A federal investigation has resulted in the dismantling of an auto insurance fraud ring that was working in New York. This group managed to scam insurance companies out of $279 million dollars, by filing bogus claims. They were able to do this by taking advantage of New York’s no-fault auto insurance.
Some states have what is called no-fault auto insurance. Florida and New York are two of the states that do. The majority of states do not use this particular type of car insurance. No-fault auto insurance is a personal, (or individual), policy that functions somewhat differently than a typical car insurance policy would.
Usually, here is what happens when two people get into a “fender bender” in a state that does not use no-fault auto insurance. After the accident occurs, one of the drivers will be deemed to be at fault. Insurance claims will be sent to that driver’s insurance company.
That insurer will pay the cost of the damages that were caused to the other person’s vehicle. It will also pay for the medical bills for the injures that happened to the people who were in the other vehicle when the accident occurred.
Things work differently with no-fault auto insurance. If two people get into “fender bender” each driver files a claim to his or her own insurance company. Each person will have the damage that happened to their vehicle, and the medical claims that happened to their passengers, paid for by their own insurance company.
An investigation in New York resulted in charges being filed against 36 people who were part of an auto insurance fraud ring. The charges included federal racketeering, health care fraud, mail fraud, and money laundering. The group consisted of ten physicians, and three lawyers. The false insurance claims they filed to auto insurance companies totaled over $279 million.
Part of the scam involved “runners”. These are people who literally chase after ambulances. They found people who were involved in real car accidents, and convinced them to visit particular clinics for the purpose of seeking unnecessary health care. Those clinics were operated by the doctors who were working with the scam artists.
People were offered up to $3,000 in “kickbacks” if they agreed to commit insurance fraud. I doubt that things were explained to the people quite so clearly as that. The law in New York allows car accident victims to receive up to $5,000 in benefits per person for a car insurance accident claim.
Once a person went to the clinic, they would be prescribed physical therapy, acupuncture, and other treatments. This was prescribed to all patients, no matter what their actual injuries happened to be. Some patients were told to come to the clinic five times a week. It is also alleged that the clinics would refer patients to lawyers who would then file baseless personal injury lawsuits.
Image by Mark Tee on Flickr