A federal judge whacked a Las Vegas-area chiro this week with an order to pay Allstate more than $1.2 million involving 78 bogus crash claims. The insurer’s RICO civil suit alleged that Rit Charette inflated medical reports, gave unneeded treatments, prepared fraudulent bills and made illegal referrals to other healthcare providers.
The recovery speaks to a larger and welcome trend of insurers taking down fraudsters with civil suits. Much of the action centers around networks of crooked no-fault doctors, chiros, attorneys and others. They stage car wrecks, or simply invent medical records of phantom passengers and crashes.
Sometimes crashes are real, involving real victims who are recruited unknowingly for shoddy treatment. Whatever the business model, the crime rings bombard insurers with lavish and false treatment claims.
Crash rings are soaking up billions of dollars in false injury claims a year. They’re hiking auto premiums for honest drivers.
Fed-up auto insurers are striking back with increasing force by lodging civil actions against brazen fraud rings in federal and state courts.
State Farm has sued the heavily promoted clinic network called “1-800-ASK GARY” accident-referral service in Florida. The insurer alleges the large outfit illegally referred crash victims only to medical providers controlled by owner Gary Kompthecras in Florida, Minnesota and Kentucky.
Farmers Insurance is going after more than 40 New York medical providers for an alleged illegal scheme involving unlicensed laypeople who made false claims for treating crash victims.
Geico sued the owners of an Orlando chiro practice in March. The insurer alleges that the practice stole $2.3 million from false claims involving real and staged crashes.
Other auto swindles feel the weight of civil suits. Allstate last week earned a judgement of more than $1.4 million against a firm that billed the insurer for false windshield repairs. Part of that money will also go to the State of California as a co-plaintiff in the case.
Insurers may or may not recoup their typically large investments in attorney fees, staff time and other expenses. Often these suits are financial break-even propositions, at best. Frequently the crooks have spent or laundered the money, or don’t have enough assets to pay off the judgements.
But forcing ringleaders into protracted suits with large-dollar judgments can disrupt rings and drain their finances — thus undermining or putting them out of business.
Civil suits also emit a loud signal to the public that a given insurer takes a no-nonsense approach to crime rings that are driving up premiums and endangering motorists.
Word also spreads in the criminal underworld that certain auto insurers are too dangerous to try and defraud. Some rings avoid insurers that are known to make trouble with civil actions.
Crash rings must come to fear the large prospects of courts gaveling them into ruin. For fraud rings, there’s nothing civil about civil suits.
About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.