A workshop on towing fraud at this week’s annual conference of the Pennsylvania Insurance Fraud Prevention Authority serves as a reminder that we all need to be vigilant to potential schemes that can cause big headaches and empty our wallets.

First the disclaimer — most tow-truck operators are decent, hardworking folks trying to make an honest dollar. So are the body shops that received damaged vehicles.

But scams are a big-dollar business [something missing here] for bandit towing firms — and the body shops. Violence can flare up over lucrative territory in Philadelphia, the workshop presenters noted. Shouting matches, fist fights and evens shots fired come with territorial disputes.

Dishonest towing firms pounce on vehicles at the crash scenes. They quickly show up at crash scenes and try to reassuringly sweet-talk often traumatized drivers into having their car towed to ZWZ body shop. The towing firm may be operating in cahoots with the body shop to make outrageously inflated repair and towing claims against you and your policy.

Bandit towing firms also grab parked cars and lug them away to a commercial storage yard somewhere. Some vehicles were illegally parked, and others perfectly legal.

Either way, the towing firm piles on dubious fees— parking lot fees, security fees, winching and towing, and so forth. A simple tow down the street can add up to hundreds of suspicious dollars. The unfortunate drivers may have to pay out of pocket just to get their car back, or the fee may be tacked onto their auto policy if it was in an insured crash.

A banged up car may be hauled to a body shop that pays a kickback for the repair business. The body shop may enhance the damage to illicitly tack on thousands of dollars in repairs charged to your auto policy.

A whack with a hammer or baseball bat can add a nice-sized dent to your insurance bill, and so can ramming a forklift into the bumper. Body shops might even have intimidating “escorts” to tail insurer damage estimators around the shop or yard to try and distract them from spotting other fake damage to vehicles. A body shop might also try to bribe drivers into going along with inflated damage claims.

Drivers do have options, the Coalition is alerting the public.

It’s hard to prevent your vehicle from being illegally towed while you’re innocently shopping somewhere. But get a police report on record, and know your local laws about towing. Dispute any fees that seem unwarranted.

Avoid towing firms that miraculously show up at the crash scene. Especially, turn down operators that try to pressure you into hauling your vehicle away.

See if you have roadside service through your carmaker or other service.

Get a detailed invoice and damage assessment before your vehicle is taken, and know exactly where your car is going. Also, avoid giving out too much insurance-policy information. Scammers could use that to make more illicit damage claims.

Be sure to get the towing firm’s name address and phone number before it takes your vehicle away.

And use your cell camera to photograph the damage, position of the vehicles and other information. This can refute an inflated damage claim by a crooked body shop.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

America is awash in surveillance cameras. They catch us speeding, jaywalking, robbing ATMs and drugstores. And committing insurance fraud.

This is especially true of some city bus and rail systems. Dishonest passengers use the slightest little traffic tap to try and soak the systems for thousands of dollars in nuisance claims for patently bogus injuries.

So many people have tried the fake-injury gambit on Philadelphia’s bus system that SEPTA has been forced to rig busses with up to 10 cameras per vehicle to catch wrongdoers. Rail cars also are bedecked with the all-seeing lenses. Transit systems in other cities have done likewise.

What’s the tradeoff between preserving passenger privacy, and detecting scams and increasing overall passenger safety?

Look at SEPTA’s experience, at least in fighting insurance scams that contribute to rising fares. At least 9,000 claims for injuries or property damage have been made against SEPTA since the beginning of 2010, and at least 5,000 have been settled in or out of court.

SEPTA also pays about $35 million in claims each year, and about 40 percent of claims are settled without going to court. Some percentage of claims and lawsuits are no doubt false.

Onboard cameras have uncovered varied faked injuries after minor accidents. Here are some recent doozies…

One video shows a woman passenger who didn’t even know the bus was in a low-impact bump. She then flopped down and faked an injury after she realized she had a potential money-maker.

Ronald Moore sprinted down the street to board a bus that was bumped in a minor accident. He climbed aboard and pretended to be injured, holding his back. He was convicted. Moore has nine aliases and convictions for drug, robbery and other offenses.

A motorist who lost control of his vehicle, sliced through two lanes of opposing traffic and hit a SEPTA bus. He claimed the bus went into oncoming traffic and struck his vehicle.

Another woman said a minor crash caused her to jerk and slam against a window, injuring her back. She handed SEPTA a $5,000 insurance claim.

Yet another said the accident caused whiplash, which triggered headaches and back pain. He claimed $6,000 for 39 medical treatments. But no passengers reported injuries at the scene and no emergency crews were called.

Video surveillance on a bus is almost comical. It allegedly shows two passengers talking throughout the ride. Then they continued talking normally after the mirror was clipped, officials say. The DA’s insurance-fraud unit busted them.

SEPTA says it expects all buses to have surveillance cameras this year.

Resolving privacy concerns about bus or train surveillance cameras is beyond the scope of this week’s blog. Let the privacy debates continue on. But in the meantime, city transit systems will be content to let cameras keep disrupting flagrant injury scammers, keeping busses safer, and saving  taxpayers and passengers millions of dollars a year.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

A South Florida woman received six years in jail on Friday for putting her five kids through several rounds of staged car crashes.

In phone calls from jail, Ana Ovando’s children pleaded desperately with her to stop involving them in various crimes and allow them to have a peaceful home where they wouldn’t have to worry about police officers knocking at the door. Sobbing at her sentencing, her kids said they loved their mother and asked that she be spared from prison.

Also this month, a Calif. father and daughter pleaded guilty to workers comp fraud. The daughter was not an innocent child, but had grown up to become complicit in her father’s schemes and mentality.

The societal damage brought on by these schemes and many other similar schemes is self-evident. But the greatest damage will be the repercussions in the lives of the children.

Growing up, I looked up to my parents with great admiration. I thought they knew everything about the world, and turned to them for advice along every step of my journey. They were my role models, and primary sources for learning how to navigate in society. They spoke using certain gestures, I speak using certain gestures. They explained to me why they had never tried drugs, so I’ve never tried drugs. They killed insects, I kill insects. Most people can mention attributes of parents that they emulate.

Ultimately, the ones who were most defrauded by these cons were the kids. They won’t have a mom at home for the next six years from a self-inflicted injustice. And they will have to piece their lives back together as they grow older and decide what kind of people they want to become. The capacity for good is inside all of us, but Ovando’s children are now starting with a painful disadvantage.

About the author: Jennifer Tchinnosian is communications specialist for the Coalition Against Insurance Fraud.

Most of us rarely think twice about the airbags tucked into the steering column and other crevasses of our cars and SUVs.

Bang into another car, and presto, the airbag inflates in a micro-second. Your life expectancy just increased.

But guess what. There’s no guarantee you have a working airbag. This blog will expand on an earlier blog on the topic. Remember our last visit to this seedy world:

Thousands of motorists may be driving with cheap knockoffs from China.
The feds tested several of the airbags. Some exploded , spewing metal shards and other shrapnel onto crash dummies. Others just didn’t work.

Those crash dummies could’ve been your kids in a real accident. As many as 250,000 or more drivers may have junky airbags right now, the feds say. A simple trip to the grocery store can be a life-and-death proposition if you’re in a crash.

People have died or been grievously injured in crashes after crooked body shops tampered with their airbags. There’s big profit in cheating you. A knockoff can cost about $50, but the body shop charges your auto-insurance policy hundreds of dollars for a new airbag.

Now comes the scary part: Dishonest mechanics insert junk into the airbag cavity. Old sneakers, beer cans, packing peanuts and other garbage have been found. Body shops also might insert useless knockoffs.

And now let’s look toward an entirely new danger posed by storms such as Sandy: Flood waters will ruin a lot of vehicles. How many will be reconditioned and resold to innocent consumers? The airbag modules may be in place, but they they’ve been ruined by the flood waters and minute debris particles.

The airbags may not have been professionally checked out, and may not work if you’re in a crash.

When these vehicles are cleaned up, much of this damage is not obvious with a basic inspection. And used-car sellers often ship reconditioned cars to other states for sale to unknowing consumers.

Many states require a flooded car to have that fact stamped on its title to warn buyers. Some states require it only when an insurer pays a total-loss claim. Deceitful wholesalers often take flooded cars to a state without any flood-labeling rule and obtain a new title. This is known as “title washing.” It leaves you dangerously vulnerable.

Airbag hoodwinks sit just inches away from you, or your spouse or kids. But these ruses are fiendishly hard to catch because the airbag is out of sight.

The swindlers don’t care if you live or die; they just want their blood money. But there’s a lot you can do help ensure your airbags are safe and life-saving.

Have a certified mechanic check the airbag of any used or reconditioned vehicle you’re considering buying. Visit a useful federal site, the National Motor Vehicle Title Information Service. Check the vehicle’s history via a commercial service. And visit the Coalition’s convenient alert for more ideas.

Your next drive should be safely in your car, not an ambulance.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Imagine you’re driving home after a pleasant dinner with friends one night. An oncoming vehicle veers and slams into your car. Glass flies and metal buckles in that terrifying split second, but your airbag doesn’t open.

I’ll let your imagination roam, and decide how badly injured you’ll be without this vital safety protection as the ambulance speeds your broken body to the emergency room.

But in the meantime, you might want to thank Dai Zhensong or others who traffic in cheap, knockoff airbags being installed in vehicles around the U.S. Also thank crooked body shops that knowingly install such rubbish (literally, but more on that in a minute).

The motive is cold profit. To be blunt…shady airbag traffickers don’t care if you live or die. They just want their blood money; whether you or your kids survive a horrific crash is your business.

Zhensong flooded the U.S. market with tens of thousands of counterfeit bags made at his plant in China. A suspected cohort named Igor Borodin allegedly sold 7,000 of the knockoffs. All told, some 250,000 bags could be out there, either installed or waiting to be installed, the feds say. Zhensong has 37 months in federal prison to rethink his career choice.

How big is airbag fraud nationally? That’s anybody’s guess; nobody keeps total stats.

And most body shops are honest, but some knowingly install worthless airbags after the valid original bags deploy during a crash. Buy a $50 knockoff from the internet or a shady street dealer, and charge the insurer several hundred dollars.

Body shops also shove beer cans, packing peanuts, old sneakers and other junk into the airbag compartment. Or they just leave the compartment empty.

Sometimes a body shop will even pull out an airbag that hasn’t deployed, then lie to the insurance adjuster that the bag had opened during the accident.

Used and salvaged vehicles are especially vulnerable to these scams, but so is your new car if it crashes. So let’s return to Zhensong. Alarmed carmakers have set up call centers that drivers like you can contact to see if your airbag is counterfeit.

Innocent drivers have died or been grievously injured without airbag protection. San Diego-area teenager Bobby Ellsworth died when the Dodge pickup truck in which he was riding crashed. A body shop had stuffed the airbag compartment with paper and glued it shut. Even the dashboard light was disabled so it wouldn’t flash a warning.

Nursing assistant Damaris Gatihi was driving along Interstate 5 in Seattle. Her Toyota Corolla was bumped from behind, then spun around and hit another vehicle head-on. Her airbag didn’t deploy; she died from massive bleeding in her heart. A body shop had cut out the airbags and glued the covers back on to make the bags look functional. A local TV investigation discovered numerous used cars for sale without airbags and phony compartment covers.

Laura Vega of Houston was badly injured and her mother killed when their car was hit head-on. Neither air bag worked. The passenger-side airbag had been previously deployed, then stuffed back in and the cover taped shut. There was no driver-side airbag at all.

Connie Van Slyke’s used minivan crashed. The Kansas City, Mo. woman was killed instantly, possibly after falling asleep at the wheel. Her neck was broken, relatives told reporters. Connie had bought the minivan used, just two weeks prior. The vehicle had been in an earlier crash and the airbags had deployed. Nobody reconnected the bags, and the dashboard warning light was removed. Connie was a single mother; she left behind three young sons.

Najma Ladhani was driving alone in her car outside of Vancouver, Canada. She swerved into an oncoming car. She was found dead, crushed over the steering wheel. A piece of foam filled the compartment instead of an airbag.

Ok, enough of these terrible deaths. Point made: Airbag cons are a nasty insurance ripoff, but a far worse threat to the lives of everyone in a vehicle.

You can turn the odds in your favor with by taking these life-saving steps:

• Check the dashboard airbag safety light. It should blink for a few seconds then turn off. If the light doesn’t come on or keeps blinking, you may have a faulty airbag;

• Have a certified mechanic you trust inspect the airbags of any used or salvaged vehicle you’re considering buying. Don’t try to take off the lid yourself; it might trigger an explosion;

• Use a commercial service to search the history of a used vehicle you’re considering buying. See if it has been in a crash or salvaged; and

• And once again, contact your carmaker call center and see if your airbag is bogus.

It’s time that every driver mobilizes to take the air out of airbag scams. This is one speed limit we should all break.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Last fall, local legislators in Hillsborough County, Fla., took a radical step and passed restrictions on medical clinics that treat auto-accident victims in that jurisdiction. Lawmakers and residents were growing tired of hearing that the Tampa area had become the new staged-crash capitol of the U.S.

The county had hoped the state would enact new restrictions to crack down on clinics. But when state legislative efforts failed, the county imposed its own crackdown. The new ordinance requires doctors affiliated with local clinics to be onsite at least three days a week. This prevents clinics from using no-show docs just to look legit.

Doctors who operate clinics also must be a signatory to the clinics’ bank accounts and insurance policies — another good measure that can trip up a sham clinics.

Many observers believe the new ordinance is an effective step to put shady clinics out of business.

But now comes word that county legislators are reworking the law in the face of a lawsuit by five clinics. The clinics say the new law unfairly punishes legitimate clinics with stringent, unnecessary regulations.

So legislators are meeting today to amend the law to try to appease legitimate clinics while retaining enough teeth to hurt the crooked ones. We wish them success.

Congratulations to the Lawrence, Mass. police department for winning a prestigious award from Harvard. The Lawrence Auto Fraud Task Force was cited as one of this year’s top 50 innovations in government. The task force is credited with breaking a community’s tolerance for staging car crashes to steal millions from insurance companies.

Lawrence Police Chief John Romero initiated the task force in 2003 after the death of a 65-year-old grandmother who died in a staged crash. To date, citizens of Lawrence have saved more than $15 million on car insurance premiums thanks to the program.

Congratulations also should go to the other agencies who make up the task force, including the Massachusetts Fraud Bureau and the state’s AG’s office.

The award is from The Ash Institute for Democratic Governance and Innovation at Harvard University’s John F. Kennedy School of Government.

Think insurance fraud is a victimless crime? Consider the case involving the son of Elsa Moure in Lawrence, Mass. As a six-year-old, this boy was placed in a car by his parents who then proceeded to intentionally crash the vehicle` for insurance money.

He was injured, but not severely. The real damage likely will be the emotional scars he’ll carry well into adulthood in trying to figure how supposedly loving parents could place his well being in jeopardy.

This is the sickening side of insurance fraud, a trend where scams become more daring and destructive. Moure’s not the first mother to use her kid as a crash-test dummy. Just yesterday, a Virginia woman who packed her car with her kids was convicted of being a serial crasher over a two-year period. She allegedly coached her kids on how to act injured when police arrived on the scene.

Staged crashers think that insurers are more likely to pay a claim if a child is injured. Or in the case of crooked surgeons, they think their claims will get by if they actually cut open a patient for a needless operation rather than just submit a phony bill.

Elsa Moure was sentenced yesterday to three-years’ probation and ordered to pay back the $60,000 she and the boy’s father stole in insurance money.

An argument can be made that she deserved prison. In my book, she forfeited her right to be a mother.

To all enterprising Texans looking to make $300 for ten minutes work, meet Carlos Campos, entrepreneur and operator of the
Texas Marketing Group. If you can talk an accident victim into talking with Carlos — and that conversation results in at least five treatments at a local client, then you get the 300 bucks.

Carlos is an aggressive, unapologetic marketeer of what he says is a much-needed service of helping innocent accident victims receive medical treatment. He gathers auto accident reports from the local police and uses that information for his telemarketers to contact and convince accidents victims to seek treatment.

He says he never pressures anyone he calls, and that maybe only one out of ten is receptive to the idea. And he’s adamant that he would never encourage anyone to commit insurance fraud, although he admits some of his competitors probably do.

From a phone conversation earlier today, I found Carlos to be a well-spoken and thoughtful person who seems like he genuinely wants to help people — while making a buck. He said he’s a former insurance adjuster and that there wouldn’t be a market for his business if insurers did their jobs better. He says insurance adjusters only role is to save insurers money and that leaves real victims without treatment.

Most of the people Carlos solicits (he prefers ‘markets to’) are low-income folks without health insurance or the means to see a doctor, he says. Some may not know their rights as accident victims. He feels the insurance system is leaving these people out in the cold.

While there’s a lot of room for healthy skepticism here, if low-income people are getting squeezed out of the system, then insurers might have a hard time getting the Texas legislature to enact pending legislation that would put Carlos and his competitors out of business.

Similar laws that prohibit solicitation and restrict access to accident reports appear to have cut down on fraudulent claims involving soft-tissue injuries. Let’s hope that they don’t also unwittingly restrict needed treatment for those who really need it. Insurers and policymakers need to make sure on both counts.

New research on the extent of automobile insurance fraud was released today by the Insurance Research Council. Shortly after, I received an analysis from insurance attorney Barry Zalma, whose views I don’t always share, but fully respect. His observations are usually insightful and sometimes provocative, and he doesn’t disappoint on this latest:

Readers will not be surprised by the most recent conclusion of the Insurance Research Council (IRC) that estimates that claim fraud and buildup added between $4.8 billion and $6.8 billion in excess payments to auto injury insurance claims closed with payment in 2007.

What is amazing about this report, and what should cause all shareholders in stock insurers and members of mutual insurers or interinsurance exchanges, is that those insurers identified more than 20,000 claims that involved fraud and yet made payment on each of those claims. Since one who commits fraud may not recover at all, regardless of how small the fraud, any more than a person can just be partially dead, those more than 20,000 claims were successful frauds identified by the insurer. At least the same amount of fraud – more likely tenfold more – were not discovered and were paid.

Insurers who identify fraud should not pay a cent to the perpetrator. That $4.8 to $6.8 billion was paid to people who committed fraud is a travesty and a mark of unprofessional claims handling.

The payments, described by the IRC to be “excess payments” amount to between 13 percent and 18 percent of total payments under the five main private passenger auto injury coverages.

The study showed that excess payments were greater in 2007 than in 2002. In 2002 IRC estimated excess payments at between $4.3 billion and $5.8 billion, or between 11 and 15 percent of total payments.

The percentage of claims that appeared to involve fraud, defined as specific material misrepresentation of the facts of a loss, increased from 9 percent of bodily injury (BI) claims closed with payment in 2002 to 11 percent of closed claims in 2007.

The most common type of claim abuse found by the IRC was described as “buildup,” that the IRC defined as the inflation of an otherwise legitimate claim, such as through unnecessary medical treatments or diagnostic procedures. Twenty percent of BI claims appeared to involve buildup in 2007, up from 18 percent in 2002. Apparent buildup was found in 14 percent of PIP claims, up from 12 percent in 2002.

The study also examined differences in claiming behavior between claims with apparent fraud or buildup and claims without apparent fraud or buildup. Claims with apparent fraud or buildup were more likely than other claims to involve sprain and strain injuries and periods of disability. In addition, the study found that claimants in apparent fraud and buildup claims were more likely than other claimants to receive treatment from physical therapists, chiropractors, and other alternative medical providers.

The study, Fraud and Buildup in Auto Injury Insurance Claims: 2008 Edition, is based on data from more than 42,000 auto injury claims closed with payment under the five principal private passenger coverages. Twenty-two insurers, representing 58 percent of the private passenger auto insurance market in the Unites Sates in 2006, participated in the study. The IRC closed claim study collected detailed data on injury, medical treatment, claimed losses and total payments, claim handling techniques, and attorney involvement. In addition, claim file reviewers were asked to indicate whether specific elements of fraud or buildup appeared in the claims.

Because the study involves only claims closed with payment, it likely understates the incidence of fraud and buildup in all claims filed whether without payment or with payment but not discovered as fraud.

Thanks, Barry. And thanks for the IRC for its continued work in producing useful research on insurance fraud.