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April 2005

State: New York

Area of Interest: AON Settles Corruption Probe Leading Insurance Broker Agrees to Pay $190 Million and Adopt Sweeping Reforms

Attorney General Eliot Spitzer and Acting New York State Insurance Superintendent Howard Mills, together with Connecticut Attorney General Richard Blumenthal, Illinois Attorney General Lisa Madigan and Illinois Acting Director of Insurance Deirdre Manna, today announced an agreement with the nation's second largest insurance brokerage to resolve allegations of fraud and anti-competitive practices.

Under the agreement, the Chicago-based Aon Corporation is providing $190 million over a 30- month period for restitution to policyholders and is adopting a new business model designed to avoid conflicts of interest. In addition, Aon's Chairman and CEO, Patrick G. Ryan, has issued a public statement apologizing for Aon's improper conduct.

The civil complaint filed today in State Supreme Court in Manhattan and the citation issued by the New York Insurance Department allege that for years Aon received special payments from insurance companies that were above and beyond normal sales commissions. These payments -- known as "contingent commissions" -- were characterized as compensation for "services to underwriters" but were, in fact, rewards for the business that Aon steered and allocated to the insurance companies. Industry representatives defend this long-standing practice as acceptable and even beneficial to clients, but Spitzer's office and the Insurance Department have uncovered extensive evidence showing that the practice distorts and corrupts the insurance marketplace and cheats insurance customers.

More information can be found at http://www.ins.state.ny.us/p0503041.htm

Source: State of New York

State: New York

Area of Interest: OSHA Fines Mendon, N.Y., Contractor $116,000 for Cave-In Hazards at Two Greater Rochester Worksites

Failure to supply cave-in protection for workers at two Rochester-area sewer installation sites has resulted in a Mendon contractor being fined $116,000 by the U.S. Labor Department's Occupational Safety and Health Administration (OSHA).

Victor Excavating Inc. was cited for a total of eight alleged willful and serious safety violations after OSHA inspectors found employees working in unprotected nine to ten-foot deep excavations at jobsites on Ambassador Drive in Rochester and Linden Avenue in Brighton. Each excavation also lacked a ladder or other safe means of exit. The inspections took place on Sept. 17 and Oct. 22, 2004.

As a result, Victor Excavating was issued three willful citations and fined $105,000 for lack of cave-in protection at both excavations and for failing to provide a ladder or other safe means of exit from the Brighton excavation. OSHA defines a willful violation as one committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and regulations.

Source: Occupational Safety and Health Administration

State: New York

Area of Interest: Kings County District Attorney Charles J. Hynes Announces Takedown of Seven Scammers Who Collected Workers’ Compensation

Kings County District Attorney Charles J. Hynes today announced the takedown of seven suspects who collected benefits from Workers’ Compensation for injuries suffered on the job, while taking on other jobs or in one case, performing extensive physical activity on house repairs. They defrauded the system by receiving these benefits which included intermittent payments to settle their claims for lost wages. Six of the seven defendants were arrested and there is an arrest warrant for the last defendant. They all face top charges of Grand Larceny in the Third Degree and Insurance Fraud in the Third Degree, both Class D felonies, punishable by a maximum of 2 1/3 – 7 years. Other charges include Falsification of Business Records in the First Degree and Offering a False Instrument for Filing in the First Degree.

A condition of the suspects receiving benefits was that the defendants were, and remained, unable to work. In order to continue to collect benefits, the targets were required to file documentation attesting to the fact that they remained injured and unable to work. They falsely attested that they remained unemployed.

Investigations which included videotape surveillance was initiated by several agencies including the Kings County District Attorney’s Office, NYS Workers’ Compensation Board, NYC Transit Authority, NYS Insurance Department, the U.S. Department of Labor and the U.S. Postal Inspection Services.

One of the defendants, Cynthia Fields, was a bus driver who allegedly sustained an injury when a bus that she was driving hit a pothole. She filed documentation with the New York City Transit Authority claiming that she was unable to work because of her injury, yet at the same time she was actually employed by Verizon as a customers service representative. Her duties with Verizon include wearing telephone headsets for extended periods of time, but in documentation submitted to the Transit Authority she claims to have been unable to sit or stand for more than twenty minutes at a time.

Ralph Guido was also employed by the NYC Transit Authority as a bus driver. He claimed to have suffered an injury when he slipped on ice while at work in 1988. He had not been back to work since and continued to collect benefits. However even when collecting benefits, he was working as a car dealer.

Richard Salo was a detective assigned to the NYC Transit Authority, who claims to have suffered an injury when arresting a suspect in 1974. In March of 2001, Salo incorporated the Salo Mortgage Company in Florida, and investigators conducting surveillance of the office observed the defendant working there. But in documentation submitted in support of his receiving continued benefits, the defendant continuously maintained that his injury prevented him from working. He is the one defendant who has not yet been arrested. A warrant was issued for his arrest.

Edgar Hernandez claims to have suffered an injury while working for the New York City Housing Authority in 1997. He received Workers’ Compensation for this alleged injury. However, investigation reveals that since 2000, the defendant had worked as a bus/truck driver for several companies. In fact, in August of 2000, investigators observed the defendant driving a tractor trailer truck.

David Sorkin is an electrician who claimed to have sustained an on the-job injury, resulting in a Workers’ Compensation award. But shortly after being classified as disabled, he was video-taped teaching student drivers.

George Radu was working as a building superintendent while at the same time collecting Workers’ Compensation benefits for an injury purportedly sustained at a previous job.

Eugene Ayala claims to have suffered an injury while working for the United States Postal Service as a letter carrier in June 2004. He received Workers’ Compensation for this alleged injury. However, the United States Postal Inspection Service and the Office of Inspector General, U.S. Department of Labor carried out video surveillance of Mr. Ayala performing various physical acts, while repairing his house, which when in documentation submitted in support of his claim, he contended to have been unable to perform.

Over $100,000 was stolen from Workers’ Compensation.

Source: State of New York

State: Florida

Area of Interest: Cocoa Beach Man Arrested for False Hurricane Claim

A Brevard County homeowner is facing a felony charge of filing a false insurance claim for allegedly claiming that renovation work to his home was the result of hurricane damage.

Robert Milliken, 60, of 744 S. Orlando Ave. # 709, was arrested Tuesday by investigators with the Department of Financial Services, Division of Insurance Fraud. He was booked into the Brevard County Jail and, if convicted on the third-degree felony charge, faces up to five years in prison.

Milliken filed the fraudulent claim last September with Citizens Property Insurance Corporation for his home at 423 S. Atlantic Ave., claiming that Hurricane Frances caused nearly $60,000 in personal property damage. Investigators, however, determined that Milliken contracted with Mack Mosier of Trade Wind Builders to remodel his residence, and the work began on Aug. 10, 2004. The work involved the removal of all of Milliken’s furniture as well as the roof and windows.

Hurricane Frances struck the Treasure Coast on September 5, 2004

Source: State of Florida

Area of Interest: OSHA Identifies 14,000 Workplaces with High Injury and Illness Rates

Approximately 14,000 employers have been notified that injury and illness rates at their worksites are higher than average and that assistance is available to help them fix safety and health hazards, the Occupational Safety and Health Administration (OSHA) announced today.

Establishments with the nation's high workplace injury and illness rates were identified by OSHA through employer-reported data from a 2004 survey of 80,000 worksites (the survey consisted of data from calendar year 2003). The workplaces identified had 6.5 or more injuries or illnesses resulting in days away from work, restricted work activity, or job transfer (DART) for every 100 full-time workers. The national average during 2003 was 2.6 DART instances for every 100 workers.

Employers receiving the letters were also provided copies of their injury and illness data, along with a list of the most frequently violated OSHA standard for their specific industry. Snare also offered the agency's assistance in helping turn the numbers around, suggesting, among other things, the use of free safety and health consultation services provided by OSHA through the states, state workers' compensation agencies, insurance carriers, or outside safety and health consultants.

Source: Occupational Safety and Health Administration

Area of Interest: OSHA Cites Valmont Coatings After Chemical Spill Sends 18 to Hospital

The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) has issued citations to Valmont Coatings-Oklahoma Galvanizing in Claremore, Okla., and proposed penalties totaling $126,000 for safety and health violations which sent 18 employees to the hospital.

Valmont Coatings-Oklahoma Galvanizing, a hot-dip galvanizing business, is owned by Valmont Industries Inc., headquartered in Omaha. Neb. The company employs more than 3000 workers, about 100 are located in Claremore. Following an inspection that began Aug. 31, OSHA cited the company for one alleged willful and eight alleged serious violations for exposing employees to sulfuric acid during a clean up spill from the rupture of a storage tank.

The alleged willful violation was issued for failing to provide personal protective equipment to employees who responded to the acid spill. A willful citation is issued by OSHA when an employer either knew that a condition constituted a violation or was aware that a hazardous condition existed and made no reasonable effort to correct it.

The alleged serious citations included failing to ensure that the premises were free from hazardous conditions such as exposure to concentrated sulfuric acid or being struck-by debris caused by the leakage and/or rupture of a storage tank operating under pressure; failing to develop and implement an emergency response plan; failing to assure the senior emergency response official took charge of the situation at the site when the spill occurred; and failing to train employees in emergency response operations. OSHA defines a serious violation as one in which there is a substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known.

Valmont Industries has had numerous inspections in past years, one of which resulted in proposed penalties of $20,000 when an employee died in Valley, Neb., after being crushed by a stamper machine in July 1996. Violations involved machine guarding and control of hazardous energy.

Source: Occupational Safety and Health Administration

State: Florida

Area of Interest: Three Charged with Insurance Fraud In Staged Accident

A couple and a relative are facing felony insurance fraud charges after state investigators determined they fraudulently collected $39,000 from their insurance coverage stemming from a staged automobile accident.

On Friday, Gallagher was in Tampa as fraud investigators arrested 14 individuals involved in a patient brokering scheme to bill insurance companies. In the last five years, the department has arrested more than 800 people associated with $23 million in auto insurance fraud. The St. Petersburg Division of Insurance Fraud office is investigating numerous accidents believed to have been staged, and further arrests are expected.

Investigators determined that the January 2004 accident, at 8th Street and 94th Avenue North, was staged, and that the defendants reported false information to Dairyland Insurance Company. The Jakupajes said they did not know Muratovic, who was in the other car, but a witness said they were seen talking prior to the accident, and the investigation revealed that they are related. The Jakupajes’ two young daughters were in the car at the time of the staged accident, investigators said.

They did not report being injured at the accident scene, but later claimed injuries. They filed a $85,000 claim with Dairyland under their bodily injury coverage and collected $39,000.

Source: State of Florida

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