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Insurance Scam Ring Gets Busted

     I hope that the following story  from thw Washington Examiner, has the participants singing together “Hi Ho, Hi Ho, it’s off  to prison we go”.

     The FBI had been told that there was a Maryland lawyer that was recruiting people to fake injuries from car accidents. So, the FBI and the Washington, D.C. Police Department decided to plant the seed and see if they could catch the lawyer, and anyone else that was working on the scheme with him.

     The seed was an accident report. As part of the undercover operation, a fake accident report was put into the police department’s system. Then, an FBI agent posed as the driver who had been rear-ended in the fake report.

     A day after the report was planted, the special agent received a phone call from an Alba Bustamante, who said that he had obtained the accident report and wanted to refer him to a lawyer, Ryan A. Lahuti. I’m guessing the undercover sting said, “Here we go” because that was the lawyer that they were targeting.

     The driver (undercover) said he wasn’t injured. Bustamante said that “it didn’t matter”. He explained that he just needed to give the lawyer’s card to a chiropractor, and tell the chiropractor that his back and neck hurt. He then told the undercover agent that by doing this, he could end up “pocketing 4 or 5 thousand dollars”.

     The agent went to the chiropractor and presented the card. He advised that he felt no pain, no dizziness and did not suffer from headaches or loss of sleep.

     The chiropractor told him that really, his back was out of alignment and that he could get treatment, and that insurance would cover it. The chiropractor’s assistant told the “patient” to get 25 visits of treatment, to get the maximum amount of insurance money.

     It’s here where I have to break from the story. It torments me. It’s conduct and news stories like this that make it hard for the truly injured to receive proper care and hold the responsible party accountable for their medical bills.

     The ending of this story is that Bustamante and the lawyer are being charged with wire fraud and health fraud. The chiropractor and his assistant are facing charges of conspiracy to commit mail fraud. Their mailing of the bills and records, I guess; based on the statements of no injury, amount to the  criminal charges.

     One final thought. The words “insurance” and “scam” make it worse for everyone. Rates go up; It contributes to the bad image of lawyers and it ultimately can effect the jury system. That’s why it’s important to get this kind of story out. It doesn’t make injury lawyers look good, but we also shouldn’t hide behind the reality that there are unsavory characters that are doing this kind of fraud.

Virginia Fraud Fighters

     The prospective client called and asked if we would meet him at his business.  “Of course”, I said, since we advertise that “we will come to you”. Upon arrival, we asked to see “Jim”. (I use that name for confidentiality and I once heard a story about a mule named Jim)

     Prospective client “Jim” came walking out, from behind his counter. He had a sledge hammer in his hand. That caught my attention and I half wondered if he thought that was how to negotiate a legal fee.  He asked if we wanted to see his car first, before discussing the case. We followed him to the parking lot. Then, he began to raise the sledgehammer toward the car bumper and asked how much damage we wanted to his car, “to make the case worth more”.

     Needless to say, except for the frightening memory of that event, I have no other story to tell about that case, as we quickly found ourselves travelling down the highway, without a client. I left him, his case and his sledgehammer behind.  

     The Virginia State Police are running a full page advertisement in the newspaper  that honors eight of Virginia’s top fraud fighters. Each of the recipients of the Fraud Fighter Awards have taken some action  to stop insurance fraud. They correctly state that, ultimately, everyone pays a price for insurance fraud. That’s why, when I see a mention of insurance fraud, my mind goes back to that sledgehammer story. I wonder if “Jim” is still out there. I suspect that he got rewarded in a way that he didn’t expect.

     Conversely, when I see campaigns against insurance fraud, I wonder why there is no mention of insurance companies or adjusters, who have committed fraud this past year. In my experience, it’s not just a one way street. Collecting premiums, with an intent to figure out a way to keep from making payment to the insured, also constitutes fraud.

     Virginia has a code section (8.01-66.1) that deals with insurance companies that deal in bad faith. In my practice,  I see it. For instance, I recently submitted  different medical payment packages to the same insurance company, on behalf of  different clients. The packages included the full billing, coding and all information relating to the treatment. In fact, the coverages were the clients’, since these three carried medical payment coverage on their car insurance. Medical payment coverage is an elective coverage that costs a small extra premium, to help pay medical bills resulting from a car crash, without consideration as to who is at fault.

     In these  submitted packages, a form letter came back that basically said something to the effect that no payment was forthcoming, until all information about the bills was submitted that related to when the treatment occurred and what kind of treatment was included. Of course, these original packages had correctly included such information. This insurance company apparently had come up with the idea to delay payments by sending out these “we need more information” letters.

     I wrote a form letter response to the three different adjusters that had sent these form letters. I reminded them of the package that had been sent, that had included all the information that had been requested in the “delay payment letter”. My letter may have also said something about preserving all evidence and their file, so I could document their bad faith handling, at a later date. I might have even sarcastically asked for the middle initial of the adjuster on the letter, so I could make sure that the “fraud plaque” I was sending, would properly show the full name. OK, maybe I’m getting a bit revved up. Imagine,  full payment checks showed up within 7 days, without any other explanation.

     The point of this blog is that insurance fraud is bad. It hurts deserving clients and it logically causes premiums to increase.  However, I don’t think that insurance companies should get a free pass on their conduct either. A quick google of insurance bad faith brings up a lot of examples of insurance companies not acting in good faith. As I have said in a few prior blogs, the fight continues! I wonder what ever happened to Jim the Mule?

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