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July 2005

State: Maine

Area of Interest: Crane Collapse and Fall Hazards at Freeport, Maine, Construction Site Lead to $114,700 in OSHA Fines for Two Contractors

The Dec. 2, 2004, tip-over of a crane at a hotel construction site in Freeport, Maine, has resulted in two contractors being fined a total of $114,700 by the U.S. Labor Department's Occupational Safety and Health Administration (OSHA). OSHA cited J.D. Irving Ltd. and Irving Equipment Inc., Burlington, Mass., which operated the crane, and TRB Development Group Inc., Hooksett, N.H., the project's general contractor.

OSHA's inspection of Irving found that the crane was overloaded and its safety indicator overridden. The crane was not operated within the manufacturer's specifications and was not inspected to ensure it was in safe operating condition. In addition, the crane's swing radius was not barricaded to prevent employees from being struck or crushed during its operation and frequent and regular inspections of the jobsite to identify unsafe conditions were not conducted. Irving was fined $80,000 and was issued one willful and three serious citations for these hazards.

OSHA's inspection of the construction site found that TRB employees were exposed to falls and other hazards. Specifically, employees working at locations 14 to 28 feet above the ground lacked fall protection and were not given fall protection training; floor holes were not covered; reinforcing steel was not capped or guarded to prevent impalement; LP gas systems were not protected against damage by vehicular traffic; and ladders were not used safely. OSHA issued one willful and six serious citations to TRB and fined the company $34,700.

Source: Occupational Safety and Health Administration

State: Florida

Area of Interest: Florida Office of Insurance Regulation Issues Cease and Desist Orders

Florida Insurance Regulation Commissioner Kevin M. McCarty issued cease and desist orders to companies in Hartford, Connecticut, Suwanee, Georgia, Port Vila, Vanuatu, South Pacific, and Auckland, New Zealand ordering them to cease operations in Florida. International Fidelity and Surety, Ltd. (IFS), ICM Group, LLC (ICM) have sold performance and labor and material bonds, and a guaranty policy in Florida. Contractors Bonding Limited (CBL) and National Program Management (NPM) sold liability and physical damage insurance policies for hot air balloons. The four companies are unlicensed and unauthorized to transact bond or insurance business in Florida. The companies were charged with engaging in the unauthorized transaction of insurance in Florida, directly or through an unauthorized agent or representative, and failure to file or seek approval of forms or rates. IFS and ICM sold bonds for construction projects. CBL and NPM sold 87 liability and physical damage hot air balloon flight insurance policies, collecting over $98,000 in premiums. The orders come on the heels of the Governor’s signing of a bill that strengthens Florida’s laws on unauthorized insurance entities. The bill authorizes the Office of Insurance Regulation or the Department of Financial Services to issue a cease and desist order against a person or entity conducting insurance business in or from the state of Florida without a valid license. The law was amended to state that “irreparable harm” to an individual is now presumed for a violation of the statute.

Source: State of Florida

State: Florida

Area of Interest: CFO Gallagher Releases Annual Top 10 Fraud List

2004-2005 Top 10 cases add up to more than $2.7 million in losses TALLAHASSEE – Florida’s Chief Financial Officer Tom Gallagher today released the Department of Financial Services’ annual Top 10 Fraud List, which summarizes 10 of the costliest or boldest securities, financial and insurance fraud scams that resulted in arrests or convictions by the Division of Insurance Fraud during the fiscal year that began July 1, 2004, and ends June 30, 2005.

The department’s 2004-2005 Top 10 Fraud List is below.Please note: $2.7 million is the estimated amount of losses in these 10 cases only.

Not Flying Straight SARASOTA—An attorney who continued to work while collecting more than $130,000 in disability benefits likely won’t get a chance to cash in his frequent flyer miles anytime soon. Peter W. Martin, 58, faces up to 15 years in prison after insurance fraud detectives uncovered that he submitted false information on a disability claim. Martin reported that, following a motor vehicle accident, he became partially disabled and that his condition deteriorated making him totally disabled in September 2003. Detectives, however, found that Martin had continued to practice law in Florida as well as in New York while he collected disability benefits.

This is Not Monopoly CLERMONT—A title agent accused of stealing more than $1.1 million in customer escrow funds took the money – along with her boyfriend and coworkers – on a Las Vegas junket, but didn’t bet on getting caught. Kathryn Knight, 37, also known as Kathryn Weed, was operating Weed & Associates Title Services when American Pioneer Title Insurance Company conducted an audit and discovered discrepancies in Weed & Associates’ escrow account. Fraud detectives determined that Knight misappropriated in excess of $1.1 million from the escrow account and used these funds to buy vehicles, the Las Vegas getaway and make a down payment on a $9 million Lake County land purchase. Her title agent license was immediately revoked and she faces up to 60 years in prison if convicted on the charges.

The Reporter’s Instinct PLANTATION—Eight individuals who illegally obtained traffic accident reports from police departments throughout Palm Beach, Broward and Dade counties posed as reporters to gain access to the reports. They used the information in the reports to solicit accident victims to go to medical clinics and auto body shops for the purpose of collecting money on fraudulent auto insurance claims. They pretended to work for media publications such as Impact News Weekly, South Florida Journal and Greek American Herald.

Home Repairs the Cheating Way (or Huff and Puff) COCOA BEACH—A Brevard County homeowner claimed that renovation work to his home was the result of hurricane damage, but the work had begun almost a month before the hurricane hit. Robert Milliken, 60, 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. Detectives, however, determined that Milliken contracted with Mack Mosier of Trade Wind Builders to remodel his residence, and the work, which involved the removal of all of Milliken’s furniture as well as the roof and windows, began on Aug. 10, 2004. Hurricane Frances struck the Treasure Coast on September 5, 2004

Fake Cards, Real Money RIVIERA BEACH—A man who sold fake motor vehicle insurance cards to nearly 200 South Florida drivers was sentenced to three years in prison. Howard M. McKinon, 58, of 481 W. 30th St., pleaded guilty to nine counts of marketing a false or fraudulent motor vehicle insurance card and one count of organized scheme to defraud. State fraud investigators determined that McKinon issued at least 196 cards, most of them to drivers in West Palm Beach and Riviera Beach. The cards appeared to be issued by Progressive Insurance Company and purported to carry the minimum statutory levels of Personal Injury Protection and Property Damage coverage. The cards had the same policy number, with different personal and vehicle information typed on them.

The World is Your Stage MIAMI—Fraud detectives in February arrested 25 individuals believed to have been involved in a ring that staged at least a dozen auto crashes and fraudulently billed insurance companies for $1 million. If convicted, they will face a minimum mandatory sentence of two years in prison for organizing the staged crashes, and up to 15 years in prison on all charges. The 53-year-old suspected ringleader Wilfred Cyriaque, also known as “Lopez” or “Blanc,” is charged with 51 counts each of insurance fraud and grand theft, four counts of staging an accident, and organized scheme to defraud. Investigators believe Cyriaque may have staged as many as 90 crashes during the last several years.

Now You Can Panic POMPANO BEACH—A man who allegedly lied on his application for disability income insurance and then filed a claim one week after getting the policy is facing felony charges that could land him up to 65 years in prison. Bruce Sutherland, 43, had a real estate license but claimed he was unable to work due to panic attacks. Department detectives said medical and hospital records confirmed that Sutherland provided false information regarding his medical history, and documents from the Social Security Administration indicated he provided false salary information as well. Based on his application, Sutherland was issued a Disability Income policy that provided a monthly disability benefit of $3,000 until he turned 65. Sutherland’s maximum benefit for disability would have been approximately $828,000. The claim was denied.

Who Are You? ST. PETERSBURG—A couple and a relative are facing felony insurance fraud charges after state fraud detectives determined they fraudulently collected $39,000 from their insurance coverage stemming from a staged automobile accident. Detectives determined that Azem Jakupaj, 41, his wife, Fikreta, 36, and Edin Muratovic, 26, gave false information to their insurance company following a January 2004 staged crash at 8th Street and 94th Avenue North. 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.

Angling for Annuities JACKSONVILLE—An insurance agent who stole $366,000 by convincing at least six elderly clients to cash in their annuities and reinvest in other insurance products was sentenced to three years in prison and order to pay restitution. Thomas Larry Griggs, 48, operated Griggs Financial Services in Jacksonville and was a licensed insurance agent. He persuaded several elderly victims to surrender their annuities and reinvest into other insurance products sold by Griggs, but insurance fraud detectives determined that once Griggs received the surrender proceeds from the annuities, he converted the monies to his own personal use. Two of the victims, who ranged in age from 68 to 79, have since died.

Land Ho PLANTATION—Three South Floridians bamboozled a title insurance company out of $1.2 million by playing with the paperwork. Anthony Phillips, Suzanne Destefano and Chena Henry are accused of conspiring to steal $1.2 million from Attorney’s Title Insurance Fund through a fictitious purchase of property. The lending agent was advised to wire the money to an unlicensed broker (Chena Henry) for the property. Henry then followed the instructions of Anthony Phillips and wired the money to Phillips and Suzanne Destefano in prescribed amounts. Phillips used the stolen money to purchase property in which he had an interest in Miami-Dade County.

Source: State of Florida

State: California

Area of Interest: Insurance Commissioner Garamendi Calls for 18% Decrease in Workers Compensation Pure Premium Rate

“The historic workers’ compensation reforms beginning with AB 227 and SB 228 are working. California’s workers’ compensation system costs are no longer on the up escalator, and the cost of claims is on the down elevator in a rapid descent. The reforms are working.

“Today, I have completed my assessment of the workers’ compensation system through hearings on the pure premium rate, as well as extensive actuarial analysis of the costs within the system.

“Using that information, I am recommending an additional 18% reduction in the cost of claims for policies incepting on or after July 2005. Combined with the 22.6% in reductions I have recommended since 2003, this brings the total amount of reductions to 36.5% since the reforms were enacted.

Source: State of California

State: California

Area of Interest: Riverside Roofing Contractor Pleads Guilty to Workers Compensation Premium Fraud - Ordered to Pay $66,000 in Restitution

Insurance Commissioner John Garamendi announced that a Landers roofing contractor has pled guilty to workers’ compensation premium fraud and other charges. Michael Louis Curran, 50, pled guilty on June 8, 2005 to one felony count of making material misrepresentations to the State Compensation Insurance Fund (SCIF) in order to obtain workers’ compensation insurance for his workers at less than the proper rate and one felony count of intent to evade taxes to the Employment Development Department.

The investigation revealed that Curran, doing business as Curran Roofing, while working on a roofing project in Indio, made material misrepresentations to SCIF to obtain the lower premiums by intentionally misclassifying his workers’ job classifications in intentionally failing to disclose his total payroll. This resulted in lost workers’ compensation premiums of approximately $60,000 to SCIF. Working in conjunction with the Employment Development Department, the investigation also revealed that Curran also failed to report and pay employment taxes to EDD in the amount of $6,000.

As a result of the guilty plea, Curran was placed on formal probation for 36 months, ordered to pay $60,000 in restitution to SCIF, $6,000 in restitution to EDD, and spend 240 days in county jail. He was also ordered to violate no workers’ compensation, Labor or Employment Tax Laws. The investigation was conducted by the Fraud Division of the California Department of Insurance. The Riverside County District Attorney’s Office successfully prosecuted this case.

Source: State of California

State: Ohio

Area of Interest: OSHA Fines Georgia-based Construction Company $242,500 for Workplace Safety and Health Violations in Chillicothe, Ohio

The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) today announced citations against European Craft Construction of Buford, Ga., and its owner, Ioan Tampa, for workplace safety violations following a November 2004 inspection at a Chillicothe, Ohio, jobsite. Proposed penalties total $242,500.

The most recent inspection marks the 16th time since June 1999 that Tampa's worksites have drawn OSHA scrutiny. Outstanding proposed penalties, some being contested, and final determinations or settlements total over $600,000. The penalties resulted from cases in Indiana, Ohio, and Georgia.

An OSHA compliance officer observed unsafe conditions at a work site in Chillicothe where employees were seen working from platforms without fall protection. OSHA opened a formal inspection based on a local emphasis program to promote protection from falls. OSHA alleged five serious, five willful and one repeat violations of workplace safety standards. Willful violations were issued for unsafe scaffolding and lack of fall protection from falls of up to 25 feet. Alleged serious violations involved electrical hazards, and the repeat citation was issued for failing to provide personal protective equipment and lack of toe boards or overhead protection on the scaffolds.

Source: Occupational Safety and Health Administration

State: Texas

Area of Interest: OSHA Proposes $107,250 in Penalties Against Houston-based Marcus Oil & Chemical for Alleged Safety and Health Violations

The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) has issued citations against Marcus Oil & Chemical Inc. of Houston for alleged violations of safety standards. The agency proposed penalties totaling $107,250.

Marcus Oil & Chemical, which produces polyethylene waxes and light hydrocarbons, was cited for one alleged willful and 25 alleged serious violations following an inspection by OSHA's Houston South area office. The inspection, which began Dec. 3 as a result of an explosion and fire at the plant, found that employees were operating pressure vessels without adequate safety relief devices.

The alleged willful violation was for failing to develop and implement safety practices for the control of hazardous chemicals. OSHA defines a willful violation as one committed with intentional disregard of or plain indifference to the requirements of the Occupational Safety and Health Act.

The alleged serious violations included failure to: provide adequate storage of compressed gas and oxygen cylinders and polyethylene waxes; repair or replace defective forklifts and ladders; correct electrical deficiencies, and provide storage space for fire extinguishers. The company also violated the terms of OSHA's Process Safety Management Standard for highly hazardous chemicals by failing to conduct an initial process hazard analysis and compliance audit and develop written operating procedures

Source: Occupational Safety and Health Administration

Area of Interest: OSHA Seeks Comments on Lead Construction Standard

The Occupational Safety and Health Administration today called for comments on its lead in construction standard that requires testing for lead exposures, provisions to protect workers from exposure where lead is present, and medical monitoring of exposed workers.

OSHA is conducting its regulatory review of the lead in construction standard under Section 610 of the Regulatory Flexibility Act and Section 5 of Executive Order 12866 to determine if the standard is needed and if it should be amended.

The construction industry employs millions of workers in jobs where lead exposures are most likely to occur, like paint removal, building and bridge renovation, plumbing, and water system repair and replacement. Overexposure to lead can cause serious damage to the body's blood-forming, nervous, urinary and reproductive systems. OSHA's lead in construction standard establishes procedures for minimizing the level of exposure to lead for all workers covered.

Source: Occupational Safety and Health Administration

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