Florida leads U.S. in faked car accidents

Feb 7, 2011

The following article was published in the Palm Beach Post on February 7, 2011:

Florida Leads U.S. in Faked Car Accidents

By Laura Green


A rental truck and an SUV bumped into each other at Blue Heron Boulevard and Military Trail in Riviera Beach, causing only scratches and some chipped paint.

Within weeks, the four occupants of the vehicles visited clinics that billed nearly $40,000 in treatment for soft tissue injuries – a diagnosis that’s tougher for insurance companies to dispute than, say, broken bones.

Investigators say the crash was a setup, one of dozens of staged accidents each year in Palm Beach County designed to cash in on loopholes in Florida’s no-fault insurance policy.

Florida now ranks first in the nation in questionable insurance claims for what appear to be staged accidents, according to the National Insurance Crime Bureau. The number of cases grew 77 percent in the first half of 2010 compared with the same period in 2009.

Tampa, Orlando and Miami remain the prime spots for this kind of crime. But the fraud has taken off in Palm Beach County, too, at an alarming rate.

Suspected staged accidents in West Palm Beach surged from 50 in 2008 to 96 in 2009, according to the most recent data available.

“It’s an easy crime to do,” said Special Agent Fred Burkhardt of the South Florida Major Medical Fraud Task Force. “It doesn’t take a lot of expertise. It doesn’t take a lot of skill. You just need to provide your car and you’re good to go.”

What makes staging an accident so lucrative is Florida’s personal injury protection law, which pays up to $10,000 in medical claims for a person injured in an accident without the squabble over who was at fault, which is required in most states. In Florida, your insurance company pays for your treatment even if the other driver was at fault. Only 12 states and Puerto Rico have no-fault laws.

When Florida adopted no-fault in the 1970s, it seemed perfect for a state where trial lawyers are not held in high esteem. The idea was that the legitimately injured could get their treatment covered without having to fight in court and passing on costly legal fees to the insurance company and eventually other policyholders. It was going to save money, proponents thought.

But whoever ran the numbers in the 1970s wasn’t as imaginative as the schemers who have exploited the law’s flaws. A single accident with two cars carrying four passengers each can cost insurers $80,000.

And insurance companies are passing on that cost.

In 2010, Floridians paid roughly $50 per car in a “fraud tax,” said Bob Hartwig, president of the Insurance Information Institute. That so-called tax, really the increase in premium attributed to fraud, is expected to jump to more than $83 this year if the crime goes unchecked. That figure, multiplied by the state’s 11.22 million insured vehicles, means drivers will pay an additional $946 million in 2011 because of fraud, the Insurance Information Institute estimates.

Florida Chief Financial Officer Jeff Atwater has pledged to strengthen the law to reduce fraud and “put criminals who commit this fraud behind bars.”

“It is unfair and unconscionable that every person who buys an auto insurance policy in the state of Florida is paying for the thieves who are gaming the system, and it won’t be tolerated,” he said.

Proving that an insurance claim is a scam recently got harder when the state Supreme Court struck down insurance companies’ ability to require people suspected of fraud to answer questions under oath and submit to an independent medical exam, said Ron Poindexter, a director of operations for the National Insurance Crime Bureau.

Between 2009 and 2010, the state Division of Insurance Fraud opened 1,388 investigations into suspected staged accidents but closed only 34, an indication of how easy the fraud is to commit and how hard it can be to prosecute the offenders.

All you need to score a quick payment are a few participants, two cars to hit each other, and some connections in the medical world. Some fraudsters don’t even bother with the accident. They recruit participants to go to a police department and fill out a short form, claiming that they were in an accident but didn’t call an officer. It’s called a paper crash.

There are some small-time players in this racket, but most of the claims are thought to be filed by “organized, linked criminal enterprises,” Poindexter said.

The biggest rings have learned to exploit an exemption in state law that allows medical professionals, such as doctors and massage therapists, to open a clinic without submitting to state licensing. Some doctors open clinics themselves, hoping to cash in; others, for a fee, merely lend their ID number to someone opening a straw clinic.

No-fault fraud also is connected to more serious crimes, including human trafficking, Poindexter said. Smugglers force people they’ve illegally brought into the country to participate in accidents before they repay their debt, he said.

Florida legislators are discussing ways to plug the holes in the law.

But Poindexter, a former director of the Florida Division of Insurance Fraud, also is lobbying for a statewide grand jury to crack down on the crime. Legislators previously addressed other flaws in the law – and scammers still found ways to exploit it.

“You turn on a light in one room and the cockroaches go in another room,” he said.

‘Gold mine’ for the unscrupulous

Staged accidents are such a common type of fraud that one was featured in an episode of Law & Order. On the show, an illegal immigrant was killed in the accident. Two lawyers and a chiropractor were found guilty of murder for setting up the scam.

‘A system designed to do away with frivolous lawsuits has turned out to be a gold mine for unscrupulous lawyers, doctors and massage therapists,’ says Ron Poindexter of the National Insurance Crime Bureau. In many cases, organized rings carry out the fraud.

Some of the loopholes Poindexter identified:

Licensing: Medical providers can open a clinic without first getting a license. That allows scammers to open clinics with little oversight to serve essentially as fronts to bill insurance companies for bogus claims.

Paperwork: People who were never in an accident can file an accident claim by going to a police department and filling out a form. After a staged accident, people who were not there can simply fill in their names and claim to be passengers, allowing them to file for medical benefits. Poindexter says the law should be changed to prohibit anyone who was not on the original police report from filing a claim.

Proving fraud: The Florida Supreme Court recently struck down insurance companies’ ability to require someone suspected of fraud to submit to an independent medical exam or answer questions under oath. The law should be changed to allow both, Poindexter says.

Find this article here:  http://www.palmbeachpost.com/money/florida-leads-u-s-in-faked-car-accidents-1239149.html