Following a 2008 investigation of insurance fraud, Queens District Attorney Richard Brown reimbursed $505,000 to 16 insurance companies cheated in the scam.
The investigation, dubbed Operation Direct Hit, began when police officers discovered a peculiar pattern of accidents. Dating back to 2005, more than 40 car accidents were reported involving a car pulling out of a driveway or parking lot hit by another car. Despite suffering only minor damage, the occupants of the struck cars all received extensive medical treatment at the same medical clinic, Brown said.
Under New York’s no-fault insurance law, a person injured in a motor vehicle accident can receive up to $50,000 coverage for medical expenses. In most instances, insurance carriers directly reimburse the health providers for medical treatment.
In October 2008, the DA charged 61 individuals and two businesses for their role in this scam. Along with the criminal charges, a civil forfeiture action was filed against several defendants, which resulted in the repayments to several companies.
Companies reimbursed included Enterprise Rent-A-Car, GEICO, AIG, Progressive, Allstate, Lincoln General, Dollar Rent A Car, Nationwide, The Hartford, American Independent Insurance, Infinity Insurance, American Transit Insurance, Sentry Insurance, Esurance and New York Central Mutual.
“The defendants deliberately caused or staged more than 40 automobile accidents with unsuspecting drivers,” Brown said. “Although successful investigations such as this one has helped reduce no-fault insurance fraud in New York by about 25 percent since 2002, it continues to cost the industry about $14 billion a year in false claims nationwide. The consumer, in the last analysis, pays the bill because the cost of fraud is ultimately passed on to all of us by way of increased insurance premiums.”