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May 2006

State: New York

Area of Interest: ACE Settles Bid Rigging Probe

Attorney General Eliot Spitzer and State Insurance Superintendent Howard Mills

announced an agreement with ACE Limited, a Bermuda-based holding company that trades on the New York Stock Exchange, and its United States subsidiaries to resolve allegations of bid-rigging and improper "finite reinsurance" transactions.

Under the agreement, ACE will pay $80 million in restitution and penalties and adopt a series of sweeping reforms of its business practices. In addition, ACE has issued an apology acknowledging its improper conduct.

The settlement agreement, called an Assurance of Discontinuance and Voluntary Compliance, alleges that ACE was a full participant in a scheme to fix insurance prices in the excess casualty area.

Additional information pertaining this settlement can be found at the State of New York’s Insurance Department’s website.

Source: State of New York

State: New York

Area of Interest: Superintendent Mills, District Attorny Muehl Announce Oneonta Man’s Insurance Fraud Arrest

Superintendent of Insurance Howard Mills and Otsego County District Attorney John Muehl today announced the arrest of a 38-year-old Oneonta, NY businessman on insurance fraud and arson charges related to a fire that occurred at Monser Brothers Tire Sales, Inc. in Oneonta, NY in August 2002.

Jeffrey Gelbsman, 38, of 24 East Street, Oneonta, NY, the part-owner and full-time manager of the retail/wholesale tire store in question, was arrested and arraigned in the town of Oneonta's local criminal court. What was then the site of Monser Brothers Tire Sales, Inc. at 15 Wall Street, Oneonta, NY, Mr. Gelbsman's arrest was for his alleged role in a fire that occurred there late in the evening of Aug. 16, 2002. The business has since moved to, and is currently situated at, 375 Chestnut Street, Oneonta, NY.

Mr. Gelbsman posted bail of $15,000 in cash and must return to court on Thursday, April 27 for further proceedings.

Selective Insurance Company, the property/casualty insurer for Monser Brothers Tire Sales, Inc., paid claims to Monser totaling more than $480,000 for the losses the business incurred in August 2002. With the insurance monies, Monser Brothers Tire Sales, Inc. constructed its existing outlet at 375 Chestnut Street, Oneonta, NY. The property on which Monser previously operated, and where the fire occurred, was subsequently sold to the city of Oneonta, NY and converted into a municipal parking lot.

Source: State of New York

State: Ohio

Area of Interest: Insurance Department Announces Chiropractic Fraud Plea; Ringleader Faces Five Year Maximum Sentence

A national joint investigation led by the Ohio Department of Insurance and the United States Department of Health and Human Services (HHS), and supported by the Office of the United States Attorney, Southern District of Ohio, the Ohio Bureau of Workers Compensation (BWC) and the United States Postal Inspection Services has led to a plea agreement for health care fraud and maximum five-year prison sentence for Markel D. Boulis. Boulis is the ringleader of a national chiropractic operation that fraudulently billed insurance companies and government agencies nearly $1,000,000.

Boulis owned Practice Solutions Inc., a chiropractic "practice management" consulting business, and National Insurance Auditors LLC, both originally licensed in Pennsylvania, which provided services in Ohio and throughout the country. From 1999 to 2003 Boulis' businesses helped chiropractors – approximately 20 in Ohio and 200 nationwide – submit bogus insurance claims for unnecessary or fictitious chiropractic services.

Practice Solutions was marketed as the sponsor of "practice building" seminars focusing on methods to increase revenues for attendees. Through the seminars, chiropractors where then encouraged to contact Boulis' National Insurance Auditors, to utilize "experts" who could review chiropractic patient files and identify "lost income" resulting from services that had not been "properly reimbursed" by insurers due to "incorrect coding" or a "failure" to bill for the services.

Source: State of Ohio

State: California

Area of Interest: Insurance Commissioner John Garamendi Announces the Arrest of California Department of Corrections and Rehabilitation Correctional Sergeant for Workers' Comp Insurance Fraud

Sacramento correctional sergeant collects $115,000 in workers’ comp benefits while earning $130,000 working as a real estate agent.

Insurance Commissioner John Garamendi announced today the arrest of Sacramento resident and California Department of Corrections and Rehabilitation Correctional Sergeant Steven Michael Shadden, 32, on April 4, 2006, on workers’ compensation insurance fraud charges.

Shadden was booked into the Sacramento County Jail with $115,000 bail. He was charged with one felony count of knowingly preparing or making a false written or oral statement in support of an insurance claim; one felony count of knowingly concealing an event that would affect a person’s right to an insurance benefit; and one felony count of knowingly making or representing a false or fraudulent statement or representation for the purpose of obtaining insurance compensation.

From the time Shadden filed his workers’ compensation claim in March 2003 through December 2005, SCIF paid approximately $115,000 in benefits for his injury. Approximately $97,000 was paid directly to Shadden for temporary and industrial disability leave, while another $18,000 was paid for medical bills.

The continuing investigation is being conducted by the California Department of Insurance’s Fraud Division, the California Department of Corrections and Rehabilitation’s Office of Internal Affairs, CalPERS’ Investigations Unit and SCIF’s Special Investigative Unit. The Sacramento County District Attorney’s Office is prosecuting the case.

Additional information pertaining to this case can be found at the State of California’s Department of Insurance Website.

Source: State of California

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 2005 survey of 80,000 worksites (the survey consisted of data from calendar year 2004). The workplaces identified had 6.0 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 2004 was 2.5 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 standards for their specific industry. The letter 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

State: New York

Area of Interest: Vytra Health Plans I.L to Offer $2.1 Million in Rate Credits

Superintendent of Insurance Howard Mills today announced that the New York State Insurance Department and Vytra Health Plans Long Island, Inc. (Vytra), a Melville, NY-based health maintenance organization (HMO), have reached an agreement whereby Vytra will offer $2.1 million in rate credits and/or refunds to certain policyholders and pay a $300,000 fine for violating a number of consumer protection laws.

The Insurance Department determined during a market conduct examination that between January 2003 and June 2005 Vytra did not follow its own Department-approved experience rating formula. These formulae are created by HMOs and form the basis for the premiums charged to experience related group policyholders, who are comprised of companies with more than 50 employees. Most policyholders affected by the agreement are in the 50-200 employee range.

Vytra was purchased in 2001 by the Health Insurance Plan of Greater New York (HIP) but Vytra has functioned over the past five years as an independent company. Vytra is merging its operations into HIP’s in 2006 and policyholders who are eligible for rate credits or refunds will learn the details about what compensation they are entitled to under the Insurance Department accord when their group policy comes up for renewal.

Source: State of New York

State: New York

Area of Interest: OSHA Fines Webster, N.Y., Contractor $323,000 for Lead Exposure Hazards at SUNY Geneseo Worksite

A Webster, N.Y., construction contractor, faces a total of $323,000 in proposed fines from the U.S. Labor Department's Occupational Safety and Health Administration (OSHA) for allegedly failing to protect its employees against lead exposure hazards at a worksite on the campus of the State University of New York at Geneseo.

Leo J. Roth Corp. was cited for a total of seven alleged willful and serious violations of workplace health standards following an OSHA inspection begun Oct. 25, 2005, in response to an employee complaint. At that time, Roth had been engaged for several weeks in the demolition and replacement of a lead-coated copper roof on Sturges Hall, a process that generated lead-containing dust.

OSHA's inspection found that Roth had not conducted initial monitoring to determine if the workers were exposed to airborne concentrations of lead at levels that would trigger protective measures. The company also had not provided the workers with interim safeguards, including respiratory protection, personal protective clothing, biological monitoring of blood lead levels, medical surveillance, training and hazard communication.

Source: Occupational Safety and Health Administration

State: Ohio

Area of Interest: OSHA Fines BP $2.4 Million for Safety and Health Violations

Inspection Initiated under Enhanced Enforcement Program

The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) fined BP Products North America, Inc. more than $2.4 million for unsafe operations at the company's Oregon, Ohio refinery. OSHA's inspection identified a number of violations similar to those found during an investigation of the fatal explosion at BP's Texas City, Texas, refinery that claimed the lives of 15 workers and injured more than 170 others.

OSHA's Toledo Area Office initiated an inspection at the Ohio refinery in response to an alert issued by OSHA under the EEP. The inspection resulted in 32 per-instance willful citations, with penalties of more than $2.2 million. OSHA cited BP for locating people in vulnerable buildings among the processing units; failing to correct de-pressurization deficiencies; failing to correct deficiencies with gas monitors; and failing to prevent the use of non-approved electrical equipment in locations in which hazardous concentrations of flammable gases or vapors may exist.

BP was fined an additional $140,000 for two willful violations. The company neglected to develop shutdown procedures and designate responsibilities, and failed to establish a system to promptly address and resolve recommendations made after an incident when a large feed pump failed. Three years later those recommendations had still not been implemented.

Source: Occupational Safety and Health Administration

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