Law Times

Law Times • January 10, 2011 FOCUS Police, prosecutors taking action, but new scams targeting innocent drivers Orchestrated car accidents on the rise BY JUDY VAN RHIJN For Law Times cident, most people assume that it is, in fact, unintentional. Recent investigations, how- W ever, have revealed that fraud- sters and organized crime rings are orchestrating accidents in order to claim lucrative no-fault benefi ts. Th is is one reason cited for last year's legislative changes to reduce benefi ts and increase penalties, but it remains to be seen if they'll be eff ective in stopping the most recent and alarming form of the scam that targets innocent drivers. John Norton, a lawyer at McCall Dawson Osterberg Handler LLP in London, Ont., believes auto accident frauds have blossomed in Ontario with Toronto being the main hot spot because of generous no-fault benefi ts available here compared to other jurisdictions. "People purposefully crash or don't really crash, then pretend to be injured," he says. "Recent changes to benefi ts might make Ontario less attractive, but even in reducing the benefi ts, we still have very generous benefi ts compared to the U.S." Rick Dubin, vice president of investigative services at the Insurance Bureau of Canada, says the chronology of the staged collisions is interesting. "At fi rst, they weren't actually hitting each other. Th ere would be two vehicles but no impact between them. Accident recon- struction disclosed this, so then they moved to actual striking. Th ey would replace some pan- els with damaged ones, load up the vehicles with individuals, and progress from insurer to insurer making claims." Investigators have been able to identify the practice by cross- referencing and social network- ing. "We check the names of the participants, the vehicles, the way they were hit, and the service suppliers," he says. One highly successful exam- ple of these tactics as well as the eff ectiveness of a team approach was Project 92, an unoffi cial joint task force involving two dedicated prosecutors and To- ronto police working with in- vestigators from the Insurance Bureau. "Th ree hundred charg- es were laid with 22 convictions so far," Dubin notes. "Th e key players are now proceeding to trial. Th ey have been charged with fraud and conspiracy and convicted of taking part in a criminal organization, which we haven't seen in the insurance in- dustry before. We've completed 20 fi les and identifi ed 40 more suspected cases." Unfortunately, the scam has now morphed into an even more worrisome set of circum- stances, which refl ects the abil- ity of organized crime groups to modify their approach when conditions change. "Th ey retool, hen the rubber hits the road in the form of an automobile ac- regroup, and strike again," Dubin warns. "Th ey are in- novative and creative." In the meantime, investi- gators identifi ed roughly 12 accidents during the summer involving innocent drivers. "Where it is someone's fi fth accident in fi ve years with someone else who's had fi ve accidents in fi ve years or the parties know each other, it looks suspicious, so they go out and fi nd an innocent par- ty," Norton says. "Th ere are various scenarios. Someone might slam on the brakes, and the person behind rear- ends them. With an innocent person involved, it is much more diffi cult for investiga- tors to fi gure out." In many scenarios, the innocent victims were making a left turn, Dubin notes. "Someone gets in the way and then waves them on. Th en another car comes and crashes into them. One driver reported that he felt like a deer in the headlights treatments. "Either the forms were signed in blank or clients were charging for services never rendered. Ownership of many rehabil- itation fi rms is not by medi- cal practitioners." Norton believes fraudsters 'As a result of Project 92, we have started to see some serious jail time that could act as a deterrent,' says Rick Dubin. Th ey are tying up emergency ser- vices that are needed elsewhere for legitimate reasons." Another worrisome aspect is that the scams require the in- volvement of medical special- are going to legitimate doc- tors to treat injuries that are hard to assess. "Something like chronic pain or whiplash — doctors aren't sure. It doesn't show up on an X-ray, so it's easy to complain of persistent pain. An innocent doctor might give a disability certifi - cate, which gives them access to benefi ts and allows them to say, 'I have to take time off work.' Equally, a lawyer might innocently assist a cli- ent who comes in with a neck brace, a doctor's certifi cate, and a police report." Norton notes there are also sophisticated scams in which the fraudster has invent- ed a story about a job. "Th ey produce documentation that says they worked for a year Sometimes, doctors say people are injured when they weren't or provide billing for treatment that's not happening. because the other vehicle sped up to run into him. In cases like that, we can be confi dent it's an intended collision." Investigators are alarmed by this recent trend. "It's a safety and security issue," Dubin says. "Th ere's a high probability some- one will get seriously injured. Also, the fraudsters who make out they are injured at the scene have been calling ambulances. ists. "Th e scheme becomes elab- orate when a criminal member of some treatment profession is willing to participate," says Norton. "Sometimes, doctors say people are injured when they weren't or provide billing for treatment that's not hap- pening." Dubin, in fact, has seen cases in which people were sent for phantom rehabilitation and earned a certain amount of money. Th ere may even be a so-called employer. It's very diffi cult for insurers. Th e sys- tem is based on a certain level of trust that most people meet. Th e system is not designed to address that level of fraud." Of course, the money at stake can be quite lucra- tive. "At any given time, we have 30 projects on the go at diff erent stages, many involving organized rings," says Dubin. "Th e expense to insurers so far is $10 million. Another 50 staged accidents will take it to $25 million." But while Dubin hopes the recent reforms will have an eff ect on dealing with the problem, he's not yet convinced they will. "Some insurers have reported a decrease in volume in suspect- ed staged auto collisions, but it's possible that they're not yet identifying the activity. In lots of cases, you need a series of simi- lar collisions before you can start identifying a linkage between ve- hicles and participants." In the meantime, the Insur- ance Bureau has recommended that the Ontario government set up a permanent task force involving its investigators, po- lice, and dedicated prosecu- tors. Th is has already proven to be highly successful in New Jersey and Massachusetts where staged collisions involv- ing innocent drivers have been common. In Massachusetts, a grandmother was killed in an orchestrated collision. "Th e problems we ran into in Ontario were, fi rstly, get- ting law enforcement to follow through because of resource issues," says Dubin. "Second- ly, it got shuffl ed from pros- ecutor to prosecutor and then was thrown out for unreason- able delay, or the prosecutors would plea them out to a lesser charge. Very few received jail sentences. As a result of Project 92, we have started to see some serious jail time that could act as a deterrent." 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