Baltimore lawyer faces bail hearing on insurance fraud counts Indictment follows an accident-claims investigation.

March 10, 1992|By David Michael Ettlin | David Michael Ettlin,Staff Writer Richard Irwin contributed to this story.

A bail review hearing before a District Court judge was set today for a 62-year-old Baltimore lawyer who was indicted on theft and fraud charges stemming from a yearlong investigation of automobile insurance accident claims.

A Central District Court commissioner earlier today ordered the attorney, Nelson R. Kandel, held in lieu of $25,000 bail pending today's bail review hearing. Mr. Kandel was arrested yesterday.

The charges against Mr. Kandel, of Ruxton, were the first to arise from the investigation, targeting the practices of lawyers, doctors and other professionals with roles in the handling of insurance claims, according to the Maryland attorney general's office.

A state insurance official said as many as 10 lawyers and several physicians also could face indictment in the probe -- the first major investigation of insurance fraud in the state since the mid-1970s.

"We are targeting the key players who encourage and facilitate the theft of millions of insurance dollars each year, including some lawyers, doctors, and others," said Attorney General J. Joseph Curran Jr.

"Enormous amounts are lost each year to insurance fraud, and the cost is borne by every insurance consumer," Mr. Curran said.

"The industry in general and Baltimore in particular seems to be very hard hit by an inordinate amount of frivolous and fraudulent insurance claims," said Ronald A. Sallow, supervisor of the Maryland Automobile Insurance Fund's special investigation unit.

More than a year ago, he said, insurance industry representatives -- including what now is the National Insurance Crime Bureau -- began work on "a plan of attack" against fraud, and won the support of the attorney general's office in ferreting out lawyers who allegedly encourage the filing of false claims, often with the cooperation of medical care providers.

The investigators furnished undercover police officers with phony identities and bogus policies provided by insurance companies, and sent them to visit lawyers handling accident claims.

"We insured State Police undercover vehicles," Mr. Sallow said. "There was never any contact or damage to any of the vehicles. There were never any accidents."

But the undercover operatives would tell the lawyers they had been involved in an accident, were not injured, but wanted to make some money, according to Mr. Sallow.

"I can tell you that the people in the attorney general's office and State Police were shocked at how blatant the actions were on the part of virtually every attorney they went into," Mr. Sallow said. "There were a significant number of attorneys involved, and a collateral number of care providers.

"We in the industry felt strongly that this was what was going to happen, but I think that's because we had our fingers on the pulse a little more than they [the police and prosecutors] did. I don't think they realized how blatant it was."

Mr. Sallow said "there are probably 10 attorneys who have significant problems" as a result of the investigation, but "they don't know who they are yet. We're just going to sit back and let them stew. They'll stew until the next [indictment] comes down."

Mr. Kandel, of the 7500 block of L'Hirondelle Club Road in Ruxton, was arrested at his office in the downtown USF&G Building by State Police investigators.

The police had a search warrant and seized "a carefully enumerated group of files," said Norman L. Smith, the assistant attorney general in the Criminal Investigations Division who is in charge of the case.

Mr. Kandel was charged with 10 counts of felony theft, presenting fraudulent insurance claims, and soliciting others to steal, file fraudulent claims and make a false police report.

Three of the investigators are identified in the indictments, which allege that Mr. Kandel solicited them variously to make false insurance claims, and through false claims to steal money from the Government Employees Insurance Co., better known as GEICO.

The lawyer faces possible maximum penalties of 50 years in prison if he is convicted on all charges, Mr. Smith said.

In the last major investigation of fraud in automobile accident claims, federal prosecutors won convictions of more than a dozen lawyers, doctors and chiropractors.

The government exposed ties between lawyers and medical practitioners in a conspiracy to inflate or create fictitious medical bills -- evidence of the extent of injury on which insurance settlements usually are based.

After the cases in the 1970s, investigation of organized insurance fraud "really cooled out for a while," Mr. Sallow said, adding that the problem has "gradually been getting worse and worse."

"People in my line of work -- we sit there and see how much this type of thing is costing the industry, and every policyholder . . . and it infuriates us because for the deeds of few, many suffer," Mr. Sallow said.

"I'm just hoping this investigation will result in an impact on the rates policyholders in this state have to pay," he said.

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