Protecting insurer rights to EUOs vital to fraud fight

Adverse decision in Kentucky could embolden crash rings Continue reading

A Kentucky lower court has thrown a wrench in the campaign to combat the growing scams involving PIP crashes in the Bluegrass State. The court agreed with two claimants in an auto crash. They’re suspected of fraud. Insurers have no right to compel them to attend an examination under oath (EUO), the lower court ruled.

The Coalition and NICB filed an amicus brief this week asking the Kentucky Supreme Court to overturn the decision and restore insurer rights to use EUOs.

EUOs are a powerful weapon to get at the truth. When summoned, many fraudsters don’t bother showing up —especially lower-level ring members. They feel the few dollars they’re making don’t offset the potential of getting caught.

EUOs are a deterrent as well. Knowing there’s a chance you might have to give details of a claim under oath helps keep people honest.

Take the EUO away, and more fraud rings likely will escape detection and feel emboldened to commit more fraud.

The Kentucky claimants contend insurers use EUOs to harass and intimidate honest claimants. We’ve found no evidence to support this contention. We determined that insurers use EUOs very infrequently, and only when necessary to discover truth about a claim.

In fact, EUOs can be an important tool to validate legitimate claims.

Sometime later this year, the Kentucky supreme court will announce its decision. Here’s hoping they support uncovering the truth about potentially fraudulent auto claims.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Pay me now or …

Police are responding less and less to minor auto accidents Continue reading

If you crash cars for a living in New Orleans, your life may be getting a bit easier.

Thanks to a bill in the state legislature, police in the Crescent City may no longer be required to respond to fender benders. If you’re involved in a minor accident, just head over to your local police station, give them the details, and they’ll  hand you an accident report you can use to file your insurance claim.

Crashers will no longer need to  stage a collision. Just report it. How convenient.

The bill aims to relieve the cash-strapped city so police can focus more on violent and more-serious crimes. Responding to some 14,000 minor accidents each year is a drain on city resources, according to news reports.

That argument is hard to argue with. And it’s one that more and more jurisdictions are grappling with as cities continue struggling with adequate funding for police.

The extra dollars residents likely will pay in auto premiums rarely gets discussed in these deliberations. It’s a hidden tax that’s better spent paying for more police.

So while fraud fighters likely won’t win this policy battle, they can try to minimize the losses by educating the public and beefing up anti-fraud training of claims reps.

Pay now or pay later. Either way, this legislation will cost taxpayers and consumers.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Taking the wind out of airbag scams

Salvaged junk airbags dished to drivers — N.Y. insurers alert consumers Continue reading

Trafficking in junk airbags earned a salvaged-car dealer an unwanted date with New York’s AG. And a brisk rebuke from insurers in the state.

The incident also makes you wonder … How many people are driving with unsafe and potentially death-dealing airbags tucked into their steering columns and passenger areas?

Don’s Automotive Mall illegally sold possibly hundreds of recycled airbags pulled from salvaged cars, the AG charges. Don’s denies all, yet agreed to test all salvaged airbags before selling them. A $12,500 fine drove home the point.

Those bags have filtered throughout the U.S. Nobody knows where they all went. Drivers and passengers could face injuries and death if the salvaged bags don’t deploy in a crash.

Luckless motorists have died in unrelated crashes when crooked body shops stole their airbags during repairs. Cheaters have filled airbag compartments with beer cans, sneakers, Styrofoam peanuts and other stuff. Great protection.

New York insurers rapidly responded to the AG’s agreement, launching a statewide news campaign.

“The flood of unsafe knockoff airbags places drivers and passengers at risk of severe injury during auto crashes. Tens of thousands of unsafe airbags are believed to be in circulation across the U.S. In fact, several injuries and deaths have been attributed to knockoff airbags,” the New York Alliance Against Insurance Fraud said.

Salvaged cars have been dunked in floodwaters, soaked by storms, reclaimed from crashes. An airbag module soaked by grimy floodwater and sludge, for instance, is a lousy bet to open in a collision.

The airbag could be a party balloon, for all the protection it gives.

A Chinese national was busted several years ago. His factory in China churned out knockoff bags cleverly disguised to look like real ones made by mainstream carmakers.

Dai Zhensong tried to flood the U.S. with hundreds of thousands of junky airbags. Some exploded like hand grenades and shot shrapnel into crash dummies when the feds tested them.

Like the bags from the Don’s salvage firm, nobody knows how many of Zhensong’s knockoffs are lurking inside vehicles. Fortunately, his scam was dismantled and he was handed three years in federal prison.

Frontline airbag specialists have privately told me they see junk airbags all the time.

The New York Alliance launches statewide outreach programs to educate consumers about insurance cons — and how people can defend against predators.

The group offers common-sense airbag advice:

  • Make sure your dashboard airbag light comes on for a few seconds when the car starts — especially if the car was repaired recently. If the light stays on, starts flashing or doesn’t flash on at all, the airbag system probably isn’t working;
  • After your car was serviced, check the body shop’s invoice to make sure the airbag came from a legitimate car manufacturer, dealer or recycler;
  • Deal only with a registered New York shop. It must have a green and white sign that says “Registered State of New York Motor Vehicle Repair Shop.” The shop also must have a valid Department of Motor Vehicles (DMV) registration certificate; and
  • When shopping for a used vehicle, get its history report from commercial services. If you discover the vehicle was in a major crash or flood, have a certified mechanic or airbag technician check it out before buying.

Wise words — whether you live in Rochester, Chicago, Walla Walla or Waco.

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

Let’s get creative with fraud sentences

Make Major League star speak out against insurance cons
Continue reading

Much of the public knows that former Major League Baseball star Ted Lilly recently was charged with insurance fraud.

He crunched his $200,000 RV in a collision, incurring $4,600 in damages.

Lilly was uninsured for the damage and quickly bought a policy. Then he lied to his insurer that the crash happened after the purchase so the damage would be covered.

Lilly played for several teams and reportedly earned $80 million-100 million dollars in his career. It’s incredulous that a wealthy and famous athlete would try to get away with this scam.

He could’ve spent several years in jail, yet reached a plea deal with the San Luis Obispo district attorney’s office that avoided hard time. Part of the deal included 250 hours of community service.

And that’s the rub. I found no news stories that described what kind of community service he’d perform. Does it include speaking to organizations and groups about insurance fraud and why it’s a dead-end street? I raised that question with the San Luis Obispo DAs office.

Community service was open-ended, the office said. So there’s no clear definition of what Lilly was supposed to perform.

I’m fine if he has to coach youth baseball teams. Those boys and girls would learn a lot from a former ballplayer of his caliber. And he also should speak to school or community groups about why insurance fraud is wrong and how it messed up his life.

Innovative sentences like this can have greater impact than jailtime in many cases. Having convicted fraudsters talk eye-to-eye about their crime goes farther than all the stats and anti-fraud quotes in news stories.

So let’s make fraudsters like Ted Lilly spend quality time working to make consumers — young and adult — four-square against this crime.

Thus we can turn Lilly’s regretful act into a positive. It can a springboard for a wider dialogue on creative sentences for insurance crimes.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

More states taking on vehicle rate evaders

Drivers falsely registering in states with lower premiums Continue reading

Dishonest drivers are ginning the auto-insurance system by illicitly registering their vehicles in states or counties with lower auto premiums. These cheaters may not drive or live there, but dishonestly setting up the address can save them a bundle on auto premiums.

This insurance scheme may cost honest consumers and the insurance system millions of dollars. And in some jurisdictions the drivers are committing insurance fraud.

Years ago the then-Philadelphia DA offered amnesty for dishonest drivers to step forward and properly register their vehicles in Philadelphia instead of their falsely claimed addresses in the Philly suburbs or southern New Jersey. A number of folks set their registration record straight — including an employee in the DA’s office.

More recently, North Carolina knew it had a problem with out-of-state drivers registering in the Tar Heel State. North Carolina now requires drivers to show proof of residence before they can register and insure their vehicle.

Several weeks ago the New Jersey Assembly passed a bill targeting drivers who lie about where they garage their vehicles. The state would gain more authority to go after these insurance cheaters if the bill becomes law.

New York has seen insurance investigators, consumer and community groups identify numerous suspicious vehicles parked in residential neighborhoods in Staten Island and Brooklyn. The vehicles oddly had license plates from Virginia, North Carolina, Pennsylvania and Iowa. Visiting friends or relatives don’t own these vehicles. They’re driven by New Yorkers who are cheating the insurance system.

An agent also may be helping New York drivers register vehicles in a state hundreds of miles away, confidential sources say. These drivers are cheating the system. They are raising the insurance risks and possibly auto premiums in the target state. They also are paying lower auto premiums without lowering the insurance risks in New York.

Neighborhood groups, anti-fraud groups and some legislators would like to make false vehicle registering a crime of insurance fraud in New York. A bill awaits action in Albany.

Most states have yet to make illegal registering a specific insurance crime. For the most part, we’ve also seen only sporadic enforcement. Still, more auto insurers and states are starting to realize that false vehicle registering can lead to other insurance crimes such as bogus vehicle injury or theft claims. Stopping rate evasion thus can help in the larger fraud fight.

States should step up and realize that rate evasion is an insurance fraud that needs targeting. It’s good for honest consumers and the insurance system.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.


Home-grown scammers causing plenty of trouble

Mobster’s reputed auto cons show America can create its own defrauders
Continue reading

“I live my life to cheat insurance companies — my high every day is to cheat insurance companies.”

That’s the motto of reputed Philly mobster Ronald Galati, say accomplices arrested in a widespread sweep yesterday. A grand jury in the city of Brotherly Love indicted 41 yesterday for allegedly staging auto crashes and faking damage to previously banged-up cars. Galati and his body shop collected millions from insurers in the scam, prosecutors say.

Investigators say Galati even had shop employees gather and store deer blood, hair and carcasses as props in photos later submitted with claims to insurers.

Participants in the long-running scam include body-shop employees, tow- truck operators, a city cop and two insurer adjusters — plus Galati’s wife, son and daughter.

Galati, an auto mechanic at American Collision, Inc., had strong mob ties and was out on bail for allegedly masterminding a triple murder-for-hire plot against men he believed had testified against him involving the insurance plot?

Much of organized crime involving insurance in America focuses on immigrant groups — Russians in New York City, Armenians in Los Angeles,  Dominicans and Cubans in Miami, and Nigerians and Somalians in Houston.

This case reminds us that we still have home-grown gangsters likely defrauding insurers and their policyholders in every major city. Our work in exposing their crimes must remain vigilant — wherever they hail from.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Protecting airbag protection

States debate making airbag scams a specific crime Continue reading

nullLast December at the Coalition’s annual membership meeting, a Tennessee federal prosecutor detailed how his office investigated and prosecuted a Chinese national who was manufacturing counterfeit airbags in China and selling them in the U.S. It was a shocking story how compromised auto-safety equipment was produced and distributed that could cause serious injury or death.

Since then, three states have picked up on this public-safety issue and moved on legislation setting criminal penalties for marketing and knowingly installing the phony airbags during vehicle repairs. Bills in Connecticut, New York and Ohio are nearly identical. They would send a clear message that knowingly using knockoff airbags will be met by the long arm of the law.

The Coalition has been concerned about airbag theft and fraud for several years. It’s an insurance swindle because insurers unknowingly pay full fare for low-dollar knockoffs installed at repair shops. But most important is the threat to people’s safety and lives.

Airbags are supposed to protect motorists from serious injuries or death. We have every right to expect airbags will indeed protect us. Counterfeit or non-functioning airbags place that expectation in jeopardy. In fact, motorists have died in crashes involving nonfunctioning or removed airbags.

We have worked to strengthen state laws protecting consumers. We worked closely with the National Conference of Insurance Legislators in crafting a model airbag theft and fraud law that is a comprehensive approach to the issue.

This latest trend in the marketing and installation of counterfeit airbags must be addressed. We applaud Connecticut, New York and Ohio for working to criminalize this life-threatening swindle, and are working to ensure bills will be enacted in the coming weeks.

The Coalition will work to see other states to join the bandwagon in this legislative session and the next one. It’s time to deflate airbag scams once and for all.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Towing & repair scams: Road to nowwhere

blogA 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.

Busting bus scams with onboard cameras

Lenses catch knuckleheads faking injuries after minor traffic bumps Continue reading


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.

It’s time to deflate deadly airbag schemes

Thousands of motorists may be driving with cheap knockoffs from China Continue reading

airbag_schemeMost 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.