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Recognizing Fraud and Fighting It in the Courtroom, Part II: Casualty, Automobile, and Jewelry

Tue, 13 May 2014
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Published in Articles

INTRODUCTION

The cost of fraudulent insurance claims in the United States is estimated to be $120 billion dollars per year. Fraud is responsible for 10 percent of the property/casualty industry’s sustained losses and loss adjustment expenses, according to Best’s Review. Even though the majority of fraud involves healthcare claims, a significant portion involves property and casualty claims submitted to private insurance companies. Claims representatives are on the front line of fighting the never ending war against insurance fraud. This three-part series discusses ways to recognize potentially fraudulent property and casualty claims and fight them in the courtroom. In Part I, we looked at the myths surrounding insurance claims and the signs that may indicate a potentially fraudulent property claim. In this issue, we look at the indicators of potentially fraudulent casualty claims and jewelry theft claims.

FRAUDULENT CASUALTY CLAIMS

Fraudulent casualty claims can be asserted in many different forms. They range from staged automobile accidents to fake slip and falls to exaggeration of legitimate injuries. In some major metropolitan areas (including some Texas cities), there are professional rings who are organized from the staging of the accident to the medical treatment to the repair of the vehicle and to the litigation of the claim. Fabricated slip and fall claims typically involve an individual, but can sometimes involve the property owner and possibly, medical providers.

STAGED AUTOMOBILE ACCIDENTS

Sometimes the staged accident actually involves a collision between two cars on a public street. Typically, it is done at a place and time when there is little vehicular traffic. The trick in an actual staged accident is to create lots of property damage but not really hurt the occupants.

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times, staged automobile accidents involve previously created property damage and the placing of the vehicle at a spot where an accident supposedly occurred. Indicators of fraudulent automobile accidents include the following:

  • Inconsistent physical characteristics, such as the lack of skid marks and the lack of collateral damage;
  • Relatives or associates that are in both vehicles;
  • Both vehicles being newly purchased;
  • Both vehicles being taken to the same body shop;
  • An empty gasoline tank in the car being hit from the rear;
  • Vehement admission by the driver of the offending vehicle that the accident was his/her fault;
  • Numerous previous accidents;
  • Recent issuance of a Social Security number and/or driver’s license; and
  • The claimant’s lawyer having previously represented any of the persons involved in the accident, including drivers and passengers.

The following are indicators of staged one-vehicle accidents:

  • The accident occurring at an isolated time and/or place (middle of the night on a country road);
  • A lack of physical evidence supporting the occurrence of the accident;
  • A lack of collateral damage;

SWOOP AND SQUAT ACCIDENTS

These occur when a professional incapacitates the brake lights and creates rear-end collisions by suddenly stopping in front of a late model vehicle. In order for this type of fraudulent claim to be discovered, quick action must be taken to inspect the claimants’ vehicle before the undamaged brake lights can be corrected. Unfortunately, the claimants usually have the vehicles quickly removed to a “friendly” body shop that quickly engages the brake lights.

Many times these types of claims can only be fought through establishing a pattern of the claimant being “victimized” by an inordinate number of rear-end collisions, wherein the same body shop is retained to repair the vehicle.

FRAUDULENT JEWELRY THEFTS

Fraudulent jewelry thefts are extremely difficult to establish. There is a ready market for jewelry and, unless it is extremely unique, it is unidentifiable after it is sold. In addition, jewelry worth large amounts of money can be stored/hidden in extremely small places. Therefore, it is extremely difficult to identify fraudulent jewelry claims. The following are examples of indicators that may suggest that a jewelry claim is fraudulent:

  • A lack of evidence of forced entry;
  • A complete absence of supporting documentation such as receipts, canceled checks, etc.;
  • Highly documented claims;
  • Suspicious receipts;
  • Suspicious photographs;
  • Long distance telephone calls made at the time when the theft supposedly occurred;
  • All cash purchases;
  • Previous theft losses involving the same jewelry;
  • Recent opening or access to a safe deposit box;
  • Observation of the policyholder wearing the jewelry after the reported theft (believe it or not, it happens); and
  • Recent divorce proceedings whereby the jewelry was awarded to the other spouse.

CONCLUSION

Given the right circumstances, insurance companies, in my view, ought to not only aggressively defend suits based upon fraudulent claims, but also assert counter-claims seeking recovery of attorney’s fees and expenses in defending against fraud. Juries can be made to understand the costs of fraud. They also understand that fraud results in higher premiums, which we all end up paying. Finally, Jurors do not appreciate our Courts being used to perpetuate dishonesty, lies and the intentional destruction of property.

 

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