New York Says Insurance Fraud Arrests Are Up

January 16, 2008

Investigations by New York’s insurance frauds bureau led to over 700 arrests last year, a 17 percent increase from 2006, according to an annual report released today by the state insurance department.

The bureau, established in 1981, received about 22,079 reports of suspected fraud last year – more than 60 a day – most of which were from agents. About 1,100 new investigations were opened in 2007.

Among the major cases:

• Twenty-six suspects were arrested as a result of a sting operation targeting car thieves on Long Island and in the New York Metropolitan Area, and 11 more are being sought. In addition, 92 vehicles with a Blue Book value of more than $1 million were recovered.
• The arrest and pending prosecution of a man who posed as a broker for Lloyd’s of London and sold more than $8 million in bogus insurance for bars and restaurants.
• A medical clinic operator and 30 other suspects in New York City and in the Buffalo-Niagara region were arrested for staging numerous accidents in Western New York. The drivers and several passengers in each car falsely claimed they were injured and sought medical treatment at clinics that were involved in the scheme. In some cases, the suspects who claimed injury were hundreds of miles away at the time of the alleged accidents.

In all, 147 people were directed to pay almost $20 million in court-ordered restitution, and individuals in six cases made voluntary restitution amounting to $31,723 during the year.

In another 10 instances, insurers saw savings of nearly $341,843 in connection with fraudulent claims under investigation by frauds bureau staff. Civil penalties totaling more than $550,000 were imposed in eight cases.

Beginning this year, the bureau has established a major case unit that will focus on the investigation of systemic insurance fraud involving organized conspiracies. The unit will be headed up by a deputy chief investigator and will include five investigators who were selected from the bureau’s specialized units

The new unit will take the lead in investigating complex insurance cases involving no-fault, commercial rate evasion, health care fraud and workers’ compensation premium fraud.

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