101 Indicted in Calif. Insurance Fraud Sting

January 11, 2007

A two-year undercover sting operation by the Los Angeles County District Attorney’s office has resulted in 101 indictments, of which 88 have been arrested to date.

Following a tip from a confidential informant, an investigation was launched in September 2004 involving suspected attorneys and legal office employees who were allegedly selling accident insurance claim cases for referral fees and kickbacks from chiropractic clinics.

The informant allowed an undercover investigator to be planted in the informant’s chiropractic clinic. The investigator served as the office administrator. As part of the so-called “capping” scheme, employees from 12 San Gabriel Valley law offices allegedly referred clients to the chiropractor clinic and then filed fraudulent documentation and padded the bills sent to insurance companies. Settlements were then distributed by the law offices to the client, the law office and the chiropractic clinic. Prosecutors documented more than $500,000 in losses to insurance companies from just one chiropractic clinic.

Last week, prosecutors announced 13 Grand Jury indictments were returned naming 101 defendants charged with more than 200 counts of insurance fraud. To date, 88 defendants have been arrested. Four are out of the country and 11 are in other states. A total of 325 police officers from 10 agencies assisted in the arrests.

Of the 101 people indicted, 13 are office administrators who allegedly worked as “cappers,” two are attorneys and 86 are insurance claimants.

“These people not only sought to rob California insurers and consumers of their money, but in their dishonesty have struck at the trust we place in our medical and legal professionals every day,” said Insurance Commissioner Steve Poizner. “I’m happy to say that the conduct of those arrested is the exception, not the rule.”

The following is a list of companies that cooperated in the investigation:

* 21st Century
* Allstate American Express (Ameriprise)
* American Family
* Berkley Risk Administrator
* Carl Warren & Co. (Los Angeles County)
* CNA Commercial
* Coast National Commerce
* West Continental Western Group
* Danielson National
* Electric Everest National
* Farmers
* Gallagher Bassett
* Geico
* Hartford
* Horrace Mann
* Infinity
* Kemper Independent
* Los Angeles City
* Liberty Mutual Liberty
* Mutual Commercial
* Lincoln General
* Mercury MGA Insurance
* Mitsui-Sumitomo
* Ocean Harbor Casualty
* Permanent General
* Progressive
* Safeco
* Safeway Direct
* St. Paul Travelers
* State Farm
* Sterling Casualty
* The Robert Plan
* Unitrin Direct
* Unitrin Specialty
* Viking
* Wawanesa
* Western General
* Western United
* York Claims
* Zurich Empire

Source: CDI

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