Fraud Steals estimated $87 Billion from Insurers

Real Cases Underline Duplicity

Insurance fraud continually takes more money each year than it did the last from the insurance buying public. There is no certain number. Most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

Insurers and government backed pseudo-insurers like Medicare, Medicaid, the National Flood Insurance Program and the crop insurance programs, can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

Almost every state, by statute, requires that insurers have Special Investigation Units (SIU) to investigate potential insurance fraud and present their suspicions to state officials. It sounds good but results in few convictions. Arrests mean nothing, only convictions deter those who are considering insurance fraud.

This column will only report convictions.

Mother & Daughter Guilty of Fraud

Manjit K. Singh, 48, and Harpneet K. Bath, 27, both pleaded guilty on March 23, 2020 to a single count each of conspiracy to commit wire fraud. The guilty pleas come in the wake of a March 19 indictment by a Greenup County, Kentucky grand jury. Singh’s husband, 50-year-old Gurpreet Singh Bath, was also charged of conspiracy to commit arson charge.

Authorities alleged the two tried to hire a man to burn down Wolf’s Food Mart and Pool Hall in order to collect up to a $275,000 insurance pay-out. The man they hired turned out to be an informant.

Singh, according to the plea agreement, offered the informant $5,000 to burn down the store because they could no longer afford to run it. She then gave the informant a tour of the store to show him how she wanted it torched and a $100 towards a $1,000 down payment on the arson. Bath traveled from Canada to deliver the other $900 in cash to the informant and to help her mother move up there.

The plea agreement states the wire fraud charge stems from the fact the insurance claim would have been submitted by fax or telephone through interstate wires. While his initials are in the plea agreements, federal records do not show Gurpreet Bath as being charged.

The two women will face up to 20 years in prison and not more than $250,000 in fines or twice the gross gain or loss of the insurance in the claim. Federal prosecutors have argued the pair should have a little time shaved off because the two have accepted their plea agreements in a timely fashion, but are arguing for an overall stricter sentence on the basis that the offense intended for a loss between $250,000 and $550,000 in value.  They will be sentenced later.

CEO of Sober Homes Network Convicted in $38 Million Fraud Scheme

Sebastian Ahmed, 42, of Delray Beach, Florida, was convicted of conspiracy to commit health care fraud and wire fraud, five counts of health care fraud, conspiracy to commit money laundering, and eleven counts of money laundering. As part of the scheme, the conspirators exploited vulnerable drug addicts, the majority of whom were 18 to 26 years ago; falsified paperwork; and entered into various kickback arrangements, all in order to receive millions of dollars of falsely and fraudulently obtained funds for their own personal use and benefit. As demonstrated by the trial record, of all the conspirators, no one profited more than Sebastian Ahmed, who netted more than $2.8 million in less than three years.

On Monday, March 23, 2020, following a six-week jury trial, Ahmed was found guilty of one count of conspiracy to commit health care fraud and wire fraud, ten counts of health care fraud, one count of conspiracy to commit money laundering, and eleven counts of money laundering.

Sentencing is scheduled for August 6, 2020 before United States District Judge James I. Cohn in Fort Lauderdale. As to the health care fraud and wire fraud conspiracy and money laundering conspiracy counts, the defendant faces a statutory maximum of 20 years as to each count. As to each of the health care fraud and money laundering counts, the defendant faces an additional maximum statutory sentence of 10 years’ imprisonment.

The government proved that Sebastian Ahmed was the CEO, president and CFO of the two substance abuse treatment centers: Jacob’s Well and Medí MD; and the medical health clinic, Arnica Health, all of which he operated under the umbrella of Serenity Treatment Center, Serenity Living, and “Serenity Ranch Recovery” in Davie, Florida. Ahmed operated the three clinics from in or around June 2016 through May 2019. He employed his brother, Al a/k/a “Ali” Ahmed as the COO. Testimony revealed that Al Ahmed had previously declared bankruptcy having been found liable in a civil suit brought by his former employer, Kaplan University, for stealing confidential lead information from Kaplan.

The government proved that the defendant: (1) engaged in illegal billing to private insurance plans through Jacob’s Well prior to the clinic being certified in February 9, 2017; (2) provided unlawful inducements to the approximately 500 patients consisting of free airline travel, housing, vapes, manicures, cash, and failure to collect patient responsibilities for co-pays and deductibles; and (3) billed for medically unnecessary therapeutic services consisting of therapy and urine analyses, the former having not been provided but billed by defendant’s substance abuse clinics. The patients were also permitted to reside in co-ed housing in which destructive sexual relationships, not conducive to real addiction treatment, formed – sometimes between the staff and patients, according to the evidence.

The patients resided in a series of so-called sober homes maintained by defendant in Davie, Southwest Ranches, Hollywood and Pompano. None of these homes were certified as approved community housing for persons engaged in a substance abuse treatment program.

Government expert witness Dr. Kelly Clark was a board certified addiction medicine specialist and clinical psychiatrist. She testified that the manner in which Serenity’s medical providers prescribed buprenorphine and benzodiazepines to a drug abusing population was medically inappropriate and potentially dangerous. Patient-witnesses and the parent of a former patient likewise testified that Serenity caused their addictions to intensify rather than improve, and that multiple patients suffered overdoses and relapses that went unaddressed by the staff at Serenity. Indeed, the record showed that Sebastian Ahmed failed to report a single overdose incident to DCF as required by law, and that multiple patients were cycled back and forth between detox centers and Serenity without apparent improvement in their condition. From June 2016 through May 2019, the government attributed approximately $38 million in fraudulent billing submitted by defendant’s clinics which resulted in the reimbursement of over $6 million in payments.

Co-conspirators and former co-defendants Al a/k/a Ali Ahmed, the defendant’s brother; and Hector Alvarez and Mauren Morel, the clinical directors at two of the facilities, were also charged and pled guilty in connection with the fraud.  Al a/k/a Ali Ahmed, who served as a Chief Operating Officer and co-owner of the facilities, was sentenced to ten years’ imprisonment. Hector Alvarez and Mauren Morel, both of whom testified at trial against Sebastian Ahmed, each received sentences of 32 months’ imprisonment. These three former co-defendants were sentenced by United States District Judge Federico A. Moreno prior to the trial.