Ohio insurance regulators opened 233 insurance fraud cases last year, handled 1,678 agent misconduct cases, took administrative action against 240 individuals and entities and referred 72 individuals for prosecution, the state insurance department reports.
Among the top statewide fraud and enforcement cases handled by the Ohio Department of Insurance in 2011 are:
Former Clinical Counselor Sentenced in Health Care Fraud Case – Findlay/Hancock County/$53,000
John “Blaine” Frankenburg of Findlay pled guilty to one count of insurance fraud for billing certain insurers for counseling services when he was not licensed by the state to provide such services. In January 2011, Frankenburg was sentenced to 30 days in jail, five years of community control, and ordered to pay more than $53,000 in restitution to Ohio Medical Mutual and Anthem Blue Cross/Blue Shield.
Agent and Auto Body Shop Fraud Scheme – Hicksville/Defiance County/$13,000
Former insurance agent Greg Newton pled guilty to two counts of insurance fraud for submitting false automobile repair claims with the help of associate Deron Eicher, who operated a local repair shop. Eicher pled guilty to two counts of insurance fraud for his involvement in the scheme. In February 2011, Newton was ordered to serve three years on community control. Eicher was ordered, in April, to serve two years on community control. The victim insurance company, American Family, collected about $13,000 in restitution.
Two Individuals Victimize Multiple Insurers – Cleveland/Cuyahoga County/$30,000
Donte Kyle and Allyn Lightner pled guilty to multiple counts of insurance fraud, theft, and identification and telecommunications fraud for submitting numerous fraudulent claims to multiple insurance companies. They were sentenced in March 2011. Lightner was given four years community control, ordered to complete 40 hours of community service, and pay more than $15,000 in restitution to the victim companies. Kyle was sentenced to 27 months incarceration with up to three years of post-release control and ordered to pay about $15,000 in restitution. The investigation also involved the National Insurance Crime Bureau.
Duo Stages Vehicle Theft and Arson – Wayne/Wood County/$22,000
Ken Bateson pled guilty to charges of insurance fraud and attempted arson for staging the theft of his automobile and later burning the vehicle with the assistance of accomplice Craig Crawford. Subsequently, Crawford pled guilty to complicity to insurance fraud and attempted arson. In March 2011, Bateson was sentenced to 60 days in jail, three years community control, and ordered to repay $11,000 to Permanent General Assurance Company. In June, Crawford was sentenced to three years of community control and ordered to pay $11,000 in restitution.
Fraudster Convicted in Separate Matters – Cincinnati/Hamilton County/$29,000
Dion Parker pled guilty to one count of insurance fraud for his involvement in staging an auto-theft claim with two other individuals. In a separate matter, Parker pled guilty to charges of receiving stolen property, tampering with records, and insurance fraud for assisting four others in staging an automobile accident. Both of these claims were filed against Progressive Insurance, who helped detect the fraud in these separate claims. In October 2011, Parker was sentenced on both of these cases to three years of community control with another seven years of incarceration suspended.
ENFORCEMENT
TPA’s License Revoked for Falsifying Documents – Mansfield/Richland County/$405,000
In July 2011, the Department revoked the insurance licenses of third party administrator Employer Benefit Services of Ohio, Inc. (EBS) and its owner, Van Workman. Matthew Workman, the son of Van Workman, was also assessed a civil penalty of $5,000. The investigation revealed that the Workmans, who administered partially self-insured health plans for small businesses under the business name EBS, swindled more than $405,000 total from multiple clients.
Agent Withholds Client’s Money – Marysville/Union County/$34,000
In March 2011, former agent Paul Yocum agreed to permanently surrender his insurance license for improperly withholding, misappropriating, or converting money received in the course of doing business. It was alleged that he withheld approximately $34,000 from a female client. He was later convicted of grand theft.
Agent Employs Unlicensed Individual as Insurance Agent – Avon Lake/Lorain County/$35,000
In May 2011, agent Robert V. Gay, Jr. was assessed a $30,000 civil penalty and a $5,000 administrative fee for allegedly employing an unlicensed individual who repeatedly portrayed himself to be an insurance agent.
Agency Fails to Disclose Fees and to Pay Referral Fee – Beachwood/Cuyahoga County/$50,000
In September 2011, American Auto Insurance Agency admitted to failing to properly disclose application fees and failing to consistently pay a $40 referral fee on insurance business from car dealerships. The agency was assessed a civil penalty in the amount of $40,000 and a $10,000 administrative fee.
Agent Fails to Remit Premiums – Strongsville/Cuyahoga County/$94,000
In February 2011, the Department revoked David J. Habian’s resident agent license for failing to forward approximately $93,276.83 in premium payments for bonds to the insurance company. It was also discovered that Habian withheld funds from an employee of his agency that were intended for the employee’s retirement. Further, Habian was found to have outstanding tax liens owed to the state in the amount of $14,527.25.
Source: Ohio Department of Insurance
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