Volume 10, Issue 5 - September/October 2008

Insurance Talk

Washington Auto Glass Shop
Fined $500K for Insurance Fraud

LEGACY AUTO GL ASS International recently pleaded guilty of perpetrating wire fraud against the auto insurance industry in the Eastern Washington District Court. The Spokane, Wash.-based company received a $500,000 fine for its actions.

According to the plea agreement filed in the case, between October 1, 2001, and January 31, 2004, Legacy Auto Glass operated a nationwide auto glass business through a centralized call center located in Spokane. According to the U.S. Department of Justice (DOJ), during this time the company frequently reported jobs as occurring in rural “D” or “E” areas that actually were completed in A or B regions, in an effort to receive payments at a higher rate for the work from the insurance companies with which they worked.

In addition, the company was charged with using interstate telephone calls and interstate computer based electronic transmissions to communicate with customers, potential customers, insurance companies, and third-party administrators to submit fraudulent electronic bills and to be paid. During the period of its operation, Legacy Auto Glass is said to have defrauded more than sixty insurance companies primarily represented by Safelite Solutions and LYNX Services.

The total amount of claims paid through Safelite and LYNX Services to Legacy over this period was $25,160,571, of which $6,000,000 was an overpayment, according to the DOJ.

The investigation of the shop was conducted by the Federal Bureau of Investigation and National Insurance Crime Bureau.

Just months before the conclusion of this investigation, an auto glass shop owner—Bruce Riley, the owner of Glass Guys Auto Glass in Chandler, Ariz.—pleaded guilty to similar charges of fraud and theft. Riley was sentenced to 18 months in prison and seven years probation.

In addition to the prison and parole charges, Riley also was ordered to pay $118,031 in restitution, according to a statement from the Arizona attorney general’s office.

Court documents state that Riley was convicted of submitting hundreds of fraudulent insurance claims involving auto glass repairs and replacements between August 2001 and July 2005. The Fraud Unit investigators for the Arizona Department of Insurance determined that he collected more than $100,000 in fraudulent funds, which he is alleged to have used personally.

The Attorney General’s office says Riley also billed insurers for auto glass repairs and replacements that were never done. He also was charged with posing as an insured to call in fraudulent glass claims to insurance companies.

Progressive Suit Against Body Shop Owner
Dismissed; Anti-Steering Case Continues
The Westchester Civil Supreme Court of New York dismissed a case filed by Progressive Insurance against auto body shop owner Greg Coccaro and his company, North State Custom, alleging insurance fraud in early August. In the case, Progressive claimed that the shop had committed insurance fraud via its charges for a vehicle of one of its insureds. The suit alleged that the shop inflated the charges to make the car a total loss, and that both the shop and the insured received payment for the vehicle’s repairs, Coccaro says.

According to Coccaro, the case was dismissed on the grounds the Progressive had a variety of methods of recourse it could have used, including noting on the payment for the job that it was “paid in protest,” but had not done so.

“It’s a feeling of relief, for which I’m certainly grateful,” Coccaro told AGRR magazine/ glassBYTEs.com™, “but it’s not really a feeling of jubilation because I still have all these law bills to pay. This was a three-year ordeal that affected my family and business, and being accused of being a thief is not a nice thing to defend. This has never happened to be before.”

Progressive, however, plans to appeal, according to company spokesperson Christe Cote.

“We are disappointed by the court’s decision to dismiss the case and we plan to appeal,” she says..

Meanwhile, Coccaro’s anti-steering suit against Progressive, filed in March 2007, continues, and currently is in the discovery stage. Though the actual steering charges have been removed from the case, based on the fact that only a governmental agency can file charges based on steering, charges of alleged tortuous interference and deceptive business practices are still under review.

AGRR
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