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New York Nails Insurance Broker for Scamming Seniors

Broker fined for selling seniors overlapping health services

July 28, 2008

The order issued by Justice Diane Y. Devlin requires insurance broker Thomas Piccirillo of Auburn, N.Y., to pay $500,000 in restitution to seniors he defrauded, $100,000 in penalties, plus an additional $10,000 penalty to the state for targeting senior citizens.

Piccirillo also is barred from selling any home-care policies unless he posts a $500,000 bond.

"This individual illegally took advantage of New York's most vulnerable residents to increase his commissions," said Attorney General Andrew M. Cuomo. "He used the appeal of seniors maintaining their independence in order to gain their trust, which he then broke by selling unnecessary home care policies."

Piccirillo used the fear of being sent to a nursing home as a tactic to sell elderly clients overlapping home health services policies, including policies from a company that has since been banned from doing business in New York state, according to Cuomo's office.

By selling the overlapping policies, Cuomo says Piccirillo obtained significant commissions from two service companies, both of which were unaware he was selling the other's duplicative product. The initial investigation determined that in 2006 alone, Piccirillo earned over $117,000 in commissions from the two service companies.

Piccirillo went door-to-door selling nearly identical home health services agreements for Americare Home Care Services, Inc. and Homeward Bound Services of North America, Inc.

Homeward Bound Services' one-year Assisted Living Services Agreement allowed elderly consumers to pre-pay for blocks of non-medical services provided in their home, including meal preparation, laundry, bathing, cleaning, dressing, toileting, and shopping. The company would contract with local home care providers to complete these tasks. The consumer was required to renew the agreement each year in order to continue to receive services, and unused hours did not roll over from one year to the next. Homeward Bound paid 37.5 percent commission on sales.

Americare's Service Contract allowed seniors who bought the plan and needed help at home to call Americare which, in turn, would contract with a local home care provider to provide the home care services. Like Homeward Bound Services, unused hours did not roll over from one year to the next. Americare paid 50 percent commission on sales.

Piccirillo sold Americare contracts to Homeward Bound clients to collect the higher commission. In one case alone, an elderly consumer paid $40,000 for the policies and did not use a single home care hour. Piccirillo earned more than $12,000 in commissions on the sales.

In addition to selling duplicative policies, Piccirillo engaged in other acts of fraud in order to maximize commissions:

• Instead of renewing agreements for existing customers, he sold new agreements in order to get higher commissions. However, new agreements were subject to a 6 to 12-month waiting period before services are provided.

• Piccirillo defrauded his customers by adding hours of service to contracts without their consent or knowledge and never providing written proposals to customers disclosing the total hours purchased at time of sale.

• In one case, Piccirillo sold an elderly woman three Homeward Bound Agreements and three Americare Contracts from August 2005 to January 2007. Piccirillo added hours to the original agreements by persuading the woman to sign new contracts even though he knew that she had not used the original hours and he did not observe any change in her health status. In total, the consumer paid $19,056 for services and never used one hour while Piccirillo made $7,247 in commissions. Had Piccirillo simply renewed her existing policy, the consumer would have paid only $3,500 in premiums and Piccirillo would have earned commissions of less than $1,000.

Americare did not permit its agents to sell a new contract before the previous one had expired. In June 2007, Americare learned that Piccirillo was simultaneously selling its services and Homeward Bound Services agreements to consumers, leading both companies to terminate him.

Americare, upon learning of the attorney general's findings, provided $90,000 toward restitution for consumers who were defrauded.

Ann Marie Cook, President/CEO of Lifespan of Greater Rochester, Inc., a not-for-profit agency that helps older adults and their caregivers take on their challenges and opportunities, said, "Lifespan commends the attorney general's office on aggressively pursuing this matter. This broker preyed on the fears of our community's elders for his own personal gains. This is a despicable scam."

In a separate matter, Cuomo's office obtained an order requiring Homeward Bound Services and its owners to pay $100,000 in restitution for failing to honor agreements. The owners also are required to pay a civil penalty of $50,000 and costs of $12,000 to the state. As part of this order, Homeward Bound is barred from selling its Assisted Living Service Agreement unless it posts a $1 million performance bond.

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