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Charles Dodge was his name. Hospital Indemnity Plans (HIP) were his game.
Dodge was unemployed and had no regular source of income—so he arranged one by buying a variety of HIP policies. Such policies require virtually no medical history and pay a daily benefit, typically anywhere from $25 to $100, if the insured is hospitalized. Dodge had a partner in his moneymaking scam, a local doctor in his home town of Mountain Home, Arkansas, by the name of W.G. Schroeder. Schroeder was very cooperative when it came to admitting Dodge to the local hospital, perhaps because Schroeder owed Dodge the small sum of $50,000.
Over a period of four years, Dodge managed to get admitted to the hospital seven times. His diagnoses were varied: depression, pain from a fall on the ice, anxiety, falling down steps and falling off a lawn mower. In one case, he was so stressed out that he flew to California to be hospitalized. And the money rolled in, a staggering $485,000.
But there’s a somewhat pleasant twist to the story … the Internal Revenue Service stepped into the picture. They demanded that Dodge pay taxes on his windfall. Dodge replied that money received from medical insurance for injuries or sickness is not taxable income. The IRS fought on. “Dodge wasn’t sick and he didn’t have any real injuries,” they told the judge, “this was simply a moneymaking scam.”
The judge bought the argument and ruled that Dodge was liable for the taxes plus applicable penalties. The court said that he didn’t have to be formally convicted of insurance fraud, it was enough that the evidence clearly showed he was pulling a scam.
Three cheers for the IRS!
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