Insurance fraud claims exist in virtually every part of the industry. As I have engaged in researching this topic, I have been shocked, amazed and fascinated… today I want to focus on the things I found relevant to car insurance fraud. I also found there were myriad ways in which insureds attempt to perpetrate fraud, for example:
- Staging accidents and faking the depth of injuries.
- Adding passengers to claims who were not even in the car at the time of the accident – again faking injury reports.
- Exaggerating the extent of injuries and treatment of actual accidents.
- Falsifying the extent of damage following a crash; adding pre-accident damages to the mix.
- Misrepresenting where the vehicle was located at the time the accident occurred; misreporting damages to parked vehicles actually constitutes car insurance fraud.
The no-fault insurance rules in place in New York set the stage for what may have been the biggest single case of car insurance fraud in history. in 2012 well over three dozen people were arrested in a fraud scheme reported to at almost $280 million. The state rule requires expedient payouts with a minimum of investigation… and according to the state’s laws, the driver and passenger of an accident are entitled to receive up to $50 thousand in benefits – per person – no matter who is ultimately found at fault. Payments for medical treatment are also subject to the same level of expediency, hoping to negate the need for long, drawn-out lawsuits.
The suspects in this extensive fraud actually established medical clinics with the sole intention of defrauding providers – drawing on New York’s no-fault insurance rules. The clinics arranged for unnecessary treatments at myriad fraudulent businesses and providing physician referrals. In return for the referrals, the clinics would, of course, earn kickbacks, as did the recruiters who were paid unbelievable amounts for “bringing” those patients to the party!
The full scope of the investigation was mind-boggling; as the government dug deeper, imagine their own surprise to add to the list a number of prominent New York attorneys and physicians. The count was not small… ten doctors and three attorneys were part of the three dozen suspects who will face between 30 and 70 years for their malfeasance.
What really astounded me was the information that surfaced tied the group to organized crime: the Russian mob. An NBC television affiliate in New York City reported the Brooklyn-based operation was believed to be the largest ever no-fault insurance scheme uncovered. The words used by the Assistant FBI Director says it all. Janice Fedarcyk noted, “The criminal enterprise, while it lasted, was obscenely profitable.”
The more I trolled for information for this post, the easier it seemed to be to uncover the actions of highly unscrupulous “fraudsters!” In 2011 Florida fought against 25 people who were charged with insurance fraud. Staging accidents, recruiting participants, defrauding auto insurance companies… it was a big racket that called for a “staff” of over two dozen to make it all happen – including a clinic owner and staff members and several doctors who filed phony personal injury protection claims.
The “sting” which was titled Operation Dark Horizon, brought about 140 criminal charges against the group, following two full years’ investigation; charges which included racketeering, money laundering, and grand theft.
One final story here… a major auto insurance scam masterminded by a Los Angeles-based Armenian-American gang, which has been billed as one of the largest Medicare schemes to date, and responsible for losses totaling a whopping $163 million!
Another major auto insurance scheme was masterminded by an Armenian-American gang in Los Angeles in 2011. Billed as one of the largest Medicare schemes to date, the gang is believed responsible for losses totaling $163 million. Phony crash victims… phony treatments… phony medical clinics – spread out over more than two dozen states. It was no small matter to investigate, but the primary figure, Armen Karazianis, did serve a three-year federal sentence for the part he played.
The stories do go on… a big whiplash “project” that hit Canada in 2012; a fraud ring that took months to break, and damages to be assessed. The stories continued throughout Florida as it claimed the unfortunate title of #3 in the nation in auto insurance fraud, causing Governor Rick Scott to sign a tough anti-insurance fraud bill into law. The big message… insurance fraud is not an acceptable behavior in Florida!
The situations have gotten SO out of hand the Coalition Against Insurance Fraud was founded – by concerned citizens who were compelled to counter the effects the level of fraud wielded on American consumers. After close to 20 years, it remains the only organization that represents both consumers and the insurance industry; it has also strategically become an insurance fraud clearinghouse of information. The statistics that come from the CAIF are startling! Imagine if you will the $80 billion in terms of lost production and resources. If you do the simple math, broken down per household, this on-going insurance fraud costs each family $980 a year – close to a thousand dollars a family might better spend on living essentials.
What started out as a curiosity factor has led to a passion to inform our public of the possible car insurance fraud activities and embrace their willingness to immediately report suspicious activities.
Independent Insurance Agent
Proudly serving her clients and her industry for 30+ years