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Archive for the ‘Fraud’ Category

Edmonson not the first in DPS to try state ripoff subterfuge; undersecretary retires/re-hires, keeps $46k incentive payout

Posted in Budget, Corruption, Fraud, Governor's Office, Jobs, Layoffs, Retirement, State Police, Uncategorized on August 24, 2014| 11 Comments »

The underhanded attempt to rip off the Louisiana State Police Retirement System (LSRPS) on behalf of State Police Superintendent Mike Edmonson (aka “Precious”) through a shady back door amendment steered through the Legislature by State Sen. Neil Riser wasn’t the first time that the agency charged with protecting Louisiana citizens has illicitly commandeered state funds on behalf of one of its own.

And, it seems, the more deeply we venture down the rabbit hole that is the Department of Public Safety (DPS), the uglier and scarier the unfolding picture becomes.

In April of 2010, the Jindal administration, in an offer to implement across the board savings, made a one-time incentive package offer to various state agencies as a means to encourage state employees to take early retirement.

Handled properly, it appeared at the time—and still does appear—to have been an economical and compassionate way to nudge employees who wanted out but who could not afford to retire, into making the decision to walk away, thus reducing the number of state employees which in turn translated to long-term savings in salaries and benefits paid by the state.

On April 23 of that year, DPS Deputy Undersecretary Jill Boudreaux sent an email to all personnel informing them that the Department of Civil Service and the Louisiana State Police Commission had approved the retirement incentive as a “Layoff Avoidance Plan.”

In legal-speak, under the incentive eligible applicants would receive a payment of 50 percent of the savings realized by DPS for one year from the effective date of the employee’s retirement.

In simpler language, the incentive was simply 50 percent of the employee’s annual salary. If an employee making $50,000 per year, for example, was approved for the incentive, he or she would walk away with $25,000 in up-front payments, plus his or her regular retirement and the agency would save one-half of her salary from the date of retirement to the end of the fiscal year. The higher the salary, the higher the potential savings.

The program, offered to the first 20 DPS employees to sign up via an internet link on a specific date, was designed to save the state many times that amount over the long haul. If, for example, 20 employees, each making $50,000 a year, took advantage of the incentive, DPS theoretically would realize a savings of $1 million per year thereafter following the initial retirement year.

That formula, repeated in multiple agencies, could produce a savings of several million—not that much in terms of a $25 billion state budget, but a savings nonetheless.

The policy did come with one major caveat from the Department of Civil Service, however. Agencies were cautioned not to circumvent the program through the state’s obscure retire-rehire policy whereby several administrative personnel, the most notable being former Secretary of Higher Education Sally Clausen, have “retired,” only to be “rehired” a day or so later in order to reap a monetary windfall.

“We strongly recommend that agencies exercise caution in re-hiring an employee who has received a retirement incentive payment within the same budget unit until it can be clearly demonstrated that the projected savings have been realized,” the Civil Service communique said.

And, to again quote our favorite redneck playwright from Denham on Amite, Billy Wayne Shakespeare from his greatest play, Hamlet Bob, “Aye, that’s the rub.” (often misquoted as “Therein lies the rub.”)

Basically, to realize a savings under the early retirement incentive payout, an agency would have had to wait at least a year before rehiring an employee who had retired under the program.

Boudreaux, by what many in DPS feel was more than mere happenstance, managed to be the first person to sign up on the date the internet link opened up for applications.

In Boudreaux’s case, her incentive payment was based on an annual salary of about $92,000 so her incentive payment was around $46,000. In addition, she was also entitled to payment of up to 300 hours of unused annual leave which came to another $13,000 or so for a total of about $59,000 in walk-around money.

Her retirement date was April 28 but the day before, on April 27, she double encumbered herself into the classified (Civil Service) Deputy Undersecretary position because another employee was promoted into her old position on April 26.

A double incumbency is when an employee is appointed to a position that is already occupied by an incumbent, in this case, Boudreaux’s successor. Double incumbencies are mostly used for smooth succession planning initiatives when the incumbent of a position (Boudreaux, in this case) is planning to retire, according to the Louisiana Department of Civil Service.

http://www.civilservice.louisiana.gov/files/HRHandbook/JobAid/5-Double%20Incumbency.pdf

Here’s the kicker: agencies are not required to report double incumbencies to the Civil Service Department if the separation or retirement will last for fewer than 30 days. And because State Civil Service is not required to fund double incumbencies, everything is conveniently kept in-house and away from public scrutiny.

On April 30, under the little-known retire-rehire policy, Boudreaux was rehired two days after her “retirement,” but this time at the higher paying position of Undersecretary, an unclassified, or appointive position.

What’s more, though she “retired” as Deputy Undersecretary on April 28, her “retirement” was inexplicably calculated based on the higher Undersecretary position’s salary, a position she did not assume until April 30—two days after her “retirement,” sources inside DPS told LouisianaVoice.

Following her maneuver, then-Commissioner of Administration Angelé Davis apparently saw through the ruse and reportedly ordered Boudreaux to repay her incentive payment as well as the payment for her 300 hours of annual leave, according to those same DPS sources.

It was about this time, however, that Davis left Gov. Bobby Jindal’s administration to take a position in the private sector. Paul Rainwater, Jindal’s former Deputy Chief of Staff, was named to succeed Davis on June 24, 2010, and the matter of Boudreaux’s payment quickly slipped through the cracks and was never repaid.

This occurred, it should be noted, at a time when state employees, including state police, (except for a few of Edmonson’s top aides, who we plan to discuss in future posts) were already into a period of five or six years of going without pay raises because of the state’s financial condition which has deteriorated in each year of Jindal’s administration.

Meanwhile, Jill Boudreaux continues in her position of Undersecretary of the Department of Public Safety at her present salary of $118,600 per year.

Now that we have shone a little light on her retire-rehire ploy, the question becomes this: Will anyone in the Jindal administration look into this matter and demand that she repay the money—with interest?

Or will the governor, who insisted as Candidate Jindal that “it is time we declare war on the incompetence and corruption” https://www.nrapvf.org/articles/20070720/nra-pvf-endorses-congressman-bobby-jindal-for-governor-of-louisiana

and that incompetence and corruption “will not be tolerated,” http://www.npr.org/templates/story/story.php?storyId=15503722

and that he has “zero tolerance for wrongdoing,” http://theadvocate.com/home/5500946-125/federal-grand-jury-looks-at

continue to ignore problems at home as he racks up frequent flyer miles in quest of the presidency that is far beyond his grasp?

Governor, the ball is now in your court.

Put up or shut up.

 

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The new spirit of insurance industry’s claims management encapsulated in single Livingston Parish vandalism claim

Posted in Attorney General, Campaign Contributions, Fraud on July 10, 2014| 7 Comments »

“Japs need not apply.”

That was the remark Japanese-American Rodger Asai overheard on the telephone during a call to a representative of Imperial Fire & Casualty of Opelousas while trying unsuccessfully to resolve a dispute with his insurer after tenants destroyed his rent home in Livingston Parish.

Asai, whose father and two uncles were among those recognized with the Congressional Gold Medal for their military service during World War II even as his father’s own parents and other family members were being held in internment camps, has been fighting Imperial for more than a year now over damages inflicted by unauthorized individuals who had taken occupancy of the home from the original tenants unbeknownst to Asai.

The original tenants had moved from the home because they were unable to afford the $1500 per month rent, Asai was told when he came to Louisiana from his home in Oregon to check on the house because the original tenant had fallen behind on his rent.

Asai was forced to obtain a court-ordered eviction notice to get the previously unknown occupant, Michael Wayne Keller, to leave the property.

Among other things, Keller, a man who served 19 years in the Louisiana State Penitentiary at Angola for manslaughter and felony theft, apparently kept a pit bulldog in a room where it was forced to relieve itself on the floor. Elsewhere in the house, flooring was ripped up, holes torn or punched in walls, ceiling fans ripped down, coolant drained from the central air conditioning unit until the unit’s motor seized up, cabinet doors ripped off their hinges, and electrical wiring cut—all part of normal wear and tear, according to Imperial’s claims adjuster.

Imperial’s adjuster refused to acknowledge the damage was caused by vandalism, describing it instead as “wear and tear” and inept remodeling efforts.

That “wear and tear” cost Asai $45,680 to repair—with him doing much of the work himself—and his mortgage and other bills for the past year added another $60,000 to the tab, he says.

Imperial originally set the rebuild cost of the house at $270,000 but after the vandalism claim was filed, downgraded the rebuild cost to $150,000 and ended up paying Asai only $4,672.01, which included the $3,000 policy limit for stolen equipment. Net payment by Imperial for property damage? $1,672.01.

Even more insulting, the insurance company initially paid only $672.06—and even that payment came with 46 cents postage due.

And the Louisiana Department of Insurance, which likes to boast that it serves the public, has been all but invisible.

http://ldi.louisiana.gov/consumers/miscellaneous_pubs.html

Click to access HowToFileAnInsuranceComplaint.pdf

But then Imperial did make a point of spreading around more than $50,000 in campaign contributions to several politicians, including Insurance Commissioner Jim Donelon, Gov. Bobby Jindal and key legislators.

The trend in insurance companies’ tactic to delay and deny claims has its roots in a 1992 decision by Allstate Insurance to retain the services of McKenzie and Co. to revamp its business model that tilted the scales from favoring the policy holder to favoring the stockholder. From 1996, the year the McKenzie plan was fully implemented, until 2006, Allstate’s operating income jumped from $820 million to $27.4 billion, a 3,335 percent increase.

In 2004, the casualty insurance industry as a whole had total assets of $412.6 billion. In 2007, two years after Hurricanes Katrina and Rita, when claims should have held down profits, the industry’s total assets totaled $1.18 trillion, or more than a third of the entire federal budget for that year.

What does Asai’s fight with Imperial have to do with Allstate and McKenzie?

Plenty.

When other insurance companies, beginning with State Farm, Liberty Mutual, Farm Bureau, etc., saw the results to Allstate’s bottom line after implementation of the McKenzie plan, they all joined in lock step to adopt the same methods of dealing with claims: delay, deny, litigate.

The plan was revealed in a single slide (among some 12,500 slides obtained by New Mexico attorney David Berardinelli) developed by McKenzie which, among other things, listed “redefinition of claims benefits and payment approach” as its criteria to boosting insurance companies’ profits.

The next step was the development of a software program that could be tweaked by insurance managers to reflect the desired percentage reduction in claim payments in order to keep the bottom line healthy.

Former Louisiana Attorney General Charles Foti filed lawsuits against Allstate, State Farm, Allstate, and three other companies in 2007, claiming the insurers were skewing home repair estimates with programs like Xactimate and IntegriClaim, in order to boost profits. Insurers, he said, use the programs to deliberate underestimate building and rebuilding claims.

http://blog.nola.com/times-picayune/2007/11/attorney_general_files_lawsuit.html

http://www.farmersinsurancegroupsucks.com/lawsuit/louisiana_state_v_farmers_insurance.pdf

The lawsuit was dismissed the following year.

http://www.insurancejournal.com/magazines/features/2009/01/11/157520.htm

The business plan originated by McKenzie reaped huge rewards in the aftermath of Katrina and Rita as unpaid or underpaid homeowners claims left entire neighborhoods ravaged and rotting.

If, for example, an Allstate adjuster found that wind caused damage, Allstate would have to pay the claim. If, however, the adjuster could attribute the damage to flooding, then the National Flood Insurance Program (NFIP), underwritten by American taxpayers, would have to foot the bill.

So, by changing the engineering reports, Berardinelli said, Allstate was able to deny claims altogether when the policyholder had no flood coverage.

Moreover, Allstate also devised two different formulae for pricing damage repair costs, thanks to an arrangement the company had with NFIP which paid Allstate fees for handling flood claims. That fee depended on the gross amount of the claim.

Ergo, if Allstate wound up on the hook for wind damage, it set the payment under the customer’s homeowner policy for, say, removing and replacing drywall at 76 cents per square foot.

If, however, the damage was attributed to flood waters and the taxpayers picked up the tab, the price was set at $3.31 per square foot. Allstate wins either way—by keeping claims costs down on wind damage and collecting inflated costs on taxpayer-financed flood damage repair.

So, now, we come to the inspection report by Imperial Fire & Casualty’s contract adjuster Paul A. Scull of Alexandria.

Scull, who works for American Delta Insurance (and apparently a second independent adjusting firm, according to records provided by the Secretary of State’s office), and whose previous experience was that of owner of a limousine service in Alexandria, attributed the torn up wooden parquet flooring and carpeting to shoddy remodeling efforts and added, “It is not reasonable to believe that someone intentionally removed or broke one or two ceiling fan blades, or precariously removed the ceiling fans or fixtures with the intent to harm someone or damage or destroy.”

Apparently Scull has never visited rent homes where tenants went on a destructive tear on the way out the door. There was one home in Denham Springs several years ago—what had been a reasonably upscale home—in which the tenants had ripped out all the electrical wiring, torn down all the ceiling fans and light fixtures, destroyed appliances and had thrown it all, along with assorted pieces of furniture, into the backyard swimming pool.

But that was most probably normal wear and tear.

As for the “Japs need not apply” comment overheard by Asai in his call to Imperial claims representative Billy Durel (and to be fair, Asai said he is not sure if the comment was made by Durel or someone in his office), we would most likely attribute that to pure bigotry.

Bigotry and ignorance.

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