OFFICE OFINSURANCE FRAUD

PROSECUTOR

ANNUAL

REPORT

2000

Office of Insurance Fraud ProsecutorDivision of Criminal JusticeDepartment of Law and Public Safety

ANNUAL REPORT

OF THE

OFFICE OF INSURANCE FRAUD PROSECUTOR

FOR CALENDAR YEAR 2000(Pursuant to N.J.S.A. 17:33A-24d)

SubmittedMarch 1, 2001

John J. Farmer, Jr.Attorney General

Kathryn FlickerDirector, Division of Criminal Justice

John J. Smith, Jr.Acting Insurance Fraud Prosecutor

Prepared by:

Office of Insurance Fraud ProsecutorDivision of Criminal Justice

Department of Law and Public SafetyP.O. Box 094

Trenton, NJ 08625-0094(609) 896-8888

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ACKNOWLEDGMENTS

The Acting Prosecutor would like to thank the following people for their contributions to thepreparation of the 2000 Annual Report:

DAG Stephen D. Moore, Liaison to County ProsecutorsJudy Burton, Administrative Assistant

Paul Loriquet, OAG Public Information OfficerPaula A. Carter, Senior Analyst

Michelle M. Apgar, Acting Civil SupervisorJohn Butchko, Liaison to Industry

Mitzi Gross, Senior Management Information Systems TechnicianSDAG John R. KrayniakASDAG Scott Patterson

DAG Jennifer FradelCharles A. Janousek, Liaison to Professional Boards

Annie Meredith, Special Projects CoordinatorSgt. Thomas A. Semon, New Jersey State Police

Patricia G. Miller, Administrative AssistantPatricia Walinski, Managing AssistantShari Grace, DCJ Media Coordinator

SSI Craig PerrelliSSI Martin SchwartzSSI Joseph Buttich

SSI Walter L. Braxton, IIILynn Wasserman, Secretarial AssistantHelen D. Hager, Secretarial Assistant

Gloria D. Tennesen, Secretarial AssistantAMDCI Quinton W. Collins, Sr.

DCI Jules MateoNora Schaffener, Office Manager

The Acting Prosecutor would also like to thank all Deputy Attorneys General, StateInvestigators and support staff assigned to the OIFP for their outstanding work, dedication andprofessionalism during calendar year 2000. The number and significance of OIFP’s criminalprosecutions continue to draw national recognition. The continued quality of OIFP’s civilinvestigations and the amount of monies collected as insurance fraud fines pursuant to consentorders have served to define the credibility and excellence of OIFP. The commitment andprofessionalism of each person assigned to OIFP are hereby acknowledged with pride and gratitude.

Finally, the Acting Prosecutor wishes to thank former Insurance Fraud Prosecutor EdwardM. Neafsey, and acknowledge his leadership and guidance which served to provide a solid basisupon which the Office of Insurance Fraud Prosecutor could achieve all that it has.

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PREFACE

The Office of Insurance FraudProsecutor (OIFP) was created pursuant tothe provisions of the Automobile InsuranceCost Reduction Act (AICRA) P.L. 1998, c.21,on May 19, 1998. As observed by theLegislature in the preamble to the Act,fraud, whether in the form of inappropriatemedical treatments, inflated claims, stagedaccidents, falsification of records, or anyother form, must be uncovered andvigorously prosecuted. According to theLegislative statement accompanying theAct, OIFP was established to “provide for amore effective investigation and prosecutionof fraud than exists at the present time.”

As required by the Act, the OIFP wasestablished in the Division of CriminalJustice in the Department of Law andPublic Safety under the direction of theInsurance Fraud Prosecutor, who isappointed by the Governor, approved by theSenate, and subject to the supervision ofthe Attorney General.

In order to ensure the effectivecoordination of the anti-fraud efforts ofvarious state agencies charged withcombating insurance fraud, AICRArequired, among other things, that certaincivil enforcement functions of the Divisionof Insurance Fraud Prevention in theDepartment of Banking and Insurance betransferred to the Office of Insurance FraudProsecutor pursuant to a plan ofreorganization (Reorganization Plan 0007-98), which Governor Christine ToddWhitman presented to the Legislature inJune of 1998.

In accordance with the ReorganizationPlan, the Division of Insurance FraudPrevention in the Department of Bankingand Insurance was transferred to, andofficially became part of, the Office ofInsurance Fraud Prosecutor within theDivision of Criminal Justice, Department ofLaw and Public Safety, on August 24, 1998.Assistant Attorney General Edward Neafseywas sworn in as New Jersey’s firstInsurance Fraud Prosecutor on October 28,1998. Upon the departure of InsuranceFraud Prosecutor Neafsey on July 1, 2000to accept appointment as New Jersey’s firstInspector General, Assistant AttorneyGeneral John J. Smith, a career prosecutorin the Division of Criminal Justice and theOffice of Insurance Fraud Prosecutor, wasappointed as Acting Insurance FraudProsecutor.

OIFP is charged under AICRA with theinvestigation of all types of insurance fraud,and serves as the focal point for criminal,civil and administrative investigations andprosecutions of insurance and Medicaidfraud within New Jersey. OIFP is alsoresponsible for coordinating all insurancefraud programs and activities among stateand local departments and agencies toensure a well integrated, cohesive anduniform statewide strategy for combatinginsurance fraud. The following constitutesthe second Annual Report of OIFP to theGovernor and Legislature pursuant toN.J.S.A. 17:33A-24d, which requires thatOIFP annually provide a report of activitiesconducted during the prior calendar year.

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STATEMENT OF THE PROSECUTOR

The Office of Insurance Fraud Prosecutor(OIFP) has completed two full years ofoperation. Like the Division of CriminalJustice of which OIFP is part, OIFP hascontinued to establish itself as a leading lawenforcement agency, accepting the mostdifficult and complex fraud matters forinvestigation and prosecution. In its first twoyears of operation, OIFP resolved many ofthose investigations with results extremelyfavorable to the State of New Jersey.

It is my firm belief that the wisdom andforesight of the New Jersey Legislature incrafting the Automobile Insurance CostReduction Act (AICRA) and creating the OIFPhas made New Jersey a leader in insurancefraud detection, investigation and enforcement.New Jersey has the benefit of having threeeffective enforcement options available toaddress insurance fraud: criminalinvestigations and prosecutions; civilinvestigations and a statutory mechanism toimpose civil insurance fraud fines; as well asprofessional licensing and other administrativesanctions. These three enforcement optionsprovide the corner stones for successfulinsurance fraud enforcement.

As mandated by the Automobile InsuranceCost Reduction Act (AICRA), the OIFP hassuccessfully assisted in coordinating theconduct of other New Jersey state departmentsand agencies having responsibility for thesethree enforcement options. Through thoroughOIFP case investigations to fully develop thefacts and the evidence, a well informeddecision can be made as to whether or not toproceed with one, two or all three of the aboveenforcement options with respect to a giveninsurance fraud matter. In this way, OIFP cansuccessfully select the most appropriate legalremedy and develop a comprehensive statewide

insurance fraud enforcement policy.

Criminal investigations and prosecutionsserve to deter all those who might be inclinedto engage in insurance fraud conduct. I ampleased to report that OIFP has once againachieved some extraordinary criminal caseresults. Those results are highlighted in thisreport.

I am also extremely pleased to report thatthe County Prosecutors’ Offices, which playan integral role in OIFP’s statewide strategy,have in calendar year 2000, with theassistance of the Office of Insurance FraudProsecutor, both in terms of resources andtraining, also achieved extraordinary criminalcase results. Some of those criminal caseresults are also highlighted in this report.

The very nature of many insurance fraudmatters dictates that civil insurance fraudinvestigations and the imposition of statutoryinsurance fraud fines are a vital component ofNew Jersey’s insurance fraud enforcementoptions. While criminal investigation andprosecution is the preferred legal remedy formany insurance fraud matters, it is not alwaysthe most appropriate legal remedy. Mattersinvolving small amounts of money stolen orattempted to be stolen, as well as facts andevidence which may not support the extremelyhigh burden of proof required for criminalconvictions, are oftentimes best addressedeither through the imposition of a civilinsurance fraud penalty with the consent ofthe subject of the civil fraud investigation, orthrough civil litigation to impose a civilinsurance fraud penalty. I am pleased toreport that OIFP has achieved significant civilinsurance fraud case results and some ofthose results are also highlighted in thisreport.

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It should be noted that OIFP has played asignificant role in the coordination ofprofessional license sanctions, working closelywith other state agencies having responsibilityfor professional licensing matters. I amtherefore pleased to report the results ofprofessional licensing penalties and sanctionsin this report.

OIFP also continued to serve as a focalpoint for continued communications anddialog with the insurance industry. Severalworking groups were formed during calendaryear 2000 consisting of representatives fromthe OIFP, other state agencies, and insurancecarriers to develop recommendations toimprove the flow of information required tosuccessfully investigate insurance fraudallegations and to improve the remediesavailable to the State to address insurancefraud. Several of those recommendations areincluded at the conclusion of this report.

In addition to civil and criminal caseinvestigations and prosecutions, AICRAimposed a host of other obligations upon OIFP.Among those obligations is the responsibility toeducate the public about insurance fraud.OIFP continued its Public Awareness MediaCampaign with radio and TV ads designed tobroadcast a message of deterrence. These adsfollowed those public awareness messagesbroadcast during OIFP’s first year ofoperations, which sought assistance from thepublic to report suspected insurance fraud.

As noted in this report, OIFP’saccomplishments over the past two years havenot gone unnoticed. In the year 2000 OIFP’s

efforts have been featured in nationalpublications, its Public Awareness MediaCampaign has earned prestigious mediaindustry awards, and its staff have beenrecognized for outstanding performance.

Finally, while it is appropriate to point outsome of the successes and highlights of OIFPoperations from the past year, I must alsopoint out that insurance fraud is becoming noeasier to detect, investigate and prosecute.The conduct of those who engage in fraud isbecoming increasingly more sophisticated.Additionally, it is no easier prosecuting theseoften complex white collar criminal and civilcases in either criminal or civil courts wherecrimes of violence and other cases frequentlyfill all too crowded court dockets, resulting inthe fact that insurance fraud cases may, attimes, be given less priority.

Nevertheless, OIFP remains firmlycommitted and dedicated to advocating thatinsurance fraud cases be addressed assignificant civil and criminal cases, and thatthese cases yield results that continue to deterany person who would defraud the insuranceindustry and the citizens of the State of NewJersey through false insurance claims andsimilar schemes. As OIFP looks to the future,I believe the coming year promises continuedsignificant criminal and civil case resultsbased on investigations that were opened andworked during calendar year 2000.

This report will begin with a briefsummary of some of the insurance fraud casehighlights achieved by the Office of InsuranceFraud Prosecutor during 2000.

John J. Smith, AAGActing Insurance Fraud Prosecutor

TABLE OF CONTENTSCRIMINAL CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INSURANCE FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

HEALTH CARE CLAIMS FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Fraud by Licensed Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

“Slip and Fall” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Phony Medical Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

AUTO INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

False Auto Theft Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Fake Property Damage Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Jump In Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

“Give-Up” Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Staged Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fake Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Using “Runners” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Phony Auto Insurance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

PROPERTY INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

LIFE INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

INSURANCE AGENT FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

CONTRACTOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

PUBLIC ADJUSTER FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

LABOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Unemployment Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Workers’ Compensation Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

MEDICAID FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Medical Treatment Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Medicaid Laboratory Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Medicaid Drug Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Medicaid Transportation Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

OIFP-CRIMINAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

INSURANCE FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

MEDICAID FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CRIMINAL INVESTIGATION AND PROSECUTION STATISTICS . . . . . . . . . . . . . . . . . . . 21

OIFP-CIVIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

CIVIL INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Referrals of Suspected Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Dispositions by Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Dispositions by Division of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CIVIL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Division of Law Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Civil Investigations Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

OIFP CIVIL STATISTICS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

COORDINATION OF LAW ENFORCEMENT, GOVERNMENT AND INDUSTRY . . . . . . . . . . 29

COUNTY PROSECUTORS’ OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Training of County Prosecutor Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Funding of County Prosecutors’ Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Highlights of Insurance Fraud Investigations by Counties . . . . . . . . . . . . . . . . . 31

STATE POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Insurance Fraud Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Auto Theft Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

MUNICIPAL POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

OTHER LAW ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Coordination with New Jersey Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Liaison and Continuing Communications Group . . . . . . . . . . . . . . . . . . . 40Department of Banking and Insurance (DOBI) . . . . . . . . . . . . . . . . . . . 42Department of Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Division of Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

INTERSTATE INSURANCE FRAUD COORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

National Association of Medicaid Fraud Control Units (NAMFCU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Mid-Atlantic States Insurance Fraud Association . . . . . . . . . . . . . . . . . . . . . . . . 43

State Fraud Directors’ Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

INSURANCE INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

OIFP TRAINING INITIATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Basic Course for Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Advanced Insurance Fraud Investigations Training Program (AIFITP) . . . . . . . . . . . . . . 46

Basic Insurance Fraud Training Program (BIFTP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Other OIFP In-Service Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Roll Call Training Videos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Regional Law Enforcement Coordination Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Offices of the County Prosecutor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Insurance Industry Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

OIFP SYSTEMS DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Case Management and Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

All Claims Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

PUBLIC AWARENESS ENDEAVORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

PUBLIC RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24 . . . . . . . . . . . . . . . . . . . . . . . . 52

A P P E N D I X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

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CRIMINAL CASE HIGHLIGHTS

OIFP opened 519 criminalinvestigations of 746 subjects allegedlyinvolved in insurance or Medicaid fraud andobtained 75 convictions in the year 2000.OIFP prosecutors also obtained sentencesfor 45 defendants. As the chart belowreflects, 19 defendants were sentenced tomore than 34 years of incarceration. The

sentences obtained also required 110 yearsof probation, $1,130,630 in restitution, and$403,350 in criminal and civil penalties.The following case summaries demonstratethe continuing progress of OIFP’s efforts toinvestigate and prosecute insurance fraudin its second full year of operation.

Name of Defendant Date ofSentencing

Jail Time Type of Insurance Fraud

Spencer, Kevin 1/7/00 3 years Theft (false health care claims)

Romero, Abigail 1/28/00 3 years Agent (bribery police accident reports)

Baker, Sheree 2/25/00 30 days Theft (false health care claims)

Anthony, Mark 5/9/00 5 years Medicaid fraud (false rx)

Butler, Elaugh 6/23/00 3 years Theft (false health care claims)

Lester, Lucy 6/30/00 4 years Theft (false health care claims)

Newman, Willie 6/30/00 90 days VOP, conspiracy, theft, false health care claims

Ivashenko, Alexander 7/7/00 180 days Theft (false health care claims)

Hernandez, Fabian 7/7/00 4 years Possession of stolen cars used in phonyinsurance claims

McDaniel, Darlene 7/28/00 180 days Theft (health care claims money from provider)

Rampersad, Vernon 8/4/00 180 days Medicaid-inflating patient transportationmileage charges

Alvarez, Samuel 10/6/00 94 days False PIP insurance claim

Usarzewicz, Steven 11/3/00 3 years Agent fraud

Milman, Boris 11/13/00 60 days Medicaid fraud (false transportation claims)

Soyfer, Alexander 11/13/00 60 days Medicaid fraud (false transportation claims)

Schultz, Anthony 12/1/00 364 days Added name to police report to make falseinsurance claim

Carmona, Yolanda 12/1/00 162 days Medicaid, unlicensed practice of medicine,endangering welfare of a child

UMurry, Tommie 1/5/01 3 years Medicaid fraud (false drug and counselingclaims)

UFagan, John 1/12/01 3 years Writing a false police report for a stolen vehicle

TOTAL 34 YEARS - 10 months

UAs reflected above, the Murry and Fagan sentences were not imposed until after January 1, 2001. It isanticipated that these two sentences will also be reported in the 2001 Annual Report, however they areincluded here in as much as both Murry and Fagan entered guilty pleas as part of significant OIFPprosecutions during 2000.

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INSURANCE FRAUD UNIT - CASE HIGHLIGHTS

HEALTH CARE CLAIMS FRAUD

Fraud by Licensed ProfessionalsState v. Carl Lichtman, et al. As OIFPpreviously reported, one of the largestinsurance fraud cases in the State’s historycontinued to advance significantly duringthe past year. Carl Lichtman, a formerlicensed psychologist, conspired with nearly200 people to defraud the State HealthBenefits Plan and approximately 35 otherinsurance carriers or health care plans outof more than $3.5 million for no showtreatments for “neurotic depression.”Lichtman pocketed the money he receivedfor the bogus treatments and then kickedback 25 percent to those persons who hadprovided their insurance information to himto submit the fictitious claims. Lichtmanwas able to steal millions from the carriersbecause he started a referral system inorder to recruit new “patients” so he couldfraudulently bill their carriers. Lichtmanwould typically pay $750 to a “recruiter” foreach person brought into the scheme.Some of the conspirators recruited as manyas a dozen people into the scheme.

On February 18, 2000, Kevin Spencer,an active recruiter of “patients,” wassentenced to a three year state prisonsentence, required to pay an insurancefraud fine of $10,000 and restitution of$11,094. Lucy Lester was convictedfollowing trial of conspiracy, theft bydeception and official misconduct. She wassentenced on June 30, 2000 to four yearsstate prison and ordered to makerestitution of $7,965 to the State HealthBenefits Program. Elaugh Butler was alsoconvicted following trial of conspiracy, theft

by deception and official misconduct. Shewas sentenced to three years state prisonand ordered to make restitution to the StateHealth Benefits Program. Sheree Baker, alower level conspirator, was sentenced to 30days in the Bergen County Jail, restitutionof $2,950 and insurance fraud fines in theamount of $2,500. Willie Newman wassentenced to 90 days in the Bergen CountyJail for violating probation based on hisconspiracy with Dr. Lichtman. By the closeof 2000, approximately 190 individuals hadbeen prosecuted for involvement in theLichtman conspiracy. Cases against theremaining co-defendants are pending incourt.

State v. Alexander Ivashenko On July 7,2000, Alexander Ivashenko, a formerlylicensed physical therapist and ChiefOperating Officer for a string of physicaltherapy offices in New York and northeastNew Jersey, was sentenced for theft in his"pocketing" of excess medical claimspayments which resulted in thevictimization of over 100 patients andinsurance organizations. Ivashenko wassentenced to five years probationconditioned on serving 180 days in countyjail, 200 hours of community service andthe payment of $75,000 in restitution. Therestitution payment, which Ivashenko madeimmediately following his sentencing, willbe divided among as many as 48 patients,and 58 insurance carriers and self-insuredorganizations.

State v. Anthony B. Spain, D.M.D. OnDecember 11, 2000, Anthony Spain pledguilty to an Accusation charging him withfalsifying records relating to orthodontic

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treatment he had provided to two minorchildren. He had received Medicaid anddirect payments from the children’s motherover a three year period, but in a sum lessthan he normally would have been paid.He sought to make up the shortfall througha claim to a dental insurance plan (DeltaDental) in which the mother had recentlyenrolled, misrepresenting the period oftreatment and billing prospectively for workalready completed and paid for. Spainvoluntarily made restitution to the carrierwhile the investigation was pending. Thiscase was scheduled for sentencing onFebruary 16, 2001. It will also be referredto the dental Professional Licensing Boardfor appropriate professional licensingaction.

“Slip and Fall”State v. Bruce Robert Tarlowe On April13, 2000, Bruce Robert Tarlowe, a licensedinsurance agent in the State of New Jersey,was charged by a State Grand Jury withhealth care claims fraud and attemptedtheft by deception. It is alleged thatTarlowe staged a phony "slip and fall"accident, and claimed that he fell as theresult of lettuce lying on the floor of theproduce aisle in an A&P Supermarket. Theindictment further alleges that Tarlowesubmitted more than 20 health insuranceclaims, totaling more than $5,700 to UnitedStates Life Insurance Company for injuriespurportedly resulting from the accident.During the court proceedings, Tarlowechallenged the appropriateness of charginghealth care claims fraud based on thisconduct, but the court denied his motion.This case remains pending in court.

Phony Medical BillsState v. Sharon DaCosta-Barrett, et al. On February 25, 2000, Sharmaine Wilsonwas sentenced, following her guilty plea toa charge of theft from Blue Cross/BlueShield, to five years probation. Herhusband, Edwin Wilson entered a plea andwas admitted to the Pre-Trial InterventionProgram. Previously, co-defendant SharonDaCosta-Barrett, a former Blue Cross/BlueShield health insurance claims processor,was sentenced to four years in state prisonfor causing the issuance of fraudulentclaims checks in excess of $97,000 to herhusband, Clive Barrett; her sister,Sharmaine Wilson; and her brother-in-law,Edwin Wilson. As a condition of Ms.Wilson’s probation and Mr. Wilson’sadmission into the Pre-Trial InterventionProgram, they agreed to be jointlyresponsible for the payment of $32,562 inrestitution, which represented one third ofthe total dollar amount stolen. CliveBarrett pled guilty to theft on March 17,2000. On June 2, 2000, he was alsosentenced to five years probationconditioned upon the payment of $32,562in restitution.

State v. The Healing Clinic, HudsonNeurological, Inc. Florida MedicalSupply and Mario Macias T h r e e n o wdefunct corporations, The Healing ClinicIncorporated, Hudson Neurological, Inc.and Florida Medical Supply, and theirformer manager and corporate officer, MarioMacias, were previously indicted fordefrauding numerous insurance carriers ofmore than $86,000. According to theindictment, the medical providers billed thehealth insurers for medical services thatwere never rendered and for medicalequipment that was never provided. OnMarch 17, 2000, the corporate defendants

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entered guilty pleas. The Healing Clinicpled guilty to one count of attempted theftby deception, and was later sentenced topay an insurance fraud penalty of $10,000,as well as other fines, and restitution in theamount of $48,041. Also on that date,Hudson Neurological pled guilty to onecount of attempted theft by deception, andwas later sentenced to pay a civiladministrative penalty in the amount of$10,000, as well as other fines andrestitution in the amount of $33,572.Florida Medical Supply also pled guilty toone count of attempted theft by deception,and was later sentenced to pay aninsurance fraud penalty of $10,000, as wellas other fines, and restitution in theamount of $5,283. The case against theindividual defendant, Mario Macias, is stillpending in court.

State v. Carrell Martin and DarleneMcDaniel On March 8, 2000, CarrellMartin and Darlene McDaniel were indictedon second degree charges of conspiracy andtheft by deception. The indictment chargedDarlene McDaniel, an employee of FamilyHealth Center (FHC), a subsidiary of UnionHospital, with diverting approximately$77,000 in checks issued by US Healthcareto FHC by portraying Martin as anosteopathic physician entitled to themoney. After being diverted by McDaniel,the checks were ultimately deposited intoCarrell Martin’s bank account and theproceeds split by McDaniel and Martin.The stolen money represented payments toFHC for medical services provided tovarious patients. On May 15, 2000, CarrellMartin pled guilty to conspiracy chargesand was sentenced to three years probationand restitution of $33,500. DefendantMcDaniel pled guilty to conspiracy andtheft by deception charges and was

sentenced to 180 days in the Union CountyJail as a condition of probation, ordered tomake restitution of $33,500 and ordered toperform 200 hours of community service.

State v. Joanne Panico O n M a y 2 6 ,2000, a former insurance adjuster, pledguilty to an Accusation charging healthcare claims fraud. Joanne Panico, formerlyemployed by Blue Cross/Blue Shield as aTeam Service Representative, was chargedwith defrauding her employer ofapproximately $3,500 by electronicallymanipulating claims in order to issuechecks in her husband’s name for servicesnever rendered. Panico was sentenced tofour years probation and was ordered topay restitution to Blue Cross, as well as a$5,000 civil insurance fraud fine.

State v. Barbara Moran On November28, 2000, Barbara Moran pled guilty tohealth care claims fraud and forgery arisingout of her submission of several fraudulenthealth care claims to Prudential InsuranceCompany. Moran filed the fraudulentclaims for reimbursement of medicalservices, which she claimed she receivedand paid for, but were never actuallyprovided. Moran submitted receipts fromvarious doctors, which she altered, tosupport her fraudulent claims. Under theplea agreement, Moran is required to pay a$5,000 civil insurance fraud fine. Hersentencing was scheduled for January 19,2001.

State v. Charlene Vaughan a.k.a.Charlene Jordan On June 16, 2000,Charlene Jordan was sentenced to threeyears probation and ordered to make$9,015 in restitution after pleading guilty totheft by deception. Jordan, who then usedher married name of Charlene Vaughan,

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worked as a claims adjuster for GREInsurance in Princeton. At GRE, shedefrauded her employer by issuingfraudulent payments to an outsideconsultant for fictitious services. Vaughanforged the consultant’s signature andcashed the checks.

State v. Xun-Cheng Huang On February25, 2000, a State Grand Jury returned aten count indictment against Xun-ChengHuang, a former professor of mathematicsat New Jersey Institute of Technology(NJIT). The Hudson County resident wascharged with one count of health careclaims fraud, three counts of theft bydeception, falsification of records relating tomedical care, and three counts of forgery.

The indictment alleges that fromJanuary, 1995 through September, 1996,while employed at NJIT, Huang submittedover 100 false claims for medical services inexcess of $40,000 for reimbursementthrough the State Health Benefits Program.Upon leaving his employment at NJIT, he isalleged to have submitted an additional 20fraudulent claims in excess of $2,500 underinsurance coverage obtained by hisdaughter while a student at the Universityof Pennsylvania. For most claims, thenamed medical provider did not exist andwas allegedly a fictitious provider created byHuang. For those claims where themedical provider did exist, the claimedservices were never provided. Huang failedto appear for his arraignment and a warrantfor his arrest has been issued.

State v. Lorna Kitson On April 14, 2000,Lorna Kitson was indicted for attemptedtheft by deception stemming from heralleged submission of health care bills inthe name of herself and others to twoinsurance carriers. Between 1995 and1997, Kitson, who had worked forHackensack University Medical Center,allegedly submitted bogus health insuranceclaims to Connecticut General LifeInsurance Company (CIGNA) and ProvidentLife and Accident Insurance Companytotaling more than $220,000 and receivedapproximately $146,000 from thosecarriers. CIGNA’s fraud unit referred theinvestigation to OIFP in March 1999.

AUTO INSURANCE FRAUD

False Auto Theft ClaimsState v. Tok Hwan Bae On September 6,2000, Tok Hwan Bae pled guilty to a onecount Accusation charging attempted theftby deception for his role in the submissionof phony invoices to Allstate InsuranceCompany. In October 1998 Bae filed astolen vehicle claim with Allstate for his1990 Mercedes 300 SL, allegedly stolenfrom a restaurant in New York. Hesubmitted two invoices, later proven to bebogus, in support of his $4,000 claim forcustom wheels. Bae received a six monthPTI term and paid a $3,000 civil fine.

State v. John B. Fagan On October 12,2000, West Orange police officer John B.Fagan pled guilty to an Accusation chargingone count of official misconduct based onhis writing of a false West Orange Policeautomobile theft report stating that a LandRover Discovery SUV had been stolen.Fagan also admitted that he had written asecond false police report representing thathis own vehicle, a Jeep Cherokee had been

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stolen. Automobile theft and related claimstotaling approximately $40,000 weresubmitted to three separate insurancecompanies. On January 12, 2001 Faganwas sentenced to three years in stateprison, a civil insurance fraud fine of$8,000 and restitution in the amount of$9,056.

Fake Property Damage ClaimsState v. Fabian Hernandez On June 19,2000, Fabian Hernandez pled guilty to aone count Accusation charging receivingstolen property. On July 7, 2000, BergenCounty Superior Court Judge Meehansentenced Hernandez to a four year stateprison sentence for his role in possessingseveral stolen vehicles utilized in a propertydamage insurance fraud scheme. Amongthe stolen vehicles investigators found onHernandez’s North Bergen lot were a 1990BMW 535, a 1992 BMW 325i, a 1996Nissan Maxima, a 1992 Lexus GS 400, anda 1995 Ford Thunderbird. Hernandezreceived the vehicles, valued atapproximately $82,000, between June 1995and November 1997 and then changed theirvehicle identification numbers to file bogusproperty damage claims with the carriers.

Jump In ClaimsState v. Anthony Schultz On December1, 2000, Anthony Schultz, was sentenced tofive years probation conditioned on hisserving 364 days in the Camden CountyJail for causing his name to be added to aPennsauken Police automobile accidentreport. After being identified in thePennsauken Police accident report ashaving been involved in the accident whenin fact he was not, a fraudulent practiceknown as a “jump in,” Schultz then filed anautomobile insurance Personal Injury

Protection (PIP) claim seeking more than$2,500 from CNA Insurance Company formedical visits which he purportedlyunderwent as the result of the accident.Schultz had entered a guilty plea to anAccusation charging health care claimsfraud on September 9, 2000.

“Give-Up” SchemesState v. Pablo Cordero, et al. InFebruary 1999, New Jersey State PoliceAuto Unit and OIFP investigators arrestedPablo Cordero and twelve other New Jerseyresidents for their roles in “giving up” theirvehicles to a New York Police Departmentpolice officer posing as a “chop shop”operator. On January 28, 2000, Corderowas sentenced to three years probation forhis role in bringing vehicles to theundercover New York garage. Additionally,Cordero agreed to cooperate with NJSPAuto Unit detectives and OIFP investigatorsto pose as a tow truck driver who coulddispose of “give up” vehicles to developother cases. From February 1999 throughOctober 2000, Cordero broughtinvestigators eleven vehicles with anapproximate value of $105,000.

On February 10, 2000, NJSP Auto Unitdetectives, in conjunction with OIFPinvestigators, arrested 20 defendants aspart of this “sting” operation. The arresteddefendants included eight middlemen andtwelve owners, including two municipalpolice officers.

Each of the defendants was chargedwith conspiracy to commit theft bydeception. The owners allegedly filed falsepolice reports and fraudulent affidavits ofvehicle theft to support their claims to thecarriers that their vehicles had been stolen.

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Six different insurance carriers weredefrauded into paying stolen vehicle claims.

State v. Mark Francekevich On February4, 2000, the Office of Insurance FraudProsecutor filed an Accusation andaccepted a guilty plea from MarkFrancekevich to charges of attempted theftby deception and false swearing. Thecharges were based on Francekevich’sfraudulent insurance claim to RutgersInsurance Company that his MitsubishiEclipse had been stolen when it wasactually “given up,” and on the falseaffidavit of vehicle theft he submitted insupport of that claim. On March 10, 2000,Francekevich was sentenced to two yearsprobation and a civil insurance fraud fine of$4,000.

State v. Bruce Michael Garry On October13, 2000, Bruce Michael Garry wassentenced to two years probation andpayment of a civil insurance fraud fine inthe amount of $1,000. Garry wassentenced for his conduct in “giving up” aNissan Pathfinder, and falsely reporting tothe West New York Police Department thatthe Pathfinder had been stolen. After thefalse report to the police, Garry submitteda fraudulent insurance claim in theapproximate sum of $27,725 to State FarmInsurance Company, falsely claiming thatthe Nissan Pathfinder had been stolen.

Staged AccidentsState v. Anhuar Bandy, et al. Theprosecution of this alleged large scalestaged accident ring advanced significantlyin 2000. Previously, ten people werearrested and search warrants wereexecuted at eight chiropractic clinics andmedical offices in several New Jersey

locations in the first large-scale, organizedauto insurance fraud ring prosecuted underthe new Health Care Claims Fraud Act.Arrest warrants were also obtained for twoadditional defendants who remain fugitives.The complaints charge Anhuar Bandy withbeing a leader of organized crime, and withconspiracy to commit racketeering andhealth care claims fraud. Bandy is chargedwith paying people to stage automobilecollisions in order to obtain patients fornumerous chiropractic clinics he allegedlyowned and operated, thereby generatingbillings under the Personal InjuryProtection (PIP) portion of automobileinsurance policies. As a result, OIFP hasidentified numerous allegedly fraudulentclaims submitted to insurance carriersthroughout the state. Another target of thisinvestigation, Alejandro Ventura, wascharged with conspiracy to commitracketeering and health care claims fraudfor arranging the automobile collisions andrecruiting the participants.

During the past year, six individualsinvolved in staged accidents, some stagedaccidents also involving undercover StateInvestigators, have entered guilty pleas.Five of the six individuals entered guiltypleas to conspiracy to commit theft bydeception. Another entered a guilty plea toa charge of attempted theft by deception forcausing claims in excess of $10,000 to besubmitted to Selective Insurance Companyfor treatment purportedly rendered to himat a Bandy operated clinic, when in fact, hehad not even been a passenger in thevehicle involved in the staged accident.Total insurance claims for the four stagedaccidents in which the arrested defendantsallegedly participated was in excess of$108,000. The cases against several of

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those arrested, as well as against othersidentified as the result of extensiveinvestigation, is pending furtherprosecution. Fake AccidentsState v. Phillip Major, et al. This casealso significantly advanced as 18defendants pled guilty to charges of theft orattempted theft by deception during year2000 as part of the continuing investigationand prosecution of former East Orangepolice officer Phillip Major and others.Major previously pled guilty to officialmisconduct and related charges forfabricating police accident reports. Thepleas from these 18 defendants accountedfor some $167,000 of the $900,000 infraudulent insurance claims which havebeen tied to Major’s malfeasance. It isanticipated that, with the cooperation ofthese defendants, as required under theterms of their guilty pleas, additionalsubjects will be charged in 2001.

In a related case, Mark Bendet (adisbarred attorney), Imelda Toquero (anurse and Bendet’s estranged wife) andEddie Boyd (a suspected runner) wereindicted in 2000 on charges of seconddegree bribery and second degreeconspiracy to commit bribery and officialmisconduct stemming from their allegedinvolvement with a medical practice knownas Metro Medical Services. On June 9,2000, OIFP caused the arrests of Bendetand Toquero in Texas and their return toNew Jersey to face those charges.

Using “Runners”State v. James Lee Campbell OnDecember 2, 2000, James Lee Campbell, arunner, pled guilty to a State Grand Jury

indictment charging Campbell withconspiracy and bribery in official matters.The indictment was based on Campbell’spayment of approximately $1,200 to anundercover Newark police officer to obtainNewark Police automobile accident reportsin order for Campbell to solicit the personsidentified in those reports for filinginsurance claims. Campbell is due toreturn to court for sentencing later thisyear.

State v. Abigail Romero On January 28,2000, Abigail Romero, a "runner" who paidapproximately $1,800 in bribes to anundercover Newark police officer topurchase police reports for use in thesolicitation of persons to make automobileinsurance claims, was sentenced to threeyears in state prison. She had previouslybeen indicted by a State Grand Jury andcharged with conspiracy, bribery in officialmatters, and official misconduct for payingthe undercover officer bribe money toobtain police automobile accident reports.Romero would then refer the personsidentified in those police accident reports toreceive chiropractic treatment and fileautomobile insurance claims.

State v. Jerome F. Bollettieri andThomas DiPatri On October 20, 2000,the Office of Insurance Fraud Prosecutorobtained and executed arrest warrants forLt. Jerome F. Bollettieri, the officer incharge of the Camden County PoliceDepartment Records Section, and retiredCamden Police Department SergeantThomas DiPatri. Bollettieri and DiPatriwere arrested and charged with conspiracyto commit official misconduct and officialbribery. It is alleged that they acceptedmoney in return for providing Camden

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Police Department automobile accidentreports to other individuals in order forthose individuals to solicit the personsidentified in those police accident reports tobecome patients and submit automobileinsurance claims. The OIFP’s investigationin this matter is continuing and additionalcharges are anticipated.

Phony Auto Insurance DocumentsState v. Joann Sullivan On December 15,2000, Joann Sullivan waived indictmentand pled guilty to a one count Accusationcharging theft by deception in the thirddegree. The indictment charged Sullivanwith obtaining $8,855 from First TrentonIndemnity by creating or reinforcing thefalse impression that she was entitled tocompensation for lost wages and essentialservices under the Personal InjuryProtection (PIP) component of herautomobile policy as a result of an accidentshe was involved in on July 23, 1997. Theinvestigation revealed that Sullivan falsifiedthree letters purportedly from her medicalproviders in order to collect lost wages andessential services from her automobilecarrier. Essential services include paymentby an insurance carrier for assistance withhousehold work, child care and othermiscellaneous chores which would havenormally been performed by the insured.These payments were made directly toSullivan. Sullivan was scheduled to besentenced on February 16, 2000.

PROPERTY INSURANCE FRAUD

State v. Athena J. Tomasso OnSeptember 15, 2000, Athena J. Tomassowas indicted on attempted theft and forgerycharges in connection with a falsehomeowners’ claim. Tomasso allegedly

made a claim worth $15,935 on herhomeowners’ policy for vandalism andproperty allegedly damaged or stolen duringa burglary. To support her claim, Tomassoallegedly provided false information to theinsurance carrier about the items that werestolen or damaged. The false informationincluded receipts for property that wasreturned to the seller before the burglary,and forged receipts for nonexistentpurchases. The carrier stopped payment onthe claim after discovering the bogusreceipts. The case is pending in SuperiorCourt.

State v. Paul LoPapa On October 25,2000, Paul LoPapa was indicted by a StateGrand Jury on 15 counts charging him withtheft and attempted theft by deception,misconduct by a corporate official, failureto file a New Jersey Income Tax-ResidentReturn, failure to pay New Jersey GrossIncome Tax with intent to evade, falsifyingrecords and forgery. The investigationleading to the indictment was conductedjointly by the New Jersey State Police andOIFP. In addition to a fraudulent realestate financing scheme, the indictmentcharges LoPapa with attempting to file afraudulent insurance claim under hishomeowners’ policy in the sum of $33,400for purported water damage. The case ispending trial.

LIFE INSURANCE FRAUD

State v. Lucille Dennis On October 16,2000, the State Grand Jury returned a 14count indictment against Lucille Dennis forallegedly attempting to collect accidentaldeath benefits for her late husband andbrother, both of whom died natural deaths.Typically, these attempts were allegedly

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made by altering police reports and/ordeath certificates to reflect accidents whichnever occurred. These attempts are allegedto have taken place between 1995 and 1998against five different insurance companies.The most recent attempt involves an allegedeffort to collect on a $1 million accidentaldeath policy. In that case, it is charged thatDennis enrolled her husband for theaccidental death benefits three monthsafter he had already passed away. Dennisis currently a fugitive and a bench warranthas been issued for her arrest.

INSURANCE AGENT FRAUD

State v. Steven M. Usarzewicz OnNovember 3, 2000, Steven M. Usarzewicz, aformerly licensed insurance producer andsecurities dealer, was sentenced to threeyears in state prison after pleading guilty tothe looting of over $100,000 from the trustfunds and insurance policies of a client’stwo minor children. On December 8, 2000,the sentencing court also ordered thatUsarzewicz make payment of restitution inthe sum of $106,810.

State v. Joseph Greenfield On November9, 2000, Joseph Greenfield, a licensedinsurance agent in New Jersey, pled guiltyto an Accusation charging theft bydeception. The Accusation chargedGreenfield with theft of approximately$65,232 representing insurance premiumsfor a variety of insurance policies includingcommercial auto and multi-peril insurance,accident/sickness coverage and workers’compensation, along with a “floater” forequipment damaged or lost, which he soldto the Marlboro Township Board of FireCommissioners, Fire District #2. Greenfieldpurposely overcharged the fire district forthe insurance coverage and kept the excess

money. On January 12, 2001 Greenfieldwas sentenced to three years probation,and restitution in the amount of $65,232.Because he was a licensed insurance agent,the OIFP referred Greenfield’s criminalconviction to the Department of Bankingand Insurance for appropriate action withrespect to Greenfield’s insurance agent’slicense.

State v. Richard Leavitt On August 25,2000, a former licensed insurance producerwho operated an insurance agency inSomerville, NJ, pled guilty to theft bydeception and falsifying records for failingto remit $16,924 in premium funds to aninsurance company on behalf of an insuredfor an automobile policy. Leavittfraudulently collected the premium fundsfrom the insured, Atlantic SportsManagement, for coverage for sevenvehicles which were purportedly insured byNew Hampshire Insurance Company, eventhough the policy had not been renewedand was no longer in effect. Leavitt keptthe premium money and used it forpersonal expenses. Leavitt also admitted toproducing a fraudulent auto insuranceidentification card for one of the vehiclespurportedly insured under the policy. OnOctober 20, 2000, he was sentenced tothree years probation and was ordered topay full restitution and a $5,000 insurancefraud fine.

CONTRACTOR FRAUD

State v. Jeffrey Nemes On December 18,2000, Jeffrey Nemes, a Hamilton Twp.police officer was charged with theft byfailure to make required disposition ofmoney in excess of $75,000. Theindictment alleges that Nemes, whooperated a construction business in

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addition to being a Hamilton Twp. policeofficer, stole in excess of $75,000 ininsurance claim money from severalpersons who suffered property damage tohomes or commercial businesses that theyowned. This case remains pending incourt.

PUBLIC ADJUSTER FRAUD

State v. Michael Winberg On September22, 2000, Michael Winberg, a licensedpublic adjuster, was indicted for allegedlystealing over $15,000 which representedthe insurance proceeds settlement checksfrom two clients. The indictment allegesthat Winberg, in his capacity as a licensedpublic adjuster working for AmericanAdjustment Agency of Bordentown, NewJersey, was retained by two homeowners tonegotiate settlements with PrudentialInsurance Company following damage totheir homes from a storm. Prudentialissued five checks, each made payable toone of the homeowners and AmericanAdjustment Agency as co-payees. Winberg,allegedly had each homeowner endorse thechecks, then cashed them and kept themoney for his own personal use. The caseis pending in court.

LABOR FRAUD1

As a result of a cooperative effort amongOIFP, the Labor Prosecutions Unit of theDivision of Criminal Justice, and the NewJersey Department of Labor, the followingunemployment insurance fraud cases andworkers’ compensation cases were filed:

Unemployment Insurance FraudState v. Renee Brown; State v. ZinaShivers On August 29, 2000, two personswere separately indicted by a State GrandJury for allegedly falsifying officialdocuments in order to obtain thousands ofdollars in unemployment insurance towhich they were not entitled. AllegedlyBrown received more than $15,000 andShivers over $8,000.

State v. Anthony Pagan; State v. MarkDiNacola; State v. Vanegas Wilborne;State v. Darnell Toliver; State v.Bernard Wilson On September 29, 2000,five persons were separately indicted by aState Grand Jury for allegedly falsifyingofficial documents in order to obtainthousands of dollars in unemploymentinsurance to which they were not entitled.Allegedly, Toliver received over $8,000,DiNacola received almost $12,000 andPagan received over $8,500.

State v. Walter Harris; State v.Constance Odoemena-Henderson; Statev. Pamela Mundy; State v. AndegdoNaccillo On December 4, 2000, fourpersons were separately indicted by a StateGrand Jury for allegedly falsifying officialdocuments in order to obtain thousands ofdollars in unemployment insurance towhich they were not entitled. AllegedlyHarris received more than $9,000 andOdoemena-Henderson received over$7,000.

1 All cases reported in the Labor Fraud sectionof OIFP’s Annual Report may also be reported elsewhereby the Division of Criminal Justice.

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State v. Johhny Medrano; State v.Gregory K. Jones; State v. DeniseDinielli; State v. Charles Gosha; State v.Camille Buffa; State v. Frank Tarantino;State v. Deborah Brown On December18, 2000, seven persons were separatelyindicted by a State Grand Jury for allegedlyfalsifying official documents in order toobtain thousands of dollars inunemployment insurance to which theywere not entitled. Allegedly, Medranoreceived more than $12,000, Tarantinoreceived over $12,000, Buffa received over$9,000 and Jones received almost $9,000.These cases are pending in Court in variousstages of prosecution.

Workers’ Compensation Insurance FraudState v. Lawrence Ford, Sr. OnSeptember 18, 2000, Lawrence Ford, Sr.was sentenced pursuant to an indictmentcharging him with theft by deception andforgery for cashing more than $150,000worth of workers’ compensation checksissued to his deceased father. Ford wassentenced to five years probation and givenfive days jail credit. The case had beenreferred by the Division of Workers’Compensation after new computertechnology designed to uncover workers’compensation fraud revealed potentialfraud.

State v. Maude E. Huggins On November8, 2000, Maude E. Huggins pled guilty toan Accusation charging second degree theftby deception, third degree theft bydeception and two counts of fourth degreeforgery. The charges stem from her falselyendorsing $200,430 worth of benefit checksfrom New Jersey Manufacturers InsuranceCompany and the State of New Jersey. Bypleading guilty, she admitted that shefraudulently obtained disability benefitsfrom the Second Injury Fund, a program

operated by the Division of Workers’Compensation within the New JerseyDepartment of Labor. Huggins admittedthat she forged the name of a deceasedassociate, who had legitimately received thebenefit payments until his death inSeptember 1989. She also admitted tofraudulently obtaining $63,784 in disabilitybenefits from New Jersey ManufacturersInsurance Company for the same timeperiod and same deceased associate.

State v. Leonard Lipman On September25, 2000, Leonard Lipman pled guilty to anAccusation charging failure to provideworkers’ compensation coverage. Lipmanadmitted that an employee was injuredwhile working for him at Serene RestaurantEquipment Corporation and agreed to pay$73,248 to the Uninsured Employer Fundof the New Jersey Department of Labor.

MEDICAID FRAUD UNIT - CASEHIGHLIGHTS

Medical Treatment FraudState v. Tommie Murry and The ExcelCenter, Inc. On August 1, 2000,defendants Tommie Murry and The ExcelCenter, Inc., a subsidiary of FacilitiesManagement Associates, Inc., entered guiltypleas in Superior Court, Mercer County, tothe crime of theft by deception pursuant tothe terms of a plea agreement negotiatedwith OIFP. Murry, formerly the ExecutiveDirector of the Excel Center, together withthat corporation, admitted to defrauding theMedicaid Program of approximately$600,000 through the submission of falseclaims for group and individual therapysessions which never occurred. The ExcelCenter had operated as a substance abusetreatment center in Vineland, New Jersey.

As a result of these guilty pleas, on

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January 5, 2001, defendant Murry wassentenced to three years in state prison andthe corporation was sentenced to and paida fine of $10,000. Both defendantsconsented to an order debarring them fromparticipation in the Medicaid Program andwaived any claims to approximately $1.7million that had previously been forfeited inconnection with the case.

State v. Yogendra Sharma YogendraSharma, the sole owner and operator ofAdvanced Optical, previously pled guilty toa one count Accusation of health careclaims fraud, for recklessly committinghealth care claims fraud in the course ofproviding professional services. Sharma, anoptometrist, billed Medicaid for serviceswhich were never prescribed by a physicianand which were never provided by Sharmato Medicaid recipients. The majority of hispatients were elderly. On February 8,2000, Yogendra Sharma was sentenced inMercer County to four years probation,ordered to pay restitution in the amount of$2,951, and a criminal fine of $12,000, andto serve 100 hours of community service.Additionally, he was debarred fromMedicaid and any similar health insuranceprograms for a minimum of five years. Thejudge ordered Sharma’s optometrist licenseto be suspended for one year during whichtime he is barred from the practice of theprofession.

State v. Alice Yolanda Carmona OnOctober 23, 2000, defendant Carmona pledguilty to a one count Accusation chargingMedicaid fraud. Carmona was an employeeof a mental health clinic and after thedoctor left the clinic, Carmona, who was notlicensed as a medical care practitioner,continued to provide mental healthcounseling to Medicaid patients.

On December 1, 2000, Carmona wassentenced to three years probation and 162days timed served in the CumberlandCounty Jail. She was also debarred fromthe Medicaid program for a minimumperiod of five years. As indicated elsewherein this report, Carmona also pled guilty toCumberland County charges relating to theunlicensed practice of medicine.

Medicaid Laboratory FraudState v. Venditti Clinical Laboratory, etal. On August 1, 2000, Venditti ClinicalLaboratory of South Plainfield, MohammedSaleem, Iftikhar Hussain and Abdul HafeezRaja, owners and operators of VendittiClinical Laboratory were indicted forconspiracy, Medicaid fraud and misconductby a corporate official. The defendantsallegedly paid almost $347,000 inkickbacks to encourage clinic owners tosubmit blood samples to the laboratory toundergo an expensive panel of diagnostictests. All the samples submitted were fromMedicaid recipients and paid for by theMedicaid Program. The defendantsallegedly attempted to hide the kickbackpayments by writing checks from theVenditti business account to fictitiousbusiness entities controlled by the variousclinic owners. This case is pending trial inMiddlesex County.

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State v. Janet Scarpitta On October 23,2000, Janet Scarpitta, the former managerof Roseville Medical Center in Newark, andAmad, Inc., also in Newark, was indicted forconspiracy, Medicaid fraud, and theft bydeception. Scarpitta was charged withfabricating blood requisition forms inconnection with fraudulent blood testspurportedly performed by United DiagnosticLaboratory and causing Medicaid to bebilled approximately $129,991 for expensesrelated to the purported blood testing. Inaddition, while working as office manager ofAmad, Inc., Scarpitta is alleged to havedeposited into her bank account 17 checkstotaling $5,877 made payable to threedoctors, without the authorization of thosedoctors. The case is pending trial inMonmouth County.

Medicaid Drug FraudState v. Mark Anthony On May 9, 2000,Anthony was sentenced to five years inprison after he pled guilty to one count ofhealth care claims fraud. Anthony engagedin a scheme to defraud the MedicaidProgram by forging prescriptions for high-priced drugs. Using stolen or purchasedMedicaid cards, he had these prescriptionsfilled at pharmacies which in turn billed theMedicaid Program. Anthony then sold thedrugs on the street for a fraction of theirvalue. OIFP investigators from theMedicaid Fraud Section, were able todetermine that Anthony was responsible forover $250,000 in Medicaid billings beforehe was apprehended.

State v. Hanan Selim, Wail Aly andPaterson Community Pharmacy OnMarch 3, 2000, a State Grand Jury indictedthe defendants for conspiracy and Medicaidfraud. Additionally, Hanan Selim, alicensed pharmacist, was charged as a

practitioner with one count of health careclaims fraud. Aly was also indicted for onecount of health care claims fraud as a non-practitioner. The defendants owned andoperated Paterson Community Pharmacy inPaterson. It is alleged that the defendantspurchased prescriptions for Serostim, anexpensive anti-AIDS medication. It is alsoalleged that the defendants did notdispense the medication but submitted aclaim for reimbursement to the MedicaidProgram, and received approximately$170,000 in Medicaid payments. It isfurther alleged that in an attempt to coverup their crime, the defendants submittedfalse invoices to establish that theirinventory contained the amount of drugsprovided. This matter is pending in PassaicCounty. Medicaid Transportation FraudState v. I&I Invalid Coach, ImadElbashir and Imadelin Khair OnNovember 29, 2000, Imad Elbashir,Imadelin Khair and I&I Invalid Coach wereindicted for conspiracy, health care claimsfraud, theft by deception, Medicaid fraud,and corporate misconduct. I&I was aninvalid coach provider in Clifton, NewJersey, owned by defendants Imad Elbashirand Imadelin Khair, that provided non-emergency medical transportation toMedicaid recipients. It is alleged that,between November 15, 1995 and July 27,1999, I&I inflated mileage on claimssubmitted to the Medicaid Program andreceived $90,000 more than it was entitledto for services rendered. In addition, thedefendants are alleged to have paid cashkickbacks to several Medicaid recipients inexchange for their continued patronage.The matter is pending in Passaic County.

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State v. Lakshminarine Rampersad OnAugust 4, 2000, Rampersad, the owner ofFirst Invalid Coach Company in Landing,Morris County, was sentenced to 180 daysin the Morris County Jail and placed onprobation for three years. Rampersad alsowas disqualified from participation as atransportation provider in the New JerseyMedicaid Program for a minimum period ofeight years and relinquished all rights to$172,400 in claims submitted by him thathad been held in abeyance until theconclusion of this case. This case wasreferred to the Medicaid Fraud Section inthe OIFP by the Division of MedicalAssistance and Health Services. An audithad revealed unusually high mileagecharges which was confirmed by OIFPinvestigation.

State v. Genady Chulak; State v. ElanaBilenkin On December 14, 2000, a juryfound Genady Chulak, owner of GGEImpact Corp. t/a Medicall, guilty of theft bydeception, Medicaid fraud, and misconductby a corporate official. Chulak defraudedthe Medicaid Program by submittingapproximately $400,000 in false claims. Hefalsely certified to the Medicaid agency themileage driven to transport Medicaidrecipients, which was greatly in excess ofthe mileage actually driven. Additionally,Chulak had provided illegal kickbacks toMedicaid recipients in the form of cash,checks and other valuable items.Sentencing for Chulak was scheduled forFebruary 20, 2001. On December 5, 2000Elana Bilenkin, wife of Genady Chulak andco-owner of GGE Impact Corp. t/a Medicallpled guilty to one count of Medicaid fraud,for knowingly and willfully making falsestatements of material fact on Medicaidclaim forms, and one count of Medicaidfraud for offering kickbacks in connection

with the furnishing of Medicaid services.Sentencing for Bilenkin was scheduled forFebruary 5, 2001.

State v. Alaa Baker and Ali Baker OnApril 28, 2000, Alaa and Ali Baker, ownersof Royal International Trade and Services,Inc., were indicted by a State Grand Juryfor conspiracy, theft by deception,misconduct by a corporate official andMedicaid fraud. The defendants, throughtheir company, provided transportationservices to Medicaid recipients in theMonmouth County area. They allegedlysubmitted approximately 1,902 fraudulentclaims for services not rendered andinflated mileage charges on other claimsresulting in losses of approximately$138,380 to the Medicaid Program. Bothdefendants were arrested in Virginia and,after an extradition hearing, ordered toappear in Monmouth County SuperiorCourt. Both defendants failed to appearand arrest warrants were issued for them. State v. Rafik Raziq On November 30,2000, a State Grand Jury returned anindictment charging Rafik Raziq with theftby deception, misconduct by a corporateofficial and Medicaid fraud. Raziq was theowner and manager of Absolute Transportand Limousine Service in MonmouthCounty. He is alleged to have unlawfullyobtained more than $140,000 from theState Medicaid Program by submittingclaims for services that were not renderedand inflating mileage charges on otherclaims. A warrant has been issued forRaziq’s arrest.

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State v. Alexander Soyfer, Boris Milman,Vadim Boguslavskiy and A&B InvalidCoach Company On March 29, 2000, thedefendants were indicted by a State GrandJury for conspiracy, theft, Medicaid fraudand misconduct by a corporate official. Thedefendants operated A&B Invalid Coach inWoodbridge, New Jersey. They werecharged with defrauding the MedicaidProgram by submitting approximately$141,000 in false claims, falsely certifyingto the Medicaid agency that recipients werein need of invalid coach services when theywere not. They also inflated mileagecharges on claims they submitted.

On October 2, 2000, defendants Milmanand Soyfer pled guilty to Medicaid fraud.On November 13, 2000, the defendantswere each sentenced to four yearsprobation, ordered to spend 60 days in theMiddlesex County Jail, and to pay $42,153restitution, as well as to debarment fromthe Medicaid Program. On December 18,2000, defendant Boguslavskiy pled guilty toone count of Medicaid fraud. Hissentencing was scheduled for February 20,2001. State v. Stone Arch Health Care Center,Inc., Nancy Tofani and David Hofstetter On February 14, 2000, a State GrandJury indicted David Hofstetter, NancyTofani and Stone Arch Health Care CenterInc., for conspiracy, theft by deception, andMedicaid fraud. David Hofstetter andNancy Tofani were also indicted formisconduct by a corporate official. StoneArch is a nursing home owned by defendantHofstetter. Nancy Tofani is theadministrator of Stone Arch. This caseinvolves approximately $104,566 in allegedMedicaid fraud. The defendants are

alleged to have submitted false expenses oncost reports to the Medicaid agency. Theallegedly fraudulent expenses are related toa bus that Stone Arch purportedly used forpatient care but which was actuallyinoperable. It is also alleged that StoneArch reported to Medicaid the salary andhealth benefits of an alleged "no-show"employee who was the daughter of thenursing home owner. The case is pendingin Mercer County.

State v. M&G Livery and Transportation,Inc., Gregory Sverdlov, Raisa Zeltser OnJune 21, 2000, the three defendants wereindicted in connection with the operation ofa livery transportation company called M&GLivery and Transportation, Inc. Theindictment variously charged GregorySverdlov, Raisa Zeltser and the corporationwith conspiracy, Medicaid fraud, theft bydeception, and misconduct by a corporateofficial.

Sverdlov and Zeltser, who were married,are alleged to have fraudulently operatedM&G Livery and Transportation, Inc. bypaying kickbacks to induce Medicaidrecipients to use their company, by billingfor people ineligible to receive Medicaid, bytransporting Medicaid recipients todestinations not allowable under Medicaidregulations and by submitting falseinformation on Medicaid forms to avoidMedicaid scrutiny. This matter is currentlypending trial in Union County.

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OIFP-CRIMINAL

OIFP’s criminal cases are investigated byState Investigators within the Division ofCriminal Justice, Department of Law andPublic Safety, who are assigned to the OIFP.Deputy Attorneys General within theDivision of Criminal Justice, also assignedto OIFP, prosecute OIFP’s criminal cases.These Deputy Attorneys General andinvestigators are assigned to squads in theInsurance Fraud Unit or the MedicaidFraud Unit of OIFP, which are each headedby a Supervising Deputy Attorney General.Investigators within these units report to aSupervising State Investigator, who, inturn, reports to the Deputy ChiefInvestigator in charge of OIFP -Criminal.The Deputy Chief Investigators in charge ofOIFP-Criminal and OIFP-Civil aresupervised by OIFP’s top rankinginvestigator, the Managing Deputy ChiefInvestigator, who oversees all OIFPinvestigators and investigations, both civiland criminal. Currently, the OIFPManaging Deputy Chief Investigatorposition is vacant. The Deputy ChiefInvestigator-Criminal has been serving asboth the Deputy Chief Investigator-Criminaland as the Managing Deputy ChiefInvestigator for OIFP, following thedeparture of the former Managing DeputyChief Investigator to join the InspectorGeneral’s Office on August 11, 2000.

The Insurance Fraud Unit of OIFPinvestigates and prosecutes all types ofinsurance fraud, most of which involveeither health, automobile, homeowners, orcommercial insurance policies. Healthinsurance fraud constitutes a significantportion of cases handled by OIFP. Healthcare claims fraud may be committed by

health care providers, such as doctors,dentists, chiropractors, etc. or by individualpatients, or by others providing health carerelated services, such as medical billing andinvalid transportation businesses. Healthcare claims fraud occurs when a person orbusiness makes a misrepresentation in ahealth claim for benefits under a policy ofhealth insurance. See N.J.S.A. 2C:21-4.2.For example, health care claims fraud iscommitted when a physician knowinglysubmits bills for unnecessary medicalprocedures or for medical services that werenot provided. Similarly, a patient commitshealth care claims fraud when submitting aclaim for medical benefits for treatment offeigned injuries, when submitting falsemedical receipts for reimbursement or,when as an accomplice, a healthcareprovider submits a false or inflated claim forshared benefits.

According to the United States GeneralAccounting Office, health care fraud lossesmay constitute as much as ten percent ofour nation’s annual health careexpenditures. In addition to increasing ourhealth care insurance premiums, healthcare claims fraud may also adversely affectthe quality of medical care rendered bythose committing health care fraud anddiminish available funding for medicalresearch.

Because false or inflated health careclaims frequently arise in the context ofautomobile accidents, these claims alsoimpact the premiums charged for thePersonal Injury Protection (PIP) componentsof car insurance in New Jersey. OIFPplaces a high priority on the prosecution of

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individuals and practitioners engaging inhealth care claims fraud, as exemplified byits prosecutions of phony clinics andmedical mills, often times associated withstaged accident rings.

Staged accidents are among the crimes ofmost concern to OIFP because of the threatto the safety of the motoring public andinnocent bystanders. In this type ofinsurance fraud, the subjects plan andintentionally cause a motor vehiclecollision, often purposely involvingunsuspecting motorists in the “accident.”Typical staged accident scenarios involvepassing an innocent motorist and abruptlybraking, causing the motorist to appear atfault by causing him to crash into the rearof the subject’s vehicle; or waving anunsuspecting motorist from a stop sign orparking spot and then quickly proceeding tocrash into the unsuspecting motorist, againin an attempt to make the unsuspectingmotorist appear at fault. Other stagedaccident scenarios involve an intentionalsideswipe in which the driver in the insidelane of a dual left turn lane intentionallydrifts into the outer lane causing acollision, and the “hit and run” when thesubject drives a damaged vehicle to a publiclocation and falsely reports that thesubject’s vehicle had just been damaged bya fleeing driver.

Subjects who stage such events frequentlyplant coached “witnesses” at the scene ofthe alleged accident or as passengers in thepurported accident, and may subsequentlywork with unscrupulous doctors, lawyers,or auto repair facilities to fabricate or inflateclaims for injury or property damage.Those engaged in staging multiple accidentssometimes attempt to “fly below the radar

screen” of law enforcement by the use ofaliases supported by phony credentials,such as false social security numbers andcounterfeit drivers’ licenses. Because of thepotential for serious injury to innocentvictims, staged accidents pose a significantthreat to the safety of the public.

OIFP has also committed to theprosecution of fraudulent automobileinsurance theft claims resulting fromstaged auto thefts, sometimes referred to as“give-ups.” In these cases, an automobileowner or lessee purposely abandons ordisposes of the insured automobile in orderto fraudulently collect the insuranceproceeds, frequently turning the vehicleover (the “give-up”) to an intermediary.Often those who lease automobiles stagethese vehicle thefts to avoid the substantialmileage or repair costs which mightotherwise have to be paid by the lesseeupon the return of the vehicle to the leasingcompany at the conclusion of the lease. Inother cases, a theft is staged to enable anowner to recover more than the ownerwould have received from the purchaser ina legitimate sale. Vehicles which are givento a middle man may be exported for foreignresale, quickly disassembled at a “chopshop” which sells the parts on the blackmarket or uses the parts in conjunctionwith an auto body repair business, or maybe simply destroyed or otherwise disposedof to prevent the insurance company fromreturning a recovered vehicle to the owneror lessee. The search of lakes, rivers andponds frequently reveals automobiles whichwere the subject of “give-up” thefts. Asexplained elsewhere in this report, toaddress the growing problem of fraudulentauto theft claims, OIFP-Civil has instituteda program designated as the “Give-Up

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Initiative,” to focus and coordinate lawenforcement efforts in the detection,investigation and prosecution of thesephony auto theft claims.

Medicaid fraud investigations andprosecutions also comprise a significantportion of the criminal case load of theOIFP. The Medicaid Program is a state andfederally-funded health insurance programthat pays for the health care needs of thedisabled and economically disadvantaged ofour state. In New Jersey, the state andfederal government equally share the cost ofthe Medicaid Program. In 2000, OIFP’sMedicaid Fraud Unit was responsible forpolicing the state’s Medicaid Program whichexpended over $5.5 billion in medicalassistance payments. The state’s share ofthe Medicaid expenditures representsapproximately fifteen percent of NewJersey’s annual budget.

The Medicaid Fraud Unit investigates andprosecutes health care providers such asdoctors, pharmacists, dentists and ancillaryservice providers, who defraud the MedicaidProgram. As a general rule, the Unit doesnot prosecute Medicaid patients whodefraud the program. Rather, these mattersare referred to the state’s Medicaid agency,the Division of Medical Assistance andHealth Services in the Department ofHuman Services. However, if a conspiracyexists between a Medicaid patient andprovider to defraud the program, theMedicaid Fraud Unit will investigate andprosecute all parties in the conspiracy.Medicaid fraud occurs when a providerfraudulently receives medical assistancepayments to which he is not entitled or in agreater amount than that to which he isentitled. Effective January 15, 1998, withthe passage of the Health Care ClaimsFraud Act, a provider who commits

Medicaid fraud also will have committedhealth care claims fraud.

The New Jersey Medicaid Program isgenerous in its benefits in that it pays fornon-emergency transportation for Medicaidrecipients to and from their homes and theplace where a service reimbursed byMedicaid is rendered. The programprovides different modes of transportationdepending upon the Medicaid beneficiaries’ability to ambulate without assistance.Livery transportation is provided to thosewho can ambulate and do not needassistance going between home andmedical services. Mobility assistedvehicles, in the past referred to as invalidcoach services, are available to those whoare wheelchair bound or not able toambulate freely due to a medical or mentalcondition. These transportation services,while intended to assist the medical needsof patients, also present an inviting targetfor providers intent upon committing fraud.This fraud is also committed by inflatingthe mileage for patient transportationclaims, billing for services that were notprovided, and falsifying prior authorizationforms to qualify a recipient for mobilityassisted services. This service is paid at ahigher rate than livery service.

INSURANCE FRAUD UNIT

The Insurance Fraud Unit (IFU) iscurrently overseen by an Acting SupervisingDeputy Attorney General, who has beenassigned to the headquarters office of theOIFP in Lawrenceville since the departure ofthe former Supervising Deputy AttorneyGeneral on August 11, 2000. The Unit’sstaff of 22 Deputy Attorneys General and 57Criminal Investigators is divided into fivesquads. Squads one and two are housed inOIFP’s north office in Whippany; squads

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three and four in the Lawrenceville office;and squad five in the Cherry Hill southoffice.

A Deputy Attorney General in each squadserves as team leader of the other DeputyAttorneys General in that squad, and theCriminal Investigators in each squad reportto a Supervising State Investigator. The fiveSupervising State Investigators report to theDeputy Chief Investigator in charge ofcriminal investigations.

IFU operations are supported by a team ofthree Analysts and three TechnicalAssistants, supervised by a Senior Analyst.This team provides professional assistancein the analysis and organization ofdocuments, records and data obtained inthe course of criminal investigations ofinsurance fraud.

MEDICAID FRAUD UNIT

A Supervising Deputy Attorney Generalheads the Medicaid Fraud Unit (MFU)which is also housed in OIFP’sLawrenceville Office. In addition to theSupervising Deputy Attorney General, theMFU currently has five other attorneys,three in Lawrenceville and two in thenorthern office of the Division of CriminalJustice in Whippany. The criminalinvestigative staff of 18 is assigned to theNorth and Central offices of OIFP and each

squad of investigators is headed by aSupervising State Investigator. Augmentingthe staff are two Auditors, a Paralegal, aSenior Management Assistant and anAdministrative Analyst who assist in caseand financial analysis, legal research, casetracking, and other support andadministrative functions for the MedicaidFraud Unit. The MFU is also charged withinvestigating fraud in the administration ofthe Medicaid Program. Changes in federallaw allow the Unit to investigate andprosecute health care fraud in otherfederally-funded health care programs,such as Medicare, when the case involves anexus to Medicaid fraud and theappropriate Inspector General of the federalagency involved concurs.

The MFU functions under a strike forceconfiguration of Deputy Attorneys General,Auditors, Analysts, Investigators and aParalegal working together, full-time, toinvestigate and prosecute provider fraud inthe Medicaid Program. The Unit includesattorneys experienced in the investigationand prosecution of criminal, as well as civilfraud cases, auditors capable of reviewingfinancial records and cost reports and stateinvestigators experienced in white-collarcrime investigations.

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CRIMINAL INVESTIGATION AND PROSECUTION STATISTICSOIFP Criminal Statistics Summary

January 1, 2000 - December 31, 2000

Cases Pending at end of 1999Individual Subjects of Pending Cases

329888

New Cases OpenedIndividual Subjects of New Cases

519746

Cases Investigated (pending plus opened during period)Persons Investigated

8481,634

Indictments/Accusations Filed 86

Convictions (Pleas/Trial Convictions) 75

Total Fines (Includes Civil Penalties in Criminal Cases) $403,100

Total Restitution $1,126,228

D o c um e nt F ra ud/F o rg e ry 8

A g e nt F ra ud 2 8

M is c e lla ne o us 5 2

D is a bility/ W o rk e r's C o m p.

8 4

P ro pe rty 3 5

A uto Ins ura nc e 3 1 7

H e a lth C a re 1 8 4

M e dic a id 1 4 0

Staged Accidents/ HealthCare

/PIP/BI 119

Misc. Auto 61

Falsifying Records

37

False Claims 100

OIFP 2000:Criminal Cases Investigatedby Fraud Type

Medicaid Cases by Provider Type

Auto Cases byFraud Type

All OIFP Criminal Cases by Fraud Type

Ot her 21

Nursing Home 7

Dental 5

Facility/ Institut ion 10

Miscellaneous Practit ioners 19

Durable Medical Equipment 3

Home Health 7Lab 9

Clinic 10

Transportat ion 17

Pharm acy 32

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OIFP-CIVIL

Civil insurance fraud occurs when aperson violates the New Jersey InsuranceFraud Prevention Act (Fraud Act), N.J.S.A.17:33A-1 et seq. The Fraud Act providesthat a person or practitioner violates theAct if, among other things, he or shesubmits a false statement or makes amaterial omission on an application forinsurance (application fraud) or submits afalse statement in support of a claim forbenefits from an insurance carrier (claimsfraud).

OIFP-Civil insurance fraud cases areinvestigated by civil investigators in theDivision of Criminal Justice, Department ofLaw and Public Safety. The cases areusually received as referrals from insurancecarriers which suspect fraud. However,referrals are also received from privatecitizens through the OIFP hotline and OIFPweb site, as well as from other lawenforcement and administrative agencies.At the conclusion of an investigation, if theevidence tends to support the allegation offraud, the civil investigator assigned to thematter attempts to resolve the case byissuing the subject of the investigation anadministrative consent order for aninsurance fraud fine. The consent orderrequires admissions by the subject andincludes the amount of the fine. If thesubject holds a professional license(physician, attorney, nurse, auto bodyshop, etc.) the consent order also containsa provision stating that the relevantlicensing authority will be notified that itslicensee entered into a consent orderregarding an insurance fraud matter.

If the subject refuses to resolve the matterat the conclusion of the investigation, thecase is referred to the Division of Law,

Insurance Fraud for litigation. There arepresently 13 Deputy Attorneys Generalassigned to the Division of Law InsuranceFraud Unit. These attorneys are located inOIFP’s Lawrenceville Office, where they arereadily available to render legal advice andassistance as needed. Paralegals areassigned to assist the Deputy AttorneysGeneral.

Examples of automobile application fraudinclude the omission of informationregarding motor vehicle violations,accidents and licensed drivers residing inthe household and the use of a New Jerseyaddress by an out-of-state resident toobtain less expensive insurance, a practicereferred to as “rate evasion.” Homeowners’claims fraud typically involves thesubmission of inflated claims and falsereceipts arising from legitimate claims.Examples of automobile claims fraudinclude staged automobile thefts and falseor inflated claims for property damage.

In the year 2000, OIFP has undertakenefforts which “up the ante” for those whowould file a false auto theft report in NewJersey. To address the growing problem ofauto theft claims, OIFP-Civil established anew program designated as the “Give-UpInitiative,” to coordinate law enforcementefforts in the realm of phony auto theftclaims. Civil investigators with extensivebackgrounds in auto theft cases in OIFP’sthree regional offices are assigned toidentify and screen case referrals involvingsuspicious auto theft claims, to enter thesecases into a special database, and toascertain trends or patterns indicative ofpossible organized criminal involvement.Investigators assigned to the “Give-UpInitiative” work closely with municipal

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police departments, the New Jersey StatePolice, County Prosecutors, federal lawenforcement agencies and the privateinsurance industry in the sharing ofinformation and resources to ensure thatthose submitting fraudulent auto theftclaims are subjected to substantial civilfines, criminal prosecution, or both.

The Fraud Act provides for a stiff civilmonetary penalty for each act of insurancefraud. A civil insurance fraud fine for thefirst violation can reach as high as $5,000,a second violation as high as $10,000, andeach subsequent violation as high as$15,000. Significantly, each falsestatement or omission submitted in supportof a single claim or application constitutesa separate violation of the Fraud Act,thereby subjecting a violator to significantpenalties for multiple false statements oromissions made in the course of fraudulentconduct, even if in the context of a singleclaim. In addition to civil penalties, theDivision of Law Insurance Fraud Unit alsoseeks attorneys fees and restitution, whereappropriate.

CIVIL INVESTIGATIONS

Organization Civil investigations are conducted byapproximately120 investigators assigned tothe OIFP-Civil Section. Investigators areassigned in equal numbers among the fourregional units of OIFP located, respectively,at Whippany (North Unit), Lawrenceville(Central Units 1 & 2), and Cherry Hill(South Unit). Each regional unit of 30investigators is headed by a SupervisingState Investigator and is divided into threesquads of ten, headed by team leaders. TheSupervising State Investigators in charge ofthe four regional units report to a DeputyChief Investigator in charge of

investigations who, in turn, is supervisedby OIFP’s highest ranking investigativeofficial, the Managing Deputy ChiefInvestigator.

Referrals of Suspected Insurance Fraud In the year 2000, OIFP received 11,888

reports of suspected insurance fraud,including 8,556 from insurance carriers,which are required by law to refer all suchmatters to OIFP. 1,946 of the referrals camefrom citizens, either through OIFP’s toll-freehotline, or through letters, e-mail, or theon-line reporting form provided at the OIFPweb site www.njinsurancefraud.org.

Approximately 241 of OIFP’s civil casereferrals originated from the monthlyreporting of criminal cases by CountyProsecutors’ Offices. The balance ofapproximately 1,145 civil cases came froma variety of sources including other sectionsof the Division of Criminal Justice; othergovernment agencies such as the Divisionof Motor Vehicles, the Department ofBanking and Insurance and theDepartment of Labor; and OIFP initiatedinvestigations.

Upon receipt, all referrals to OIFP areassigned a case number and logged intoOIFP’s civil case database. Approximatelytwice a month all referrals are screened byan OIFP team comprised of civilinvestigators, Deputy Attorneys Generaland the OIFP County Prosecutor andProfessional Boards Liaisons to determinethe suitability of these matters as potentialcivil or criminal cases, or as referrals toother agencies such as offices of the CountyProsecutor, professional licensing boards orthe Department of Banking and Insurance.

Of the referrals to OIFP in the year 2000,6,589 were forwarded to OIFP civil

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investigators for further investigative actionafter initial review. Those matters notwarranting assignment to civ i linvestigators, most often because ofinadequate facts to clearly demonstrate thata violation of the Act occurred, aremaintained on file for purpose of futureinvestigative reference. While matters areoccasionally screened for assignmentdirectly to the criminal investigative section,OIFP-Civil often undertakes the initialinvestigation of referred matters, andsubsequently determines whether a matterwarrants forwarding for criminal action.Some of the cases criminally prosecutedsuccessfully by OIFP started as civilinvestigations conducted by OIFP-Civil. Dispositions by Civil Investigators

OIFP civil investigators conductedinvestigations resulting in the issuance of889 insurance fraud consent orders andagreements totaling $2,441,545 in civilinsurance fraud fines. 367 matters,involving $830,762 were successfullyconcluded through investigative action. Thebalance of the consent orders andagreements remain pending. With theenactment of the Penalty Enforcement Act,N.J.S.A. 2A:58-10 et seq., OIFP, throughthe Division of Law, may now docket itsconsent orders as judgements with theSuperior Court clerk, enabling OIFP, inappropriate cases, to obtain a judgementlien and/or proceed directly to executionwhen necessary.

Dispositions by Division of LawInsurance Fraud Unit attorneys received a

total of 639 matters for litigation, most ofwhich were referred by OIFP’s civilinvestigation section. These matters involvecases where the facts demonstrated a

violation(s) of the Act occurred but wherethe subject was unwilling to sign aninsurance fraud consent order oragreement, or where a subject becameseriously delinquent in remitting paymentpursuant to a prior fraud settlement.

Division of Law attorneys successfullyconcluded settlements or judgements in146 cases totaling $2,534,200 and obtainedan additional $944,121 throughenforcement actions. The State was alsoawarded over $16,745 in counsel fees inlitigated matters. The civil attorneysresolved a total of 390 matters whichincluded enforcement actions with respectto previous settlements.

CollectionsThe Department of Banking and Insurance

(DOBI) is responsible for the collection ofmonies resulting from the successfulconclusion of civil matters through OIFPcivil investigative actions or through theefforts of the Division of Law DeputyAttorneys General assigned to handle OIFPcivil litigation. According to DOBI, itreceived $2,467,697.15 in payments in2000, and closed 560 accounts receivableas paid in full during the year.

CIVIL HIGHLIGHTS

Division of Law HighlightsState v. Annie M. Proctor On March 20,2000, the Division of Law obtained a defaultjudgment awarding $60,000 in civilinsurance fraud penalties against AnnieProctor resulting from her false report thather 1991 Mercedes Benz automobile hadbeen stolen. In fact, Proctor arranged tohave the automobile stored in a garage inPhiladelphia. In addition to the civil

26

penalties, Proctor was ordered to payrestitution in the amount of $21,863 toState Farm Insurance Company and $1, 883 to Allstate Insurance Company.

State v. Joseph Giordano On September5, 2000, the Division of Law obtained adefault judgment against Joseph Giordanoin the amount of $30,018 resulting fromfalse reports to the Ocean Township PoliceDepartment and the Allstate InsuranceCompany that his automobile had beenstolen from the Seaview Square Mall. Infact, the day before the alleged theft, theautomobile had been involved in a hit andrun accident and the automobile wasalready in the custody of the Newark PoliceDepartment at the time of the alleged theft.

State v. Nicholas Sottiriou On April 5,2000, a default judgment in the amount of$70,030 was obtained against NicholasSottiriou. Sottiriou, a licensed chiropractor,previously entered into an insurance fraudconsent agreement with the Department ofBanking and Insurance to resolveallegations regarding insurance claims forservices that were never rendered.Sottiriou failed to adhere to the paymentterms of the consent agreement and thejudgment was obtained.

State v. Ashendorf On August 3, 2000,Ashendorf, a physician, entered into astipulation of settlement and consentjudgement whereby he agreed to pay a civilpenalty of $55,000 for billing insurancecompanies for treatment on dates on whichthe patients did not appear for scheduledappointments. These billings andpayments occurred from 1988 to 1991 andinvolved at least 138 patient files, withrespect to which Ashendorf made

restitution to the insurance companies.OIFP referred this matter for considerationof possible licensure action by the StateMedical Board.

State v. Shoppe Publications OnSeptember 27, 2000, after a bench trial, aCape May County Law Division Judgefound the defendant liable for threeviolations of the Act and assessed a penaltyof $1,000 for each violation. The matterarose out of a commercial fire loss afterwhich the defendant submitted false andinflated claims for damages.

State v. Anthony White OIFP obtaineda $90,000 default judgement against thedefendant, a Newark motorcycle policeofficer, for violations of the Insurance FraudPrevention Act stemming from his falseclaim that his personal use motorcycle hadbeen stolen. After paying off the loan onthe motorcycle with the proceeds of theinsurance policy, White sold the motorcycletogether with a handwritten bill of salecontaining a falsified VIN number. Thefraud was detected during a VIN check at aFlorida motocross event.

Civil Investigations HighlightsIn the Matter of Mark Stewart On April

18, 2000, Mark Stewart signed a consentorder requiring him to pay a $5,000insurance fraud fine after investigationrevealed that he had created a fictitiousemployment group to qualify his companyfor entry into a group health plan operatedby Blue Cross/ Blue Shield. Stewart’s wife,who was not an employee of the company,submitted more than $47,000 in medicalclaims to Blue Cross/Blue Shield before thefraud was discovered.

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In the Matter of Richard Verdoni, M.D.;In the Matter of JoAnn Green InFebruary 2000, Dr. Richard Verdoni paid$4,000 in insurance fraud fines on behalf ofhimself and his sister, JoAnn Green, afterinvestigation of a hotline complaint againstVerdoni confirmed that Verdoni hadfraudulently represented Green to be anemployee of the medical practice with whichhe was associated for the purpose ofobtaining health insurance for Green.Twenty-five claims totaling over $1,500were submitted in Green’s name beforeOIFP was alerted by the hotline caller. Thecase was referred to the New Jersey MedicalLicensing Board.

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OIFP CIVIL STATISTICS SUMMARYJanuary 1, 2000 - December 31, 2000

CIVIL INVESTIGATIONS Number Dollar Amount

New Cases Opened 11,888

Number Forwarded for Investigation 6,589

No Investigation Warranted 5,299

PRE-LITIGATION DISPOSITIONS

Consent Orders/Agreements Issued 889 $2,441,545.75

Consent Orders/Agreements Executed 367 $830,762.75

LITIGATION (Division of Law)

Number of Referrals Received by Division ofLaw

639

Number of Cases Resolved: 390

Enforcement Actions by Division of Law $944,121.03

Division of Law Original Settlements $2,534,200.96

COLLECTIONS (Department of Banking and Insurance)*

Total Amount Received $2,467,697.15

Number of OIFP Accounts Paid in Full 560

*As reported to OIFP by DOBI

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COORDINATION OF LAW ENFORCEMENT, GOVERNMENT ANDINDUSTRY

In order to ensure the effectivecoordination of public and private anti-insurance fraud efforts in New Jersey,AICRA requires that OIFP designate asection of the office to establish liaison andcontinuing communications with theinsurance industry, law enforcement andother public agencies. Consistent with thislegislative mandate, OIFP has assignedexperienced personnel with appropriatebackgrounds to act as liaisons to coordinateOIFP’s programs with professional licensingboards, insurance carriers, CountyProsecutors’ Offices and other lawenforcement agencies.

COUNTY PROSECUTORS’ OFFICES

AICRA provides that, with the assistanceand support of OIFP, Offices of the CountyProsecutor assume and maintain a role ofcritical importance in the detection,investigation and prosecution of insurancefraud in New Jersey. As provided in AICRA,OIFP refers investigative leads and offersother investigative assistance to CountyProsecutors’ Offices, conducts insurancefraud-related training for CountyProsecutor personnel, and affords fundingto those offices seeking to establish orexpand insurance fraud units.

In the year 2000, OIFP’s ProsecutorLiaison implemented a protocol foridentifying, forwarding and trackinginsurance fraud referrals to the State’s 21County Prosecutors’ Offices. By the close ofthe year, OIFP had referred more than 150matters to County Prosecutors’ Offices forinvestigation and possible prosecution.

Those referrals encompassed the fullspectrum of insurance fraud matters,ranging from auto theft and arson claimsfraud to health care claims fraud.Including cases referred by OIFP, Offices ofthe County Prosecutor reportedinvestigating or prosecuting 906 cases ofsuspected insurance fraud in the year2000.

Training of County Prosecutor PersonnelIn May of 2000, OIFP conducted a two day

course of instruction for assistantprosecutors and County Prosecutorinvestigative personnel, examining in detailactual insurance fraud cases investigatedand prosecuted by OIFP involving stagedaccidents, alleged auto thefts, insuranceagent fraud, disability claims fraud,commercial casualty and health care claimsfraud. Actual case studies were presentedby the State Investigators and DeputyAttorneys General who originally handledthe cases on behalf of OIFP, and includedthe review and analysis of court documentsand investigative materials prepared byOIFP in conjunction with those cases.Training was attended by 12 assistantprosecutors and 21 investigative personnelrepresenting 17 County Prosecutors’Offices, as well as by State Investigatorsand Deputy Attorneys General from OIFP.OIFP also presented an insurance fraudroundtable for assistant prosecutors andinvestigative staff at the New JerseyProsecutors Association Annual Conferencein Atlantic City in September 2000.Chaired by the Acting Insurance FraudProsecutor, the roundtable addressed avariety of subjects ranging from recently

30

enacted insurance fraud legislation toOIFP’s auto theft “Give-Up Initiative.”

Throughout the year OIFP also providedtraining materials and instructors uponrequest to County Prosecutors’ Offices andpolice training academies throughout thestate, ranging from Cape May County in thesouth, to Bergen County in the north.

Funding of County Prosecutors’ OfficesTo encourage and assist County

Prosecutors with establishing or expandingunits working on insurance fraud matters,AICRA provides that the Attorney Generalallocate monies from OIFP’s budget to afund dedicated to reimbursing CountyProsecutors’ efforts in combating insurancefraud. Previously, 16 of the State’s 21County Prosecutors requested and received

two year funding commitments totaling $5million. During 2000, the original two yearfunding commitments were extended inseveral counties to allow for the use ofunexpended funds resulting fromoccasional unavoidable delays in hiring orprocurement. This dedicated fundingsource has enabled participatingProsecutors’ Offices to add eight assistantprosecutors, 26 investigators and fiveclerical support positions, and tounderwrite the purchase of essentialequipment and other investigativeexpenses. It is anticipated that, in 2001,funding commitments to the 16participating County Prosecutors’ Officeswill be renewed, and that several of theProsecutors’ Offices which had notparticipated in the initial funding, will applyfor funding for the next program fundingperiod.

COUNTY PROSECUTORS’ OFFICESSUBJECTS UNDER INVESTIGATION IN 2000

FOR SUSPECTED INSURANCE FRAUD

Atlantic 35 Gloucester 45 Ocean 42

Bergen 41 Hudson 260 Passaic 212

Burlington 2 Hunterdon --- Salem 15

Camden 77 Mercer 35 Somerset 17

Cape May 12 Middlesex 12 Sussex ---

Cumberland 4 Monmouth 31 Union 7

Essex 18 Morris 32 Warren 9

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Highlights of Insurance FraudInvestigations by Counties

State v. Charles Walton On October 18,2000, Charles Walton of Philadelphia,Pennsylvania was indicted on charges ofaggravated arson, arson for insurance andconspiracy for his role in abandoning andburning a vehicle on the Garden StateParkway on July 14, 2000 for purposes offiling a fraudulent auto theft claim. Whileparked on the shoulder of the highway priorto the arson, Walton had been offered anddeclined roadside assistance by New JerseyState Troopers on patrol. The Troopers laterfound the vehicle abandoned and charred.Subsequent forensic examination of thevehicle by the New Jersey State Police ArsonUnit resulted in the discovery ofphotographs of Walton in the vehicle’s glovecompartment. The case was investigatedjointly by the New Jersey State Police andthe Atlantic County Prosecutor’s InsuranceFraud Task Force. The matter is pendingtrial.

State v. Robert Stanton On November 14,2000, Robert Stanton was indicted oncharges of theft by deception, conspiracy,falsifying records, false swearing andunsworn falsification in conjunction with hisreport to police that his 1995 Dodge Intrepidhad been stolen and his subsequent autotheft claim to the First Trenton IndemnityInsurance Company. After paying Stanton$13,871 on his claim, the insurance carrieralerted the Atlantic County Prosecutor’sOffice of its suspicions of fraud associatedwith Stanton’s claim. After further

investigation by the Atlantic CountyProsecutor’s Office Insurance Fraud TaskForce, Stanton was charged with “giving-up” his automobile to a friend who allegedlytook it to a Philadelphia based chop shop.The case is pending trial.

State v. Evelyn T. Brown On December1, 2000, members of the Atlantic CountyProsecutor’s Office Insurance Fraud TaskForce arrested and charged Evelyn T. Brownwith five counts of wrongful impersonationfor using another person’s identity andcredentials to procure auto insurancecoverage. AAA Mid-Atlantic InsuranceCompany/Keystone Insurance Companyhad referred the matter to the AtlanticCounty Prosecutor’s Office after Brown hadbeen involved in a traffic accident inBrigantine in the spring of 1997. The caseis currently pending presentation to aGrand Jury.

State v. Cleveland Alexander On June16, 2000, a Bergen County Grand Juryindicted Cleveland Alexander fordistributing fraudulent New Jersey motorvehicle documents including counterfeitinsurance cards, fictitious temporaryregistration tags and fake motor vehicleinspection stickers. Alexander wassentenced on December 22, 2000 to 60days in the Bergen County Jail (SLAPProgram) as a condition of long termprobation. This investigation, whichresulted in multiple undercover purchasesof original quality counterfeit documents,was conducted jointly by the Bergen CountyProsecutor’s Office Insurance Fraud Squadand the New Jersey State Police.

Bergen County Prosecutor’s Office

Atlantic County Prosecutor’s Office

32

State v. Lori Mobio, et al. On June 16,2000, a Bergen County Grand Jury chargedLori Mobio and Veronica Jackson in an eightcount indictment for manufacturing anddistributing fake State Farm and Allstateinsurance cards. This joint investigation bythe Bergen County Prosecutor’s Office andthe New Jersey State Police resulted in twocriminal convictions in November, 2000.

State v. Nicholas Chrin On August 11,2000, a Bergen County Grand Jury indictedNicholas Chrin for four counts of theft bydeception in an agent embezzlementscheme. Chrin, a long time NorthwesternMutual Life Insurance Company agent,diverted several cash surrender values froma long time client’s life insurance policies.He pled guilty to two counts of theft bydeception, agreed to pay over $30,000 incriminal restitution and was accepted forentry into the Pre-Trial Intervention Programon January 2, 2001.

State v. Joseph Larkin On July 30, 2000,Joseph Larkin was indicted for aggravatedarson, insurance fraud arson, and theft bydeception in conjunction with a fire whichhad destroyed Larkin’s house trailer thenight before he was to sell it for $16,000. Alamp was suggested as the cause of the fire.Further investigation revealed that the firehad been caused by the direct ignition ofcombustible materials rather than by thelamp, and that Larkin had allegedly received$31,000 from the insurance company on aclaim he filed under his homeowners’insurance. The case is pending trial.

State v. Mark Krauss On April 14, 2000,Mark Krauss was sentenced to a term ofthree years probation with 150 hours ofcommunity service after admitting to fakingthe burglary of his own home and the theftof over $15,000 worth of contents. Kraussadmitted his deception and made fullrestitution to Allstate Insurance Companyafter being confronted by a GloucesterTownship Police Detective with thenumerous inconsistencies in his burglaryreport.

State v. Joseph Shaw On October 11,2000, the Camden County Grand Juryreturned an indictment against JosephShaw charging second degree aggravatedarson and second degree attempted theft bydeception for the destruction of hisresidence by fire on February 17, 1998, andhis alleged attempts to obtain more than$189,000 in insurance proceeds fromPeerless Insurance Company. Although hiswife was not at home at the time and Mr.Shaw escaped unharmed, the couple’s threepet dogs perished in the fire. The residencewas a total loss and was determined to havebeen set by direct ignition of combustiblematerials in the basement area. Theextreme heat caused major portions of thesecond floor of the dwelling to collapse andone firefighter sustained second degreeburns fighting the blaze.

State v. Ada Lebron; State v. KennethCarstarphen; State v. Jose Bouson Inits continuing efforts to halt theproliferation of simulated automobileinsurance identification cards in CamdenCounty, the Camden County Prosecutor’s

Camden County Prosecutor’s Office

Burlington County Prosecutor’s Office

33

Office obtained three indictments in the year2000 against individuals who were engagedin making and selling such cards, usuallyfor $50 a piece. Ada Lebron pled guilty andwas sentenced to probation with 30 dayscommunity service. Kenneth Carstarphenpled guilty on condition of a term of 12months in prison but is expected to besentenced to a term of 364 days in thehouse arrest program due to his extremelypoor health. The indictment against JoseBouson is still pending in Superior Court.All three arrests were made by the NewJersey State Police Insurance Fraud Unitwhich works in cooperation with theCamden County Prosecutor’s Office on aregular basis.

In the year 2000, the Camden CountyProsecutor’s Office Insurance Fraud Unitopened more than 70 investigations,including approximately 40 which remainpending.

State v. Edward Jones On June 6, 2000,a Cape May County Grand Jury indictedEdward Jones, the owner of C&E towing, fortheft by deception. Jones allegedly billedSelective Insurance Company for thepurported storage of a vehicle, which wasbeing stored at the police impound lot.

State v. Alice Yolanda Carmona OnOctober 23, 2000, Alice Yolanda Carmonapled guilty to one count of a CumberlandCounty indictment charging her with thecrime of practice of medicine by an

unlicensed person, and to an Accusationfiled by the OIFP charging her withMedicaid fraud. Carmona had operatedVineland Human Services where sheprovided counseling services and wrote andaltered prescriptions, despite the fact thatshe was not licensed to practice medicine.She also billed the Medicaid Program forrendering pharmacologic managementservices under guise of medical licensure.Carmona was sentenced on December 1,2000, to 162 days time served in jail, threeyears probation and forfeiture of $9,629 tothe Cumberland County Prosecutor’s Office.The investigation was conducted jointly bythe OIFP and the Cumberland CountyProsecutor’s Office.

State v. Edward D. Walker In March of2000, Edward D. Walker was found guiltyby a Gloucester County Jury of purposelystarting a fire in his 1992 Ford Explorer inorder to collect insurance for thedestruction of, or damage to, his vehicle.On April 28, 2000 Walker, was sentenced tothree and a half years in state prison.

State v. Kevin Stokes On September 20,2000, Kevin Stokes was arrested by theGloucester County Prosecutor’s Office andcharged with attempted theft by deception,falsifying documents and tampering withpublic records or information in connectionwith an automobile “give-up” scheme.Stokes allegedly reported his vehicle stolenand filed a theft claim under his automobileinsurance policy.

Gloucester County Prosecutor’s Office

Cape May County Prosecutor’s Office

Cumberland County Prosecutor’s Office

34

State v. Daniel Kerr On December 1,2000, Daniel H. Kerr, a six year veteran ofthe Gibbsboro Police Department, wasarrested at an auto shop he owns inPaulsboro and charged with officialmisconduct and tampering with publicrecords. Kerr is alleged to have illegally soldtemporary license plates from his businessand unlawfully obtained drivers’ abstractsfrom police computers for his own use. Thearrest followed several months ofinvestigation by the Gloucester CountyProsecutor’s Office and New Jersey StatePolice.

State v. Amarilis Flores and SantosMarrero Following a joint investigation bythe Gloucester County Prosecutor’s Officeand Woolwich Township Police Department,Amarilis Flores and Santos Marrero werearrested on October 17, 2000 and November8, 2000 in connection with an automobile“give-up” scheme. Flores and Marrero werecharged with conspiracy, aggravated arson,attempt to commit theft by deception,falsifying documents and tampering withpublic records and information. It is allegedthat Flores conspired with Marrero to get ridof her 1994 Mazda, gave the car to Marreroand other unknown conspirators, falselyreported that her vehicle had been stolen,and filed a fraudulent theft claim under herautomobile insurance policy.

State v. Bernardo Barreras On October4, 2000, a Hudson County Grand Juryindicted Bernardo Barreras on a charge oftheft by deception. Barreras worked as aninsurance agent for the State FarmInsurance Company in Hoboken and isalleged, on at least six occasions, to havedefrauded individuals of insuranceapplication premiums after he took theircash payments for new automobileinsurance policies. The amount allegedlydefrauded is in excess of $3,000.

State v. Frank Munafo, et al. OnAugust 23, 2000, Frank J. Munafo wascharged with theft in connection with asuspected chop shop on 37th Street inUnion City, Hudson County. The chargesstem from a raid carried out by theProsecutor’s Office detectives on a ten cargarage where three stolen vehicles wererecovered.

Staged Accidents The Hudson CountyProsecutor’s is currently engaged in theinvestigation of over one hundred subjectssuspected of staging accidents in the NorthHudson vicinity. In August 2000, a dozenindividuals targeted as the alleged ringleaders of those staged accidents wereindicted in conjunction with the ongoinginvestigation, which is expected to result indozens of arrests and convictions in theyear 2001.

Hudson County Prosecutor’s Office

35

State v. Sybil A. Francis On September5, 2000, Sybil A. Francis was indicted forattempted theft by deception stemmingfrom her false report that her 1995 BMWhad been stolen from the front of a barwhere she had purportedly left the carrunning. It is alleged that Francis made thefalse report as a predicate to the filing of afraudulent insurance claim.

State v. Fred Rossi On August 12, 2000,a Middlesex County Grand Jury handed upan indictment of Fred Rossi, anindependent insurance broker in Carteret,New Jersey, charging him with thepocketing of clients’ insurance premiumswithout actually placing insurance for thoseclients over a period of approximately threeyears. Rossi pled guilty on November 27,2000 to two counts of issuing a simulatedmotor vehicle insurance identification cardand one count of theft by deception andwas sentenced on January 16, 2001 to fiveyears probation conditioned uponrestitution of $5,502 and forfeiture of hisinsurance agent’s license.

State v. James Coonan and AnthonyManno On June 5, 2000, a MonmouthCounty Grand Jury indicted both JamesCoonan and Anthony Manno on threecounts of arson and one count of theft by

deception in conjunction with their schemeto stage the theft and destruction ofManno’s 1993 Honda Accord. Thedefendants, employed together as stagehands at the Metropolitan Opera House inManhattan, plotted for Coonan to driveManno’s car to New Jersey and burn it,following which Manno would file aninsurance claim. The car was taken anddestroyed, but the plan unraveled beforeTravelers Insurance Company madepayment on the phony claim. Both Coonanand Manno pled guilty to arson for startinga fire to collect insurance proceeds, andwere sentenced to terms of probation.

State v. George Underhill, GregoryUnderhill and Underhill Excavating On January 18, 2000, George and GregoryUnderhill were arrested and charged withtheft by deception, receiving stolen propertyand conspiracy in conjunction with aninsurance scam in which they fraudulentlysought to collect insurance proceeds onheavy construction equipment which theyfalsely claimed was stolen. Subsequently,seven Case backhoes were seized, includingthree that had previously been reportedstolen by George Underhill Excavating. Ofthe three backhoes that had been retainedby Underhill, two were later traded intoward the purchase of new machines. OnSeptember 14, 2000, George Underhill pledguilty to receiving stolen property; GregoryUnderhill pled guilty to theft by deceptionand the company pled guilty to tamperingwith public records. Over $400,000 worthof equipment was seized in thisinvestigation, enabling Zurich InsuranceCompany to recoup losses of $114,103 and

Morris County Prosecutor’s Office

Mercer County Prosecutor’s Office

Middlesex County Prosecutor’s Office

Monmouth County Prosecutor’s Office

36

Selective Insurance Company to recouplosses of $62,500. On January 12, 2001,George Underhill was sentenced to threeyears probation and Gregory Underhill wassentenced to five years state prison. Inaddition, their corporation was ordered topay $15,000 in civil penalties.

State v. Wayne Stover On May 5, 2000,Wayne Stover was charged with theft bydeception, criminal attempt and the filing ofa false police report in conjunction with aphony $5,000 burglary claim. Stover hadfalsely reported to police that his car wasburglarized while parked at his place ofemployment at St. Claire’s Hospital - DoverCampus. Under subsequent questioning bydetectives from the Morris CountyProsecutor’s Office and the Dover CountyPolice Department, Stover admittedconcocting the story to make a fraudulentinsurance claim. Stover was accepted intothe county’s Pre-Trial Intervention Program.

State v. Raffael N. Melchione RaffaelMelchione was charged on October 31,2000 for staging the theft and arson of a1999 Infiniti he had leased and which wassignificantly over the mileage permittedunder the terms of the lease. Melchioneeventually admitted under questioning thathe had committed the fraud to avoid payingexcess mileage charges to the leasingcompany when the vehicle was due to bereturned. Melchione pled guilty to theft bydeception as a condition of his entry intothe Pre-Trial Intervention Program.

State v. Luis Delgado and MaritzaRivera The married defendants were

indicted on March 29, 2000 in connectionwith a scheme to file a phony vehicle theftclaim a week after selling their 1997 FordF-150 pickup to a truck dealer on May 22,1997. Rivera falsely swore on an affidavit oftheft that she had last seen the vehicle,intact and in good condition, on May 28,1997. Delgado subsequently pled guilty totheft by deception and agreed to payrestitution and an insurance fraud civil fineof $5,000 as a condition of three yearsprobation. Rivera was accepted into thePre-Trial Intervention Program and alsoagreed to pay restitution.

State v. Lawrence Nesser; State v. RenaeNesser; State v. James Russo; State v.Thomas Allen Palmarini In Septemberof 2000, Lawrence Nesser, Renae Nesser,James Russo and Thomas Palmarini wereeach charged with theft by deception, theftby unlawful taking or disposition,defrauding secured creditors andconspiracy to defraud, in connection withtheir alleged scheme to stage the theft ofRenae Nesser’s leased 1998 ChryslerSebring as a predicate to the filing of afraudulent insurance claim. Facing the endof a lease with substantial excess mileagecharges, the Nessers allegedly sought theassistance of Russo, who recruitedPalmarini, to “steal” Nesser’s vehicle fromthe Nessers’ Bradley Beach residence.Palmarini allegedly attempted to abandonthe vehicle in New York City, but detouredto a remote area of Ocean County nearAsarco Lake where the vehicle got stuckand Palmarini allegedly set it ablaze. Thecharges are pending presentation to aGrand Jury. Asarco Lake Recoveries Whileinvestigating the Nesser case, the Ocean

Ocean County Prosecutor’s Office

37

County Prosecutor’s Office turned itsattention to Asarco Lake, the site of aformer mining operation in ManchesterTownship reputed to have been the finalresting place of a number “abandoned”motor vehicles. While divers from theManchester Township Police Departmentidentified several vehicles by their VINnumbers, members of the Ocean CountyProsecutor’s Office organized a majorrecovery effort, ultimately yielding elevenvehicles, including at least six of whichwere the subject of suspicious insuranceclaims. The Ocean County Prosecutor’sOffice anticipates the filing of criminalcharges in conjunction with the illegaldisposal of several of these vehicles early in2001. The Ocean County Prosecutor’sOffice was assisted in the recovery effort bythe New Jersey State Police T.E.A.M.S. Unit,the Vehicle Theft Investigators Association,the Manchester Police Department, theOcean County Road Department and theOIFP.

State v. Jose Siri, et al. A four yearinvestigation into two distinct, yetoverlapping staged accident rings operatingin the Paterson and Passaic City areas hasyielded 23 indictments charging 127subjects since December of 1999. To date,more than 30 of those charged have enteredguilty pleas, while others have agreed tocooperate in the continuing investigation.

Passaic County Auto Theft Task Force In the year 2000 the Passaic County AutoTheft Task Force, a special unit within thePassaic County Prosecutor’s Office, charged24 subjects with various theft charges

stemming from fraudulent auto insurancetheft claims known as “give-ups.” Fifteen ofthose charged entered guilty pleas beforeyear’s end.

State v. Jason Narbonne; State v. StevenSiegel On March 10, 2000, JasonNarbonne was arrested and charged withthe removal of motor vehicle ID numbers.Detectives recovered two stolen vehicles, aFord Mustang and a Chevrolet Blazer, thathad been re-plated. A GMC Jimmy wasalso recovered, parts of which had allegedlybeen used to alter the Blazer’s identity. Theinvestigation also determined that thechassis of another vehicle, which VIN wasaffixed to the stolen Mustang, had beendestroyed by fire and sold to Steven Siegel,the owner of a high performance auto shopcalled “5.0" in Maplewood, New Jersey. Ina separate investigation, detectives from theMaplewood Police Department executed asearch warrant at Siegel’s business andlocated a number of detached VIN plates,resulting in Siegel’s arrest. Both defendantsare awaiting trial.

State v. Brian Horton On August 14,2000, Horton, a Union County ProbationOfficer, was charged by the Union CountyProsecutor’s Office with attempted theft bydeception and false swearing afterinvestigation determined that Horton hadallegedly falsely reported his vehicle stolenwhile it remained in his possession.Because of a possible conflict relating toHorton’s public employment as a Probation

Somerset County Prosecutor’s Office

Union County Prosecutor’s Office

Passaic County Prosecutor’s Office

38

Officer in Union County, the matter wastransferred by the Criminal Presiding Judgeto Middlesex County where Horton wasindicted in November of 2000. The case ispending in court.

State v. Kenneth Williams On September21, 2000, Kenneth Williams, a Plainfieldfirefighter, was charged with attemptedtheft by deception, tampering with recordsand false swearing. Mr. Williams reportedhis vehicle stolen after it had been towedand while in police custody. This case ispresently pending a Pre-Trial Interventionappeal by the defendant after the Stateobjected to his entry into the Pre-TrialIntervention Program.

STATE POLICE

Insurance Fraud Unit Previously, the New Jersey State Policeestablished an Insurance Fraud Unit,funded by OIFP, to address the widespreadproblems presented by the use of fictitiousauto insurance cards and related types ofautomobile insurance fraud.

In a reflection of the underlying problem ofuninsured motorists in New Jersey, aninformal New Jersey State Police survey in1998 revealed that as many as 37 percentof the insurance cards presented bymotorists in the course of routine trafficstops were fraudulent. A fraudulentinsurance identification card reflects thefact that the motorist is driving withoutinsurance.

Working in close conjunction with OIFP,the mission of the New Jersey State PoliceInsurance Fraud Unit is to train state,county and municipal law enforcement

authorities in the identification andinvestigation of fraudulent insurance cards,and to undertake its own investigations ofsubjects possessing or producingfraudulent insurance cards with the intentto defeat New Jersey’s system of mandatoryautomobile insurance.

In 2000, the New Jersey State PoliceInsurance Fraud Unit conducted 128investigations and arrested 100 individualson 104 criminal charges. In addition, itissued 159 traffic summonses. While themajority of the Unit’s investigationsinvolved the presentation of fraudulentinsurance documentation by motorists,other investigations of the Unit involved theillegal sale of fraudulent cards by insuranceagents, the sale of “temporary registrations”by an off duty police officer through hisused car dealership, and stolen vehicles.The Unit also assisted OIFP, Prosecutors’Offices and municipal police departments inother investigations relating to medicalfraud, stolen vehicles and other types ofinsurance fraud.

In addition to its investigativeresponsibilities during 2000, the NewJersey State Police Insurance Fraud Unitconducted substantial training, including18 seminars in which 800 law enforcementpersonnel received instruction in thedetection and investigation of insurancefraud. Members of the Unit also madesubstantial contributions to the productionof OIFP’s roll call training videos addressingfraudulent insurance cards, stagedaccidents and staged auto thefts.

Since its inception, the Unit has beenstaffed by a Sergeant and five troopers, andis slated for expansion upon the graduation

39

of several new classes of troopers from theNew Jersey State Police Training Academyin 2001.

Auto Theft UnitOIFP has also jointly investigated and

prosecuted cases with the NJSP Auto TheftUnit. In one case, OIFP and Auto UnitInvestigators developed a confidentialinformant who received automobile “give-ups” from various individuals. In thisinvestigation the informant receivedvehicles from several middlemen whodisposed of the vehicles on behalf of thevehicle owners. As a result of thisinvestigation, 18 individuals were arrestedin Hudson County. One arrest resulted inthe forfeiture of $23,000 cash, allegedly theproceeds of drug transactions. This case iscurrently scheduled for guilty pleas toAccusations and possible presentation to aState Grand Jury.

In another investigation, the Auto Unitdeveloped an informant who led them to a“give-up” operation. The Auto Unit seizedmore than $110,000 in “give-up” vehicles inone day from one garage. This matter iscurrently scheduled for presentation to theGrand Jury.

MUNICIPAL POLICE

Effective coordination among all lawenforcement agencies in New Jersey is keyto the success of OIFP’s mission to tacklethe challenges presented by those whocommit insurance fraud. To ensure the fullparticipation of New Jersey’s municipalpolice departments in this effort, OIFP’sLaw Enforcement Liaison has been chargedwith responsibility for establishing lines ofcommunication with, and offering training

and other assistance to, municipal andother law enforcement agencies with apresence in New Jersey.

While urban police departments havefrequently encountered and investigatedinsurance fraud as resources permitted,most municipal police departments in NewJersey have had little or no training orexperience in the investigation of insurancefraud. To address the need for training inthis area, and to enable police departmentsto capably detect, investigate and chargeinsurance cheats, OIFP has committed to aprogram of comprehensive insurance fraudtraining throughout New Jersey, and to thesharing of intelligence and expertisethrough the sponsoring of periodic regionalmeetings of law enforcement agencies indifferent areas of the state.

As indicated in the section of this reportdetailing OIFP’s training initiatives, OIFPhas produced a pair of roll call trainingvideos for distribution to police agenciesthroughout New Jersey. The first of thesetraining videos provided instruction in thedetection of staged accidents andfraudulent insurance cards, and wasdistributed, along with model “visor cards”and other training materials, to all policedepartments in April, 2000. The second ofthese training videos concerns theidentification and investigation of stagedautomobile thefts, and is slated for similardistribution with supporting trainingmaterials in 2001.

To provide more formalized training ininsurance fraud, either directly to policedepartments, or through county policetraining academies, OIFP has developed acomprehensive insurance fraud curriculum

40

encompassing ten subject areas rangingfrom surveillance techniques to questioneddocument examination. OIFP has apprisedall of the counties’ police academy directorsof OIFP’s training capabilities through apresentation at a meeting of the PoliceAcademy Directors’ Association, andth rough appropr ia t e f o l l ow -upcorrespondence to each director. In 2000,OIFP provided training to both municipalpolice and New Jersey State Police officersat the New Jersey State Police TrainingAcademy in Sea Girt and at county trainingacademies across the state.

OTHER LAW ENFORCEMENT

The Law Enforcement Liaison has workedclosely with OIFP’s regional SupervisingState Investigators and the ProsecutorLiaison to schedule periodic regionalmeetings of municipal, county, state andfederal law enforcement agencies. Meetingsare designed to facilitate the sharing ofinformation and expertise, and typicallyinclude a presentation on a specific topicsuch as the forensic examination ofquestioned documents, the implementationof a program to combat staged auto theftsat shopping malls, and the emergence ofnew insurance fraud rings.

Throughout the year OIFP establishedcontacts with numerous law enforcementagencies and associations including theNew Jersey State Police Traffic Bureaucommand staff, the New Jersey HighwayTraffic Officers Association, the CasinoInvestigators Association, the New JerseyState Chiefs of Police Association and lawenforcement detective associations inBurlington, Camden, and Hunterdoncounties. The Law Enforcement Liaison,

with the assistance of the ProsecutorLiaison, has undertaken an effort to identifyas many New Jersey investigative agenciesand associations as possible for purposes ofestablishing ongoing channels ofcommunication and, in appropriate cases,sharing of investigative resources.

GOVERNMENTCoordination with New Jersey Agencies

L i a i s o n a n d C o n t i n u i n gCommunications GroupOne of the liaison functions required by

AICRA is the coordinat ion ofc o m m u n i c a t i o n s w i t h t h eprofessional/occupational Boards withinthe Division of Consumer Affairs. Thenumber of professional/occupationalBoards within the Division of ConsumerAffairs has grown from 13 in 1976 to itscurrent total of 38. Those 38 Boards nowregulate over 60 professions andoccupations.

OIFP refers relevant insurance fraudm a t t e r s t o t h e a p p r o p r i a t eprofessional/occupational Board eitherdirectly or through the Division ofConsumer Affairs Enforcement Bureauwhich conducts investigations for all of theBoards. In some instances, the informationthat OIFP provides to the Division ofConsumer Affairs results in the initiation ofadministrative disciplinary action againstthe professional/occupational licensee.Conversely, information that is obtained bythe Division of Consumer Affairs, througheither the professional Board itself or theEnforcement Bureau, is submitted to OIFP,which initiates an appropriate investigation,often resulting in the issuance of a consentorder including a civil insurance fraud

41

penalty, or in the initiation of a criminalinvestigation leading to possible criminalcharges. Disciplinary licensure actionstaken by the professional/occupationalBoards within the Division of ConsumerAffairs during calendar year 2000 resultedin disciplinary action against 33individuals.

The following represents the actions taken by each Board identified:

Suspension Revocation VoluntarySurrender

Reprimand TOTAL

Chiropractors 1 1 0 0 2

Medical 3 8 1 2 14

Nursing 0 2 0 0 2

Dental 2 0 0 2 4

Pharmacy 1 6 0 0 7

Physical Therapy 0 0 1 0 1

Social Worker 1 1 0 0 2

Optician 1 0 0 0 1

TOTALS 9 18 2 4 33

The Professional Boards Liaison wasinstrumental in establishing the OIFPLiaison Group in October of 1998. Chairedby the OIFP Professional Boards Liaison,the Group tracks active cases ofprofessional licensees under investigationby OIFP’s civil and criminal sections, aswell as by the Division of Consumer AffairsEnforcement Bureau, and has met onalmost a monthly basis since its inception.The Liaison Group strives to bring togetherrepresentative individuals from varioussections of OIFP and the Division ofConsumer Affairs who share the commonresponsibility for investigating professionallicensees suspected of committing

insurance fraud, and provides those inattendance with an opportunity to reviewand share updates, and offer insights intoeach active investigation. These monthlymeetings of the OIFP Liaison Group haveproven invaluable in facilitating theexchange of information among OIFP’s civiland criminal sections, the Division ofConsumer Affairs Enforcement Bureau, andother members of the Group.

At the end of 2000, the Liaison Group wasmonitoring 399 active cases, a substantialincrease from the 306 active cases carriedat the beginning of calendar year 1999.From the inception of the Liaison Group

42

through the end of 2000, 184 cases werereviewed and concluded, either because nofurther action was warranted, or becausethe matter resulted in a final disposition byOIFP or the appropriate professionallicensing Board. Department of Banking and Insurance(DOBI)A liaison group previously established and

comprised of representatives from OIFP, theDOBI Enforcement Division and theDivision of Law in the Department of Lawand Public Safety, continued in the year2000 to develop an effective protocol for thecoordination of cases of suspected fraud bylicensed producers (insurance agents) andpublic adjusters. The protocol addressescase tracking, sharing of investigativeinformation and the coordination necessaryfor possible global case dispositions.

Since the establishment of this liaisongroup, 72 cases have been identified forreview and possible joint action, including17 in which global or partial globalsettlement is expected. Anticipateddispositions include a combination ofcriminal convictions, civil fines, restitutionand professional license suspension orrevocation. As a result of the protocolestablished by the liaison group, OIFP hasalso opened investigations of formerproducers who are no longer licensed.

Department of LaborA protocol developed for the referral of

cases and exchange of information amongthe Labor Prosecutions Unit in the Divisionof Criminal Justice, OIFP and the Divisionof Workers’ Compensation in theDepartment of Labor has been undergoingfurther review. The anticipated revisedprotocol will further ensure that all mattersin which any indicia of criminality exists

will be forwarded by the Department ofLabor for prosecutorial review in a timelyfashion. The revised protocol will furtherestablish a procedure to refer cases to theappropriate prosecuting agency, whetherOIFP, the Division of Criminal Justice’sLabor Prosecutions Unit or a CountyProsecutor’s Office, and to advise theDepartment of Labor of the matter’s status.This revised protocol will further ensurecontinuing communication among theagencies responsible for workers’compensation enforcement matters. It isanticipated that the close workingrelationship between OIFP, the LaborProsecutions Unit and the Division ofWorkers’ Compensation in the Departmentof Labor will continue.

Division of Motor VehiclesIn 2000, OIFP commenced a series of

meetings with the Division of MotorVehicles (DMV) to address issues of mutualconcern pertaining to the problem ofautomobile insurance fraud in New Jersey.At the request of the insurance industry,this series of meetings was initiated todiscuss more effective ways for insurancecompanies to obtain information from DMVfor Special Investigations Unit purposes.DMV has been receptive to industryconcerns and is currently seeking solutionsto address these concerns. In November of2000 representatives from OIFP and theDivision of Law in the Department of Lawand Public Safety met with DMV officials toplan the establishment of a liaison group tocoordinate matters involving licensed repairfacilities suspected of engaging ininsurance fraud. This liaison group willfocus on the imposition of appropriatelicensing sanctions in addition to the levy ofinsurance fraud fines, and is expected to befully functional early in 2001.

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INTERSTATE INSURANCE FRAUDCOORDINATIONNational Association of Medicaid Fraud Control Units (NAMFCU)

The National Association of MedicaidFraud Control Units is an Association offorty-seven Medicaid Fraud Control Unitswhose mission is to provide a coordinatingpoint for the nationwide sharing ofinformation on all matters relating toMedicaid fraud investigations. NAMFCUprovides training which is accredited by theFederal Law Enforcement Training Center,for investigators, auditors and attorneysfrom each of the 47 state members.NAMFCU provides important coordinationbetween the state Medicaid Programs,including New Jersey’s Program and theUnited States Department of Justice withrespect to investigating, prosecuting, andsettling both civil and criminal mattersagainst Medicaid providers who operatenationwide. OIFP’s Medicaid Fraud Unit isan active participant in nationwide civilMedicaid fraud settlements by NAMFCUwhere the targeted providers have billed theNew Jersey Medicaid Program.

The Supervising Deputy Attorney Generalof the Medicaid Fraud Unit has been amember of NAMFCU’s Executive Committeefor the past six years. He also serves on theFinance Committee and representsNAMFCU in cases that have nationwideimplications.

Mid-Atlantic States Insurance FraudAssociation

On February 2, 2000, May 9, 2000, andOctober 17, 2000 representatives of OIFPvariously met with representatives from theNew Jersey Department of Banking and

Insurance and local insurance fraud andlaw enforcement agencies from New York,Pennsylvania, Maryland, Delaware, Virginiaand Washington, D.C. as part of the Mid-Atlantic States Insurance FraudAssociation. This multi-state group meetsperiodically to share information aboutinsurance fraud trends, newly detectedinsurance fraud schemes, specificinvestigations and cases as may beappropriate, and to provide mutualassistance with regard to investigations andtargets whose insurance fraud conduct hascrossed state lines.

State Fraud Directors’ ConferenceOn October 11 through 13, 2000, senior

OIFP staff attended the State FraudDirectors’ Conference, a national conferenceof public agencies dedicated to theinvestigation and prosecution of insurancefraud. Attendees discussed currentinsurance fraud trends that have beenidentified throughout the United States,including those involving staged accidentrings, runners and the increasingparticipation of medical providers in theseinsurance schemes. OIFP representativesmade a presentation at the conferenceregarding OIFP’s public awarenesscampaign, which included showings ofOIFP’s television spots and roll call trainingvideo. Discussions at the conferencefocused on the need for expansion ofinterstate communications among memberagencies in attendance.

INSURANCE INDUSTRY

Led by the efforts of its Industry Liaison,OIFP continued in 2000 to build upon itsstrong working relationship with the

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insurance industry. In the course of thepast year, the OIFP Industry Liaison workedclosely with the insurance industry onmatters of shared concern, providedtraining and instruction to insuranceindustry professionals throughout NewJersey, made numerous presentations toinsurance industry trade groups on behalfof OIFP, and frequently conferred andcoordinated his activities with agencies inand outside of New Jersey. A m o n g t h eOIFP Industry Liaison’s efforts to ensureeffective continuing communicationbetween OIFP and the insurance industrywas the establishment of working groupscomprised of Special Investigations Unitexecutives and the OIFP Industry Liaison.These working groups met regularlythroughout the year to identify andarticulate concerns of the insuranceindustry with respect to insurance fraud inthe auto, health, and general insurancemarkets.

Working groups’ progress reports werepresented at quarterly mini-summitmeetings with OIFP executive staff, and thegroups ’ f ina l conc lus ions andrecommendations were presented at theAnnual Insurance Fraud Summit sponsoredby OIFP, the Insurance Council of NewJersey and the New Jersey SpecialInvestigators Association (NJSIA) AnnualConference held in Cherry Hill, New Jerseyon October 10, 2000. The efforts of theseworking groups constitute the foundationfor several of the recommendations set forthat the conclusion of this report.

OIFP is committed to maintaining aproductive dialog with the insuranceindustry about matters of shared concernas they relate to insurance fraud, and

anticipates an expansion of these workinggroups to involve additional state agenciesin the future.

Between February and November of 2000,the OIFP Industry Liaison trained over 800insurance industry professionals in 22training sessions with regard to recentlyenacted requirements for referring cases toOIFP. In October the OIFP Industry Liaisonconducted a workshop for insuranceindustry personnel at the annual NJSIAConference, highlighting initiativesundertaken by OIFP during 2000 includingOIFP’s roll call video and public awarenesscampaign. The OIFP Industry Liaison alsoinstructed attendees regarding completionand submission of the new case reportingforms.

In May the OIFP Industry Liaisonparticipated in a panel discussion regardingcurrent insurance fraud issues with theNew Jersey Association of HealthUnderwriters (NJAHU) at their annualconference in Atlantic City, New Jersey.The NJAHU is an organization with fivelocal chapters, whose members haveworked with state representativesresponsible for the Small Employer HealthBenefits Plan and the Individual HealthCoverage Program, as well as the NewJersey KidCare Program.

The OIFP Industry Liaison was a frequentspeaker and presenter at insuranceindustry meetings throughout the yearincluding appearances before the SouthJersey Claims Association, the AtlanticCounty Association of Insurance Women,the Cape May County Independent AgentsAssociation, the Delaware Valley ClaimsAssociation, the Prudential Advisory

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Council on Investigation, the InternationalAssociation of Insurance Auditors, the Mid-Atlantic Region Health and Safety Expo2000, the Independent Insurance Agents ofMonmouth County and the Liberty Mutualand Atlantic Mutual Insurance Companies.

The Industry Liaison worked closely withthe Division of Anti-Fraud Compliance inthe Department of Banking and Insuranceto organize the review of fraud planssubmitted by carriers regarding the referralcriteria outlined for monetary thresholdproposals pursuant to N.J.A.C. 11:16-6.6(b)3. OIFP’s Industry Liaison alsoactively participated in an Insurance Fraud

Working Group for the Insurance FraudPrevention Authority in the State ofPennsylvania, which, with variousinsurance carriers, is developingrecommendations for legislative andregulatory reform to enable Pennsylvaniaauthorities to more effectively investigateand prosecute insurance fraud. The OIFPIndustry Liaison continues to serve as aboard member of the NJSIA and toparticipate in the board’s monthlymeetings. The NJSIA is a trade groupcomprised of law enforcement and industryinvestigators responsible for handlinginsurance fraud matters in their respectiveagencies and companies.

OIFP TRAINING INITIATIVES

As the New Jersey agency charged withleading the campaign against insurancefraud, OIFP has undertaken an ambitiousprogram of insurance fraud trainingencompassing a wide variety of subjectsand incorporating several training formats.In addition to providing for the trainingneeds of its own staff of Deputy AttorneysGeneral, investigators and support staff,OIFP has crafted training modules anddeveloped other training tools which affordinsurance fraud training opportunities forevery level of law enforcement and privateindustry. OIFP training is sometimesprovided jointly with instructors from otheragencies such as the New Jersey StatePolice Insurance Fraud Unit or Offices ofthe County Prosecutor, or solely byinstructors from OIFP.

In the year 2000 OIFP conducted, orjoined in conducting, insurance fraudrelated training on at least 73 occasions,including many in which OIFP personnelwere also enrolled as participants. Thesetraining efforts will continue to increase in

the year 2001 as OIFP’s Training Programexpands into county police trainingacademies and municipal policedepartments across the state.

Basic Course for Civil Investigators(BCCI) All newly hired civil investigators withinOIFP must successfully complete acomprehensive five week trainingcurriculum designed to provide a commoncore foundation of the basic investigativeskills required of every entry level OIFP civilinvestigator. The curriculum explains themost common types of insurance coverageand explores the fraud techniques typicallyassociated with each such type of coverage.The curriculum also emphasizesinvestigative resources and casemanagement techniques, and covers suchdiverse subjects as report writing,interviewing techniques, rules of evidence,surveillance techniques, computer fraud,insurance terminology and the developmentof informants.

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All trainees participate in a “hands-on”training exercise in which they arepresented with one of several real casescenarios, and are encouraged to apply theinvestigative skills they have acquired inthe course of their training. At theconclusion of this exercise, trainees preparea report of their investigative efforts,culminating in their testifying as witnessesin a moot court setting.

Advanced Insurance Fraud InvestigationsTraining Program (AIFITP)

This OIFP training program is designed toprovide experienced investigators with theopportunity for advanced training inspecialized areas of insurance fraud suchas auto theft and arson investigations,public adjuster fraud and the imposition ofsanctions by professional licensing boards.The curriculum has enabled OIFP tobroaden its own base of internal expertisewhile offering highly specialized trainingsegments to sister law enforcementagencies throughout the state. Thecurriculum is comprised of discrete blocksof instruction of two to four hours each,depending upon the segment selected andthe agency’s particular training needs. Theblocks of instruction have been designed sothat the curriculum may be presented toboth civil and criminal law enforcement atthe local, county or state levels.

Basic Insurance Fraud Training Program(BIFTP)

OIFP developed the Basic Insurance FraudTraining Program for personnel of CountyProsecutors’ Offices. The program mirrorsthe Basic Course for Civil Investigators insuch subject areas as types of insurancecoverage, commonly encountered frauds,and the selection and employment of

appropriate investigative techniques.Although initially designed as a one weekcourse of training, it has been expanded toaccommodate additional subject matter.

Other OIFP In-Service TrainingIn addition to OIFP’s Basic Course for Civil

Investigators and Advanced InsuranceFraud Investigators Training Program, OIFPpersonnel are frequently afforded theopportunity to attend additional in-servicetraining designed to improve upon theircurrent level of investigative andprosecutorial skills. As employees of theDivision of Criminal Justice, OIFP staff mayavail themselves of the same in-servicetraining opportunities that are open to allDivision of Criminal Justice employees,ranging from trial advocacy, moneylaundering investigation techniques, andfinancial investigative analysis to severallevels of varying types of computer skills.In addition, OIFP periodically offers OIFPstaff its own in-service trainingopportunities designed to sharpen skillsspecifically relating to insurance fraudinvestigations, such as training relating tothe investigation of public adjusters,Medicaid fraud and fraudulent providerbilling practices.

Roll Call Training VideosRoll call training videos are an important

component of OIFP’s overall program oftraining for municipal police officers.Because training videos may be viewed atany time, either individually or in groups,their use as training tools can minimizeotherwise difficult scheduling issues withinpolice departments. The use of trainingvideos also ensures the delivery of uniformcontent and quality while reducingdemands on the time otherwise required of

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the OIFP personnel who conduct insurancefraud training in addition to their primaryresponsibilities of investigation andprosecution.

By the close of 2000, OIFP had completedproduction of two roll call training videos.The first training video, addressing thedetection and investigation of fraudulentinsurance cards and staged accidents, wasdistributed with complementary trainingmaterials to over 700 local and county lawenforcement agencies in April of 2000. Thecomplementary training materials includedmodel visor and wallet reference cards forpatrol officers, setting forth “red flag”indicators of motorist fraud, as well as amaster list of insurance company “hot-line”telephone numbers for use by policedispatchers in verifying insurance coverage.

The second roll call training videoconcerning the detection and investigationof staged auto thefts, or “give-ups,” isundergoing editing and is scheduled forsimilar distribution with complementaryvisor and wallet cards and othersupplemental training materials early in2001. This training video is an importantpart of the implementation of OIFP’s “Give-Up Initiative,” which represents a concertedeffort by OIFP, with the support andcooperation of other law enforcementagencies, to address the growing problem offraudulent vehicular theft claims.

Regional Law Enforcement CoordinationMeetings

Each of OIFP’s three regional officesperiodically hosts regional law enforcementcoordination meetings of law enforcementagencies involved in the detection andinvestigation of insurance fraud. Whilethose meetings provide participating

agencies with an opportunity to establishcontacts and to share intelligence andexpertise, each meeting also includes aninstructional presentation relating toinsurance fraud. Topics in 2000 rangedfrom the emergence of non-traditionalorganized crime rings to the manner inwhich a law enforcement agency maydesign and implement a program to stemfraudulent auto theft claims at majorshopping malls. Meetings are typicallyattended by members of federal, state,county and local law enforcement agencies,as well as by key OIFP personnel. It isestimated that in 2000, over 50 differentlaw enforcement agencies benefitted bytheir participation in these regionalmeetings.

Offices of the County ProsecutorBecause of the County Prosecutor’s status

as chief law enforcement officer in eachcounty, Offices of the County Prosecutorthroughout New Jersey play a critical rolein the State’s response to insurance fraud.The partnerships forged between OIFP andProsecutors’ Offices extend beyond thesharing of investigative resources andreciprocal referrals of cases and intelligenceto the partnering of insurance fraudtraining efforts. As indicated elsewhere inthis report, OIFP conducted a two daycourse of instruction for assistantprosecutors and County Prosecutorinvestigative personnel in May of 2000,followed by an insurance fraud roundtableat the prosecutors’ annual conference inSeptember of 2000. Throughout the courseof the year, OIFP and Offices of the CountyProsecutor frequently sought mutualassistance conducting the joint training oflocal law enforcement personnel. It isanticipated that this partnership willcontinue to grow as OIFP’s training

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initiative expands into New Jersey’s countypolice training academies in 2001.

Insurance Industry ProfessionalsThe training of insurance industry

professionals in the operations of OIFP andthe manner in which the industry can mosteffectively coordinate its insurance fraudinvestigations with OIFP is crucial to the

success of our collective efforts to combatinsurance fraud. The OIFP Industry Liaisonconducts an active program ofpresentations and instruction to membersof the insurance industry throughout theyear. In 2000, in addition to his otherresponsibilities, the OIFP Industry Liaisonoffered training or instruction on 51occasions, reaching over 2500 individuals.

OIFP SYSTEMS DEVELOPMENT

Case Management and TrackingThe initial phase of the Law Manager

integrated computerized case trackingsystem is on schedule for implementationby the end of the first quarter of 2001.When completed, all historical case relateddata currently found on the various casetracking systems used by the Division ofCriminal Justice will reside on a singledatabase, and will be accessible toauthorized users through a customizedsoftware application developed by anoutside legal software vendor. Phase onewill enable users to refer to a single sourcefor both civil and criminal case information,and to conduct searches through historicaland current case data using one centralizedcomputer system. Planning is underway forfurther customization which will providee ve n more soph i s t i c a t e d an dcomprehensive searching and reportingcapabilities.

All Claims DatabaseIn 2000, OIFP advanced toward

establishment of the comprehensivedatabase of insurance claims requiredunder AICRA as set forth at N.J.S.A.17:33A-22. After extensive researchcommencing in 1999, and the subsequentappointment of a project manager in 2000,a Request for Proposal (RFP) was issued forpotential vendors on November 16, 2000.The RFP solicited proposals for thedevelopment and implementation of acomprehensive database to include claimsinformation on stolen vehicles, bodily injuryclaimants and property damage inautomobile accidents, and PIP and otherhealth care insurance claims. Following abidder’s conference on December 5, 2000,an addendum to the RFP was transmittedto prospective contractors on December 18,2000. Bid submissions were due onJanuary 23, 2001 vendor selection by theevaluation committee is scheduled forcompletion by February 28, 2001 and workby the successful contractor is scheduled tobegin within 20 days of contract award.

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PUBLIC AWARENESS ENDEAVORS

The message of deterrence resulting fromOIFP’s record of successful prosecutions isamplified by OIFP’s program of publicawareness initiatives. The focal point ofOIFP’s public information program over thepast year and a half has been the OIFPPublic Awareness Media Campaignconsisting of radio and television spots, andprint ads appearing on billboards andbuses on major transportation routes inNew Jersey. The first phase of the MediaCampaign, which ran from October of 1999through April of 2000, was designed tofocus the public’s attention on the problemof insurance fraud, to inform the public ofOIFP’s mission and to encourage thepublic’s assistance in the reporting ofinstances of suspected insurance fraud.

This phase featured two sets of adsportraying, respectively, an affluent“professional” named Richard who hasaccumulated his wealth by committinginsurance fraud, and a youthful femaleinjury claimant who is sufficiently healthyto nimbly dance the night away at a livelynight spot. The second phase of the MediaCampaign, which runs from October of2000 through the spring of 2001, shiftsfrom a “call to action,” to a strong messageof deterrence, by following Richard as he isarrested, convicted and jailed for hiscrimes. Both phases of the MediaCampaign prominently feature the OIFP tollfree telephone hotline number for reportinginsurance fraud, as well as the OIFP website address.

OIFP’s interactive web site provides thepublic with general information regardingthe most common types of insurance fraud,

as well as with several alternative methodsof reporting suspected insurance fraud toOIFP, including an e-mail link to OIFP, anon-line reporting form and OIFP’s hotlinetelephone number. The OIFP web site alsoposts insurance industry reporting formsand Fraud Prevention Detection Planrequirements, OIFP’s most recent AnnualReport and a compendium of OIFP’s newsreleases.

To keep the public apprised of its efforts,and to emphasize the criminalconsequences of insurance fraud, OIFProutinely issues news releases chroniclingsignificant public developments in thecourse of its criminal prosecutions.

In addition to its web site, news releasesand continuing Media Campaign, OIFPconducts an active program of outreach topublic agencies and private organizations.OIFP’s Industry Liaison, for example, is afounding member of the New Jersey SpecialInvestigators Association and plays asignificant role in organizing, andestablishing the agenda for its annualconference which is attended by over 800members of the insurance industry who areresponsible for investigating insurancefraud. The Law Enforcement andProsecutor Liaisons have, similarly, soughtopportunities to address appropriateagencies and organizations regardinginsurance fraud, most recently appearingbefore the New Jersey Chiefs of PoliceAssociation and the Municipal CourtAdministrators Association of New Jersey atits annual meeting at the New JerseyLeague of Municipalities Conference. Theseoutreach efforts are designed to identify

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agencies and organizations that may makea contribution to combating insurancefraud, and to provide them with theinformation and tools necessary to providethat assistance.

PUBLIC RECOGNITION

In calendar year 2000, OIFP was honoredto have been recognized as a leader in thefight against insurance fraud. In March of2000, OIFP was featured nationally in boththe Fraud Report of the Coalition AgainstInsurance Fraud and the Health CareFraud Report published by the NationalAssociation of Attorneys General.

OIFP staff were called upon to provideguidance and assistance to organizationssuch as the National White Collar CrimeCenter, the National Association ofMedicaid Fraud Control Units, thePennsylvania Fraud Prevention Authority,the Mid-Atlantic States Insurance FraudAssociation and the State Fraud Directors’Conference. OIFP staff were alsoindividually honored by variousorganizations, such as the New JerseySpecial Investigators Association, for theircontributions in combating insurancefraud.

OIFP’s Public Awareness Media Campaignwas recognized by leaders in the marketingand advertising community which awardedthe campaign top honors for effectivenessand creativity. First place trophies weregiven to the OIFP television and radiocommercials by the New Jersey BusinessMarketing Association, the New JerseyAdvertising Club and the New JerseyCommunicat ions and Market ingAssociation.

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RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24

N.J.S.A. 17:33A-24 requires the OIFP to make appropriate legislative and regulatoryrecommendations. Among them are:

1. Criteria are set forth at N.J.S.A.17:33B-13 pursuant to which anapplicant for automobile insurancemay be denied status as an “eligibleperson” to be afforded coverage in thevoluntary automobile insurancemarket. Persons who are not eligiblefor coverage in the voluntary marketare placed in the Personal AutomobileInsurance Plan (PAIP) pursuant toN.J.S.A. 17:29D-1. The criteria foreligible persons currently provide thatthose who have been convicted of aninsurance fraud offense, or have beensuccessfully denied an automobileinsurance claim in excess of $1,000on grounds of fraud, may be excludedfrom eligibility for insurance in thevoluntary market. It is possible,however, that a person who hasviolated the Insurance FraudPrevention Act may qualify as an“eligible person” for voluntaryinsurance market coverage becausethat civil violation did not result in acriminal conviction or in the denial ofan automobile insurance claim inexcess of $1,000. This gap in thecriteria relating to the definition of an“eligible person” may be rectified byamendment of the statute adding, asan additional ground for exclusion foreligibility, that the applicant forautomobile insurance “admittedviolating, or has been adjudicated tohave violated,” the Insurance FraudPrevention Act. This recommendationis based upon the findings of the OIFP

Automobile Insurance Workgroupwhich identified this statutory gapand suggested that the currentstatute be amended with languagethat would, in effect, make any personwho violates the Insurance FraudPrevention Act ineligible for insurancecoverage in the voluntary automobileinsurance market.

2. The authority to suspend or revokethe license of a person or businesswho has engaged in insurance fraudis one of the State’s most effectivetools in combating insurance fraud,both in limiting the offending party’sability to continue its fraudulentconduct, and in deterring others fromengaging in insurance fraud. As thehead of the New Jersey agencyresponsible for regulatory oversight ofthe State’s automotive businesses, theDirector of the Division of MotorVehicles is expressly empowered bystatute to suspend or revoke thelicense of a motor vehicle dealer orauto body repair facility underspecified circumstances. However,neither of the statutes providing suchauthority, N.J.S.A. 39:10-20 andN.J.S.A. 39:13-4 respectively,includes violation of the InsuranceFraud Prevention Act as grounds forsuch licensure action by the Director.OIFP would recommend that thesestatutes be amended to add, asgrounds for licensure sanctions by theDirector of the Division of Motor

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Vehicles, that a motor vehicle dealeror auto body repair facility has beenconvicted of a crime or offense relatedto insurance fraud, or that suchbusiness has admitted to, or beenadjudicated of, violating the InsuranceFraud Prevention Act.

3. Insurance carriers are severely limitedin their ability to promptly terminatean automobile insurance policy orapplication where underwriting fraudhas been discovered. Current NewJersey law and regulations wouldseem to limit insurers’ recourse undersuch circumstances to non-renewal ofthe insurance policy until after itexpires. (See N.J.S.A. 17:29C-7.1.f) Itis recommended that this problem berectified by amending the currentstatute providing authority for autoinsurance policy cancellations, to add,as grounds for cancellation, that theinsured has been determined to havemade a material misrepresentation inthe application for the currentinsurance policy, or that, during thecurrent policy term, the insured hasadmitted to violating, or has beenadjudicated to have violated, theInsurance Fraud Prevention Act. Thisrecommendation is based uponidentification of this gap in theregulations by the OIFP AutomobileInsurance Workgroup and itsproposal for appropriate legislativeamendments.

4. Insurers are currently precluded fromnon-renewing an automobileinsurance policy on grounds of aninsurer’s failure to complete andreturn a renewal questionnairewithout first giving written notice to

the policy holder one full policy cycleprior to the issuance of the notice ofnon-renewal. This notice requirementeffectively mandates that insurersmaintain insurance policies forextended periods despite theinsured’s failure to cooperate inproviding current underwritinginformation, which may have changedsignificantly since the policy’sinception. OIFP recommends thatlegislation be enacted to rectify thisproblem by reducing the notice periodfrom a full policy cycle to 30 daysand/or by adding, as grounds forcancellation, the insured’s failure toreturn a fully completed renewalquestionnaire within 30 days of itsdue date.

5. Undisclosed drivers in a householdfrequently avoid detection because thecurrent regulation requires that anapplicant for an automobile insurancepolicy disclose only information“regarding each resident licenseddriver who is to be a named insured.”The identification of other possibledrivers within an insured householdwould enable insurance carriers tomore accurately determine theapplicant’s underwriting risk and tocalculate appropriate premiumscommensurate with that risk. OIFPrecommends that the regulationssetting forth information required ofapplicants for automobile insurancebe amended to authorize the inclusionon an automobile insuranceapplication of information regardingany resident of the household whohas reached his or her seventeenthbirthday.

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6. A court is required to awardreasonable attorneys fees and costs tothe State under N.J.S.A. 17:33A-5 inan action by the State to recover civilinsurance fraud penalties forviolations of the Insurance FraudPrevention Act. Similarly, N.J.S.A.17:33A-7a requires the award ofreasonable attorneys fees and costs toan insurance company whichsuccessfully sues to recovercompensatory damages from a partythat has defrauded the company.Howeve r , i n an appare n tinconsistency within the Act, anaward of attorneys fees and costs tothe State is only discretionary (andnot mandatory) by the Court when theState’s action to recover civil penaltiesis by way of intervention in theinsurance company’s pending suit.N.J.S.A. 17:33A-7d. Thisincons is tency can produceanomalous, and OIFP believesunintended, results, as in one recentcase where the State intervened andprevailed in an insurance companylawsuit, but was denied an award ofattorneys fees. After the Stateintervened, presented its case, andprevailed on the merits, the insurancecompany successfully filed asummary judgement motion based onthe Court’s findings in the State’scase, and was awarded $18,000 infees. We recommend that N.J.S.A.17:33A-7d be amended to bring it intoconformity with the other provisionsof the Insurance Fraud Prevention Actrequiring the award of attorneys feesby making the award of attorneys feesmandatory in cases where the Statesuccessfully intervenes in a pendinginsurance company lawsuit.

7. Magnetic Resonance Imaging (MRI) isa commonly used imaging techniquefor producing images of the inside ofthe human body and is used toidentify and diagnose traumaticinjuries such as those that may resultfrom automobile accidents. Recentexperience has shown that the highfees commanded by MRI facilities,which can average as much as $1,000per scan, and the lack of thoroughbackground checks of MRI licensees,makes the MRI industry vulnerable toinfiltration by persons suspected ofharboring criminal purposes andother unscrupulous operators. Toensure the integrity of those whooperate MRI facilities, OIFPrecommends the implementation of acomprehensive system of backgroundchecks of prospective MRI licenseessimilar to those employed in thecasino, check cashing and alcoholicbeverage industries.

8. Current New Jersey law appears toallow virtually unfettered access topolice department motor vehicleaccident reports for “runners” andothers seeking to solicit those listedon an accident report to file insuranceclaims. Such unrestricted accessoften encroaches upon the privacyinterests of those listed on the reportswhen they are subjected to unwantedsolicitations to file personal injuryclaims, sometimes only hours afterthe accident has occurred. Suchunrestricted access also subjectsthose listed on the reports to therelease of sensitive personalinformation, such as home address,date of birth and driver’s licensenumber, to any individual, leaving

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those listed on the reports vulnerableto identity theft, or targeting at theirhomes for burglary or crimes ofviolence. Additionally, New Jerseylaw with respect to policedepartmental motor vehicle accidentreports currently, in effect, reducespolice departments to the status of“clerks” who gather and copy theaccident reports for private businessenterprises which more frequentlymake blanket requests for thoseaccident reports. OIFP wouldrecommend that the Legislature givecareful consideration to theenactment of reasonable standards forauthorizing the release of accidentreports to those with a legitimate needfor the information which accidentreports contain.

A P P E N D I X