Car insurance fraud skyrockets as doctors and lawyers work in cahoots

Published: 2012-04-02 10:40:19

 Car accident fraud has driven up New Jersey car insurance premiums by over 25 percent in the past few years, according to the NJ Department of Banking and major insurance companies.

Because various state, county and local police agencies are involved in fighting fraud, overall really accurate numbers are not available. But the resulting dramatic increase in premiums is clear.

In fact, for every $1 the insurance companies collect under the Personal Injury Protection clause in car insurance, $1.25 is paid out. Thus the increase in premium costs.

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More than 2,000 potential auto fraud cases are referred to the State Fraud Prosecutor every year. Dozens more ar referred to local police and court agencies. Estimates are that there is $100 million in car insurance fraud in New Jersey alone. Nationwide car accident fraud may even amount to some $2.5 billion.

The methods may vary, but the results are the same.

Deanna Lykins, President of the Insurance Council of New Jersey, describes a “red flag” scenario and says most targeted are seniors and non-English speaking immigrants.

She describes a typical situation. The insured is in a car accident and injuries are minor and did not require any medical attention. Two days after the accident a white van parks in front of your house. A stranger knocks on your door offering to take you to a lawyer or doctor. The stranger may say “I’m with the insurance company (or even the state) and you need to come with us right now!” Or the stranger may merely look like an official. The stranger says you must go talk with a lawyer or see a doctor. Or the stranger (called a “runner”) may offer you some money immediately with promises you will receive a lot more later on.

Lykins says, “An insurance company or the state never sends someone to an accident victim’s door.”

According to Bergen County court resources, a case completed last month involved three chiropractors and the office’s Office Manager. They were found guilty of falsification of medical records, fraudulent health care claims, and violation of the NJ Insurance Fraud act. One chiropractor was found guilty of money laundering.

In this case, a person was involved in a minor accident. He was not hurt and was sent home. Within hours, the same day, a stranger knocked on the door and claimed to be a representative from the insurance company. The insured insisted he was not injured. The stranger told him he had to go to the doctor.

Even though the insured protested, he was talked into going with the stranger. He was transported to the office of the three chiropractors. The insured told the chiropractor that he had no injuries and was not in any pain. The insured was treated anyway and was told he had to talk to an attorney. The attorney was right across the hall from the chiropractor.

As a result of such situations, several major insurance companies have notified their policy holders to be suspicious of strangers contacting them after an accident.