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Firm to Pay $56.5 Million In Fraud Case

Construction Scam Hit Major Projects
By James Campbell

Construction giant Lend Lease has admitted to systematically cheating clients out of millions of dollars in an overbilling scheme, including fraudulent fees for work on Grand Central Terminal, Citi Field and the U.S. District Court in Brooklyn.

“We believe that it’s definitely, as you put it, a New York thing,” said U.S. District Attorney Loretta Lynch, after a deferred-prosecution deal with the company was unsealed Tuesday.

As part of the largest construction settlement in New York history, the Australian company’s American division, Lend Lease (U.S.) Construction, formerly Bovis Lend Lease, agreed to pay a fine of $40.5 million, as well as up to $16 million in restitution to its victims.

James Abadie, 55 years old, the former head of the company’s New York office, also pleaded guilty to conspiracy to commit mail and wire fraud and was released on bail. He faces up to 20 years in prison.

Lend Lease also admitted to making false claims under programs for minority- and women-controlled businesses in order to win contracts.

The overbilling scheme saw Lend Lease pay foremen one or two hours extra each day for work that was never done, passing on the expenses to clients without their knowledge, according to court documents. The company also padded its billings by paying foremen for sick days, holidays and vacation time in violation of its labor agreements.

Ms. Lynch said the overpayments benefited a group of 40 to 60 foremen, all of whom are members of Local 79, a building-trades union. The investigation analyzed thousands of time sheets over a 10-year period dating back to 1999, when Bovis was purchased by Lend Lease.

The company engaged in the overbilling on “every project over years,” Ms. Lynch said, defrauding clients of $19 million.

There was one exception: The National September 11 Memorial and Museum, on which Lend Lease is the project manager, was not affected by the fraud.

Lend Lease said in a statement the company had fully and extensively cooperated with the investigations since 2009.

“We accept responsibility for what happened in the past and have agreed to continue to make restitution to the affected clients,” said Robert McNamara, CEO Lend Lease Americas region. “We are satisfied that the investigation is now resolved and we are looking forward to continuing our commitment to projects in New York City.”

Mr. Abadie’s attorney and representatives for Local 79 didn’t return phone calls Tuesday.

Private projects identified as victims of the fraud include the Time Warner Center, the American Natural History Museum, and two hospitals, according to law-enforcement officials.

Government projects were also affected, including the U.S. Post Office and Bankruptcy Court in Brooklyn, the New York Mets’ new stadium in Queens, and Grand Central Terminal.

Lend Lease was responsible for the demolition of the former Deutsche Bank building, which was damaged in the Sept. 11, 2001, terrorist attacks. Investigators determined that the project was affected by phony billings as well.

Two firefighters died in 2007 after they became trapped in the building during demolition. An investigation found that the fire was started by a smoking worker and a water pipe had been cut.

Jeffrey Melofchik, a site safety manager working for Lend Lease, was acquitted in 2011 of manslaughter, criminally negligent homicide and reckless endangerment in the case.

In 2008, Lend Lease reached a non-prosecution agreement with former Manhattan District Attorney Robert Morgenthau in connection with the Deutsche Bank fire. The company could still face charges if the fraud revealed Tuesday violates a good-behavior clause in the earlier agreement. The present Manhattan District Attorney, Cyrus Vance, is a party to Tuesday’s deal with federal prosecutors, but a spokeswoman declined to comment on whether Lend Lease will be accused of breaking the Deutsche Bank agreement.

Lend Lease also admitted on Tuesday to abusing affirmative-action programs designed to aid small construction firms or companies owned by women and minorities.

In those cases, Lend Lease falsely told authorities that work was being done by two firms that met the selection criteria for affirmative-action contracts. The work was instead done by Lend Lease employees who were transferred to the smaller companies’ payrolls.

Both the Dormitory Authority of the State of New York and the New Jersey Schools Development Authority were deceived by the front companies acting in concert with Lend Lease, over projects to build the Bronx Criminal Courthouse and three schools in New Jersey.

As part of its agreement with prosecutors, Lend Lease has removed senior management in charge of its New York operations at the time the frauds were committed.

Ms. Lynch, who noted the investigation is continuing, said the decision to prosecute Mr. Abadie was taken because he was seen as especially culpable.

“He was uniquely positioned to see both the labor side and the management side of the scheme, and to be aware of the fact the hours that were being billed were not only not being worked but were not being disclosed to the clients,” she said. “He also took active steps to make sure the clients were not aware of this.”

Write to James Campbell at james.campbell@dowjones.com

L.A. Firefighter Busted For MMA Fights While On Workers Comp

By Stephen Smith

Raphael Davis (Credit: CBS Los Angeles)

(CBS News) On the surface, it doesn’t seem like a big deal: A firefighter in Los Angeles competes in mixed martial arts fights in his spare time.

The problem is, the fireman’s “spare time” happened to be while he left the firehouse on worker’s compensation, declaring he was unfit to do his job.

According to CBS Los Angeles, Raphael Davis was arrested Tuesday at his home on suspicion of filing false workers’ compensation insurance claims. He is being held on $30,000 bail. Investigators say that while he filed false claims from 2008-2011, Davis was participating in mixed martial arts fights as “The Noodle.”

How in the world did “The Noodle” expect to get away with this one? MMA videos are routinely posted online after bouts. It didn’t take long for KCAL to locate a YouTube video of Davis training in 2010 and competing in 2008:

According to the MMA website sherdog.com, the 6-foot-3, 203-pound Davis posted an impressive 12-2 MMA record. His dominant performance probably only served to bring more attention to the malingering firefighter.

Prosecutors filed four counts of insurance fraud against Davis, who filed for workers’ compensation insurance between Dec. 2, 2008 and May 20, 2011, according to Head Deputy John Morris with the district attorney’s healthcare fraud division. Authorities did not say what type of illness or injury Davis claimed on his workers comp insurance.

If Davis is convicted as charged, he faces up to five years in county jail.

Los Angeles City Firefighter Accused of Worker’s Compensation Fraud

IRS releases annual ‘Dirty Dozen’ tax scams

Originally published Saturday, April 7, 2012 at 8:00 PM

The IRS doesn’t send you an email out of the blue asking for information. And if you get such an email, you should forward it to phishing@irs.gov.

By Eileen Ambrose, The Baltimore Sun

Each year, the Internal Revenue Service puts out a list of the top 12 tax scams to avoid — as victim or perpetrator. This year’s list:

• Identity theft: The IRS says it has a comprehensive strategy targeting ID theft. It also has increased internal reviews “to spot false tax returns before tax refunds are issued and is working to help victims of identity theft refund schemes.”

• Phishing: With this tactic, a thief sends an email or sets up a fake website with the hope of luring consumers to give up some of their personal information. The IRS doesn’t send you an email out of the blue asking for information. And if you get such an email, you should forward it to phishing@irs.gov.

• Return-preparer fraud: Shady preparers have taken clients’ refunds, overcharged customers and promised fat refunds to gain new clients. If you don’t deserve a fat refund, though, you can end up getting burned.

• Hiding income offshore.

• “Free money” from the IRS and tax scams involving Social Security: The IRS says this scam has been cropping up in community churches. The scammers convince the elderly and those with low income that they are entitled to money from the IRS and Social Security. The con artists collect a fee, but the filer’s claims are rejected.

• False/inflated income and expenses.

• False Form 1099 refund claims: This involves creating a false federal income-tax form to claim tax breaks.

• Frivolous arguments: One of them is that the 16th Amendment, which permits tax collections, wasn’t ever ratified, so you don’t have to pay taxes. Not true, as some jailed celebrities have found out.

• Falsely claiming zero wages.

• Abuse of charitable organizations and deductions.

• Disguised corporate ownership: Some people hide the true ownership of a business so they can avoid taxes.

• Misuse of trusts: You can’t always use a trust to shelter assets from taxes.

Workers compensation benefits jumping the border

By  Published: Apr 8, 2012 at 6:45 PM PDT

TRI-CITIES, Wash. — Getting hurt on the job in Washington doesn’t mean you have to stay here. It’s common for people getting worker’s compensation after an accident to have to move locations, so they can find work doing something else, but it goes far beyond Idaho and Oregon.

KEPR found out that Washington’s L&I has a growing department just for claims and pensions being sent outside of the country.

Labor and Industries spokesman, Hector Castro explains, “If they injured worker leaves the state, we still have the obligation to insure they have the medical care they need to become whole again.”
Right now, Washington’s Labor and Industries is paying benefits to over 100 injured workers outside of the United States. Just in 2011, about $40,000 dollars of workers comp money was sent to Canada. Almost $300,000 was sent south of the border.

In an economy like this, business owners struggle with increasing L&I rates.. Without reaping the benefits. Country Gentleman owner, Steve Simmons explains, “It’s frustrating to see that money go out of the country.”

Employers and employees alike who pay into this pool of money, insuring they’ll get help in their time of need. “Thats what the systems in place for,” says Castro.
Simmons replies, “An injured worker needs to be taken care of and taken care of properly.”

What they are just concerned about is check ups after the claims are set. Simmons says, “L&I cant stay on top of the legitimacy of claims that are out of the country.Are they trying to get off pension? Are they finding ways to get back to work?”

It turns out there is some benefits to injured workers moving abroad. The healthcare in other countries is significantly cheaper, meaning L&I is forking out less money and there’s more compensation left for workers here in Washington.

Castro says, “For instance in Mexico, even if we paid 100% of medical care its less expensive than in the United States.”
Despite this, L&I doesn’t want to continue paying so much out of the country because of the time, money and difficulty in management. He continues, “We do what we can to encourage people to stay in Washington.”

Keeping track of your tax dollars… until the jump the border. L&I awarded over a billion dollars last year nationwide.

KEPRTV.COM

Long Beach managed care firm under Civil, Criminal Investigation

A Long Beach-based health plan seeking new contracts to serve 54,000 Southern California low-income seniors has set aside $125 million to resolve claims by state and federal authorities that it overbilled Medi-Cal and Medicare.

In applications submitted in February to California’s Medi-Cal agency, the SCAN Health Plan detailed the course of civil and criminal investigations by the California attorney general’s office, saying they could lead to “substantial financial payments.” Federal authorities from the Health and Human Services and Justice departments also are investigating, the reports say.

Investigators are examining whether SCAN drew funds from both health care programs to care for the same pool of patients and intentionally hid the matter from overseers. At worst, the cases could conclude with the company banned from serving Medi-Cal or Medicare patients, the document says.

SCAN submitted applications to serve 36,000 seniors in Los Angeles County, 8,000 in San Diego County and 5,000 each in San Bernardino and Riverside counties. Medi-Cal is reviewing multiple bids from firms willing to work in each of those counties to coordinate care for patients, mostly seniors with low incomes, who receive both Medi-Cal and Medicare coverage.

Currently, the SCAN Health Plan, founded in 1977, runs a Medicare Advantage plan serving 130,000 people in California and Arizona. The firm says its members report very high satisfaction rates, and the Centers for Medicare & Medicaid Services recently awarded it 4 out of a possible 5 stars for its work in California.

California Watch reported in August that SCAN was under investigation after state Controller John Chiang audited the plan and said it “fleeced the state” out of a possible $339 million. In a financial evaluation [PDF], Medi-Cal confirmed that the health plan drew profit margins of 80 percent or more, in contrast to rates of 4 to 5 percent earned by similar plans.

The Medi-Cal Fraud Control Unit described the case in an annual report to federal funders, saying it involves “double billing.”

“It is alleged that SCAN intentionally withheld relevant cost report information from the government to hide the enormous profits SCAN was making,” the April 2011 report says.

The case “has the potential for obtaining one of the largest” financial recoveries as a result of a false-claims lawsuit by the attorney general’s Medi-Cal Fraud Control Unit, the report says. The attorney general’s office declined to comment further.

In a statement, SCAN spokesman Alan Maltun said: “Substantial progress has been made in working through these issues with the State and Federal governments, and we believe we will be able to resolve their concerns in a manner that is fair to all parties.”

SCAN disclosed to Medi-Cal authorities in February that it received a subpoena for documents in March 2010 from the Department of Health and Human Services inspector general’s office, which reports to the U.S. Department of Justice.

The company learned that the state attorney general’s Medi-Cal fraud team also was conducting civil and criminal investigations of payments to the company from 2001 to 2009.

The disclosure says SCAN learned that federal authorities also are examining whether it earned excess payments by submitting improper ratings that describe how sick members are. Medicare Advantage plans, like SCAN, are paid a per-patient rate that is based on the plan’s severity-of-illness ratings.

SCAN said that when its board of directors learned of the allegations, it appointed a special committee to lead an internal investigation. The report says the group “has not received any evidence suggesting intentional misconduct” by anyone at the company.

The company says it offered to pay $125 million to resolve claims, but government authorities said a counteroffer would be forthcoming. SCAN concluded that it “cannot predict whether or when a settlement will occur or whether criminal or civil court proceedings might be initiated.”

In applying to serve additional seniors, SCAN said its mission is to find “innovative ways to enhance our members’ ability to manage their health and control where and how they live.”

The managed care company says 98 percent of its “nursing facility level of care” seniors in California are able to live at home, rather than in institutions. It said its members’ rate of readmissions into hospitals is 24 percent lower than expected.

SCAN said that in 2011, 97 percent of its “dual eligible” – or Medi-Cal and Medicare-qualified – members were satisfied with the company.

The state Department of Health Care Services is reviewing applications from firms bidding to provide managed care services to seniors who tend to have many chronic conditions and receive care from a variety of providers.

The state is seeking to improve care and save money by giving care providers incentives to focus on healthy living and proactive management of chronic conditions. The move is meant to part ways with a system in which health providers are paid a premium for giving emergency care and performing invasive procedures.

NICB Reports 4.5 Percent Rise in First Half 2011 Questionable Claims

By National Insurance Crime Bureau
Published: Thursday, Sep. 15, 2011 – 3:09 am
DES PLAINES, Ill., Sept. 15, 2011 — Medical-Related Claims and Vehicle Hail Damage Post Sharp Increases

DES PLAINES, Ill., Sept. 15, 2011 /PRNewswire-USNewswire/ — The National Insurance Crime Bureau today released its first half 2011 questionable claims (QC) referral reason analysis. The report examines six referral reason categories of claims—property, casualty, commercial, workers’ compensation, vehicle and miscellaneous—for the first half of 2009, 2010 and 2011.

Questionable claims are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons.

During the first half of 2009, a total of 41,309 QCs were referred. That number increased to 46,766 in 2010 and to 48,887 in the first half of 2011. There was a 4.5 percent increase in QCs this year compared with 2010, and an 18.3 percent increase when compared with the first half of 2009.

Medical-related referral reasons generated significant QCs as did the category of vehicle hail damage. Under workers’ compensation, just two referral reasons—”inflated medical billing” and “duplicate billing” combined for a 445 percent change increase from the first half of 2010.

The full report is available here.

Anyone with information concerning vehicle theft or insurance fraud can report it anonymously by calling toll-free 1-800-TEL-NICB (1-800-835-6422), texting keyword “fraud” to TIP411 (847411) or by visiting our web site at http://www.nicb.org.

About the National Insurance Crime Bureau: headquartered in Des Plaines, Ill., the NICB is the nation’s leading not-for-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy and public awareness. The NICB is supported by more than 1,100 property and casualty insurance companies and self-insured organizations. NICB member companies wrote over $317 billion in insurance premiums in 2010, or approximately 80 percent of the nation’s property/casualty insurance. That includes more than 93 percent ($151 billion) of the nation’s personal auto insurance. To learn more visit http://www.nicb.org.

SOURCE National Insurance Crime Bureau

Read more: http://www.sacbee.com/2011/09/15/3912062/nicb-reports-45-percent-rise-in.html#ixzz1YBAhwbmG

New York Private Investigators, ICORP Investigations helps stop Fraud in Workmen’s Compensation Cases.

HOLBROOK, NY, October 10, 2009 /24-7PressRelease/New York Private Investigators, ICORP Investigations helps many small business owners and corporations fight against Workman’s Compensation Fraud, Personal Injury and Liability Claims.

According to experts, 16,000 workplace injuries happen daily in the United States and approximately, 192 million are covered under workers’ compensation.

Although it is considered illegal for an employee to falsely claim benefits from workers’ compensation, there are countless people who are never brought to justice.

How does an employer know for sure that their employees who are currently collecting workman’s compensation benefits are being truthful? Unfortunately, many employers are unable to answer that question.
Many companies hire a professional private investigation team to investigate employees who are on disability in order to determine the truth.

Statistics show that companies who hire private investigators have a higher success rating than companies who do not when it comes to catching untruthful employees in the act.

ICORP Investigations Saves Business Owners Thousands of Dollars

Companies across the country have hired private investigators to use surveillance technology such as videotape. Many surveillance videos have exposed employees involved in sports, yard work, heavy lifting and other strenuous activity.

Fraudulent insurance claims cost business owners hundreds and thousands of dollars annually. The astronomical costs of worker’s compensation have resulted in several business owners applying for bankruptcy.

The Private investigation team at ICORP Investigations has solved many cases involving workers compensation. This has saved Long Island business owners a considerable amount of money in workers’ compensation costs. ICORP keeps their clients updated 24/7 via telephone and email. This is made possible through their web-based system.

About ICORP Investigations.

The private investigation team at ICORP Investigationshas combined years of experience in surveillance and has successfully conducted surveillance on Workman’s Compensation Claims including Personal Injury and Liability Claims. Their private investigative team thoroughly verifies whether or not insurance claimants are being honest about their disabilities.

Unlike many investigative agencies that only spy on a claimant at their place of residence or at work, ICORP is completely hands-on when it comes to investigating each assignment.

ICORP Investigations has developed a reputation for being persistent with their video documentation. When business owners challenge false claims, ICORP is considered number one.

To find out further information about ICORP Investigations workman’s compensation investigation service including personal injury and liability claims long onto: http://www.newyorkprivateinvestigatorssite.com

ICORP Investigations
New York Office
300 Park Avenue, 17th Floor
New York, NY 10022
Tel: 212.572.4823
Fax: 212.572.6499
http://www.newyorkprivateinvestigatorssite.com

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