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For Immediate Release: Tuesday, January 24, 2006
Dover – Continuing a crackdown on insurance fraud in Delaware, Insurance Commissioner Matt Denn Tuesday, highlighted two initiatives to reduce it: legislation to create a new reward program that pays for tips about fraud, and the release of a list of individuals who were been civilly convicted of or admitted to defrauding insurance companies in 2005.
“Insurance fraud by a few individuals results in higher rates and costs for the rest of us in Delaware, which is why it’s so important to reduce it however we can,” Commissioner Denn said. “The proposed “Fraud Busters” reward program will encourage Delawareans to report suspected fraud and hopefully increase our convictions. And I said when I took office that I would publicize the identities of those caught engaging in auto insurance fraud and today I am following through on that pledge.”
“Fraud Busters”: Sponsored by state Sen. David Sokola and state Rep. Donna Stone, the proposed legislation would create a “Fraud Busters” program, providing a reward for tips that led to a civil conviction for insurance fraud. The amount of reward in each case would vary based on the potential dollar loss.
“In Delaware and around the country, tips from the public are often the key to uncovering insurance fraud schemes,” Commissioner Denn said. “That’s why I am pleased to join Sen. Sokola and Rep. Stone in furthering our state’s efforts to reduce insurance fraud.”
“We believe people should be encouraged to come forward with their knowledge or suspicions of insurance fraud and they should be rewarded if their information proves valuable,” Sen. Sokola said. “It’s worked in Delaware with programs like Crimestoppers and we want to mirror that program to reduce insurance fraud.”
“In other states with similar programs, a few thousand dollars of reward money has prevented millions of dollars in fraudulent claims from being paid,” Rep. Stone said. “Reducing insurance fraud is one way we know to try to control insurance rates.”
Under the proposal, tips that lead to a civil fraud conviction will be eligible for a reward of up to $25,000.
Auto Fraud Cases: Under Delaware law, the Fraud Prevention Bureau in the Insurance Commissioner’s Office has the ability to investigate alleged fraud. Following a hearing or admission of fraud by the individual, the Commissioner can levy a civil penalty and fine, based largely on the monetary loss to the insurance company that was defrauded as well as an amount to defray the cost of the investigation. Individuals found to have engaged in insurance fraud often are also reported to law enforcement to face criminal charges.
The following individuals had civil judgments entered against them and fines imposed in 2005:
§ Linda Ford of Christian Meadows, Bear told her insurer that her son was involved in an accident at 10:45 p.m. on August 6, 2004 in her 1988 Ford Club Wagon. An investigation found that Ford called her insurer at 10:11 p.m. on August 6, 2004, and added the 1988 Ford Club Wagon to her automobile policy. However, the accident was reported to the police at 9:48 p.m. on August 6, 2004, before the vehicle was added to the policy. Ford admitted to the Fraud Bureau that she filed false and misleading information in support of this claim with her insurer. Ford was fined $575 and the case was closed May 5, 2005.
§ Stephanie N. Neal of Abbey Walk Apartments, Newark, filed a complaint with the police of a carjacking involving her boyfriend and her 1998 Dodge Neon, reporting that the incident occurred on March 18, 2005. She had obtained insurance for her vehicle on March 18 at 10 a.m. and filed a claim at noon the same day regarding the carjacking incident. An investigation by the Fraud Bureau concluded that the carjacking incident actually occurred on March 17, prior to the vehicle being insured. Neal was fined $747 and the case was closed Nov. 14, 2005.
§ Thomas E. Brown, of Purdue Avenue, New Castle, was in an auto accident on December 9, 2004. In a wage and salary verification form submitted to his insurer, he stated that he was employed by an excavating company as a truck driver from September 15, 2004 until December 9, 2004, the date of the accident. An investigation by the Fraud Bureau determined that Brown had in fact last worked for that employer November 29, 2004, approximately two weeks prior to the accident, therefore, he would not have been entitled to lost wages. Brown admitted that a relative, not his former employer, had completed the wage and salary verification. Brown was fined $690 and the case was closed Oct. 31, 2005.
§ Rose Xedus and Donna Barcus of Rodney Street, Clayton were fined as the result of the submission of false information regarding a lost wages statement. Following a Feb. 25, 2004, auto accident, Rose Xedus completed a wage and salary verification form indicating that she was an employee of Barcus Management of Clayton, earning $1264.95 a week. Donna Barcus signed her husband’s name as president of Barcus Management to a wage and salary verification form on April 11, 2004 and submitted it to State Farm Insurance Company indicating that Xedus was an employee at the time of her accident. An investigation found that Xedus was not an employee at the time of her accident and that Xedus and Barcus both made false statements about Xedus’s employment. Xedus was fined $575 and Barcus was fined $1,150 and the case was closed Oct. 17, 2005.
§ Richard C. White Jr. of Deville Circle, Wilmington, reported to the police and his insurer that his 2001 Nissan Pathfinder was damaged in a hit and run accident on May 23, 2004. During a subsequent investigation by the police and the Fraud Bureau, White admitted that he was not the victim of a hit and run, but rather his vehicle was the striking vehicle in a hit and run accident. White was fined $287 and the case was closed Oct. 13, 2005.
§ Kevin T. Culver, of Edna Drive, Seaford, filed a claim as a result of an automobile accident that occurred on November 6, 2003. In support of the claim, Mr. Culver, who stated that he was due to begin work for an employer before being injured in the accident submitted six notes from November 2003 to April 2004 from his attending physician saying that he could not work. An investigation found that a doctor’s note dated April 8 excusing Mr. Culver from work until May 8 was not authentic. Additionally, in support of a claim for lost wages, Culver submitted an employment verification note to his insurer in March 2004 from an alleged prospective employer stating that he was scheduled to begin work on or about November 6, 2003, the day of the accident. The alleged employer said he spoke with Culver concerning a job but did not fill out the employment verification form submitted by Culver to the insurer. After a hearing, Culver was fined $2,875 and the case was closed May 24, 2005.
§ Robert T. Palmer Jr. of Sherwood Forest Way, Hartly, filed a claim with his insurer on June 3, 2005 stating that his Dodge van had been damaged by a hit and run vehicle in the parking lot of Wal-Mart in Dover. During an investigation by the insurer and the Fraud Bureau, Palmer admitted that the damage was actually sustained earlier when he hit a pole in a parking lot in Harrington. Palmer was fined $287 and the case was closed Dec. 1, 2005.
“Auto insurance fraud does not just hurt insurance companies; it hits the pocketbooks of every law-abiding insured driver on Delaware’s roads. I will continue to release the names of those individuals who have committed auto insurance fraud,” Commissioner Denn said. ###
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