FBI Targets Rings Staging Car Accidents

In a continuing crackdown on medical fraud in California, a major target will be lawyers, chiropractors and others involved in staging car accidents to swindle insurance companies, FBI officials say.

Working with state insurance officials, agents say, they have identified 400 lawyers and chiropractors in Southern California who are involved in that type of fraudulent activity, and at least twice as many statewide.

Nationally, one in three car wrecks results in an insurance claim, officials say. In California, that rises to two out of three. In Los Angeles, it is about 90%.

FBI Agent Daniel Martino, head of health-care fraud investigations in the Los Angeles area, said dozens of arrests have been made and more are expected.

“I wouldn’t call it an epidemic,” Martino said, “but there is an unbelievably large cadre of lawyers and chiropractors running these operations.”

Auto fraud rings typically include a lawyer, a chiropractor and a recruiter, or “capper,” who enlists others who serve as drivers and passengers or allow use of their cars, Martino said.

One common staged accident is known as a “swoop and squat.” One driver suddenly swerves in front of an unsuspecting motorist and hits the brakes. A second car blocks any side movement by the innocent party, forcing a collision.

During the past two years, as part of a broader crackdown on health-care fraud in California, the FBI and state insurance officials established operations in San Diego and Los Angeles to investigate auto accident fraud rings.

The San Diego operation, dubbed Twisted Metal, resulted in 51 convictions. Those convicted of various fraud charges included five chiropractors and seven lawyers and law office administrators.

During the same time, the FBI launched a second operation, Bad Faith, that used tax laws to go after lawyers, chiropractors and other ring members for failing to report as income the kickbacks they received.

That operation, Martino said, has led to 27 more fraud and income tax convictions, including seven chiropractors, seven lawyers, 11 law office administrators and two medical office managers.

The California Department of Insurance has worked with the FBI on its investigations over the last two years, and officials there agree that auto accident fraud should remain a top priority.

Dick Ross, deputy commissioner of criminal investigations for the department, said state and federal officials focus on staged accidents because they can lead to injury and even death.

In 1997, an Orange County couple and their 2-year-old daughter were killed in a staged accident on the Long Beach Freeway. Members of an auto accident ring later were sentenced to 11 years in prison on manslaughter charges in that crime.

“That accident demonstrated that this particular kind of fraud deserves special attention,” Ross said.

He said it is difficult to measure the amount that insurance companies pay in fraudulent claims--and ultimately pass on to consumers. “It’s obviously a huge amount of money. Has to be in the millions,” he said.

He would be guessing, Ross added, if he tried to estimate how many people on any given day are cruising the state’s highways, deliberately trying to cause a traffic accident so that they can swindle an insurance company.

“There are groups of people out there doing this,” he said. “It’s like shooting fish in a barrel for them, finding places to stage accidents. Innocent people get hurt.”