coverage that Coalition said in cover story placed
seems too good for the price...Call your in USA Today.
health premiums are insurance department to make sure the
plan is licensed, the Coalition warned “It’s very dangerous out there,” the
expensive... tens of millions in news stories and consumer Coalition told U.S. News & World
alerts prominently posted on Report.
of people have no health www.InsuranceFraud.org and Facebook.
True-life fraud cases
coverage. This is an ideal Exposing fake health plans was make cons come alive
a high point of a year that saw the
breeding ground for scams.” Coalition earn more than 950 America is a wired nation, and
the Coalition continued wiring
last year. Swindlers exploited the its outreach efforts in sync with
downturned economy, promising consumers who increasingly
reliable health insurance to cash- connect, talk and learn through the
strapped consumers. But instead, ether.

The explosive power of Facebook
and Twitter became platforms for

5

Public Outreach

Exposing phony health plans, wiring public outreach

reaching the public. Each day, the Kansas preacher who betrayed his On healthcare reform: “The
Coalition engages people in wired parishioners by burning down their government, for the most part,
dialogue. church for insurance. has moved away from this idea
of a partnership, to focus almost
And the Coalition’s website — The Odditorium opened last exclusively on the impact of
www.InsuranceFraud.org — expanded year. Taking a lighter touch, the fraud on government health-care
its presence as the nation’s Odditorium highlights strange programs,” warned Kirk Nahra, a
preeminent online center of schemes that bizarrely bellyflop. A leading privacy and health-reform
consumer fraud information. police officer shot himself to lodge a attorney.
workers compensation claim.
Recounting memorable On no-fault schemes: “Absent
cases forms another part of the New fraud journal leads significant reforms, no-fault crime
Coalition’s online consumer leadership thinking likely will remain a persistent
strategy. Showing swindlers in and costly drain on insurers,
action puts a human face on fraud. The Coalition launched a
Consumers thus will better grasp leadership journal, the nation’s only regulators and
this crime’s large toll. publication focused on executive- policyholders
level thinking involving insurance for years
“Much of the solution to fraud. to come...
even with
fraud resides in teaching The first issue of the Journal of better-funded
Insurance Fraud in America took efforts,” concluded a Coalition-
good character to adults flight with C-Suite analyses by written analysis.
influential experts.
and school-age children.” Sunshine Alliance clouds
On youth attitudes: “Much of no-fault cons
The annual Hall of Shame the solution to fraud resides in
dishonored America’s worst teaching good character to adults With staged-crash rings driving
swindlers of 2010. One lowlight: and school-age children...” wrote up auto premiums in Florida, the
Debra Morris died in a home Michael Josephson, president of the Coalition worked to build public
arson set by Jeffrey Alnutt to steal Josephson Institute of Ethics. “An support for anti-fraud reforms
$277,000 in insurance money. ethics-based outreach campaign to in early 2011 (see Legislation &
complement traditional enforcement Regulation section). The Sunshine
The Fraud of the Month also efforts can...produce a desirable ROI Alliance to Erase Fraud earned
humanized cons. Like the unholy in lower claim costs to insurers.”

6

Public Outreach

“Honest Florida drivers are Prosecutor of the Year
convicts with conviction
being taken for a ride by
Joe Licandro was new on the job as
greedy staged-crash gangs.”
an Assistant State Attorney based in
news stories, blogs and editorials Jacksonville, Fla.
throughout the legislative session.
And a targeted TV ad campaign He learned insurance fraud on the
generated nearly 200 letters by run. But the tenacious young fraud
constituents to their state legislators. prosecutor stirred up courtroom
action like a longtime veteran.
“Honest Florida drivers are being
taken for a ride by greedy staged- By ramping up so much heat, so fast
crash gangs,” Walter Dartland, co- and so effectively, Licandro earned the Coalition’s Prosecutor of
chair of the Sunshine Alliance and the Year Award for 2010.
Coalition board member, said in the
South Florida Sun Sentinel. “Urgently The award honors insurance prosecutors for courtroom
needed anti-fraud reforms will turn impact and leadership. Injecting infectious energy, Licandro
up the heat on swindlers.” prosecuted 77 cases worth more than $2 million in just his first
year.
The statehouse closed in early
May with two new fraud reforms He took down an auto-glass firm that had filed nearly 1,000
on the books. And yet another side- bogus claims for repairing windshields. He also gutted a ring
benefit: Legislators and millions of operating out of a car dealership. The gang was advising
Florida consumers now better-grasp dealer customers how to illegally dump unwanted vehicles for
the large toll crash gangs inflict on insurance payouts.
the state.
Licandro also transformed how fraud cases are built in his
7 district. He greatly expanded coordination. More fraud fighters
began comparing notes...evidence grew...arrests multiplied...
cases sped to court faster...more convictions followed.

His cases are so airtight that many suspects plead guilty
rather than take him head-on in court. Licandro convicts with
conviction.

7

Legislation & Regulation

States pass fraud laws despite pressure to balance shaky budgets

C heaters literally were driven forces. All told, the Coalition from vehicles to cheat drivers and
to deceive last year, often lobbied for bills in 12 states, and insurers. The Coalition supported
heisting auto-insurance money testified or gave presentations before that measure in written testimony.
with industrial-strength efficiency. 17 states and conferences. Among
Roadblocking staged-crash gangs the focal points of 2010: Insurance personnel such as
and other auto schemes thus was crooked agents also face stronger
a defining theme of last year’s “That momentum carried criminal sanctions. The Coalition
legislative campaigns. closely advised the sponsor as the
into 2011, when two bill wound through the statehouse.
Another theme: 33 anti-fraud bills
of all kinds were inked into law in new no-fault fraud laws And shady medical discount plans
18 states — among the largest totals were placed under state oversight,
in recent years. went onto the books.” with full Coalition involvement.

Lawmakers singled out insurance New Jersey. Drivers were illegally Florida. Staged-crash rings have
fraud for attention in many states, lowering their auto premiums by crept into most urban areas of
despite spending inordinate efforts lying to their insurers about where Florida in recent years. Fraudulent
to balance troubled state budgets. the drivers garaged their vehicles. injury claims have made auto
This suggests progress by fraud premiums in the state among
fighters in heightening awareness A bill addressing this and other America’s highest.
of fraud’s large social and economic fraud schemes was introduced in
costs. late 2010. The Coalition, NICB and The Coalition helped convene a
Insurance Council of New Jersey
The Coalition was one of the met with legislative staff to map out Howard Goldblatt
nation’s most visible anti-fraud a strategy for passage. The bill now
is in play. statewide fraud summit last year.
Dennis Jay The event drew attention among
Rhode Island. Fraud fighters earned major decisionmakers about the
a trifecta: Three Coalition-backed
fraud laws went onto the books in
2010.

In yet another state auto-reform
effort, body shops now face stiffer
penalties for stealing airbags

8

Legislation & Regulation

extent and high costs of auto-fraud Albany for too many years. Colorado. Workers comp
gangs in the Sunshine State — and The Coalition helped build investigations came under fire with
potential ways to curb auto schemes. a proposal to greatly limit video
consensus for reforms and provided surveillance of suspicious claimants
The momentum carried into testimony at a top-tier roundtable in the state.
2011. Florida’s Chief Financial and Senate committee hearings, and
Officer gained authority to civilly through ongoing involvement in a Insurers would’ve been open game
fine auto-insurance wrongdoers, larger group working on legislation. for fraudulent workplace injury
and accept grants for auto-fraud claims if surveillance was unfairly
investigations and prosecutions. Reform legislation surfaced in limited.
More information about passengers early 2011 as the momentum carried
also will be required on police over. One cornerstone proposal: The Coalition advised state fraud
accident reports. These were Recruiting people into crash fighters about effective responses,
small gains, but still, another step schemes — and being a recruiter — and opposed the bills in letters to
forward. would be specific insurance crimes the leadership of key statehouse
with intimidating penalties. So committees. The proposal failed as
“Auto fraud gangs were would staging a crash. opposition mounted.

inflicting too much damage, Pennsylvania. Investigators “Insurers would’ve been
strengthened their ability to
and much-needed reform jointly pursue cases. Gov. Ed open game for fraudulent
Randall signed a bill allowing
bills had stalled in Albany more cooperation on cases among workplace injury claims
insurers, law enforcement and NICB
for too many years.” without exposure to defamation if surveillance was
lawsuits.
New York. It’s time to re-oxygenate a unfairly limited.”
push in Albany to strike back with The Coalition backed the
news laws leaning hard on staged- measure with a strong letter to Gov.
crash gangs that are fleecing the Rendall in 2010, and earlier in 2009
Empire State’s no-fault auto system. testimony.

That was the Coalition’s repeated
message to legislators, regulators,
law enforcement and frontline fraud
fighters.

Auto fraud gangs were inflicting
too much damage, and much-
needed reform bills had stalled in

9

Legislation & Regulation

Trendwatch: budget crisis attempted money-saving moves. national breadth of knowledge and
Louisiana’s fraud bureau lost two insight.
Many states and municipalities
face budget crisis. They’re investigators last year. Budget cutters As the longtime consumer advisor
insistently seeking ways to prune are trying to slash the Minnesota to the NAIC’s anti-fraud task force,
costs. Cutting back anti-fraud efforts fraud unit’s budget fully 50 percent. the Coalition counseled the task
could well be among the force as it approved guidelines for
The Lawrence, Mass. anti- insurers to submit anti-fraud plans
“Louisiana’s fraud bureau fraud task force was gutted. And to state insurance departments.
the Arizona fraud bureau was The guideline awaits full NAIC
lost two investigators eviscerated several years ago. approval.

last year. Budget cutters Fraud fighters increasingly will The Coalition also worked with
be challenged to make a convincing NCOIL, the central group for state
are trying to slash the case that combating this crime insurance lawmakers. NCOIL re-
is essential to public safety and endorsed the Coalition’s model law
Minnesota fraud unit’s wellbeing. criminalizing recruiting people into
staged-crash rings.
budget fully 50 percent.” Advise & consent
The Coalition also regularly
The Coalition was a trusted advised the Virginia and Louisiana
advisor to the fraud-fighting state polices as members of their
community, bringing to bear a anti-fraud advisory committees.

Coalition supports Medicare rules

Federal regulators sought to cork the leaking defenses each year by organized crime rings and dishonest medical
of Medicare and Medicaid, which were making overnight providers,” the Coalition’s Dennis Jay said at a news conference
millionaires of swindlers who often had little trouble supporting the January 2011 unveiling of the regulations.
breaching the taxpayer-funded health programs.
The Coalition also was involved in health-care reform,
HHS Secretary Kathleen Sebelius asked the Coalition including the Medical Loss Ratios (MLR). Health reform
to share the dais when she proposed new rules to block requires insurers to devoted a large percent of premium
dishonest medical providers from the Medicare and Medicaid income to policyholder wellness. Fraud fighting wasn’t
systems. included in the ratios, and the Coalition urged state regulators
to monitor MRLs to see how health-insurer anti-fraud efforts
“The new rules give the government more ability to stem are affected.
the outflow of billions of taxpayer dollars that are stolen

10

Why We Fight

Large human costs lend urgency to fraud fight

Insurance fraud...that abstract “Many victims face in prison. But his family also was
white-collar crime. Mostly just depression, despair and sentenced.
glowing digits on computer fraud- feelings of humiliation.
loss spreadsheets. His kids lost their father. His wife
Some lose their life Abby lost her husband. She also had
So why worry, right? savings, and some die.” abnormal cells that threatened to
Wrong. become cancer. Jones now can’t take
Examine the untold thousands of mansion for a $1.7-million insurance care of Abby. And if she develops
Americans whose lives are harmed payday. cancer, the kids probably will be
by close encounters with insurance shunted to a foster home.
fraud. But astute investigators pried
Many victims face depression, open his fairytale. Two cans of Unholy auto con
despair and feelings of humiliation. diesel fuel were found in the ruins.
Some lose their life savings, and Jones also said he escaped through a A so-called “Christian” outfit
some die. Our insurance premiums glass door. But the fire started near pretended to peddle low-cost auto
also are forced higher. that same door. He would’ve had to insurance. But the insurer run by
Families are torn apart and James Kalfsbeek and Donna Jean
children traumatized when a parent Aaron Jones Rowe was little more than an anti-
is jailed for fraud. run through a solid wall of flames. government fringe group called
Insurance fraud isn’t pretty. We’re Nor were his clothes dirty or grass Puget’s Sound Agricultural Society.
all punished somehow. And that’s stained. Jones received 10 years
why we fight. The California pair issued fake
auto insurance cards saying the
Smoked-out home arson coverage was “in compliance with
all state laws.” But Puget’s Sound
Burglars broke into Aaron Jones’ actually complied with thievery.
mansion, tied him up and set the
place on fire, he claimed. But the The group stole millions of dollars
Benton, Ark. man invented the in premiums and didn’t pay many
whole story. claims. Luckless “policyholders”
often were stuck with large bills
Jones had fallen on hard times after getting in accidents and
after making a fortune in real estate. discovering their coverage was
Desperate for cash, he torched his worthless.

A Michigan civil court awarded

11

Why We Fight

$20 million for a crash that killed prescribed 120 doses of a painkiller murder case that earned him 50
Fred Coty and left Jill Glover
disabled for life. A Puget’s Sound for her headaches. years in prison.
member drove the vehicle.
Sixty-eight addicted patients died Disfigured toddlers
But the sham insurer kindly of overdoses linked to prescriptions
handed the grieving families a
useless “Bill of Exchange” that Schneider handed out, and 176
“authorized” the U.S. Treasury to
pay the money. overdoses stemmed from his Five-year-old Brandon Dillbeck

A Puget’s Sound driver hit and operation, prosecutors contended. went for routine tooth cleaning at a
severely injured a bicycler in South
Carolina. The “insurer” paid only But Schneider’s sentence was no dental clinic in North Carolina. But
$6,000. Kalfsbeek received 10 years
in federal prison, and Rowe four overdose: He received 30 years in the little guy was trapped for two
years.
prison. hours in a tooth-rattling chamber of
Addict drug market
Chilly child drowning horrors.
Drug addicts called Dr. Stephen A dentist capped 16 of his teeth
Schneider the “Candy Man.” The
Wichita, Kans. pain doctor ran a with stainless steel after tightly
deadly pill mill.
Little Ashley McLellan’s lungs
He spooned out powerful,
addictive painkillers such as filled with freezing water in the
OxyContin to nearly anybody who
asked. family’s backyard swimming pool

His clinic was a drug cafeteria, not near Seattle.
a house of healing. Addicts lined
up outside his front door, anxiously Her final, futile gasps for air must
waiting for insurer-paid fixes that
helped them get woozily through have terrified her. But Ashley’s
each day.
stepfather Joel Zellmer didn’t care.
Schneider also wrote dozens
of prescriptions for patients even He drowned her for a $200,000 life-
after they’d overdosed and gone
to hospital emergency rooms. insurance payout. strapping him to a board so he
One addict died after Schneider
Fire fighters found Ashley’s wet, couldn’t struggle. Brandon left the

unconscious body flopped on the clinic with a frightening mouth of

living-room floor. metal.

Zellmer claimed he discovered her The dentist stole insurance money

floating in the pool. She probably by billing for painfully disfiguring

went outside to the deck and surgery that Brandon and other

somehow slid children never needed.

into the water, he “When he came out he was

told investigators. crying. His whole shirt was soaking

No witnesses in sweat,” his mother Christy said.

saw Zellmer “He whole head was soaking wet

drown her. and his mouth was full of gauze,

But astute just held open.” Seven kids had

prosecutors wove teeth yanked and capped. The clinic

Ashley McLellan a convincing owners paid $10 million to settle.

12

How We Fight

Investigators thwart crash rings by using persistence, science

Fraud investigators often spend drove up auto premiums. Halliday also contacted other auto
long, lonely hours patiently But that changed. Crash gangs insurers in the Tampa region. They
stitching together clues that unravel began sharing leads and comparing
well-disguised schemes. It’s like began slithering into Tampa. John claim patterns. A large undercover
assembling fragments of some operation was launched. More than
ancient papyrus. John Halliday 80 arrests followed. Millions of
dollars in fraudulent injury claims
Using patience, trained instincts Halliday, an investigator with Sentry were successfully challenged.
and applied science, fraud Insurance, was among the first to
investigators methodically gather notice. Bad actors acting worse
the evidence needed to resist
fraudulent claims — and ultimately, He spied a disturbing pattern Robert Gogolin, a Hillsborough
to convict. Investigators come from that suggested a large crash ring was County Deputy Sheriff, had little
insurers, and government officials working the Tampa area last year. experience with staged crashes. But
such as state fraud bureaus and the Sheriff patrol officer’s honed
law enforcement. It’s common Multiple passengers were in instincts helped discover and break
for them to work cases jointly, vehicles with minor damage... open one of the largest staged-crash
thus multiplying the pressure on Crashes happened in remote, low- rings in Florida.
insurance cheaters. traffic areas...The same clinics in the
same section of Tampa treated every A rash of unusual fender benders
Two investigators played leading passenger...treatments all lasted five
roles in taking down large staged- days...clinic owners had no training Robert Gogolin
crash rings in the Tampa, Fla. area in medicine. began piling up, Gogolin noticed as
last year. One investigator is an he arrived at growing numbers of
insurer employee, the other a public Halliday stepped up his crash scenes.
servant. investigation. Every crash claim
was carefully examined. Halliday
Crashing staged crashes personally interviewed more than
100 suspects to glean more evidence.
For years, the Tampa area was
relatively free of staged crashes that
infested the Miami region farther
south. The Miami rings bled auto
insurers with fake injury claims, and

13

How We Fight

The crashes were suspiciously of the crashes. Two months of data Many “victims” were rattled. They
alike. Each involved multiple
vehicles. The drivers and passengers confirmed his suspicions: A crash confessed at the scene, or shortly
all were family members or friends.
gang was operating in his territory. after being arrested.
Nor did the supposed crash
victims put on convincing shows. And it was a big criminal outfit. Investigators also built a network
Their groans and moans seemed
mechanically rehearsed, and Gogolin then set in motion a of informants who continually
all sounded the same. And the
“victims” quickly, and all-too- severe body blow to the gang. supplied leads. The crash ring
smoothly, handed responding
officers their insurance info, vehicle He quickly contacted other finally buckled under the relentless
registrations and driver licenses.
Such precision doesn’t normally insurers in the Tampa area. These pressure. At least 54 suspects were
happen during the confusion of
accidents, Gogolin reasoned. investigators, too, had noticed the arrested, and shady clinics were shut

Most of the crashes also were low- same suspicious crash patterns. down.
speed bumper benders that couldn’t
possibly hurt so many car passengers The dots of deceit now were Interestingly, Gogolin and
so painfully.
connecting. “Operation Crash Halliday unintentionally crossed
The crashes were pure theater,
Gogolin realized. for Cash” left the launch pad in paths, hunting down many of the

He mapped the times and dates a concentrated show of force. same crash suspects.

Joint investigations started up. Honors without asking
Law enforcement and insurers

continually shared case information.

Police officers also were taught the Fraud fighters don’t usually seek

warning signs of fraud. They began public acclaim. But sometimes

asking more-detailed questions of recognition comes to them without

passengers at crash scenes. The asking.

scrutiny gleaned clues from their Halliday received the Investigator

comments and how they acted. of the Year Award from the

International Association of Special

Investigation Units, and Gogolin

won the Public Service Award.

Their success reveals how

patience, honed instincts and

applied science can take down

highly resistant insurance schemes.

The stories of Gogolin and

Halliday open a small window to

the shrewd minds and methods of

fraud chasers around the U.S. And

a large window to how fraud fighters

help keep premiums down, and the

public safer.

14

Fast Forward

Coalition will keep making exceptional the norm

Each year the Coalition sets its consumer information. by helping launch a statewide
high goals higher, above the ▪ Identify emerging fraud trends then grassroots campaign push for new
cloud cover. Normalcy is too normal widely alert consumers; and reform laws.
when winning the fraud fight ▪ Work to build public support of
demands the exceptional. To this anti-fraud efforts in New York and In other government goals:
end, the board of directors adopted Florida: two of America’s hotbeds ▪ Access to fraud laws. Develop an
ambitious goals for 2011... for a variety of frauds, especially online resource center that houses
involving auto insurance. many of the best state fraud laws.
Public outreach This will provide useful models
Government affairs fraud fighters can use for drafting
Consumers increasingly default to fraud bills. Auto fraud will be a
the ether for information that helps Auto schemes continue imposing startup focus.
drive their opinions — and actions higher premiums on consumers, and ▪ Health reform. Monitor anti-fraud
— about fraud. The Coalition is the large financial losses on insurers in elements of health reform, and work
nation’s must-visit source of online New Jersey, New York and Florida. for increased funding and effective
insight. That mission will grow... Thus, much of this year’s legislative implementation of fraud-fighting
▪ Increase use of social media such as work seeks stronger penalties in efforts.
Facebook and Twitter; and these states...
▪ Expand the Coalition’s online ▪ New Jersey. Stiffen penalties for Research

drivers who lie about As a leading national hub of fraud
where they garage their research, the Coalition will compile,
vehicles to illegally lower analyze and disseminate new data
their auto premiums. that creates a better understanding
▪ New York. Target of fraud trends...
recruiters for staged- ▪ Publish annual study of state fraud
crash gangs. Also... bureaus. The study provides one-of-
pursue drivers who a-kind intelligence into state anti-
evade paying full auto fraud efforts;
premiums, much like the ▪ Create a quarterly research panel to
effort in New Jersey. uncover trending information.
▪ Florida. Increase pressure ▪ Explore measuring court-ordered
on staged-crash gangs penalties.

15

Members

Consumer organizations Office of Attorney General, Arizona Kentucky Employers’ Mutual Insurance Frasco
Office of Attorney General, Liberty Mutual Group G4S Compliance & Investigations
American Council on Consumer Life Insurance Settlement Association Global Options
Interests Pennsylvania Mass Mutual Hub Enterprises
Office of the Cape May (NJ) Prosecutor MetLife ICS Merrill
Center for Consumer Affairs-University Office of Medicaid Inspector General National Health Care Anti-Fraud ISG
of Wisc.- Milwaukee ISO
(NJ) Association LexisNexis
Citizen Advocacy Center Pennsylvania Insurance Fraud National Insurance Crime Bureau Llorente SIU
Consumer Action Nationwide Insurance Company SAS Institute, Inc.
Consumer Alliance Prevention Authority New York Automobile Insurance Plan Sedgwick (formerly Factual Photo)
Consumer Federation of America Rhode Island Workers’ Compensation Oklahoma Insurance Department Thomson Reuters
Consumer Federation of the Southeast OneBeacon Insurance Veracity Research
Florida Consumer Action Network Fraud Unit Pinnacol Assurance Virtual Advantage
International Association of Lemon San Diego Country (Calif.) District Progressive Insurance
Property Casualty Insurers Association 2010 Officers
Law Administrators Attorney
National Association of Consumer Virginia State Police of America James Brown — University of
Prudential Insurance Wisconsin-Milwaukee, co-chair
Agency Administrators Insurance organizations Selective Insurance
National Consumers League Sentry Insurance Doug Ashbridge — Farmers
National Fraud Information Center AIPSO State Farm Insurance Companies Insurance, co-chair
National Urban League Allstate Insurance Company Swiss Re
American Family The Hanover Insurance Group John Sargent — MetLife, treasurer
Government organizations American Insurance Association The Hartford Steve Perry — D.C. Department of
Amtrust North America The Standard
International Association of Insurance BlueCross BlueShield Association The Travelers Insurance,Securities and Banking,
Fraud Agencies Citizens Property Insurance Unum Group secretary
West Bend Mutual
Louisiana Auto Theft & Insurance Corporation Zurich North America Coalition Against
Fraud Prevention Authority CNA Insurance Fraud staff
Country Insurance Fraud resource organizations
Louisiana State Police Direct General Insurance Dennis Jay, executive director
Maryland Automobile Insurance Fund Erie Insurance Claims Verification, Inc. Howard Goldblatt, director of
Massachusetts Department of Farmers Insurance Group Etico, LLC
First Acceptance Insurance FICO government affairs
Industrial Accidents GEICO Jim Quiggle, director of
National Association of Insurance HealthCare Insight
IAT Group of Companies communications
Commissioners International Association of Special Kendra Smith, executive assistant
National Conference of Insurance Jennifer Tchinnosian, communications
Investigation Units
Legislators John Hancock Financial Services specialist
National Criminal Justice Association
National District Attorneys Association
North Dakota Insurance Department

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