Tag Archives: RICO

GEICO Files RICO Suit Alleging Windshield Repair Fraud

A federal lawsuit filed by GEICO on June 9 provides an inside look at an elaborate windshield repair fraud scheme.

The suit, filed in the Middle District of Florida, makes claims of fraud, unjust enrichment and RICO (Racketeer Influenced and Corrupt Organizations Act) violations against at least two companies and their owners.

The complaint explained the scheme as follows:

A company called Cornerstone Mobile paid kickbacks to car dealerships and car wash companies to work off their properties. Cornerstone would offer to fix even the slightest damage to windshields for free. It would obtain the car owner’s insurance information and, more importantly, the owner’s signature to transfer assignment of benefits. Sometimes, GEICO alleges, the Cornerstone owners would steal insurance information from glove boxes of cars and forge the owners’ signature.

Eventually, Cornerstone Network was incorporated. The two entities had separate tax identification numbers but operated in an identical manner. GEICO says the two companies were used in hopes of reducing the number of fraudulent claims from Cornerstone Network alone, and thus avoid detection. Both companies claimed to do windshield repairs, but neither had a physical address—one was just a post office box in Tavernier.

Once Cornerstone got insurance information from automobile owners, the employees used a liquid formula from a window repair kit to coat over cracks and chips. Afterward, Cornerstone charged GEICO and other insurers for a full windshield replacement. The complaint alleges that Cornerstone would wait two to four weeks to file for reimbursement. Florida law allows insurers 30 days to make windshield replacement reimbursements, meaning GEICO was rushed to pay the claims on time and didn’t have a chance to investigate them.

GEICO presented exhibits showing more than 600 fraudulent windshield claims from each Cornerstone company, costing GEICO in excess of $223,000.

The case is Government Employees Insurance Company, et al. v. Jason Fry, et. al.

Click here for full story.

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Filed under Auto Insurance Fraud, Florida, Florida Division of Insurance Fraud, Insurance, Insurance Fraud, Middle District of Florida, Windshield Damage Scam

Chiropractors in $2.3 Million PIP Insurance Fraud Scheme will Face RICO Charges

A federal judge ruled that the chiropractors who were allegedly behind a $2.3 million ploy to defraud an insurance company must face charges for violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and Florida’s Deceptive and Unfair Trade Practices.

In July 2012, GEICO Insurance Company filed a lawsuit against two Orlando-based clinics—KJ Chiropractic Center LLC and Wellness Pain & Rehab Inc.—in addition to their two founders and a number of co-conspirators, known as “runners.” These runners helped perpetrate the suspected scam by exploiting willing third-party participants who faked accidents and injuries.

According to an article in Courthouse News Service, U.S. District Judge Charlene Edwards Honeywell said in her order that the fraudulent PIP claims resulted in more than $2.3 million in unwarranted insurance benefits and emerged from:

  • Staged accidents;
  • Real accidents in which claimants received treatment at clinics even though they were not truly injured; and
  • Real accidents in which claimants incurred some injuries, but received treatments that were pre-programmed, unnecessary, excessive and unlawful.

GEICO charged that the defendants advanced their unlawful plot by paying “anyone who referred accident victims to the clinics, offering cash directly to patients who agreed to accept unnecessary chiropractic treatment.” The insurance company also claimed the clinics provided treatment that was not in the best interest of patients because its sole intent was to maximize profits, the article said.

The U.S. District Court for Florida’s Middle District, Orlando Division, adopted Judge David Baker’s full recommendations made in October 2013 to deny the defendants’ motion to dismiss a second amended complaint on all but one count.

Judge Honeywell Edwards said she felt that GEICO adequately supported its argument with “factual allegations to state plausible claims for relief. As such, the court agrees with the Magistrate Judge that GEICO’s claims are sufficiently pled.”

The case is GEICO v. KJ Chiropractic Center LLC et. al., U.S. District Court for the Middle District of Florida, Case No. 6:12-CV-1138-ORL-36-DAB. Click on the link to read the complaint.

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Filed under Case Law, Insurance Fraud