When a Vehicle Accident is on Purpose: Anatomy of Insurance Fraud

They prowl the urban streets in their “buckets” loaded with “ghosts” looking for unsuspecting “vics” and the best opportunity for a “ride-down” or “swoop and squat.”� In plain English, they are the perpetrators of automobile insurance fraud.

Their craft consists of staging car accidents and filing false or inflated claims with insurance companies.� Their trade has become a veritable cottage industry in the country’s urban areas.� For example, the California Bureau of Fraudulent Claims in Sacramento, which helps insurance companies investigate and prosecute falsified claims, receives more than 450 new cases of suspected insurance fraud each month.

The administrative and legal costs related to fraudulent claims are often cited as one of the major factors contributing to spiraling vehicle insurance premiums nationwide.� The stakes are high.� Vehicle insurance generates billions of dollars in business annually and car accidents account for nearly half the caseload in civil courts.

Automobile insurance fraud is a well-organized, but relatively easy crime to commit in urban areas, due in part to a city’s ever increasing number of vehicles and escalating street congestion.� The players include a network of drivers, passengers, attorneys, doctors and chiropractors.

When a Vehicle Accident is on Purpose: Anatomy of Insurance Fraud

The stagers who cause these accidents drive what are called “buckets.”� These are large, heavy, early model American cars that sell for little money in the used car market and can tolerate a great deal of body damage.� One convicted stager, who cooperated with authorities in exchange for a modified sentence and anonymity, said he preferred early model Cadillacs and Buicks because they could take a beating and sold for next to nothing, which increased his ultimate profit margin.� He obtained most of his cars from private parties advertising in The Recycler, a forum for reselling merchandise with an emphasis on used vehicles.

A frequently used fraud scheme is the arrangement of a “friendly” accident.� A stager with an insurance policy, usually the minimum coverage required by the state, hits another car, which is cooperating in the operation, and then readily admits all liability.� He allows the passengers in his car and the occupants of the other car to file suit for bodily injury and property damage against his policy.� When a settlement is made, the proceeds are divided among the participants.� Using this technique, a minimum coverage policy is manipulated for its maximum yield.

Stagers conducting friendly accidents usually are not concerned about having their policies canceled.� Should an insurance company drop them as a client, they are placed into what is known as the Assigned Risk pool.� Most state laws require companies offering auto insurance in their jurisdiction to carry an allocated percentage of assigned risk drivers.� This program advances the public policy concern that insurance is made available to those who seek it, regardless of their past driving record.

But another common fraud scenario is more adversarial and involves unsuspecting drivers.� It begins when the stager fills his bucket with “ghosts,” or passengers who disappear after the accident.� Ghosts are usually family members or friends of the perpetrator invited to take a ride or go shopping.� Any seemingly innocent inducement to place more people in the car will do.� Ghosts are needed so potential witnesses can verify that the car was carrying passengers.� An increased head count will generate more money for the stager at a later phase of the scheme.

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After the accident, the stager simply takes the ghosts back home and they are not involved again in subsequent transactions.� If any interviews, statements or depositions are required from the passengers, replacements are found for the ghosts who are briefed as to what happened at the accident site.� This subterfuge is necessary to avoid having the same names repeatedly crop up on claims and cases in insurance company files.� A claimant can only appear on official records so often before becoming suspicious.� While friends and family members may be used repeatedly as ghosts, various replacements will be used to fill in for them when and if investigation is undertaken.

Once the bucket is filled with ghosts, the stager begins the “ride-down.”� This is the process of cruising the streets in search of a driver whose vehicle looks to be insured and happens to be in a vulnerable position.� The traffic situations favored by stagers are cars making left turns, U-turns, approaching intersections with 4-way stop signs, exiting parking lots and backing out of driveways.� In the aftermath, culpability in these circumstances if often questionable, and the stager can deflect as much blame as possible onto the other driver.� It stands to reason that drivers committing traffic violations are especially susceptible to a ride-down, as they will be on record as completely at fault.

The stager tries to hit or be hit within any of the quarter panel fender areas.� The objective is to put a dent in the car to prove there was contact, but not necessarily to cause actual injury to anyone involved.� Stagers have been known to bait “vics” (victims) into accidents by slowing down, pretending to look for an address, and even waving the vics through an intersection, then speeding up to hit them.

The “swoop and squat” is another technique used to transfer liability to the unsuspecting driver.� It usually requires two buckets.� One is positioned directly in front of the victim in traffic and the other swoops in front of the pair.� The middle bucket suddenly brakes, or “squats,” causing the victim to rear-end it.� The lead car drives off, unidentified, leaving the victim with the burden of liability for causing a rear-ending incident.

Older drivers and women are the favorite targets of fraud artists.� “Women, especially, because they’re more law abiding,” says the convicted accident stager.� “If they don’t do anything else, they’re going to keep their cars insured, so they would be the best to hit.”� The preferred locations in any city for ride-downs include downtown districts and any congested business districts.� Urban drivers are relatively easy prey, according to the convicted stager.� “Nine times out of ten you really don’t have to look for an accident,” he says.� Ride-downs usually take place on weekdays during the morning rush hours, lunch time and the evening commuting hours.� Cell phone users are particularly vulnerable because of their inherent distraction from the road.� Accidents are seldom staged on�freeways and expressways because it is simply too dangerous.� “The purpose is to make money, not create injuries,”�the stager emphasizes.� “We never wanted to hurt anyone – ourselves or any of the victims.� We just wanted to submit a claim.”

After an accident, the stager obtains the information he is entitled to from the victims, such as address, phone number, driver’s license number and insurance policy number, to facilitate reporting the incident to the victim’s insurance carrier.� This information is then turned over to a lawyer who is known to handle such cases.� It is “common knowledge” who such lawyers are, says the stager.� “And you meet new ones each and every day.”

As soon as the lawyer verifies that liability coverage exists and is assigned a claim number by the insurance company, he pays the stager his “front money,” which is sometimes labeled as a referral fee.� Stagers call it front money because it is paid to them immediately, before a settlement is reached or a lawsuit is filed.� The stager receives front money on a per capita basis.� The more passengers on board during an accident, the more money changes hands from lawyers to stagers.

The lawyers frequently work in conjunction with doctors, chiropractors and clinics.� Even though the stagers try to avoid injuries, a worthwhile claim contains allegations of personal injury as well as property damage.� This raises the settlement value of the case substantially.� It is the function of the doctors to create documentary proof of personal injury for the file.� In lieu of immediate payment, the doctors usually obtain a lien against any subsequent settlement payment.

Stagers go to doctors who are known to participate in such cases.� Frequently, the lawyer will recommend such a doctor or clinic.� Patients are commonly prescribed an extended treatment program for subjective complaints, such as soft tissue strains.� “With most of the doctors,” explains the stager, “you only have to see them once.� That’s when you sign up.� You sign his treatment chart in different ink pens 20 or 30 times so it looks like you visited his office at different times.� At a later date, when he gets the word from the attorney that the insurance company is ready to negotiate or to settle, he fills in the dates and his prescribed treatment.� He can submit a bill for any amount.”

Fraudulent medical treatments are known as “build-ups” and they are often characterized by prolonged periods of physical therapy.� It is estimated that there are thousands of doctors, chiropractors and clinics nationwide currently providing lawyers with artificially built-up medical bills.� Some doctors are known to simply sell sets of medical bills for such cases.� An invoice for medical treatment in the amount of $3,000, for instance, can be purchased for around $1,000.

Each link in the chain of events constituting automobile insurance fraud is dependent upon the other.� The convicted stager admits, “If you have a very good rapport or have established business relations with an attorney, he will finance you or advance you money to get started.� And the attorney will refer you to doctors and to other attorneys who may be interested in doing [this type of] business.”� With this start-up money, a stager can buy a fleet of buckets and hire a crew of drivers and passengers.� Some of these crews engage in as many as two or three accident a day in busy urban cities.� “They’re sophisticated.� They have money,” says the stager.� “They have backing and financing from some prominent people – attorneys and doctors – who will give them $20,000 to invest in cars and to hire people.� That $20,000 can easily turn into $200,000 in a matter of weeks.”

How can drivers best protect themselves from staged and induced accidents?� The convicted stagers advises, “There are certain things you should look out for, such as old model cars, three or four people in a car, and vulnerable situations in traffic.”� It is always better to hang up the cell phone and pay attention to the road.� After an accident, “don’t give any more information to the other driver than is necessary or required by law,” the stager says.� It is a good idea to ask your insurance carrier what type and how much information it recommends divulging in a suspicious accident situation.

To the fraud artist, insured urban drivers are an easy source of profit.� “I wouldn’t say the insureds are careless, but they’re unsuspecting, they’re gullible,” the stager observes.� “They don’t think that there are people out there actually doing this.”

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