101 charged after insurance sting

Los Angeles County Dist. Atty. Steve Cooley said Wednesday that a sting operation by his office had turned up an auto insurance scam resulting in criminal charges against 101 defendants.

Calling Los Angeles the auto insurance “fraud capital of the world,” Cooley told reporters at his downtown office that his investigators and other law enforcement officials spent two years uncovering a scheme by San Gabriel Valley law offices and medical clinics to overbill insurance companies by exaggerating or fabricating injuries to people involved in auto accidents.

Cooley said his office was told of the alleged scam by someone who worked in a chiropractic office. That person arranged for an undercover district attorney’s investigator to work in the clinic to observe the alleged crimes.

Insurance companies were cheated out of $500,000, Cooley said. Two of the people charged are lawyers, 13 are law or medical office administrators and 86 are insurance claimants.

California Insurance Commissioner Steve Poizner said insurance fraud of all kinds totals $15 billion annually in California. Neither he nor Cooley could say how much of that total reflects auto insurance scams like the one allegedly uncovered by the sting operation.

Acknowledging the relatively small total dollar amount of the alleged fraud found, prosecutors and Poizner said the arrests were intended to deter others from considering such fraud.

“We view this as a major investment. Unscrupulous operators have to fear they may be talking to an undercover officer,” head Deputy Dist. Atty. Steven Sowders said.

Poizner said many people think cheating a deep-pocketed insurance company is not a crime. The sting shows that “we are not going to put up with it; it costs people money,” he said.

peter.hong@latimes.com