1994’s Top 10 Insurance Scams Coalition Against Insurance Fraud

ROM STABLES TO STASHES OF CASH, 1994’S TOP 10 INSURANCE SCAMS ARE DEVIOUS AND DIVERS

WASHINGTON, D.C. – They’re diverse, devious and sometimes outright deviants.  And they cost American consumers more than $150 million last year.

The Coalition Against Insurance Fraud’s Top Ten Insurance Fraud Cases of 1994 includes scammers who are cruel, unusual, and occasionally in hiding after sucking millions of dollars from the insurance system.

“The variety of crimes committed against the honest consumer’s pocketbook demonstrates how difficult it is to fight insurance fraud with just one or two weapons,” said Dennis Jay, the Coalition’s executive director.  “We’ve seen positive signs in 1994 that we’re gaining ground, but real progress still lies ahead.”

Jay cited a new federal law, legislation establishing more fraud bureaus, enactment of state anti-fraud statutes and increased activity on hotlines as evidence of progress.  In 1995 the Coalition will seek additional remedies.  Plans include introducing state legislative action and increasing public awareness of this $68 billion problem in order to lower American tolerance of insurance fraud.

“Once people understand that insurance fraud takes more that $800 a year out of each family’s pocket, they’ll recognize fraud is not a ‘victimless’ crime,” Jay predicted

THE 1994 TOP TEN ARE:

STABLE SLAYINGS

Hired killers destroyed an unknown number of show horses.  Owners collected on animal mortality insurance policies which usually covered a horse for more than it was really worth – $25,000 and up.  The scheme has been going on for decades, and some top names in the horse world are alleged to be involved.  Twenty-three people were indicted in Chicago in July for their roles:  17 pled guilty; three were jailed and fined, and six await trial.

MINUS ONE

Dr. John Rende, a 38-year-old Florida dentist, agreed to allow two brothers, Kenneth and Robert Alberton, to cut off his index finger with an axe and claim it was an accident.  He collected a $1.4 million lump sum settlement through one brother’s homeowner policy.  He also filed a claim under his practice’s disability policy.  Rende used some of the money to buy a boat he named “Minus One.”  Rende and the Albertons pled guilty and are currently in jail, under orders to make restitution.  Mary Rende, John’s wife, is expected to plead guilty soon.

AN EMPIRE OF SCAMS

William Loeb set up a phony labor union to sell health insurance from Empire Blue Cross and Blue Shield in 1988.  When Empire terminated the insurance contract two years later, the union moved the policies to bogus insurers.  More than 8,000 consumers lost $43 million in premiums on worthless policies.  Total unpaid claims could be as much as $24 million.  Insurers for more than 600 agents named as defendants in the case have agreed to pay out more than $8 million to settle unpaid claims.  More settlements may come in March.  Loeb is serving seven years in prison.

COKER’S COVETED

Stephen D. Coker is on the run following his September indictment in Alabama on 35 fraud-related counts.  He’s accused of siphoning at least $30 million in premiums, passing them through a network of offshore insurers and reinsurers.  Coker’s accused of looting a British Virgin Islands insurer via a sham reinsurance agreement, filing false financial statements with regulators, selling policies on behalf of bogus insurance companies run by the late fraud artist Alan Teale, and reinsuring several of Teale’s own sham operations, taking in at least another $4 million.

THE EYE’S ON HIM

 Dr. Jeffrey J. Rutgard, a San Diego eye surgeon, was indicted in March on 217 counts alleging he bilked Medicare and private insurers out of millions of dollars.  He allegedly performed unnecessary operations on mostly elderly patients who often were unable to give informed consent.  He was paid $20.8 million over five years.

A BLUE BEL-AIRE

 Arthur Blumeyer III was convicted of 27 counts of conspiracy, money laundering and fraud in February.  Blumeyer was accused of using St Louis based Bel-Aire Insurance Company to bilk policyholders out of about $43.5 million over six years.  He pocketed at least $4.9 million.  Blumeyer’s conviction was overturned on a technicality and he’s currently in the insurance business awaiting a new trial.

GYPSY TRUCKERS

Ronnie Lee Johnson of Fort Myers, Florida, pled guilty to two felonies for his role in a multi-state insurance fraud case involving the diversion of at least $7 million in premiums.  The scammers obtained minimal insurance policies by misrepresenting the firms as small ones with only a handful of trucks.  The operators then charged hundreds of unwary independent truckers as much as $5,000 a year to use fraudulently obtained liability insurance.  Johnson currently is serving a 46-month prison term and cooperating with an expanded investigation.

SENIOR SWINDLERS

Retired Floridians William and Phyllis Lenahan were convicted of conning workers’ compensation and a physician’s malpractice insurer out of $3 million.  William claimed surgery for a work-related back injury was botched, leaving him totally dependent on his wife.  In an investigation initiated and paid for by the surgeon, William was videotaped dancing, among other activities.  The husband and wife each were sentenced to seven-year prison terms and ordered in June to pay $1.6 million restitution.

CHIROPRACTIC COUPLE

A Boston chiropractor and his wife were charged with 36 counts as part of a scheme worth an estimated $2 million.  They allegedly made false or inflated claims, subjected clients to unnecessary tests, required a minimum number of visits and engaged in other conduct.  Dr. Alan and Caterina Rosenthal’s trial is scheduled for February 13 in federal court.

ATLANTA 57 & COUNTING

In September, Georgia officials arrested 57 people in two counties on 258 counts of insurance fraud.  Included in the arrests were two major “runners” (those who refer patients in staged accidents) and a chiropractor.  At least 150 false or inflated claims were filed with 15 insurers and cost more than $1 million.  Officials are continuing the investigation and more arrests are expected.