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Press Release - March 9, 2011
 
STATE OF OHIO
DEPARTMENT OF INSURANCE
COMMUNICATIONS OFFICE
 
 

3/9/2011

Insurance Department Announces Top Insurance Fraud and Enforcement Cases for 2010


Consumers urged to contact Department to report fraudulent behavior


COLUMBUS - Ohio Lieutenant Governor and Department of Insurance Director Mary Taylor announced the agency’s top insurance fraud and enforcement cases of 2010. The Department opened more than 160 consumer insurance fraud cases last year, referring 80 for prosecution, and handled more than 1,200 agent misconduct cases, taking administrative action in 250. March 6-12 has been designated National Consumer Protection Week.

“The act of insurance fraud is a shameful way to make a dollar. Innocent victims can be financially ruined and it hurts us all in the form of higher insurance premiums,” Lieutenant Governor Taylor said. “It’s important that Ohioans use the resources provided by the Department to learn how to prevent insurance fraud and to not be afraid or embarrassed to call us if they have been victimized. We are here to protect Ohioans.”

The Department advises to carefully compare and review insurance products with a trusted advisor or a family member and to not be pressured into selecting a product. Ohioans can call the Department’s fraud hotline at 1-800-686-1527, between 7 a.m. and 5 p.m. to report a deceptive sales practice or suspicious behavior. Information about how to prevent and report insurance fraud is available at www.insurance.ohio.gov.

The Department’s fraud unit investigates allegations of insurance fraud and works with prosecutors to criminally prosecute those who commit insurance fraud. Insurance fraud includes, but is not limited to: inflating claims, misrepresenting facts in order to obtain insurance coverage or lower premiums, padding a health insurance claim, and submitting false claims.

The enforcement unit monitors the conduct of insurance agents. An agent who violates an insurance law may lose his/her license or be subject to a fine and/or other sanctions. If the agent’s conduct is criminal in nature, the case may also be referred to a prosecutor for potential criminal action.

Here are the Ohio Department of Insurance’s top statewide fraud and enforcement cases:


FRAUD

 #5: Springfield/Clark County/$3,000
Health Insurance Documents Forged for Prescription Medication

As the result of a joint investigation involving the Department, Peggy Cupps of Springfield pled guilty to one count of insurance fraud and one count of forgery for submitting false and forged documents to her healthcare insurer to obtain prescription medication.  In June, Cupps was ordered to serve two years of community control and pay $3,000 in restitution. 

 

#4: Dayton/Montgomery County/$15,000
Arsonist Tries to Fool Insurance Company, Gets Five-Year Sentence

In June, James Hodges, Dayton, was ordered to serve five years in prison for one count of arson and one count of insurance fraud. The Department was a party in an investigation that revealed Hodges intentionally set fire to his home in order to receive $15,000 in insurance proceeds.

 

#3: Warren/Trumbull County/$38,000
Former Agent Caught Submitting False Claims to Insurance Company

Former insurance agent Dawn Hakeem of Warren was sentenced in August to five years of community control for submitting numerous false claims to an insurance company. She pled guilty to one count of insurance fraud and one count of grand theft. She was also ordered to pay $38,000 in restitution.

 

#2: Lima/Allen County/$100,000
Unlicensed Bail Bond Agent Steals $100,000 from Family

A Department investigation revealed Darryl Ables, an Indiana bail bond agent, misled an Ohio family in Lima to believe he was able to post bonds in Ohio and stole $100,000 from them. In September, he was sentenced to four years in prison and four years of community control on one count of theft by deception. Ables also was ordered to make restitution to the victims.

 

#1: Perrysburg/Wood County/$900,000
Doctor and Accomplice Bill Insurers $900,000 for Services Never Rendered

A Department investigation revealed that Dr. Stacey Royal of Perrysburg billed insurance carriers in excess of $900,000 for inflated services or services that she, and the Royal Treatment Urgent Care, never provided. The investigation also confirmed Royal received more than $100,000 in payments as the result of her fraudulent billing practices. Royal was sentenced in October to a five-year probation sentence, ordered to pay nearly $235,000 in restitution to the insurance companies, and fined $10,000.  In November, accomplice Christopher Davis was sentenced to six months in jail and one year of probation for his role in Royal’s scheme. He was ordered to pay more than $133,000 in restitution and $18,000 in investigatory costs. 

 

ENFORCEMENT

 #5: Circleville/Pickaway County
Falsifying Life Insurance Applications Nets Agent Three Years

In January 2010, Marcus Magill of Circleville agreed to permanently surrender his insurance license after a Department investigation revealed he submitted several bogus coverage applications to Western and Southern Life Insurance Company to receive advanced commissions from the insurer. Magill later pled guilty to one count of forgery and was sentenced in September  to three years of community control and ordered to pay a $500 fine.

 

#4: Cleveland/Cuyahoga County/$542,000
Agent Son Makes 71 Unauthorized Withdrawals from Mother’s Annuity Totaling Nearly $542,000

In June, Stuart Liberman of Cleveland agreed to permanently surrender his insurance license after a Department investigation revealed he took 71 unauthorized withdrawals, totaling $541,944 from his mother’s annuity with Pacific Life Insurance Company. The withdrawals were taken without his mother’s permission and Liberman used the funds for his personal use. 

 

#3: Medina/Medina County/$685,000
Fugitive Agent’s $685,000 Annuities Heist from Nine Clients Lands Seven-Year Prison Sentence

A Department investigation revealed Damon Bryan of Medina took $685,000 in unauthorized loans from annuity policies belonging to nine of his clients. He was indicted in August 2009 then fled to Mexico. Bryan was apprehended by U.S. Marshalls and extradited from Arizona to Ohio in January 2010. In May 2010, he pled guilty to nine counts of felony theft, including theft from the elderly. Bryan was sentenced to seven years in prison and five years of probation.

 

#2: Cuyahoga Falls/Summit County/$1.5 Million
Company Fails to Pay $1.5 Million in Healthcare Claims

In November, Professional Benefits Administrators of Cuyahoga Falls, Ohio, agreed to permanently surrender their third party administrator insurance license. Benefits Administrators routinely collected funds from employer groups that were supposed to be used for the payment of health claims.  The third party administrator comingled the funds collected from employers and then failed to pay more than $1.5 million dollars in health claims.

 

#1: Cleveland/Cuyahoga County/$9 Million
Agent Confuses Elderly Woman and Attempts to Fleece Insurance Company $9 Million in STOLI Scam

The Department revoked the agent license of Alex Kozonashvili of Cleveland in March after a Department investigation revealed he participated in a Stranger Originated Life Insurance (STOLI) transaction, which are illegal in Ohio. In August 2008, Kozonashvili submitted an application for $9 million in life coverage to Prudential Insurance on behalf of a 74-year-old woman from Cleveland. Kozonashvili allegedly paid the consumer $8,000 for allowing him to take a life insurance policy out on her life. In addition to misrepresenting where the consumer lived, Kozonashvili stated the consumer had more than $12 million in assets. She actually lived on a fixed income of less than $1,000 per month.

 


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The State of Ohio is an Equal Opportunity Employer

Ohio Department of Insurance
50 W. Town Street, Third Floor - Suite 300
Columbus, Ohio  43215
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John Kasich, Governor | Mary Taylor, Lt. Governor / Director
General Info: 614-644-2658 | Consumer Hotline: 800-686-1526
Fraud Hotline: 800-686-1527 | OSHIIP Hotline: 800-686-1578