Fraud of the Month - November 2009
Slip & Fall Cons Fall Hard
Gregory Flamer said he fell, hit his face and lost four front teeth outside of Agnes & Muriel’s Restaurant in Atlanta.
He tried to extort an insurance settlement from Travelers, the eatery’s insurer. But when Travelers dug into Flamer’s history, the insurer discovered he’d made four other claims against businesses for the same broken chompers. Though Flamer will spend only 100 days in county jail, he also must repay Travelers nearly $70,000 in claims and legal fees.
Diane Smith poured water onto the floor of McDade’s Grocery in Jackson, Miss., sat down and pretended she fell and hurt herself. She’d enlisted her daughter and granddaughter as “witnesses.” Prosecutors handed Smith three years of probation.
Bogus slip and fall injuries appear to be spreading during the sour economy. Perhaps financially drained and looking for an insurance bailout, some anxiety-driven consumers are trying to extort insurance payouts from businesses of varied sizes. The con artists calculate the victimized business will quietly pay off the injury claim to avoid a public lawsuit that could cost thousands of dollars in lost customers and damaged reputation.
Fall claims climbing
Questionable slip and falls claims rose 51 percent from the first half of 2009 over the first half of 2008, according to the National Insurance Crime Bureau. Erie Insurance reports an 18-percent spike in slip-and-fall claims from July through September 2009 over the same period in 2008. Slip and fall claims in general have risen 20 percent during the last two years, adds Russell Kendzior, chair of the National Floor Safety Institute.“The con artists calculate the victimized business will quietly pay off the injury claim to avoid a public lawsuit that could cost thousands of dollars in lost customers and damaged reputation.”
Phony slip and falls, however, have long plagued businesses even before the recession set in. Many recession-era claims may simply involve greed for its own sake, not desperate attempts to survive. Regardless, they are easy to set up: Simply toss a few grapes on the floor of the produce section of your local grocery story, lie down on the floor and scream bloody murder about your injured hip.
Some scams reach irrational extremes. Louis Stevens and Francis Fredette tried to burglarize a convenience store in Vermont. But Fredette fell off the roof and seriously injured his back. Stevens drove him 40 miles to Fredette’s apartment complex in Rutland and placed him at bottom of an outdoor staircase. Fredette sued the landlord and building owners, winning a $700,000 payout before both were convicted.
Some slip-and-fall swindles are organized criminal rings designed to manufacture large volumes of bogus claims. One suspected 33-person outfit operated in Illinois and Wisconsin, lodging at least 60 dirty claims with 16 insurers, Zurich in North America says. The suspected ring targeted big-box retailers, sometimes two or three times a day, Zurich says.
Suspected ring busted
Typically, one con artist spread liquid or paper on the floor while another pretended to slip and be injured. Other suspected ring members acted as lookouts, making sure no store manager witnessed the fake accidents. The lookouts then alerted store officials of the incidents. Claims then were filed under the medical payment portions of the retailers’ policies. Insurance checks of $4,000-$8,000 were mailed directly to the claimant ring members, Zurich says. The insurer says it busted the ring after noticing suspicious claims involving a large retail client.
Philadelphia lawyer H. Allen Litt staged more than 300 fake slip-and-fall accidents that illegally earned him at least $2.5 million in insurance money during a 25-year fraud binge. He employed recruiters who hired fake injury victims and scouted local businesses to target.
They sought grocery and drug stores and other firms that were large enough to have good insurance policies but too small to hire high-powered lawyers to fight the bogus injury claims. Litt’s troopers also avoided surveillance cameras, and wanted places with holes and cracks in sidewalks, and other obstacles. The so-called victims usually claimed soft-tissue injuries, then went for inflated treatment to about 10 doctors who allegedly were part of the suspected schemes. Litt received five to 10 years.
More businesses are placing surveillance cameras throughout their store interiors and outdoor areas. The constant roving eye of camera lenses make slip falls harder to pull off. Many smaller businesses, however, remain less-protected and thus are easier targets. Yet, their insurers are employing powerful technology, including predictive modeling, to detect potential scams.
Slip and falls may be a permanent threat to businesses, impossible to fully erase. Nor does anybody knows how many patently false claims are quietly paid off, thus emboldening scammers. But growing use of well-positioned surveillance cameras and refusal to pay off bogus claims are making slip and falls a more dangerous gambit. As some scammers are discovering, their slip cons are falling hard.
