False Injury Claims Cost RTD $205,000, Prosecutors Charge

Three people have been charged with operating a phony injury claim scheme that allegedly bilked the Southern California Rapid Transit District out of $205,000.

The case, filed by the Los Angeles County district attorney’s office, alleges that the seven-month scam began in November, 1988. That was less than a year after the RTD switched insurance contractors and beefed up its administrative monitoring in the wake of an investigation that revealed hundreds of thousands of dollars in phony insurance claims against the agency.

The firm named in the new fraud case had replaced the insurance contractor involved in the earlier investigation.

Prosecutors allege the latest insurance fraud was conducted out of the office of a Glendale firm hired by the RTD to process injury claims, and involved the cooperation of some passengers and the forgery of other passengers’ names. About 40 payoffs for injury claims, typically in amounts of about $5,000, are being investigated, said Deputy Dist. Atty. Bill Seki.

RTD officials refused to comment on why their new administrative procedures failed to detect the allegedly fraudulent claims.

“Is a jail 100% secure?” asked Greg Davy, a RTD spokesman. “The answer is no, it is not. We think the system has improved a great deal. But no security system is 100% foolproof.

Charged with grand theft, conspiracy to defraud, presentation of a false claim and solicitation of others to commit a crime are Janice Curry, 29; Michael Flot, 30, and Bambi Parker, 25, all of the San Fernando Valley.

Curry was a claims examiner in the Glendale office of HCM Corp., a subsidiary of the Hertz Corp, prosecutors and court records say. The company was contracted by RTD in December, 1987, to settle injury claims filed against the RTD--most of them by passengers claiming to have been hurt in bus accidents. Flot and Parker did not work for HCM Corp. and prosecutors refused to specify the nature of their relationship with Curry.

In court records, prosecutors contend that between November, 1988, and May, Curry, Flot and Parker obtained the names of passengers involved in RTD bus accidents, then either forged claim forms for them--as well as medical and legal records required to substantiate claims--or actually persuaded the bus riders to sign the forms.

The district attorney’s complaint alleges that Flot and Parker sought out bus riders and helped them complete the claim forms. It accuses Curry, in her job of claims examiner, of submitting payment authorization requests and other documents to obtain settlements. Seki said bus riders typically kept $500 and gave $4,500 to the three suspects.

“It’s a great scam, is all I can say,” Seki said. “If they had been a little less greedy, they probably could have gotten away with it.”

Curry was fired in May, about the same time the alleged scam ended, court records show. The fraud was detected by a supervisor who became suspicious when some claims were being processed faster than usual, Seki said.

HCM managers refused to answer questions about the case, as did attorneys for Curry and Flot. The name of Parker’s attorney has not yet been disclosed.

Curry and Flot were arrested Sept. 1. They have pleaded not guilty to all the charges against them. Parker is expected to surrender to police in a few days, investigators said. An arrest warrant for her was issued Dec. 8.

If convicted, each suspect could be sentenced to up to eight years in prison and ordered to pay restitution, Seki said. The investigation is continuing and more arrests may be made, he said.

RTD officials said that in general, an injury claim travels through a number of levels of scrutiny before it is approved or denied. Passengers in bus accidents typically are given “courtesy cards” with which they can obtain a claim form. Those forms are submitted to the RTD, which forwards them to HCM. The claim then is investigated and assessed by HCM employees, who recommend to the RTD whether to settle or deny it.

HCM reimbursed the transit agency $205,000 immediately after suspicions about the alleged fraud surfaced, Davy said.

HCM had replaced Leonard J. Russo Insurance Services Inc. as the RTD’s insurance contractor after Russo declined to rebid for the contract. HCM was awarded a five-year contract with the RTD.

Russo’s image and relations with the RTD suffered after the district attorney’s office in 1986 began investigating several cases of alleged insurance fraud and an outside audit showed management problems in the company. The fraud cases involved injury claims filed for people who did not exist or who were not passengers on buses involved in accidents.

Eleven people--including two Russo claims adjusters, three attorneys and two chiropractors-- were charged with defrauding the RTD. Since then, seven have been found guilty of fraud and four are awaiting trial, said Deputy Dist. Atty. Stephen Licher.