Capital Steps Commissioner John W. Oxendine May-June 2007 Vol. 1, Issue 4 In This Issue New Task Force to Protect Consumers (Cover Story)................3 Georgians Urged to Protect Their Property with Flood Insurance.................................................4 Insurance Fraud Investigations.................................................5 Actions Against Agents..........................................................6 OUR MISSION OUR VISION The mission of the Office of Commissioner of Insurance is to ensure that the public's interests are served through professional oversight of regulated industries, consumer protection, and broadbased educational activities. Our vision is to have a welltrained workforce using state-ofthe-art technology to facilitate professional regulation, greater coordination and uniformity among state regulators, and greater public access to services and information that result in a more fire-safe environment and a consumer-friendly, competitive marketplace for insurance and small loan products. Adel Agents Arrested...............................................................6 Drought Makes July 4th Fireworks Even More Dangerous...........7 Macon Resident Receives Arson Reward................................8 Arson Investigation Stats.......................................................8 Commissioner Throws Out First Pitch.......................................9 Farewell.........................................................................................9 Summer Safety Tips................................................................9 Safe Kid Savannah Recognizes DOI.......................................10 NAIC Interns Bring International Flair.......................................10 John W. Oxendine Georgia Insurance and Safety Fire Commissioner 2 Martin Luther King, Jr. Dr., West Tower, Atlanta, GA 30334 404-656-2056 www.gainsurance.org inscomm@oci.ga.gov Agents Licensing, 404-656-2100 Consumer Services, 404-656-2070, 1-800-656-2298 Industrial Loan Division, 404-656-2078 Regulatory Services, 404-656-2074 Arson Hotline, 1-800-282-5804 Fraud Hotline, 1-800-726-6070 State Fire Marshal, 404-656-2064 Send questions or comments to inscomm@oci.ga.gov New Task Force Formed to Protect Consumers Unit to Tackle Medicare Fraud the Advantage products without their knowledge or understanding. Oxendine said he is sending a fraud investigator from his office to testify on Medicare fraud before the U.S. Senate at a hearing this week. Since January of 2006 Oxendine's office has received over 300 written complaints, along with hundreds of phone-in complaints about confusion, misleading practices, and fraud. "There are certainly some situations where consumers didn't understand, or forgot signing up for the change in programs," Oxendine said. "There are also incidences of agents blatantly misleading consumers, or even forging signatures to switch them over and get added commissions for doing so." C ommissioner John Oxendine has announced the formation of a Medicare Task Force to address the increasing number of complaints his office is receiving regarding Medicare products. In November of 2006, Commissioner Oxendine's office investigated PacifiCare Insurance Company for sales of the Advantage products to Georgians. Because his office lacks complete oversight of companies offering Medicaid, the results of the investigation were turned over to the Center for Medicaid Services. In April of this year, his office arrested two agents for selling fraudulent policies to deceased individuals. His office is currently investigating numerous other cases, and expects to make additional arrests in the very near future. "The number of complaints we're getting is shocking," Oxendine said. "At a minimum we are seeing a great deal of confusion on the part of senior citizens over the products they are being sold. Unfortunately, we are also seeing increasing cases of outright fraud as well." Much of the fraudulent activity involves agents selling the Medicare Advantage products which were approved by the federal government for sale by private insurers for 2006. In attempts to gain market share, many insurance companies offer their agents generous bonus awards for switching seniors from traditional Medicare to Medicare Advantage. Complaints most often allege consumers were switched to Oxendine said his task force will redirect resources and streamline communications between divisions so that his office may more effectively investigate Medicare related concerns. The Commissioner also plans to add at least one additional special fraud investigator dedicated solely to investigating insurance agent sales practices. "Unfortunately the Feds have most of the jurisdiction over these products, but I refuse to sit on the sidelines while our senior citizens are taken advantage of. If you are an agent selling Medicare to seniors in Georgia, you'd better be welltrained to explain this product, and you'd better have your documentation in order," Oxendine said. J May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 3 of 10 Georgians Urged to Protect their Property with Flood Insurance W hile it seems odd to talk about flood insurance during a drought, Commissioner Oxendine is joining FEMA's National Flood Insurance Program (NFIP) to remind consumers that experts are predicting another above-average hurricane season, and now is the time for people to protect their homes and property against the most frequent natural disaster in America floods. "Historically, hurricane season flooding is one of the most costly natural disasters affecting Georgia," said Commissioner Oxendine. "Residents should learn their flood risk and take steps before the next storm to protect their home or business from potential flood damage. Remember, standard homeowners insurance does not typically cover flood damage." Flood insurance backed by FEMA's National Flood Insurance Program provides homeowners, business owners and renters with the best protection available against flooding. Currently, more than 5.4 million people nationwide have flood insurance for losses they would otherwise have to pay for themselves. "Total claims paid during the 2004 and 2005 hurricane seasons totaled nearly $18 billion approximately $3 billion more than the NFIP had paid out since the program began in 1978. Yet many properties located in high-risk flood areas remain uninsured or underinsured against floods," said David Maurstad, Director of Mitigation and Federal Insurance Administrator for FEMA's National Flood Insurance Program. Although storm surge caused by hurricanes and tropical storms can wreak havoc on coastal areas, some of the most damaging floods occur hundreds of miles from the shoreline, days after the storm's initial landfall. As hurricanes and tropical storms move inland, torrential rains and high winds intensify the risks of flooding. National Flood Insurance is available to renters, business Photo by NASA Earth Observatory owners, and homeowners. The average flood insurance policy premium is around $500 a year. In low- to moderaterisk areas, homeowners can protect their properties with lower-cost Preferred Risk Policies (PRPs) that start at just $112 a year. Individuals can learn more about their flood risk by visiting gainsurance.oci.ga.gov, or calling Commissioner Oxendine's Consumer Services Division at 404-656-2070, or 1-800656-2298. Residents can also visit FloodSmart.gov or call 1-800-427-2419 for more information about flood risk and the benefit of purchasing a flood insurance policy. J May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 4 of 10 Insurance Fraud Investigations Columbus Agent Arrested A Columbus insurance agent has been charged with three counts of insurance fraud for allegedly keeping premiums paid to her for property and taxicab liability coverage instead of forwarding the payments to an insurance company. The insurer, Universal Health Insurance Company, subsequently revoked the commissions and cancelled the ten policies. Universal is working with the Centers for Medicare and Medicaid Services to reinstate all prior coverage, including prescription drug coverage. Pollyanna Johnson, 38, who has turned herself in to Columbus authorities, is part owner of Action Auto Insurance Agency in Columbus, and also part owner of CabinaAmerica, a risk retention group based in Washington, D.C. Johnson has been charged with three counts of insurance fraud. Adel Agents Arrested Two Adel insurance agents were arrested for allegedly conspiring to defraud elderly consumers by signing them up for health coverage without their knowledge. Three organizations had been identified as victims of Johnson: Top Dawg Taxi and Transportation of Athens, the Columbus Firefighters Association and A-Cab Company of Phoenix City, Alabama. The investigation into Johnson's agency and business practices had been conducted over the past six months. Johnson is alleged to have defrauded at least $200,000 from her clients. Shannon Del Vick, 35, and Cecil Wayne Ade, also 35, both work for ING/Old World Finance in Adel, Ga. They were charged with one count each of conspiracy to commit the crimes of insurance fraud, forgery, and exploitation of an elderly person. The pair allegedly signed up unwilling consumers and even deceased individuals, gleaning personal information from Medicare Part D forms already on file in their agency. Eight victims had been identified in the Albany area. J Snellville Agent Accused of Selling Fraudulent Medicare Products Mary Helen Gray, 52, a Snellville insurance agent, were arrested and charged with ten counts of insurance fraud and forgery for signing up ten consumers for Medicare Advantage policies without their knowledge or consent. The victims were all residents ofAnnandale Village, Suwanee, Ga., a facility treating adults who have been diagnosed with developmental disabilities or traumatic brain injury. Gray visited the facility last year to do an educational presentation on changes to Medicare Part D. Through their legal guardians, she sold some patients a legitimate product at that time. She then allegedly forged her clients' signatures on Medicare Advantage Part C policies. Most of the victims were eligible to receive both Medicare and Medicaid, which would have paid for all of their medical expenses. Investigators with the Department of Insurance estimate that Gray made $4,000 on commissions on the forged policies. Report Insurance Fraud 1-800-726-6070 May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 5 of 10 Actions Against Agents Blackburn, Robert Statesboro, Georgia 30459 Mr. Blackburn agreed to have his Georgia resident license suspended for a period of 24 months. Phapakdy, Laksamanh Alto, Georgia 30510 Mr. Phapakdy agreed to have his Georgia resident license issued on a probationary status for a period of 24 months. Broomfield, Danyl Macon, Georgia 31206 Mr. Broomfield agreed to have his Georgia resident license issued on a probationary status for a period of 12 months. Duran, Jessica V. Warner Robins, Georgia 31098 Ms. Duran agreed to have her Georgia resident license issued on a probationary status for a period of 12 months. Edwards, Spencer Woodstock, Georgia 30189 Mr. Edwards agreed to pay a fine in the amount of $300, and to have his Georgia resident adjuster license issued on a probationary status for a period of 12 months. Sines, James St. Petersburg, FL 33707 Mr. Sines agreed to pay a fine in the amount of $300. Stephens, Zachariah Columbus, Georgia 31907 Mr. Stephens agreed to have his Georgia resident license issued on a probationary status for a period of 12 months. Note: The actions listed above reflect cases that have been finalized and are currently closed in the Enforcement Division of the Insurance Commissioner's Office. Each case is determined on a case-by-case basis. Hilger, Peter J. Fishers, Indiana 46037 Mr. Hilger agreed to pay a fine in the amount of $300. Keller, Christine Augusta, Georgia 30906 Ms. Keller agreed to have her Georgia resident license issued on a probationary status for a period of 12 months. McGlohon, Charles Jefferson, Georgia 30549 Mr. McGlohon agreed to have his Georgia resident license issued on a probationary status for a period of 12 months. Moore, Thomas II Richmond, Virginia 23233-1319 Mr. Moore agreed to have his Georgia nonresident license issued on a probationary status for a period of 12 months. Moriera, Aviena Phoenix, Arizona 85044 Ms. Moriera agreed to have her Georgia nonresident license issued on a probationary status for a period of 12 months. Patterson, Michael Gordon Quitman, Georgia 31643 Mr. Patterson agreed to have his Georgia resident license issued on a probationary status for a period of 12 months. Pearson, Julie Mobile, Alabama 36695 Ms. Pearson agreed to have her Georgia nonresident adjuster license issued on a probationary status for a period of 12 months. Subscribe to this Newsletter www.gainsurance.org/ABOUT/register.aspx May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 6 of 10 Drought Makes July 4th Fireworks Even More Dangerous While sparklers and similar non-explosive fireworks are now legal in Georgia, Insurance and Safety Fire Commissioner John W. Oxendine is urging citizens to use extreme caution to avoid injuries and starting fires when using fireworks during the Fourth of July holiday. FIRE SAFETY HOUSE Don't forget to put in your request to have the Fire Safety House visit your community to teach the importance of fire safety. For more information, contact Greg Norton at 404-657-0831 or gnorton@sfm.ga.gov. "Even legal fireworks should only be used with close adult supervision," Oxendine said. "Especially this year, with drought conditions making wildfires a serious possibility." The law states that the definition of prohibited fireworks shall not include: "Wire or wood sparklers of 100 grams or less of mixture per item; other sparkling items which are non-explosive and nonaerial and contain 75 grams or less of chemical compound per tube or a total of 200 grams or less for multiple tubes; snake and glow worms; trick noise makers which include paper streamers, party poppers, string poppers, snappers, and drop pops each consisting of 0.25 grains or less of explosive mixture." The Commissioner said sparklers can burn at temperatures as high as 1800 degrees, and must be used properly and with adult supervision. ON THE WEB GA Public Safety Training Center www.gpstc.georgia.gov GA Firefighters Burn Foundation www.gfbf.org GA State Firefighters Association www.gsffa.org Federal Alliance for Safe Homes www.flash.org GA Public Safety Ed. Assoc. www.geocities.com/gpsea2001 "Approximately 7,000 people are treated in hospital emergency rooms every year for fireworks-related injuries," Oxendine said, "and most of those incidents involve children." He added that in a typical year, two-thirds to three-fourths of all fireworks injuries occur during the four-week period surrounding Independence Day. On the Fourth of July itself, fireworks usually start more fires nationwide than all other causes combined. The sale and use of most types of fireworks, including firecrackers, skyrockets, and cherry bombs, is still illegal in Georgia and punishable by a maximum fine of up to $1,000 and up to one year in jail. J 2007 GEORGIA FIRE FATALITIES Fire fatalities 48 Adults 39 Children 9 Arson Hotline 1-800-282-5804 May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 7 of 10 Macon Resident Receives Arson Reward C ommissioner Oxendine, Macon Fire Chief Jimmy Hartley and Bud Ausborn of the Georgia Arson Control Board, Inc., presented on May 15th, a $7,000 reward check to a Macon citizen who provided information that led to the conviction of an arsonist. The check was presented to Fire Chief Jimmy Hartley in a brief ceremony at the Fire Department's Main Headquarters. Chief Hartley will forward the reward to the recipient, who wishes to remain anonymous, Commissioner Oxendine said. The reward was given for information that led to the arrest of Guy Meadows for a 2006 fire at Colony Apartments in Macon. Meadows was later convicted on arson charges and sentenced to 15 years in prison. Commissioner Oxendine and the Georgia Arson Control Board, Inc., sponsor the Georgia Arson Control Reward Program and the Georgia Arson Hotline. Rewards of up to $10,000 are given for information leading to the arrest and conviction of an arsonist(s). Anyone with information about a suspicious fire is asked to call the hotline at 1-800-282-5804. Calls are taken 24 hours a day; callers can choose to remain anonymous. J ARSON UNIT ACTIVITY REPORT 2007 YEAR TO DATE: 50 Arrests Cases Investigated Total cases opened: 286 Total cases determined to be arson: 122 Dollar Loss Total estimated dollar loss: $31.4 million Total estimated dollar loss for arson cases: $5.3 million May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 8 of 10 Oxendine Throws Out First Pitch Farewells Keisha Lewis Steve Smith The Department of Insurance wishes the best for the following employees who will soon be leaving us: Keisha Lewis (Consumer Services) July 13, 2007. Steve Smith (Property and Casualty) July 1, 2007. Commissioner Oxendine threw out the honorary first pitch at the May 26th Columbus Catfish home game against the Savannah Sand Gnats. Commissioner Oxendine would like to thank Keisha and Steve for their dedicated service to the Department of Insurance and the people of Georgia. J Both teams are Class A MLB Minor League teams in the Southern Atlantic League. In addition to throwing out the first pitch, Commissioner Oxendine also donated 100 tickets to Columbus area firefighters to attend the game. J Summer Safety Tips 1. Use outdoor grills where they belong -- outdoors. 2. Keep the grill a safe distance from your house or car. 3. Don't leave a grill unattended. 4. Georgia law prohibits cooking on apartment/condo balconies. J May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 9 of 10 Safe Kids Savannah Recognizes DOI Partnership NAIC Interns Bring International Flare S afeKids of Savannah presented Commissioner Oxendine's Public Education Division with the Outstanding Business Partnership award at their Safe Kids Savannah Member Awards picnic. The award is presented to a government agency or business that has demonstrated exceptional efforts in partnership with the promotion of prevention of unintentional injuries. The award recognized Commissioner Oxendine's partnership with Safe Kids on a child safety seat check. The Child Passenger Safety event held on Saturday, September 16, 2006, checked 118 car safety seats and installed 102 new seats for needy families. Mustafa Al-Alawneh, Director of Technical & Financial Supervision Department with the Jordan Insurance Commission and Ida Cullufi, Financial Analyst with the Albanian Financial Supervisory Authority spent five weeks with the Georgia Department of Insurance as part of the NAIC's International Internship Program. I nternational interns, MustafaAl-Alawneh, Jordan, and Ida Cullufi, Albania, spent five weeks learning how insurance is regulated in the United States as part of the National Association of Insurance Commissioners' (NAIC) International Internship Program. (L-R) Wanda Butler, Shirley Lassiter, Suzette Elston, Ervin Bennett, and Penny Tanner show off the award from Safe Kids of Savannah "I am very proud that my Public Education Division received this recognition for their hard work," said Oxendine. Safe Kids of Savannah is part of the 22 community coalitions that make up Safe Kids of Georgia. Their main focus is on six areas of injury prevention: traffic injuries, drownings and near-drownings, fires and burns, poisonings and chokings, falls, and unintentional shootings. J To participate in the program, nonU.S. regulators were required to complete a formal application and have at least three years of experience in insurance regulation. The interns participated in a weeklong orientation in Kansas City, Mo., focusing on the broad principles of insurance regulation in the United States. Following their training at the NAIC Executive Headquarters, the interns travelled to Georgia to spend five weeks working in technical areas of their specialization under the supervision of a state insurance department staff member, who will serve as a mentor and host. In addition to learning more about insurance regulation, AlAlawneh and Cullufi had the opportunity to experience a lot of what Atlanta has to offer in terms of entertainment and culture with visits to the Georgia Aquarium, the Carter Center and the Martin Luther King, Jr. historical area. J May-June 2007 INSURANCE & SAFETY FIRE REPORT Page 10 of 10