EASTERN NEWS ZONE......

HealthMarkets Inc. announced that its subsidiary insurance companies will focus solely on marketing its ancillary vision, dental and related specialty plans in Massachusetts and discontinue marketing health insurance products in the state after Sept. 30.

The company worked with the offices of the Massachusetts Division of Insurance Commissioner and the Massachusetts Attorney General to resolve all matters related to regulatory issues with the Division of Insurance dating back to 2003, and to litigation brought by the Attorney General’s office dating back to 2004. HealthMarkets stated that given the unique environment regarding health insurance in Massachusetts, marketing only ancillary products, underwritten by its subsidiary insurance companies, is the best business strategy going forward.

This decision has no impact on the company’s marketing efforts outside the state of Massachusetts.

HealthMarkets subsidiaries have approximately 27,000 health insurance members in Massachusetts, and will continue to service those members and administer the health insurance plans currently in-force in the state, consistent with the terms of the settlement agreements.

As a result of the voluntary agreements, the company will make payments totaling $15 million to the Commonwealth of Massachusetts, from which $11.25 million will be used by the Attorney General’s office to provide restitution or other relief to Massachusetts residents who meet certain criteria and $750,000 will be used for attorney’s fees and related costs. The payment includes a $3 million civil penalty and the company will be implementing a claims reassessment program under the terms of the agreement with the Division of Insurance. In addition, the companies have previously paid amounts of more than $2.1 million in claims remediation in Massachusetts since litigation commenced.

EASTERN NEWS ZONE......

Medical payments per workers’ compensation claim in Massachusetts were the lowest of 14 states, despite steady increases since 2001, according to a new study from the Workers Compensation Research Institute (WCRI).

The study, CompScope^TM Medical Benchmarks for Massachusetts, 9th Edition, reported that employers in Massachusetts paid an average of just over $5,100 for 2006 claims with experience through March 2007.

A key driver of the lower medical payments was the lower prices paid for nonsurgical services, which were related to the lowest non-hospital provider fee schedule in the nation, according to Cambridge, Mass.-based WCRI.

Despite lower-than-typical fee schedule rates for all service categories including surgery, the study found that prices paid for surgeries were higher in Massachusetts compared to other study states. Massachusetts employers and insurers often negotiated surgery prices higher than what the fee schedule dictated, particularly for orthopedic surgeries.

WCRI observed that recent regulations in the form of fee schedule changes that became effective April 1, 2009, focused on this issue. Fees for many surgical procedures were increased to reflect current rates being paid, raising fees in some cases two to three times above the 2004 fee schedule rates.

Another provision of the revised fee schedule increased physician fees by 10 to 20 percent, except for anesthesia and surgery, which were the subject of larger increases. At the same time, hospital reimbursement rates were generally decreased.

The study found that medical payments per claim in Massachusetts were lower for nearly all providers—both non-hospital and hospital—compared to the typical study state.

For example, payments to physicians were 42 percent lower than the median of the 14 states, mainly due to fewer physician visits and fewer services per visit. Utilization for non-hospital providers in Massachusetts was the lowest among the study states.

In addition, fewer claims received specialty services, such as minor radiology and physical medicine from non-hospital providers. Conversely, these services (and evaluation and management) were provided more often in a hospital outpatient setting in Massachusetts than in the typical study state.

Payments per claim for hospital outpatient services in Massachusetts were about half the amount paid in the typical study state. The lower payments per claim for hospital outpatient services may be partially due to the fact that a higher percentage of general outpatient care was billed by hospitals in Massachusetts compared to other study states, services that would likely be billed as non-hospital services in other states. As a result, the mix of services provided in the hospital outpatient setting was less intense in Massachusetts than in the typical study state.

The lower payments per service for hospital outpatient services are likely due to the fact that the provider fee schedule applies to hospital outpatient services when it is determined that the service can be safely provided outside the hospital setting. Hospital inpatient payments per claim were lower than typical of the study states, and a lower percentage of cases involved an inpatient stay.

The study also found that medical payments per claim in Massachusetts have been steadily increasing—9 to 12 percent per year from 2001 to 2005 and at a slightly slower rate, 7 percent, in 2006 for claims with 12 months of experience.

In 2006, payments per claim to nonhospital providers were stable or falling, due mainly to fewer visits per claim; prices paid were stable. The payments per claim for hospital outpatient services had moderate growth since 2004, mainly driven by increases in payments per service for hospital outpatient services.

To order this report, go to the WCRI Web site: www.wcrinet.org.

EASTERN NEWS ZONE......

An Oneida County, New York man has been arrested for trying to get his insurance company to pay for $4,000 in living expenses at a bed and breakfast that turned out not to exist, the New York State Insurance Department reported.

State police arrested Matthew Darling, 36, of Camden, after an investigation by Tom Hurley of the Insurance Department's Frauds Bureau.

Darling is accused of submitting a fraudulent insurance claim to Kemper Insurance Company for expenses he said he incurred while his home was being repaired after smoke damage caused by a faulty furnace. The investigation revealed that a receipt for cash payments Darling submitted was phony, as was the bed and breakfast where he claimed to have stayed. He was never paid for the purported expenses.

Darling is charged with insurance fraud and falsifying business records. He could be sentenced to up to four years in prison if he is convicted. He was released pending a hearing.

• A Winchester, Massachusetts construction and demolition company was arraigned and pled guilty in Charlestown District Court last week, in connection with failing to among other things pay the proper premium for its workers’ compensation insurance policy.
  
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• P & R Partners Construction Inc. (P & R) pled guilty to charges of Workers’ Compensation Fraud. In addition, the company’s owners and officers, Elienai Coelho, age 30, of Stoneham, and Rodrigo Silva, age 29, of Medford, admitted to sufficient facts for Failing to Pay Overtime and Failing to Provide True and Accurate Payroll Records. After the plea was entered, District Court Judge Mark Summerville ordered Coelho, Silva and P & R to pay over $54,000 in restitution to 51 former employees, $50,000 in restitution to the insurance company, and a $30,000 fine to the Commonwealth. Judge Summerville also placed Coelho and Silva on probation for a period of one year.
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• Investigators from the Attorney General’s Fair Labor Division and the Insurance Fraud Bureau of Massachusetts (IFB) reviewed the company’s payroll records and determined that P & R failed to pay the proper premium for its workers’ comp insurance policy.
  

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• The Workers’ Compensation Law requires Massachusetts employers to pay workers’ comp insurance for their employees.
  

EASTERN NEWS ZONE......

An Essex County, Massachusetts Grand Jury has returned indictments against a Seabrook, New Hampshire, woman in connection with embellishing several insurance claims and fraudulently collecting lost wages.

Ana Keegan, 39, formerly of Haverhill, is charged with Motor Vehicle Insurance Fraud (3 counts), Larceny over $250 (2 counts), and Attempted Larceny (2 counts).

The Attorney General’s Office began an investigation into Keegan’s alleged activities after a referral was made by the Massachusetts Insurance Fraud Bureau (IFB). Authorities allege that in August 2002, Keegan suffered legitimate injuries from a dog biting incident and received a settlement from her insurer, State Farm Fire & Casualty Co. (State Farm). Investigators further discovered that Keegan sustained additional injuries as the result of an auto accident in February 2003, at which time she reported her injuries to MetLife Auto & Home Insurance Co. (MetLife). Authorities allege that in an effort to embellish her claim with MetLife, Keegan also cited the injuries she sustained from her previously settled August 2002 claim.

In response to her claim, MetLife paid Keegan $20,000 in compensation for her total injuries and purported loss of wages as result of the accident. According to authorities, at the time of the accident Keegan claimed to be employed at John D’s Deli, a restaurant/bar that closed in July 2002, before any of the alleged injuries occurred.

In addition, authorities allege that on three separate instances occurring on diverse dates in April 2003, September 2004, and January 2005, Keegan made embellished insurance claims as the result of minor motor vehicle accidents citing the injuries, medical reports, and loss of wage claims from the August 2002 and February 2003 settlements.

An Essex County Grand Jury returned indictments against Keegan late on Friday, June 12. Keegan is scheduled to be arraigned on July 7, 2009, in Essex Superior Court in Salem.

• The Independent Insurance Agents & Brokers of New York today commended the New York Insurance Department for a proposed rule change that will make doing business easier for New York insurance brokers.
  
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• The change, published in the June 17 edition of New York State Register, amends the so-called “export list,” the list of insurance classes and coverages which an excess line broker may place with an unlicensed insurance company without first having them rejected by licensed insurers. New York law and regulations prohibit excess line brokers from placing coverage for most types of accounts with an unlicensed company unless they can show that at least three companies licensed in New York have rejected them. However, the law allows the Insurance Department to exempt coverages from this requirement “upon findings and conclusions” based on “relevant market conditions.” Working closely with the Excess Line Association of New York and other trade groups, IIABNY has urged an expansion of the export list to include several coverages and classifications for which licensed insurers have little appetite.
  
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• Former chairs of the board Neal Sullivan and Sharon Emek and Director of Research and External Communications Tim Dodge testified at a June 2008 Insurance Department public hearing in support of the expansion. The proposed rule would exempt brokers from having to show prior rejections for a number of coverages, including liability coverage for most types of construction contractors, property coverage for very high-value buildings, professional liability coverage for institutions such as alcohol and drug rehabilitation centers and hospices, and liability coverage for special events such as trade shows, fairs and concerts.
  
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• “The Insurance Department’s action will make doing business easier for New York insurance brokers while still protecting insurance buyers,” said IIABNY Chair of the Board Lane Rubin. “The accounts that will go to the excess line market after expansion of the export list are the same ones that go there now. Expansion will free the broker from an administrative exercise that does not produce value for the client, and it will give the broker the time to do a better job for the client.”
  
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• Rubin, managing member of Excel Coverage Group LLC in Westbury, encouraged the department to make the change permanent. Under state rules, the public has until Aug. 1 to comment on the proposal. Based on public comment, the department may adopt, modify or reject the proposal after that date.

FRAUD NEWS ZONE......

* A Brookline, Massachusetts couple has pled guilty in Suffolk Superior Court to charges they schemed to obtain public health insurance to which they were not entitled.

Joseph Youshaei, 46, and Jila Youshaei, 41, each pled guilty to charges of Procurement Fraud (2 counts), and Larceny Over $250 by Continuous Scheme. Following the change of plea, Suffolk Superior Court Judge Carol Ball sentenced Joseph Youshaei to one year in the House of Corrections; 30 days to serve, balance suspended for one year. Jila Youshaei was sentenced to one year probation. Ball ordered Joseph and Jila Youshaei to jointly pay restitution in the amount of $53,114 and fined each $17,500.

From 1999 through 2005, the Youshaeis reportedly applied for and received MassHealth benefits by providing false information regarding their income. Joseph and Jila Youshaei reported in submissions to MassHealth that their only source of income was $475 a week earned by Joseph as an employee of the Boston Discount Jewelry Exchange. Based on their submissions, the Youshaeis, including their three children, qualified for and received the most comprehensive health coverage available at the time under the Commonwealth’s public health assistance program.

An investigation conducted by State Auditor Joe DeNucci’s Bureau of Special Investigations and an independent investigation conducted by the Attorney General’s Office revealed that during the relevant time period, from 1999 through 2005, the Youshaeis owned a principle residence in Brookline assessed at approximately $650,000 as well as various businesses and downtown commercial real estate assessed in the millions including the Boston Discount Jewelry Exchange building located at 365 Washington Street and commercial buildings at 48 and 52 Temple Place in Boston. In addition, the Youshaeis owned and operated three separate Honey Dew Donut franchises, a convenience store, and a fruit vendor stand located on Downtown Crossing. The investigation also revealed that during the relevant time period, all three of the Youshaei children attended an exclusive private school in Brookline. Neither these assets nor the purported income derived from the businesses and real estate ventures were reported to MassHealth.

In total, MassHealth paid over $53,000 in medical benefits on behalf of the Youshaei family.

Mass. AG Enters Into Settlement with Aetna

Massachusetts Attorney General Martha Coakley’s Office has entered into a settlement with Aetna Health Inc., resolving claims the insurer failed to provide health benefits required by Massachusetts law.

The Assurance of Discontinuance, entered in Suffolk Superior Court, alleges that Aetna committed unfair or deceptive acts when it sold health insurance policies that violated Massachusetts’ mandated benefits laws. The Assurance alleges Aetna denied coverage for infertility in certain circumstances in violation of Massachusetts law by improperly excluding benefits for egg procurement and processing services and by denying such services.

Under the terms of the agreement, Aetna will pay $10,000 to the Attorney General’s Local Consumer Aid Fund, review all denials of consumer claims and requests for the wrongfully excluded infertility treatment, and approve all requests and claims for such treatment that were wrongfully denied to consumers.

The Attorney General’s Office previously settled similar issues with 10 other health insurers, Fallon Community Health Plan, GenWorth Life and Health Insurance Company, Harvard Pilgrim Health Care, John Alden Life Insurance Company, New England Life Insurance Company, UniCare Health and Life Insurance Company, Time Insurance Company, Union Security Insurance Company, The Guardian Life Insurance Company and Pan-American Life Insurance Company.

The Attorney General also has a suit pending that relates, in part, to these issues against The Mega Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and HealthMarkets, Inc.

AIA Takes Issue with Massachusetts Regulation

The American Insurance Association (AIA) said it has deep concerns regarding many of the requirements of Massachusetts regulation 201 CMR 17.00, Standards for the Protection of Personal Information of Residents of the Commonwealth, according to testimony presented last Friday before the Office of Consumer Affairs and Business Regulation (OCABR).

Legislation passed in 2007 directed the regulation to establish minimum standards to be met in connection with the safeguarding of personal information contained in both paper and electronic records.

“Protecting consumers’ personal information is very important and our member companies take seriously the obligation to protect the data in their possession and control,” said John Murphy, AIA northeast region vice president. “We hope that Massachusetts will afford companies the flexibility to effectuate that obligation in a reasonable and sensible manner and timeframe.”

The hearing was required after OCABR issued an emergency regulation in November extending the compliance dates. The regulations, which contain personal information protection rules for businesses under the state's new identity theft law, were initially adopted by OCABR in September and set to be implemented on Jan. 1, 2009.

“The original effective date of January 1, 2009 — just three months after the final regulation was approved — was simply not realistic,” said Murphy. “While AIA appreciates OCABR’s decision to delay implementation for a few months, this ‘breathing room’ will not cure the substantive problems with the regulation or afford companies enough time to fully implement its directives.”

Murphy explained that the additional time still does not address some of the fundamental roadblocks and areas where further clarification is needed, such as encryption; data mapping or data inventory; monitoring; safeguards consistent with other state or federal regulations; and vendor contracting issues.

“AIA strongly encourages OCABR to indefinitely delay implementation of the regulation so that all affected entities can raise concerns and receive guidance from OCABR and the Massachusetts attorney general, where appropriate,” concluded Murphy.

Man Takes Jiffy Lube to Trial on Grooming Policy

The Massachusetts Supreme Judicial Court has ruled that a Rastafarian man who said no to shaving off his beard or cutting his hair to comply with Jiffy Lube's employee grooming policy can take his religious discrimination case to trial.

In its ruling on Tuesday, the Court reversed a decision by a Superior Court judge who had dismissed Bobby T. Brown's lawsuit against a Jiffy Lube franchisee before a trial.

Brown was employed as a technician at a Hadley Jiffy Lube business owned by F.L. Roberts & Co. Inc.

In 2002, after Jiffy Lube put a new grooming policy in place requiring employees who worked with customers to be clean-shaven, Brown informed management that his religion does not allow him to shave or cut his hair. Managers reportedly told Brown he could work only in lower bays where he did not have interaction with customers.

Brown filed a discrimination lawsuit in state court in 2006. A Superior Court judge agreed with the company's belief that it had the right to control its public image and found that it would be an undue hardship on Jiffy Lube to grant Brown an exemption from the grooming policy.

But the higher court disagreed, claiming Jiffy Lube had not demonstrated that no other accommodation was available for Brown without imposing an undue hardship on the company.

Although he no longer works for Jiffy Lube, Brown plans to take the case to trial to seek damages from the incident.

Mass. Man Offers Guilty Plea in Accident Scam

A Mattapan, Massachusetts man has pled guilty in Suffolk Superior Court to charges he falsely procured insurance under a false identity, reported a false motor vehicle accident and lied under oath.

Raymond DeGraca, 56, pled guilty to charges of Identity Theft (10 counts), Perjury (4 counts), False Name/Social Security to Law Enforcement (2 counts), Motor Vehicle Insurance Fraud, Larceny Over $250, Attempted Larceny, and Making False Statement on a Motor Vehicle Registration Application.

Following a change of plea from not guilty to guilty, Suffolk Superior Court Judge Carol Ball sentenced DeGraca to serve two to three years in State Prison, followed by two years probation to be served upon completion of his incarceration. While on probation DeGraca must remain drug and alcohol free and attend drug and mental health counseling programs recommended by the probation department.

In October 2002, in an effort to obtain auto insurance despite having a suspended license, DeGraca reportedly assumed the identity of his brother without his permission by using a Rhode Island license containing his brother’s information and DeGraca’s picture. DeGraca used the identification to falsely register his own car and procure an insurance policy in Revere, MA.

In March 2003, DeGraca submitted a false motor vehicle accident claim to his insurer, Amica Mutual Insurance Company, for a purported accident in Revere. DeGraca used his brother’s name to falsely claim that his vehicle was hit by another driver. The other driver involved in the purported accident reported the incident to her insurer, Liberty Mutual Insurance, indicating that no accident had occurred. Following the incident DeGraca and one of his passengers reportedly filed personal injury claims and sought medical treatment.

In June 2003, investigators from Liberty Mutual Insurance determined that DeGraca’s claim was false. During the investigation of this incident, Amica Mutual Insurance Company discovered DeGraca’s true identity based on the result of a fingerprint comparison to an unrelated auto accident in April 2003. All insurance claims filed by DeGraca in regards to the alleged accident were ultimately denied by both insurers.

Further investigation revealed that while on probation for an unrelated case DeGraca used his brother’s identity and social security number on separate occasions in West Roxbury and Dorchester District Courts in 2004 and 2005. DeGraca was then charged with Perjury, Providing a False Name to Law Enforcement, and Identity Theft in regards to these separate court appearances.

Indictments were returned against DeGraca on Aug. 27, 2008. DeGraca was arraigned on Sept. 5, 2008, in Suffolk Superior Court, at which time he entered a plea of not guilty and was ordered held on $5,000 cash bail.

Today, DeGraca entered a change of plea in Suffolk Superior Court and began serving his sentence.

Four Arrested in Motor Vehicle Accident Scam

Four Massachusetts individuals have pled guilty in Suffolk Superior Court in connection with their participation in staging fraudulent motor vehicle accidents to scam insurance companies.

The four defendants, Laura Battista, 58, of Weymouth, William Penta, 44, of Revere, Janet Vaccari, 46, of Reading, and Vaccari’s daughter Deana Pistone, 25, of Wakefield, pled guilty to charges of Motor Vehicle Insurance Fraud, Conspiracy to Commit Motor Vehicle Insurance Fraud, Larceny by False Pretenses and Attempted Larceny. Superior Court Judge Carol Ball sentenced the defendants as follows:

Laura Battista:
Five years of probation
$12,941.25 restitution
100 hours of community service

William Penta:
Two years in the House of Correction, suspended for two years, during which time he will be on probation
$4,303.75 restitution
40 hours of community service

Deana Pistone:
Two years of probation
40 hours of community service

Janet Vaccari:
Five years of probation
$8,420.38 restitution
100 hours of community service

The two remaining co-defendants, Fred Battista, age 46, of Revere, and David Forlizzi, age 47, of Hudson, NH, are scheduled for a pre-trial hearing on Dec. 18, in Suffolk Superior Court. Fred Battista is charged with Motor Vehicle Insurance Fraud (3 counts), Conspiracy to Commit Motor Vehicle Insurance Fraud (2 counts), Larceny by False Pretenses (2 counts) and Attempted Larceny. David Forlizzi is charged withMotor Vehicle Insurance Fraud (3 counts), Conspiracy to Commit Motor Vehicle Insurance Fraud (3 counts), Larceny by False Pretenses (2 counts), Attempted Larceny and Being a Habitual Offender.

An investigation conducted by the Attorney General’s Office began in July 2007 after the matter was referred by the Insurance Fraud Bureau (IFB). During the course of the investigation authorities discovered that on various dates between May 2006 and June 2007, fraudulent claims involving three staged accidents were submitted to insurance companies. Authorities allege that Penta, Vaccari, Pistone, and Laura Battista knew Forlizzi and Fred Battista, both employees of Winthrop Collision Center, also known as Collision Headquarters, were willing to pay people to submit fraudulent motor vehicle insurance claims. Investigators believe that Forlizzi and Fred Battista schemed to collect insurance money from these staged accidents.

One of the accidents involved Janet Vaccari, who submitted a claim to her insurance company Plymouth Rock Assurance Corporation (PRAC), stating that she had been involved in a motor vehicle accident with Laura Battista. PRAC paid Vaccari’s claim, and also paid Laura Battista based on the fraudulent information given by Vaccari. After receiving her check, Vaccari signed over her insurance check to the Winthrop Collision Center for repairs on her vehicle. Authorities discovered that David Forlizzi assisted Vaccari in staging this accident with the help of Laura Battista, and her stepson, Fred Battista.

During the investigation authorities discovered that a second fraudulent claim was submitted by Deana Pistone to her insurance company, also PRAC, alleging that her vehicle had been vandalized. She claimed to PRAC that as a result of the vandalism she brought her car to Winthrop Collision Center for repair. She later withdrew her claim after PRAC began investigating the incident. Pistone admitted that the claim was false and that Forlizzi convinced her to submit a false claim.

A third claim found to be fraudulent was submitted by William Penta, who stated to his insurance company, National Grange Mutual Insurance (NGM) that he had struck a parked vehicle belonging to Laura Battista. NGM paid the claim for the damage to the vehicle which Penta was driving, and also paid Laura Battista for the alleged damage to her vehicle. Penta also filed a Personal Injury Protection (“PIP”) claim for injuries sustained in the accident. Investigators discovered that Penta had known Fred Battista prior to the staged accident, and it is through this relationship that Penta became involved in the insurance fraud scheme.

A Suffolk County Grand Jury returned indictments against all six defendants on March 27, 2008. On April 15, 2008, they were arraigned in Suffolk Superior Court and entered pleas of not guilty and released on personal recognizance. Today, four of the defendants pled guilty, were sentenced to probation and ordered to pay restitution. The two remaining defendants are scheduled for a pre-trial hearing on Dec. 18.

Mass. Charges Fla. Man in Insurance Fraud Scam

A Florida man has been arraigned and ordered held on $30,000 cash bail in connection with filing false motor vehicle insurance and personal property claims, forgery of a police report, larceny, and filing false police reports with the Beverly, Massachusetts Police Department.

Tyler Parrish, 31, formerly of Peabody, was charged with Larceny over $250 (4 counts), Motor Vehicle Insurance Fraud (2 counts), Filing a False Police Report (3 counts), Attempted Larceny, Forgery, Uttering, and Insurance Fraud.

Authorities allege that while living in Beverly, Parrish committed motor vehicle insurance fraud when he vandalized his Hummer H3 in an attempt to have it deemed a total loss in order to get out of his $45,000 auto loan in July 2007. In August 2007, Parrish’s insurance provider, Arbella Mutual Insurance Company (Arbella), referred this case to the Insurance Fraud Bureau of Massachusetts (IFB) for investigation. Investigators found that Parrish filed a false police report with the Beverly Police Department regarding damage to his vehicle. The Attorney General’s Office began an investigation in April 2008, after the matter had been referred by the IFB.

After further investigation conducted by the Attorney General’s Office, investigators discovered that Parrish filed a false insurance report in 2007, claiming that an engagement ring he had purchased was stolen in Boston. Parrish allegedly submitted a forged Salem Police Department police report in order to support his fraudulent insurance claim for the engagement ring. Investigators also discovered that on separate occasions in July 2006 and March 2007, Parrish falsely claimed that his ATM card had also been stolen and that the thieves had made withdrawals on his bank accounts.

Indictments were returned against Parrish on Sept. 19, 2008. Parrish was arrested in Florida on Nov. 5, 2008, on a default warrant. On Nov. 18, 2008, Massachusetts State Police assigned to the Attorney General’s Office took Parrish into custody and transported him to Massachusetts.

Parrish was arraigned in Essex Superior Court, at which time he entered a plea of not guilty and was ordered held on $30,000 cash bail. Parrish is due back in court on Dec. 9, 2008, for a pre-trial conference.

Electric Insurance Gains Approval for Rate Decrease

Electric Insurance Company, a national provider of auto, homeowners, condominium, and renters insurance, announced that the Commonwealth of Massachusetts’ Department of Insurance has approved the company’s rate filing to decrease its personal auto insurance rates by an average of 3%. This is the second decrease in less than a year.

The company’s lower rates for qualified individuals are effective Dec. 18, 2008. This is in addition to rate decreases approved for use on April 1, 2008. Between the two reductions, auto policyholders renewing between Dec. 18, 2008 and April 1, 2009 may save as much as 30% compared to a year ago.

Policyholders will be notified of their new premium as part of their annual renewal package, and the realized savings will be based on a range of criteria that includes their experience, number of household drivers and previous driving records.

Massachusetts Man Guilty in Auto Fraud Ring

A Worcester, Massachusetts man pled guilty in Worcester Superior Court in connection with his involvement in an insurance fraud scheme that included the staging of two motor vehicle accidents in Worcester.

Eric Bonnette, age 25, pled guilty to charges of Motor Vehicle Insurance Fraud (2 counts), Conspiracy to Commit Motor Vehicle Insurance Fraud (4 counts) and Assault and Battery. Following a change of plea from not guilty to guilty, Worcester Superior Court Judge John McCann sentenced Bonnette to three years to three years and one day in State Prison on the charges of Motor Vehicle Insurance Fraud and two and a half years in the House of Correction, suspended for five years on the charge of Assault and Battery, sentences to run concurrent.

Following his incarceration, Judge McCann ordered Bonnette to serve a five year probationary term on the charges of Conspiracy to Commit Motor Vehicle Insurance Fraud. Bonnette was previously indicted and arraigned with co-defendants Mercy Encarnacion, age 30, and Damaris Matos, age 40, both of Worcester, who have since pled guilty and were each sentenced to a two and a half year sentence in the House of Correction, six months to serve, with the balance suspended for five years on each charge, sentences to run concurrently.

The Attorney General’s Office commenced a three-month investigation after the matter was referred by the Middlesex District Attorney’s Office in June 2007. On various dates in May 2004, Bonnette, Encarnacion and Matos reportedly recruited individuals to participate in staged motor vehicle accidents. These individuals would then file fraudulent insurance claims against their auto insurance carriers, for injuries they claimed to have received in these accidents, and for lost wages due to their injuries. On one occasion, Bonnette was involved in a physical altercation with one of the individuals that participated in a staged accident, but did not want to file the false insurance claims.

The investigation led to indictments against Bonnette, Encarnacion, and Matos for conspiracy to commit motor vehicle insurance fraud in Middlesex. The investigation also developed information about several staged accidents in 2004 set up by Bonnette, Encarnacion, and Matos in Worcester County.

Indictments were returned against Bonnette, Encarnacion, and Matos on Sept. 21, 2007. On Oct. 4, 2007, the defendants were arraigned in Worcester Superior Court, at which time they entered individual pleas of not guilty and were released on personal recognizance. On March 7, 2008, Encarnacion and Matos each entered individual change of pleas to guilty to charges of Motor Vehicle Insurance Fraud (2 counts) and Conspiracy to Commit Motor Vehicle Insurance Fraud (4 counts) and were sentenced in Worcester Superior Court.

Following their incarceration, Encarnacion and Matos are ordered to serve five years of probation, during which they must submit to random drug testing, stay away from Commonwealth witnesses, and seek and maintain employment. This week, Bonnette entered a change of plea to guilty in Worcester Superior Court.

Massachusetts AG Takes Bite out of Dentist

The Massachusetts Attorney General's office is attempting to close down a local dentist for good.

Massachusetts AG Martha Coakley is suing Dr. Gary Anusavice and 14 other individuals for allegedly scamming patients into dental procedures that they did not require and could not afford. Anusavice had reportedly already lost his license to practice in Rhode Island.

According to the AG's office, Anusavice, who has been issued a temporary restraining order from practicing in Massachusetts, was using new offices under different names to stay in business. He reportedly was most recently going by the names "Coast Dental" in Fall River and "Sierra Dental" in Weymouth.

Court affidavits claim that in one case, a female patient went in asking for fillings and, "Over the course of the next five and a half hours, from about 4:30 to 10 p.m., he extracted two of my teeth, did six root canals, and placed multiple temporary crowns."

The service, which the woman was reportedly originally told would cost $396, turned into a bill for $15,631.

Mass. Man Indicted for False Auto Filings

An Essex County, Massachusetts Grand Jury returned indictments against a Peabody man in connection with filing false motor vehicle insurance and personal property claims, forgery of a police report, larceny, and filing false police reports with the Beverly Police Department.

Tyler Parrish, 31, was charged with Larceny over $250 (4 counts), Motor Vehicle Insurance Fraud (2 counts), Filing a False Police Report (3 counts), Attempted Larceny, Forgery, Uttering, and Insurance Fraud.

In April 2008, the Attorney General’s Office began an investigation after the matter had been referred by the Massachusetts Insurance Fraud Bureau (IFB). In July 2007, Parrish added rental insurance coverage to his Arbella Mutual Insurance Company (Arbella) policy for his personal motor vehicle. Investigators learned that Parrish reportedly then called Arbella an hour later stating that he had been in an accident between his car and another motor vehicle. A few days later, prior to his vehicle being repaired, authorities allege that Parrish filed a fraudulent vandalism claim with Arbella, and a false police report with the Beverly Police Department for vandalism that occurred on his vehicle.

Arbella referred this case to the IFB, who then conducted an investigation and discovered that Parrish had allegedly misreported the time of the motor vehicle accident in order to gain a rental car. Investigators from the IFB discovered that Parrish had vandalized his vehicle in an attempt to have it deemed a total loss. The matter was then referred to the Attorney General’s Office.

Investigators then began a review of Parrish’s past claims with insurance companies and banks and discovered that in May 2007, Parrish filed a false report claiming an engagement ring he had purchased was stolen on his way to a dinner. Parrish allegedly submitted a forged Salem Police Department police report in order to support his fraudulent insurance claim for the engagement ring. Investigators also discovered that on two separate occasions Parrish falsely reported that his ATM card had also been stolen and that the thieves had made withdrawals on his bank accounts.

Parrish is scheduled to be arraigned in Essex Superior Court on Oct. 22.

Mass. Man Indicted on Insurance Fraud Charges

A Mattapan, Massachusetts man was indicted recently on charges he falsely procured insurance under a false identity, reported a false motor vehicle accident and lied under oath.

Raymond DeGraca, 56, was charged with Identity Theft (10 counts), Perjury (4 counts), False Name/Social Security to Law Enforcement (2 counts), Motor Vehicle Insurance Fraud, Larceny Over $250, Attempted Larceny, and Making False Statement on a Motor Vehicle Registration Application.

According to authorities, in October 2002, in an effort to obtain auto insurance despite having a suspended license, DeGraca allegedly assumed the identity of his brother without his permission. DeGraca allegedly used a Rhode Island license containing his brother’s information and DeGraca’s picture. DeGraca allegedly used the identification to falsely register his own car and procure an insurance policy in Revere, MA.

In March 2003, DeGraca allegedly submitted a false motor vehicle accident claim to his insurer, Amica Mutual Insurance Company, for an alleged accident in Revere. According to authorities, DeGraca used his brother’s name to falsely claim that his vehicle was hit by another driver. The other driver involved in the alleged accident reported the incident to their insurer, Liberty Mutual Insurance, indicating that no accident had occurred. According to authorities, following the alleged accident DeGraca and one of his passengers filed personal injury claims and sought medical treatment.

In June 2003, investigators from Liberty Mutual Insurance determined that DeGraca’s claim was false. During the investigation of this incident, Amica Mutual Insurance Company discovered DeGraca’s true identity based on the result of a fingerprint comparison to an unrelated auto accident in April 2003. All insurance claims filed by DeGraca in regards to the alleged accident were ultimately dismissed by both insurers.

Further investigation revealed that while on probation for an unrelated case DeGraca allegedly used his brother’s identity and social security number on separate occasions in Roxbury and Dorchester District Courts in 2004 and 2005. DeGraca is now being charged with perjury, providing a false name to law enforcement, and identity theft in regards to these separate court appearances.

DeGraca is scheduled to be arraigned on Sept. 5 in Suffolk Superior Court.

Mass. AG Wins Added $218K from Big Dig Insurer

Massachusetts Attorney General Martha Coakley’s Office recently recovered an additional $218,920 from American International Group (AIG) for the Central Artery Tunnel (CA/T) Project.

The payment, which was made in June, is part of an ongoing reconciliation of premiums and residual market payouts stemming from the insurer’s settlement of Big Dig workers' compensation insurance premium issues with the Attorney General’s Office. AIG serves as the workers’ comp carrier for the Central Artery Tunnel (CA/T) Project.

A review by the Attorney General’s Office last year found that the company reportedly failed to pay certain surplus funds to the Commonwealth as required under its contract. The additional payment stems from further review by the Attorney General’s Office after a May 2007 settlement in which AIG agreed to pay $58.5 million to the Commonwealth, which included $26 million owed to the Big Dig plus other compensation and $40,000 in attorney fees and costs.

As part of the ongoing reconciliation of premiums and residual market payouts and after discussions with staff at the Attorney General’s Office, AIG this year is making an additional $200,000 payment to the CAT Project.

Company Fined for Work Involving Romney Mansion

A Peabody, Massachusetts company that painted the Belmont mansion of former Gov. Mitt Romney when he was running for president has agreed to pay approximately $59,000 in penalties and restitution for exploiting dozens of its workers.

Olympic Painting and Roofing Co. also offered a guilty plea to a criminal charge of failure to acquire a workers' compensation insurance policy in 2005. The company is barred from performing any government work for three years and must also pay a $1,000 fine.

Olympic reportedly failed to pay 69 employees nearly$48,500 in overtime for work completed throughout 2006.

Owner George Vasiliades, 44, and his company also will pay over $48,700 in restitution to 69 affected employees along with $10,300 in penalties.

Mass. Legislature Concludes Formal Sessions

The Massachusetts Legislature recently adjourned its formal sessions for the 2007-2008 legislative year, concluding a challenging session for insurers according to the American Insurance Association (AIA).

“Overall, the outcome was a positive one,” said John Murphy, northeast region vice president. “The industry was up against several major pieces of legislation that would have had a tremendous negative impact on Massachusetts consumers and insurers alike. Fortunately, those bills failed to complete the legislative process.”

Just four months into a new private passenger auto insurance system, the industry faced several uphill battles with regard to auto repair legislation. The state budget established a commission to examine and possibly set labor rates for auto repairs and the House passed a comprehensive auto repair bill that would require a study of the direct repair system, prevent appraisers from recommending or referring claimants to specific repair facilities, and limit the ability of insurance companies to use third party administrators for rental and glass coverage.

“Only recently has Massachusetts embraced a new system of managed auto insurance competition, which has shown to be extremely effective in its four months of operation,” explained Murphy. “The bill was poised to undermine that competitive spirit by micro-managing auto repair options. This legislation would present a major disruption to providing service to customers and AIA will remain vigilant to make sure it does not advance.”

Coastal homeowners insurance also received a great deal of attention throughout the session. The Senate passed a widely criticized bill earlier this month, but the House’s version of the legislation was not completed before session concluded.

“AIA is pleased no action was taken on this bill,” said Murphy. “There were aspects to the bill that would have been grossly counterproductive to a healthy insurance market. The legislation did not address the problem, and in fact, would have created more problems. AIA recognizes that this issue will remain a contentious topic of debate and looks forward to further educating consumers and legislators about the ramifications of this piece of legislation.”

On a positive note, House Bill 4948 is on Gov. Deval Patrick’s desk awaiting his expected approval.

“AIA commends the Legislature for supporting this legislation,” said Murphy. “This bill will extend the group discounts for the next few years that have long been available to consumers. Without the legislation many of these group discounts would have been lost due to the extremely high participation rate required under existing law,” said Murphy.

Further, AIA continues to work on excluding terrorism from commercial standard fire policies (H. 1027) and defeating oil spill remediation legislation, which would mandate insurance coverage for response costs, remediation and damages caused by leaks from a residential liquid fuel storage tank.

Bills could pass during informal sessions throughout the remainder of the year, when legislation can be approved - if there is no objection.

Mass. Couple Pulled Over in Auto Fraud Scheme

A Plainville, Massachusetts man and woman were arraigned in connection with allegedly stealing funds from their auto insurance company, lying under oath, and obtaining fake Massachusetts identification cards.

Efrain Colon, age 43, was charged with Motor Vehicle Insurance Fraud (2 counts), Conspiracy (2 counts), Larceny Over $250, Attempted Larceny, and Perjury. Efrain’s girlfriend, Rosita Colon, age 40, was charged with Motor Vehicle Insurance Fraud (2 counts), Larceny Over $250 (2 counts), Conspiracy (2 counts), Falsification of a Massachusetts Identification Card, and Attempting to Falsify a Massachusetts Identification Card.

An investigation conducted by the Attorney General’s Office began in October 2007 after the matter had been referred by the Insurance Fraud Bureau (IFB). Investigators discovered that in October 2003, Rosita, Efrain and two of their children were involved in a minor motor vehicle crash in the South Shore Plaza parking lot in Braintree when they were struck from behind by a mall security vehicle. As a result of the motor vehicle crash, both Efrain and Rosita filed personal injury claims with their insurer, MetLife Home and Auto (MetLife). They also submitted bodily injury claims with Travelers Insurance (Travelers), the insurer for South Shore Plaza Security.

According to authorities, in an effort to recover lost wages from both insurers as a result of the accident, Efrain and Rosita claimed to have missed work from their jobs in Quincy. Based on the documents submitted for their claims, the Colons allegedly received approximately $9,000 from MetLife. Authorities also discovered that Rosita also allegedly settled a bodily injury claim with Travelers for $50,000.

Further investigation conducted by Travelers discovered that the Colons’ former employer’s main office was actually located in Allston, and not in Quincy. Travelers also discovered that the Quincy address given by Efrain and Rosita was actually an apartment rented by relatives at the time of the accident. Upon learning this information, Travelers referred the case to the IFB.

A separate investigation conducted by the IFB discovered that neither Efrain or Rosita Colon had been employed at the time the accident occurred. After their investigation, the IFB then referred the matter to the Attorney General’s Office. Efrain’s claim with Traveler’s did not settle, and he subsequently filed a lawsuit against Travelers for bodily injury in Norfolk Superior Court. During a deposition pursuant to that civil lawsuit, Efrain allegedly made false statements claiming that he was employed full time as of the date of the accident and thereafter.

Indictments were returned indictments against both Rosita and Efrain Colon on June 13, 2008. Rosita and Efrain Colon were arraigned in Plymouth Superior Court, at which time both defendants entered individual pleas of not guilty and were released on personal recognizance.

Both defendants are due back in court on Sept. 24, 2008, for a pre-trial conference.