Anybody who believes insurance coverage is a uninteresting trade is unfamiliar with latest fraud schemes so macabre they might be changed into gripping journey motion pictures.
One such caper is the staged accident scheme perpetrated by the household of ringleader William Mize. Mize went to extraordinary lengths to make it seem that allegedly injured car passengers had been really injured in intentional accidents. Actually, their accidents had been brought on by self-mutilation, sandpapering open wounds, dousing themselves with urine, and breaking of enamel with pliers. For a number of years Mize orchestrated six accidents per yr netting a cool $6 million till he was apprehended. He was on the lam for a number of years, just lately found, arrested, and is now doing time.
A extra pathetic story, paying homage to the 1971 film ‘The Gang Who Couldn’t Shoot Straight,’ which featured a younger Robert DeNiro impersonating a priest, had a California man impersonating a bear. Bear-man wore a bear swimsuit whereas crawling round and damaging the inside of a Rolls Royce Ghost and different luxurious automobiles. The mob claimed $142,000 from insurers. The brazen con was captured on tape by a member of the bear gang, who submitted it to the insurance coverage firm, the place it was judged to be a rip-off.
Whereas insurance coverage fraud by animal impersonation could also be an outlier occasion, there are just lately uncovered insurance coverage fraud schemes many instances bigger than bear-man or Mize. Actually, these schemes are so giant that they’re chargeable for vital premium will increase for all insurance coverage patrons.
The enterprise line that has been most impacted by staged accidents is business auto legal responsibility insurance coverage, which covers truck fleets and trucking corporations for bodily harm to 3rd events. Insurance coverage fraudsters gravitate to this product as a result of accidents (or alleged accidents) in accidents involving vehicles and different business automobiles might be very extreme, justifying giant courtroom awards or settlements. The most typical rip-off is the staged accident, a la Mize.
This number of fraud entails a “slammer,” who deliberately hits a big truck with their car. The automotive with a slammer has a number of passengers, who’re in cahoots with attorneys who file claims and lawsuits. The passengers are directed by the complicit attorneys to medical service suppliers who render pointless costly surgical procedures, overcharge for them, or do nothing in any respect besides produce phony payments for companies not rendered. This phenomenon has reached near-epidemic proportions, notably in New York and Louisiana. One latest case even concerned the homicide of a hoop member turned witness for the FBI, who investigated the rip-off.
Staged accidents and the associated follow of phantom damages have lengthy been sources of claims leakage for insurance coverage corporations. Phantom damages are the distinction between the price of medical companies billed and the price of medical companies really rendered. For instance, a crooked medical facility might fabricate a invoice for fictional imaging and for a number of again surgical procedures within the six-figures, whereas no medical procedures had been carried out. To ensure that staged accident schemes to work, there have to be collaboration between complicit attorneys, medical suppliers, the actors within the scheme, and the masterminds. Such a fancy rip-off was alleged in two latest Racketeer Influenced and Corrupt Organizations Act (RICO) fits. One was the civil lawsuit introduced on December 17, 2024 by American Transit Insurance coverage Firm (ATIC) within the U.S. District Court docket for the Japanese District of New York. Plaintiffs sought $153 million in compensatory damages and $459 million in treble damages. The 698-page swimsuit named 186 defendants. In January 2025 it was reported that 141 defendants agreed to settlements.
Individually, in January 2025, ridesharing firm Uber introduced a 60-page swimsuit in opposition to three plaintiff legal professional companies, alleging they colluded with medical suppliers to “exploit passengers in purported or precise minor car collisions and supply them with medical pointless and/or casually unconnected therapies.”
Insurance coverage fraud shouldn’t be victimless. The magnitude of the schemes focused by the latest RICO swimsuit reveals that insurance coverage fraud could be a main organized crime. When medical health insurance fraud, pretend journey and fall and phony employees’ compensation insurance coverage fraud are added to business auto fraud, some sources have estimated that over $300 billion in reported insurance coverage claims are fraudulent.
As we reported in our earlier article on insurance coverage fraud, major analysis has discovered that older generations (aged 45 and above) have extra compunctions about stealing from insurance coverage corporations. Youthful generations have fewer qualms about dishonest on claims. However as these older generations age out of the workforce they are going to be changed by the youthful cohorts who’re extra comfy ripping off insurance coverage corporations.
Insurance coverage fraudsters usually justify their actions by calling them “victimless.” Past insurance coverage corporations which might be defrauded, the price of insurance coverage fraud is borne by trustworthy insurance coverage patrons whose premiums are pushed greater to recoup what was stolen. At a time when insurance coverage patrons and congressional hearings are turning the highlight on insurance coverage affordability, efforts to fight insurance coverage fraud have to be excessive on the record of coverage prescriptions.
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