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Kreidler’s CIU helps uncover $1.3 million health insurance fraud in two states

September 14, 2020

OLYMPIA, Wash. – A fraud investigation launched by Insurance Commissioner Mike Kreidler’s Criminal Investigations Unit (CIU) in 2017 resulted in a federal prosecution of an Oregon woman who defrauded six health insurers of $1.3 million. 

Saffron Gustafson, 43, was sentenced to 21 months in federal prison and three years’ supervised release. Gustafson was also ordered to pay more than $1.3 million in restitution to the victim insurance plans and more than $99,000 in unpaid federal taxes. She pleaded guilty in November 2019 to charges of health care fraud and tax evasion.

“This case was a flagrant and egregious abuse of the health insurance system for purely selfish reasons,” said Kreidler. “Fraud drives up rates for all insurance policyholders. I commend the interagency cooperation and commitment to bringing this person to justice.”

Gustafson owned and operated Saffron’s Specialized Medical, a durable medical equipment company with retail stores in Portland, Springfield and Salem, Ore., and in Vancouver, Wash. Gustafson’s stores sold custom compression garments to patients with circulatory medical conditions.

Between June 2013 and August 2017, Gustafson submitted bills to insurers that inflated the cost of the compression garments by 600% or more. To support the false billings, Gustafson and her employees fabricated invoices from her wholesaler and destroyed the genuine invoices so insurance companies could not review them during audits. 

The insurers she defrauded are Cambia (Regence); CHAMP VA; Cigna; Kaiser Permanente; TRICARE; and Providence. Regence initially reported the suspected fraud to Kreidler’s CIU. 

Kreidler’s CIU notified the other agencies when detectives discovered the case involved storefronts in Oregon. In all, the case was investigated by the OIC; FBI; IRS-Criminal Investigation; the U.S. Department of Health and Human Services; U.S. Department of Veterans Affairs and Amtrak Inspectors General; and the Defense Criminal Investigative Service. Seth D. Uram, Assistant U.S. Attorney for the District of Oregon, prosecuted the case.

Kreidler’s CIU investigates insurance fraud and works with the Washington State Patrol and state and local prosecutors on criminal cases. Insurance fraud costs the average family $400 to $700 per year in increased premiums. Insurance companies are required by law to report fraud to the commissioner.  

Consumers can report suspected insurance fraud on the insurance commissioner’s website.

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