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Family Weekly May is, mt
Phony Accidents
Are
Costing You!
Has your auto insurance gone up? Put
much of the blame on the cheats who fake
collisions and "honest" citizens who kite damages from real ones
ON A highway near Fredericktown,
Mo., a young driver whipped in
front of a big semitrailer and slammed
on his brakes.
The truck smashed the old car as if it were a
bowling pin, flipping it into the ditch. Moments
later, as a highway patrolman lifted the driver,
his wife, and their nephew from the wreckage,
they complained with practiced anguish of pa
ralysis and terrible pain. This was nothing new
to them; they had deliberately caused at least 23
similar accidents in nine states.
In New York City, a respected businessman
drove his slightly damaged auto into a garage
and ordered "the works." Drawing from a reser
voir of shattered windows, smashed fenders,
dented doors, and other damaged parts hidden
on the garage roof, a repairman converted the
car into a total wreck before a claims adjuster
arrived. The owner not only "escaped" the $100
deductible clause in his collision policy, but had
enough profit left after splitting with the garage
man to cover a bill for his wife's prenatal care.
Near Wewoka, Okla., a salesman whose car
windshield had been cracked for months cruised
back and forth past a construction site until he
was passed by a loaded gravel truck. He flagged
the driver, yelled that falling gravel had broken
his windshield, indignantly demanded the name
of the trucker's insurance company, and collected
enough money for the 37th time to meet the
monthly payment on his car.
In each of these cases, sharp detective work
exposed the principals as operators in today's
fastest-growing racket: automobile-insurance
mulcting. They are just a few of the legions of
citizens many of them respected and otherwise
honest who are faking injuries, "puffing" repair
claims, and rigging accidents in order to siphon
the multibillion-dollar pool of insurance funds.
For every chiseler exposed and convicted, author
ities say hundreds of others are in business with
at least temporary impunity. Their vicious
schemes, in the words of one attorney, "have
reached the point of a national scandal."
According to Robert Chapman, manager of
the Chicago claims bureau of the Association of
Casualty and Surety Companies, spurious auto
claims have mounted at the rate of 10 percent
every year for the last decade. Some experts
charge that three out of every four auto claims
now are "tainted with fraud." This unprece
dented chicanery already is bilking the insurance
industry of an estimated $350-420 millions yearly
with the total expected to climb.
And if you buy car insurance, the appalling
loss is landing squarely in your pocketbook.
William Davis of the National Automobile
Theft Bureau, one of the agencies tracking down
insurance cheats, explains: "Whenever a person
defrauds an insurance company, he imposes a
direct tax on the reputable buyer of insurance.
The dishonest claimant who gets paid is largely
responsible for boosting insurance costs."
In about half our states last year, auto insurers
won state approval to hike rates. More raises are
expected this year. Increases reflect poor accident
rates, inflation, high jury awards, and a host of
other factors in addition to fraud. Yet, according
to numerous authorities we consulted, your auto
insurance costs probably could be decreased by
20-50 percent if every claimant were honest!
Inflated costs, however, are not the only
threat to you from accident fakers. Many use
ordinary citizens as pawns; you may not only
help them dupe an insurance company but suffer
painful injury and sustain extensive damage to
your car as well.
Hundreds of innocent motorists recently dis
covered how they had been victimized after au
thorities smashed a network of Chicago-based
fraud rings whose tentacles reached into Buffalo,
Toledo, Indianapolis, Milwaukee, St Paul, Des
Moines, Oklahoma City, San Diego, and other
communities. The rings' usual modus operandi
By CHARLES and
was for four or more conspirators to pull their
car ahead of an unwary driver who tended to
follow closely or who had been drinking, then to
slam to a stop so suddenly that the victim's car
crashed into them.
Feigning "invisible" neck and back injuries,
they would collect insurance settlements ranging
from a few hundred to several thousand dollars.
Investigators estimate the rings fleeced the insurance-buying
public of nearly $1 million and
inflicted untold injury and damage on victims.
Another popular gimmick is for pedestrian
fakers to walk into the Bide of moving cars or fall
behind trucks that are backing out of loading
zones. On the basis of injuries self-inflicted with
razor blades or cheese graters, the "victims"
collect for being "knocked down."
Personal injuries are the true "bonanza" in
insurance racketeering. The increasing proclivity
of juries to award huge sums for personal in
juries sometimes far out of line with what the
facts warrant has made insurance companies
reluctant to go to court. "They now manage to
avoid litigation nine times out of 10 by reaching
compromise settlements with claimants," says
Thomas Reynolds, general manager of the Illinois
Insurance Information Service.
Accident fakers thrive on this willingness to
settle quickly, usually punctuating injury com
BONNIE REMSBERG
plaints with threats to sue. And according to the
Insurance Information Institute, they undoubt
edly are greatly to blame for the fact that under
writers have gone in the red on bodily-injury
liability policies every year but two since 1951.
Some persons will go to frightening extremes
to collect bodily-injury claims. In Missouri, a
ring once operated in which accomplices ampu
tated arms, inflicted beatings with rubber hoses,
and mutilated each other with razors. Most
claimants, however, prefer to fake injuries or
accidents or even operate entirely on paper.
FOR EXAMPLE, a city councilman and aspirant
for mayor, who also happened to be an in
surance adjuster, set up one lucrative system in
Youngstown, Ohio.
Using aliases, he wrote policies for fictitious
persons, then drafted injury claims against them
on the basis of fabricated accidents. Settlements
were mailed to various bank accounts he main
tained under the assumed names. Before long he
had five secretaries to handle the bookkeeping.
His biggest phantom crash was worth $60,000
and allegedly involved four cars carrying nine
passengers; lesser ones totaled some $200,000.
Like a multitude of other claims swindlers, this
man had the help of an unscrupulous doctor. Such
physicians, often working closely with unethical
lawyers, are usually essential in attesting to
trumped-up injuries and submitting wildly ex
aggerated bills to inflate settlements.
An investigation of fraud rings in the New
York area, which so far has resulted in license
revocations for more than a dozen doctors and
disbarment of about 30 attorneys, is revealing
numerous instances in which $10 doctor visits
have been magnified to $500 fees.
The fake doctor also is invaluable to the type
of chiseler who actually troubles insurance com
panies more than the professional faker. This is
the ordinary guy your neighbor, perhaps who
wouldn't filch from his son's piggybank but who
tries to turn a legitimate accident into a key to
Fort Knox.
Such attempts are almost as common as acci
dents themselves, insurance men say. "Otherwise
honest people seem to don a new ethical shirt
when they deal with an insurance company," ex
plains one claims investigator. "They feel an
insurance corporation is open game if they can
cheat without getting caught."
Perhaps A driver has his first collision in 20
years and by some quirk of logic he reasons
that the insurance company owes him something
for all the time he was accident-free. Or maybe
he's an accident repeater, tired of shelling out the
$100 deductible. With the help of a cooperative
doctor and a garage owner, he pads his medical
and repair bills, and his misfortune becomes a
thing of profit.
Such a man, of course, rarely classes himself
with professional looters but he should, and so
should you. While individually his exaggerated
claim may be a mere drop in the fraud bucket,
ipsurance authorities say that when the pattern
is multiplied by the number of times it occurs,
the deceit of "honest" persons actually looms
more extensive than that of outright swindlers 1
Fully aware of the growing fraud bite, in
surance companies are not standing by idly.
Many are beefing up investigative staffs, examin
ing all claims more closely, and urging changes in
judicial procedure designed to expose exagger
ated personal injuries.
The claims bureau of the Association of Cas
ualty and Surety Companies maintains an in
creasingly successful snare for false-claims art
ists an index which classifies and permanently
catalogs every personal-injury claim reported.
This index puts agents on the trail of claimants
whose accidents or frequency of claims hints of
fraud. The system is designed so that a faker of
ten finds it impossible to escape detection even by
using aliases and moving from city to city.
Can you help the bureau and other investiga
tive agencies stamp out the fraud racket? Yes,
authorities say.
First, you can be honest in your own claims,
realizing that in the long run you'll pay for '
deceit through higher insurance costs. Also, you
can report anyone you know who is chiseling or
anyone who offers you dubious deals. And finally,
if you are involved in an accident that seems
rigged or in which the other parties seem overly
anxious for a quick settlement, you can insist
that your insurance company delay any claims
payment, pending a thorough investigation.
Such insistence may keep you from becoming
the next victim of these modern highway robbers.
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Family Weekly, May I, 1961
family Weekly, May 13, 1W2
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