Insurance Fraud NEWS
Impact of Insurance Fraud Statement by John Sargent at the sentencing of Joseph Haddad
State in court documents fraud's impact on insurers, their policyholders and society
July 10, 2014, Bridgeport, CT
Good afternoon. Your honor, my name is John Sargent. I serve as the Director of the Special Investigation Unit for MetLife.
In my role I also sit on several boards and committees. I currently sit on the Board of Governors for the Insurance Fraud Bureau of Massachusetts. I also serve on the Executive Committee for the Coalition Against Insurance Fraud, which is a Washington, D.C.-based advocacy organization that is comprised of government agencies, consumer advocate groups and insurance companies and I am the past chairman of the New York Alliance Against Insurance Fraud, which is an organization whose mission it is to increase the public’s awareness of the impact and cost of insurance fraud. I want to thank the court for the opportunity to speak on behalf of the victims today.
I also hope to provide a perspective on the impact insurance fraud has on every consumer in the United States. Many believe this is just a crime against insurance companies. It isn’t! It is a crime whose tentacles reach into the fabric of this country.
In my 20-plus years in the insurance industry, I have seen all forms of insurance fraud. It is often masked or intertwined with other related crimes — murder, arson, money laundering, identity theft, elder abuse, child endangerment, HIPPA violations. The list goes on and on. This crime, fueled by greed, endangers an industry with a history based in trust. Insurance is a protection product. We buy insurance to protect our lives and properties. We expect the insurance company to deal with us fairly, and we in turn are expected to deal honestly and fairly with them in the presentation of a claim.
Attorney Joseph Haddad preyed on the trust inherent in those insurance policies, bringing forth lies and misrepresentations. Mr. Haddad, an officer of the court — someone who swore to uphold the laws of the State of Connecticut — masterminded a fraud ring for the financial benefit of himself, while ignoring his ethical and moral responsibilities to present the truth.
As was presented to the court, he directed the fabrication medical records in an effort to increase the value of claims. He was responsible for having his clients receive unnecessary prescribed pain medication. His minions, at his direction, performed unnecessary chiropractic treatment, ordered and billed for questionable diagnostic tests, and overstated injuries allegedly caused by the automobile accidents. This was all done to increase the value of the settlement; the interests of the patient never came into play here.
And let us not underestimate the impact these claims have had on the innocent parties who may have been involved in these minor fender benders. The threats of lawsuits and the allegations of injuries are first brought to the attention of these insurance policyholders, folks who are the defendants in these cases if they are brought to trial.
They are left worrying if they have enough insurance to cover the losses being claimed. They are haunted by the allegations that they caused serious injuries to the other parties. Oftentimes these victims may have been targeted because they “looked” like someone who would have insurance. It is common that high-end vehicles and the elderly are subject to these types of staged accidents. While very difficult to prove, we still see time and time again, across the country, this crime occurring when runners and criminal enterprises such as this exist.
Mr. Haddad and his criminal enterprise are one of many that are costing insurance companies and our customers billions of dollars each year.
The exact amount of insurance fraud that occurs each year across the state is unknown. But what we do know is that every consumer in the state of Connecticut is a victim of Mr. Haddad’s crimes because they all are paying increased costs of automobile insurance. According to a study in neighboring Massachusetts, auto insurance fraud rings cost policyholders in just 13 cities — nearly $1 billion in additional insurance premiums over a 10-year period.
These crimes contribute to higher insurance premiums because insurance companies must pass the costs of fraudulent claims — and of fighting fraud — onto policyholders. According to the Coalition Against Insurance Fraud, the property/casualty insurance industry alone spends more than $1 billion each year on anti-fraud programs. We have armies of investigators, data analysts and lawyers to detect and investigate these schemes. Every year, these costs grow because fraud continues to increase. This contributes to a premium spiral that can price essential insurance coverage beyond the reach of many consumers and businesses.
At a time when many consumers are still living on the edge of our economy, this is especially troubling because for most people, having a car is essential for getting to work. Not being able to afford insurance risks those people and everyone on the road with them. The increased cost of auto insurance also is felt by businesses in the state. They must pass the cost of rising insurance premiums onto their customers by raising prices for goods and services.
Almost every product and service we buy carries a hidden fraud tax, thanks to crimes like Mr. Haddad’s.
Another study found that insurance companies are more reluctant to introduce new products or enter into a new state or territory if they perceive the incidence of fraud is high. Consumers suffer from this too.
We should not forget the accident victims in this case, those whose medical records were compromised, those who were given powerful addictive drugs they didn’t need, and those who underwent sometimes painful medical procedures that were unnecessary. All because of the greed of a few professionals.
We saw in this case, example after example of people being approached by runners, a tactic prohibited by Connecticut law, yet done at the behest of Mr. Haddad. Those individuals then were coerced into obtaining treatments and medication for injuries they never sustained. And they then became a pawn in the fraud game played by Mr. Haddad and his associates.
Schemes like this one diminish the integrity of the legal and medical professions. The diminish the confidence people have that professionals work in the interest of their patients and clients — and not to line their own pockets.
In closing, let me say that even with all the resources the insurance industry and law enforcement dedicate to combating fraud, we will never be able to detect, investigate and prosecute all of the schemes like this one.
We must rely on deterrence to encourage professionals not to cross the line into committing fraud.
We must rely on the criminal justice system to administer swift and sure punishment that will send a clear message to others that society will not tolerate such unethical and criminal behavior — and if they do cross that line, they will pay the price.
Thank you for the opportunity to appear here today.
Source: Coalition news release