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New York Takes a Bite out of Car Insurance Fraud


The New York legal system and insurance providers won a huge victory with the recent arrest of 24 individuals who have been accused of fraudulent behavior. The investigation uncovered a widespread operation that had stolen millions of dollars through filing false or embellished claims under New York's No-Fault car insurance system.

Con Artists Took Advantage of No-Fault Insurance System

The no-fault system is meant to protect drivers from high medical expenses following a car accident. In essence, the insurance provides coverage to any injured party, regardless of who is ultimately found at fault for the accident. The con artists in this case took advantage of the clause in the no-fault system that allows people who have been injured in a car accident to sign over their benefits directly to a medical provider, who will then charge the insurance companies directly for any treatment or services rendered to the injured party.

Police Scanners Were Used to Find Accident Scenes

The organization allegedly used runners who tracked down car accidents so that they could lead victims to their fake clinics for treatment. The runners would scan police bands so that they would learn about accidents as early as possible. They also paid hospital employees to provide them with the personal information of accident victims who had been transported to the hospital. Runners would receive cash payment from the con artists who were running the corrupt clinics every time they delivered a new patient - or new patient information - to the clinic so that a new scam could be established.

Recruited Patients Instructed to Undergo Intensive Treatment

The patients who were recruited by the runners were usually led directly from the scene of the accident to one of these false-front clinics. If the patient's information were gathered from a local hospital, the fake clinic would contact that patient and instruct them to come to the clinic for treatment. In most cases, the patients had not sustained serious injuries in their car accidents. Regardless of the actual injury, the clinic would instruct the patient to report certain ailments so that the clinic could bill the insurance company for unnecessary treatments. Patients were promised cash payouts if they cooperated with the scheme.

Patient Information Forged in Some Cases

If a patient stopped reporting to the clinic for the scheduled treatment visits, the clinic would continue to bill the insurance company as if the patient were attending the sessions. Detectives assert that the clinics charged the insurance companies for medical supplies, equipment, and services that were never actually delivered to patients. In some cases, the patients were unable to repeat the injuries they were supposed to have sustained and needed to consult with the clinic to be reminded of what they were being treated for. The people operating the clinic would forge patient information if necessary to continue receiving insurance funds.

Some Accidents Staged

If there were no real accidents to draw clients from, the organization of scam artists would simply stage their own. These staged accidents involved actors who were in on the scam and expected to receive a payout once the insurance companies began to be billed. With the staged accidents, the group had more control over the patients who were filing claims for medical treatment, so they could gain more illicit funds because they could invent costlier injuries and treatments. The group merely needed an accident report in order to begin arranging for the insurance companies to pay out.

Clinics Not Staffed with Medical Personnel

Although the New York no-fault insurance system requires that insurance claims be filed through clinics that employ medical professionals, these groups were able to get away with using fake clinics as fronts for their operations. They would use the names of medical officials who worked in unrelated clinics so that they could prove their medical credentials to the insurance company. In reality, no one who staffed any of these fake clinics was a medical professional. Investigators report that the group used thinly veiled fronts in order to maintain a sense of propriety and resist causing suspicion with the insurance companies.

24 Accused of a Connection with the Crime

As of today, 22 people have been arrested for this fraudulent activity. One of the accused was already incarcerated due to an unrelated incident, and the remaining individual is currently being sought by the police and the FBI. Everyone from the runners to the fake doctors and billing agents has been collected and will be processed by the New York court system. The evidence that was collected in the case is staggering, and the Attorney General expects swift action on the case. New York hopes that this large arrest serves notice that they are taking insurance fraud seriously.

Millions of Dollars Stolen

The fraud scheme robbed millions of dollars from health insurance companies in New York, including Medicare and Medicaid. The crime essentially stole tax dollars from the pockets of everyone who pays taxes in the state and in the nation. Crimes like these tend to raise health insurance rates for everyone who is covered because the insurance company needs to make up for the money that has been lost through similar scams. New York's law enforcement agency has stated that it will diligently seek out cases of insurance fraud to protect everyday citizens from the steep financial burden that can be created through these kinds of crimes.

FBI and New York State Cooperating on Investigations

This case took several months to investigate, and involved agents from New York as well as the FBI. Since the fraud was perpetrated against federal health insurance agencies like Medicare, the case fell directly under FBI jurisdiction. In a collaborative effort, the two law enforcement entities were able to collect information on all 24 people who were directly involved in the scheme and arrest all but one of them. Several search warrants have been issued and accounts have been frozen in pursuit of the one remaining conspirator who has yet to be captured.