New York Car Accident

Department And Suffolk District Attorney’s Office Announce 85 Indictments In No-Fault Insurance Fraud Scheme

Superintendent of Insurance Gregory V. Serio, along with Suffolk County District Attorney Thomas Spota and National Insurance Crime Bureau CEO Robert Bryant today at a press conference in Suffolk, announced the indictments of 85 physicians, psychologist, chiropractors, attorneys, medical clinic owners and others in the first stage of what may be the largest no-fault insurance fraud scheme ever prosecuted in New York State.

"With 85 indictments and up to 500 additional unsealed indictments - the shear magnitude of this insurance ring should shock the conscience of every honest New Yorker, because it proves that many believe that insurance fraud is an easy way to make money. The Department and Suffolk District Attorney’s office created the Insurance Crime Unit (ICU) so fraudsters don’t continue to pickpocket honest New Yorkers where it is estimated that fraud costs hundreds of dollars for every household," said Superintendent Serio. "This case started out as one investigation of suspected fraud. Because investigators from the Department, Suffolk DA’s office, State Police and the Attorney General’s office work from one central location, we were able to cross-check files to expose this intricate scheme, find these criminals and bring them down. Fraudsters beware – we are on your trail, and will find you and arrest you."

It is estimated that fraudulent no-fault insurance claims resulting from staged accidents amount to tens of millions of dollars a year in New York State, and hundreds of millions of dollars nationwide. Based on the evidence reviewed to date, the loss in this case is in the millions of dollars.

"What every New Yorker needs to know is that insurance fraud being perpetrated by individuals like these is not a victimless crime – every honest premium-paying New Yorker pays for no-fault insurance fraud when they pay their auto insurance bill," added Serio. "In fact, it is estimated that up to $177 of your auto insurance bill is due to insurance fraud. This deplorable fact is why the Governor has made fighting no-fault insurance fraud a priority and along with the Department urges tougher laws for the crime of insurance fraud and for the criminals who commit this fraud."

The additional indictments handed up by a Suffolk County grand jury are still to be unsealed. The evidence points to the operation of a complex, highly disciplined staged collision ring whose members intentionally caused car accidents to spawn phony no-fault insurance claims.

According to investigators, much of the crime uncovered in the initial stage of the problem involves insurance fraud by immigrant Russian ring members in Brooklyn. The ring members staged motor vehicle collisions in Suffolk, Nassau, Queens and Kings counties. Physicians and other trained medical professionals who are Russian émigrés have also been indicted.

The alleged scheme is described as follows: owners and managers of medical clinics pay "runners," or recruiters, arrange automobile accidents and send individuals supposedly injured in the accidents to clinics for treatment. The runners recruit drivers to cause the accident and passengers to ride in the cars. Usually, multiple passengers are recruited to maximize the profit per accident. After the drivers pick up the passengers, potentially vulnerable drivers are targetted. The caused accidents involve cars occupied by innocent victims that are hit by defendants participating in the scheme, in addition to accidents involving cars owned or insured by members of the ring hitting each other.

Although the accidents are intended to cause no real injury to the defendant drivers or passenger, they are reported to the police so that a record is created to support the fraudulent insurance claims. The runners then direct the defendant passengers to clinics for bogus medical treatment. The clinics submit claims under the insurance policy of the runner or another ring member who had insured the car. The medical bills, can go as high as $50,000 per passenger under New York law. The medical service for which the ring members seek payment from insurers is not necessary, and many such services are not actually provided at all. In addition, the claims for insurance are routinely inflated. Typically, the defendant passenger falsely claims multiple injuries to various parts of their bodies in order to maximize the fraudulent claims. In addition, the defendant passenger often files fraudulent lawsuits against insurance companies alleging bodily injury.

"Beyond the monetary cost, insurance fraud can ‘cost’ New Yorkers in other ways: employees lose jobs, honest businesses lose money, consumer goods cost more, and in the fraud ring described today, innocent people could have been injured or killed as a result of these staged auto accidents," stated Serio. "Insurance fraud is a very serious, dangerous crime and consumer are advised to become educated about insurance fraud schemes to best protect themselves from falling victim."

The charges are the result of an eight-month Insurance Crime Unit investigation into no-fault insurance fraud. The Suffolk DA’s Insurance Crimes Unit is made up of detectives and prosecutors, Insurance Department Frauds investigators, private detectives with the National Insurance Crime Bureau, fraud investigators assigned to the District Attorney’s ICU from the State Attorney General’s office, officers from the Suffolk County Police vehicle theft section and New York State Police Troopers.

The Suffolk County Special grand jury has considered evidence and testimony in the probe for eight months. The indictments unsealed in Suffolk County Court in Riverhead include felony charges of third and fourth degree insurance fraud, grand larceny, and falsifying business records.

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