Although insurance fraud is the least prosecuted of major felonies, I try to give credit to those few agencies who actually arrest, try and convict insurance fraud criminals. Here are some I collected last month. As you read note the wide disparity in penalties imposed by the various jurisdictions.

Medicaid Fraud Defeated CVS Caremark Corp. agreed in March 2008 to pay almost $37 million to nearly two dozen states and the federal government to settle claims that the nation''s largest pharmacy chain billed Medicaid programs for a more expensive formulation of an antacid, authorities said Tuesday. The settlement resulted from allegations that the nation''s largest pharmacy chain gave Medicaid patients capsules of Ranitidine, a generic version of the heartburn medication Zantac, instead of even less expensive tablets. Both generic versions of the medication have the same active ingredient. The switch was alleged to be illegal and allowed the company to charge state Medicaid programs more than four times as much for each pill, leading to a bigger profit.

CVS will pay the federal government about $21 million as part of the settlement. The remaining $15.6 million will be divided by Alabama, Connecticut, the District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia and West Virginia. The company will also pay $800,000 for investigative costs and other fees and agreed to sign a corporate integrity agreement with federal authorities.

Weiss Pleads Guilty Although not directly an insurance issue, most of the money paid to pioneering securities class-action lawyer Melvyn Weiss was paid by insurance companies. Weiss agreed to pay $10 million in fines and penalties and to serve up to 33 months in prison to resolve charges that he paid kickbacks to lead plaintiffs. The agreement calls for a sentence of 18 to 33 months in prison and gives U.S. District Judge John Walter the option to allow Weiss to serve half of the time in home confinement or community service. He will plead guilty to a single count of racketeering. Weiss will resign from the law firm he founded, Milberg Weiss, and it will change its name to Milberg LLP, according to a separate press release. The firm, which was also indicted, is seeking "a fair and appropriate resolution of remaining issues" and hopes to rebuild, according to the release issued by Sanford Dumain, a member of the firm''s executive committee.

U.S. Attorney Thomas O''Brien said in a press release that the kickback scheme lasted for more than 25 years. The release noted that the law firm remains as a defendant and is scheduled to go on trial in August. Weiss issued this statement: "I deeply regret my conduct and apologize to all those who have been affected, including all of the wonderful and extremely talented lawyers and other employees of the firm, none of whom had any involvement in any wrongdoing. I believe that it is very important to preserve this unique legal resource for the benefit of victims of wrongdoing affecting the masses, who historically have been under-served in so many ways."

William Lerach, who at one time led the firm''s West Coast operations, pleaded guilty earlier and received a two-year prison sentence in February, the maximum under the plea agreement. Despite the pending kickback charges, Milberg Weiss managed to secure $3.8 billion in settlements for securities plaintiffs last year, making it the top-ranked class-action law firm. A $10 million fine seems to be chump change in comparison to the billions Weis earned in two decades of fraudulent conduct. The Wall Street Journal, on its March 21, 2008 editorial page noted: [T]he silence from the usual corporate scolds is telling. In the wake of the felony admissions of Weiss and Lerach and last week''s bribery plea by Dickie Scruggs, where are the cries in Congress to crack down on these wealthy wrongdoers who abused their positions of legal trust? Weiss''s corner of the tort bar has enriched itself for decades on the backs of shareholders who took home a pittance while the lawyers became megamillionaires. This might be the biggest pay disparity in the country -- that between class members and the lawyers who purportedly represent them. But you won''t hear that from Democrats who bray about executive pay and the "little guy."

The tort lawyers have seen to that by sharing a percentage of their riches, almost like a service fee, with the politicians who prevent any meaningful legal reform. Insurers should also be complaining and use their lobbying clout to get some relief for those who really suffered while the 72-year-old godfather of the "strike suit" spends some time in jail and those of us who got a coupon as a member of a class and Mel''s firm got approximately $250 million in fees by fraudulently paying his class plaintiffs got the mine and we got the shaft.

Guilty Plea In Florida On March 20, 2008, Wilfred Cyriaque, 57, was sentenced to 54 months in prison, after pleading guilty to involvement in a staged accident ring, according to Florida Chief Financial Officer Alex Sink. As a condition of his plea agreement, Cyriaque was also ordered to pay restitution of $329,366 to the following insurance companies: Allstate, Direct General, State Farm, Bristol West, Illinois National/AIG and Budget Rent-A-Car. Cyriaque was the suspected ringleader of a 24-person staged accident ring, and in 2005 was charged with 51 counts each of insurance fraud and grand theft, four counts of staging an accident, and organized scheme to defraud, Sink said. Investigators believe Cyriaque may have staged as many as 90 crashes, she added. The charges stem from investigations by the Department of Financial Services'' Division of Insurance Fraud (DIF), a sworn statewide law enforcement agency responsible for the investigation of insurance fraud. DIF made more than 800 insurance fraud-related arrests in the last fiscal year.

W.C. Fraud On March 25, 2008, the West Virginia Insurance Commission reported that a Wyoming County, W. Va. man pleaded guilty to one misdemeanor count of wrongfully seeking workers compensation benefits in an amount less than $1000. Charles R. Blessard, 37, of Oceana, W. Va., was indicted on four counts of wrongfully seeking workers compensation benefits on Sept. 28, 2006, and was later arrested on June 5, 2007, after failing to appear to enter a plea on the indictment. Blessard continued to seek disability benefits from his previous employer after going to work for another employer, according to the Department of Insurance. Blessard faces a sentence of up to one year in a county jail and a fine of up to $2,500, or both.

Feds Send Insurance Agent & Fraud Perpetrator to Prison On March 26, 2008, U.S. Attorney David L. Huber of the Western District of Kentucky announced that a Prospect, Ky. woman, Gail Kubovchik, to 41 months imprisonment for one count of mail fraud. Chief Judge John G. Heyburn II, also sentenced Gail Kubovchik to three years supervised release following incarceration. In addition, restitution in the amount of $1,075,504.66 was imposed. Kubovchik pleaded guilty in October 2007 and admitted that, from on or about December 2005, until February 2007, she owned and operated The Service Agency, a commercial insurance agency located in Louisville, Ky, according to KOI. During this period, Kubovchik knowingly executed a scheme to defraud multiple insurance companies and insurance premium finance companies by means of false and fraudulent pretenses in the total amount of $1,104.066, KOI added.

The scheme to which she pleaded guilty involved Kubovchik fraudulently applying for and receiving dozens of bogus insurance policies on railroad cars that did not exist, KOI reported. Kubovchik applied for and received insurance policies for railroad cars from multiple insurance companies, including the Fireman''s Fund, Zurich Insurance, and United Shortline, and was able to obtain the bogus insurance policies by creating fictitious companies that allegedly owned the railroad cars, KOI said. To accomplish this, Kubovchik would create the fictitious businesses using various Internet Web sites and then obtain actual insurance policies on the railroad cars allegedly owned by the bogus companies. She would then obtain financing for the bogus insurance policies from insurance premium finance companies, including Baytree Finance Company, Arizona Premium Finance Company, and Premium Payment Plan. Kubovchik caused the three finance companies to finance dozens of bogus insurance policies. In addition, Kubovchik''s scheme to defraud involved her obtaining multiple premium finance loans, each from different finance companies, on the same bogus insurance policy, according to KOI. Kubovchik would then use the proceeds from the first loans to pay the monthly premiums on the bogus insurance policy and then would keep the second loan''s proceeds for herself, KOI reported. Ultimately, Kubovchik caused 45 fraudulent loans to be funded by Baytree Finance Company, 3 by Arizona Premium Finance Company, and 31 by Premium Payment Plan, KOI said. The total loss was approximately $1,104,066.