A.W.A.R.E: Alert, Warn, and Report Exposure
Automobile Accident Fraud
Chrissy Novak, Strategic Analyst
Strategic and Tactical Information Department (STI)
National Insurance Crime Bureau
Automobile Accident Fraud
Automobile accident fraud is one of the most widespread and lucrative fraud schemes in
the United States. Each year, the National Insurance Crime Bureau (NICB) receives
more than 60,000 questionable claims-half of which are associated with automobile
accidents. The effects of this fraud are significant for both property/casualty insurance
companies and consumers nationwide. Using data from the Insurance Research
Council’s (IRC) 2004 Study of Fraud and Buildup in Auto Injury Insurance Claims, it is
estimated that 24% of auto injury claims contain fraud or buildup, adding approximately
$4.5 billion annually to auto injury settlements.
While all consumers are affected by automobile accident schemes through higher
premiums, the consequences are even greater for those who are victims of fraudulent
accidents. Their insurance records are affected and can lead to the cancellation of their
policies. Aside from the economic losses, victims may spend countless hours dealing
with their insurance companies, body shops, auto repairs, the police, lawyers, and
Unfortunately, for Alice Ross, 71, of Queens, NY, the consequences were much graver.
Ross was on her way to visit her daughter in Floral Park, NY, in March of 2003 when her
1985 Buick was intentionally struck from behind by another vehicle carrying three men.
The impact forced her off the road and into a tree killing her. Ross was the victim of a
caused accident gone awry. The three men had planned the accident and on that day
they were driving around looking for an unsuspecting motorist. After the accident
occurred, the three men were taken to a medical center where they feigned an
assortment of neck, back, and other injuries in order to collect on phony injury claims.
Two of the men later admitted they were recruited by the third man to participate in the
accident that ultimately killed Alice Ross. Ward Demoliere of Brooklyn, NY was charged
with 2nd degree manslaughter, criminally negligent homicide, and fraud. Jean Carobert
of Hollis, NY was charged with forgery in the 2nd degree, criminal possession of a forged
instrument in the 2nd degree, and hindering prosecution in the 2nd degree.
In an ominous trend, automobile accident schemes are becoming more violent.
Improved efforts by law enforcement to detect them and increased competition among
participants are creating more aggression among cappers (key individuals of organized
accident rings) to secure business. For example, New York has experienced territorial
disputes between rival rings, a number of homicides of cappers, and shootings in
medical clinics by cappers seeking payment.
Automobile accident fraud generally occurs in large metropolitan areas, especially in
states with no-fault laws, such as Florida, New Jersey, and New York. In no-fault states,
parties involved in accidents submit property damage and bodily injury claims to their
own insurance companies, regardless of fault. Consequently, no-fault states have the
highest incident of automobile accident fraud problems.
An NICB major case called “Exchange” involves a large-scale staged accident ring that
commits medical insurance fraud in the Los Angeles, CA area. The case started when a
member company noted a pattern of activity among the claims it received from
participants of the group. The extent of the ring was uncovered in May of 1999 when a
capper admitted his involvement in the ring to an NICB agent. The ring was operated by
members of an organized criminal enterprise.
“Exchange” cappers recruited individuals to participate in staged accidents. They were
then directed to attorneys and medical providers, who submitted fraudulent medical
claims to insurance companies. The group operated in a number of states including:
Arizona, California, Colorado, Florida, Louisiana, Maryland, Nevada, North Dakota,
Ohio, Oregon, Pennsylvania, Texas, and Washington. It is estimated that fraudulent
claims submitted in this ring exceed $35 million.
NICB’s Strategic and Tactical Information (STI) Department researched and produced
this report as a benefit for NICB member companies. It examines the extent of
automobile accident fraud and its financial impact, the common schemes used and the
participants involved, and provides member companies with useful tips for fighting back.
Automobile Accident Schemes
Automobile accident schemes are varied and are only limited by the imaginations of the
individuals involved in them. The NICB has identified three general types of automobile
accident schemes affecting the insurance industry:
A staged accident is orchestrated among the participants involved in the accident. All of
the involved parties are willing participants in the act.
A paper accident is an accident that never happened. The “accident” only exists within
the claim file. The perpetrator falsifies the circumstances to get paid for pre-existing
damage to the vehicle. Paper accidents include hit and runs, which occur when a
perpetrator uses a damaged vehicle, drives it to a public location, and claims to be the
victim of a hit and run. The police are often called to verify the vehicle damage.
A caused accident is different from a staged accident in that the innocent insured is an
unwitting victim to the fraudulent activity, as was Alice Ross in her unfortunate case. A
caused accident tends to occur on surface streets1 or in slow moving traffic because the
perpetrator does not want to suffer actual injury. Most often, it takes place in an upscale
neighborhood because individuals who live there are perceived to have better insurance
Perpetrators target new, rental, or commercial vehicles because of the likelihood that
these vehicles are insured. Additionally, women driving alone and senior citizens are
often sought by the perpetrators because they are perceived to cause fewer problems
and are less confrontational.
There are five sub-types of caused accidents:
This is the most basic type of the caused accidents. In this scenario, the insured is
driving a vehicle of better quality than the perpetrator. The perpetrator positions his
vehicle in front of the insured’s vehicle and slams on the brakes, causing a rear-end
collision. Perpetrators involved in a panic stop intentionally damage the light bulbs on
their vehicle’s brake lights so they do not function, although the lens appears to be fine.
Therefore, the insured driver has no warning that the accident is about to occur. The
insured driver states that the perpetrator’s vehicle “suddenly stopped for no apparent
1 A surface street is any street in an urban area that is not a freeway
In a drive down, the insured vehicle merges into traffic after being motioned in by the
perpetrator. Once the insured begins to merge, the perpetrator speeds up and collides
with the insured’s vehicle. When questioned, the perpetrator denies motioning the
insured’s vehicle into traffic. The perpetrator might even give an excuse, saying that “I
was shooing away a fly”. A drive down works well where vehicles have to merge into
other traffic, such as: four-way stop signs, T-intersections, merge signs, yield signs, lane
reductions, lane closures, enter/exit freeway ramps, and when pulling out of parking
The side swipe occurs at high traffic intersections with dual left turn lanes. The
perpetrator positions the vehicle in the outer turn lane. As soon as the victim’s vehicle
drifts into the outer turn lane, the perpetrator collides with it. Perpetrators conduct
surveillance to identify heavily-traveled intersections where vehicles routinely drift over
the lane divider lines into the outer left turn lane.
Swoop and Squat
This is the most common caused accident and occurs on surface streets. A swoop and
squat involves three vehicles, two of which are driven by the perpetrators and the other
by the victim. The driver of the squat vehicle positions his vehicle in front of the victim’s
car. The driver of the swoop vehicle speeds up, pulls ahead of the squat vehicle, and
cuts it off, causing the squat vehicle driver to slam on his brakes. The victim is unable to
react in time and usually rear-ends the squat vehicle. The swoop vehicle takes off and is
never seen again. The victim states that the swoop vehicle caused the accident, but
because that vehicle cannot be found, the victim’s insurance company has to pay the
vehicle damage and personal injury claims.
Freeway Swoop and Squat
Similarly, a freeway swoop and squat occurs when four vehicles are involved. Three of
the vehicles are driven by the perpetrators and the fourth by the victim. The third
vehicle, driven by the perpetrator, blocks the victim so they cannot change lanes when
the swoop vehicle cuts off the squat vehicle. This is also known as the “box-in” effect.
After the accident, the swoop vehicle and “box-in” vehicle depart from the scene and are
not seen again.
Automobile accident schemes vary in complexity. The smallest and simplest involve one
perpetrator claiming vehicle damage from a side swipe. The largest and most complex
involve hundreds of people operating in an organized ring. The organized ring is more
significant because many insurance carriers are targeted with multiple phony claims
adding up to significant dollar amounts. The following are common players in an
organized automobile accident fraud ring:
The victim becomes an unwitting participant in the caused accident. It is the victim’s
insurance company that usually pays the claim as a result of the accident. The victim is
sometimes lured by a capper to seek expensive phony treatment from a specified doctor
or receive legal representation from a specified attorney.
An accident participant is knowingly involved in the accident. The NICB has determined
that in most instances, the participants involved in the accident know one another. It is
not uncommon to see family members, friends, co-workers, and neighbors working side
by side to commit the fraud.
In an organized ring, accident participants are recruited by a capper, for a fee, to be
involved in the accident. Organized rings often employ “jump-ins”, people who were not
involved in the actual accident, but report fake injuries to the insurance company in order
to inflate the fraudulent claim. Although no injury is reported at the scene, treatment is
later sought by the claimant(s). A police report might even state no injuries on behalf of
the insured or refusal to receive an examination from ambulance personnel.
A witness is involved in the fraudulent activity and is positioned near the accident site.
The sole purpose of the witness is to support the perpetrator’s account of the accident
and to contradict the victim’s testimony.
The capper is the key individual of the organized ring at the street level, and is known as
the “street boss” of the ring. Cappers can even be the senior managers of the organized
ring. It is the capper’s job to recruit individuals, who eventually fake injury, to participate
in the accident. Cappers target individuals for participation in tan accident who appear
to need money. They also lure in real accident victims who have no idea that the
expensive treatment received from the doctor is phony and is billed to their insurance
company. The capper will get accident victims’ names from police reports and solicit
them by phone or letter.
The capper might also provide the target car or the insurance policy to be used during
the accident. Additionally, the capper acts as “director” by providing scripts for each of
the perpetrators including: diagrams, names, seating positions, etc. Cappers also keep
elaborate records of insurance policies, claims filed as a result of the accident, names
and addresses of the participants, phone numbers, and diagrams.
After the accident has occurred, the capper “sells” it to a medical clinic. The role of
capper is quite lucrative because payment is based on the number of individuals referred
to a physician or attorney involved in the conspiracy. The size of the ring increases as
the capper tries to recruit as many participants as possible. Generally, cappers are paid
anywhere from $100 to $1000 per individual referred, usually in cash, in order to conceal
it from law enforcement. Often, cappers receive money based on a percentage of the
final settlement received from the insurance company.
A wide range of individuals assume the role of capper in the organized automobile
accident ring. A capper can be an individual off the street, a tow truck driver, an
ambulance driver, or even a police officer. Cappers can also be the owner or office
administrator of the medical clinic or law office. As an office administrator, the capper
plays a more functional role because they process the accident’s paperwork and employ
the doctor or attorney for an appearance of legitimacy. The capper, instead of the doctor
or attorney, deals directly with the insurance company.
Doctor/Chiropractor/Medical Clinic/Chiropractic Clinic
In an organized ring, the clinic “buys” the accident from a capper. Often, the clinic hires
the capper to recruit the patients. Additionally, the clinic might be a shell operation that
does not employ any medical personnel and is utilized only as a billing source.
The medical provider “treats” the “injured” who are referred by the capper. The medical
provider at the clinic may see the patient for as little as 10 to 15 minutes, or not at all.
Unqualified, unlicensed individuals might perform tests on patients. This becomes an
issue when the clinic bills the insurance company because there is there is the likelihood
of up-coding, or billing for a service not provided.
It is common to see soft tissue injuries because it is hard to diagnose this type of injury.
It is subjective in nature, and a physical examination does not reveal it. The clinic or
insurance company relies on the word of its customer, the insured. The clinic
recommends a long treatment period including a number of tests which are excessive or
unnecessary, especially when only minor injury, if any, was sustained or there was
minimal vehicle damage. Additionally, in an organized ring, the medical provider tends
to diagnose all patients from a vehicle with similar injury and treatment.
The clinic role is even more lucrative than that of a capper. The clinic can afford to pay a
capper $1000 per individual referred because it bills the insurance company at least
$5000 in phony medical bills. The clinic then “sells” the accident to an attorney.
In organized rings, an attorney is also often involved in the scheme and “buys” the
accident from the medical clinic. In some instances, an attorney is the coordinator of the
accident ring. The attorney represents the insured, and most of the time, all of the
involved participants from a specified vehicle. Often, the attorney submits the injury
claim to the insurance company on behalf of the insured and pushes for a quick
Dishonest body shops can also play a role in organized accident rings. They supply
previously damaged vehicles to inflate the property damage or injury claims. The
vehicles provide evidence to the insurance company that a supposedly legitimate
accident has occurred. Unscrupulous body shops also intentionally damage vehicles to
inflate the claim, perform unnecessary repairs, bill for repairs not performed, and bill for
repairs on previous damage to vehicles.
Tow-truck drivers are sometimes involved in the ring and will provide the capper with an
accident victim’s information.
NICB investigations have also identified instances where insurance company employees
were participants in organized rings.
Organized Ethnic Groups
Organized ring participants are frequently from the same ethnic group. Ethnic groups
are targeted and easily recruited by cappers because of their limited English language
skills. The ethnic group feels a sense of cultural trust and familiarity if recruited by a
capper of the same ethnicity. Moreover, the group is attracted by the money and has no
knowledge that their activities are illegal because of their unfamiliarity with U.S.
NICB research indicates that the largest organized group involved in automobile
accident fraud is of Russian origin. At the street level, they take the role of accident
participants, witnesses, and cappers. They are medical providers, attorneys, and
financial backers in the highest tiers of the ring. In many instances, these individuals
own and manage physical therapy, chiropractic, and medical clinics.
Connection to Identity Theft
Identity theft is increasingly associated with automobile accident fraud within the United
States. Insurance policies are purchased with stolen drivers licenses, social security
numbers, and other forms of identification. The stolen identification is also used to avoid
detection by insurance companies or law enforcement.
Identities are stolen in several ways. Some are stolen when exchanging information at
the scene of the accident, while others are stolen after applying for a job which involves
driving. In these instances, the perpetrator uses the driver’s license to obtain the stolen
identity which is used over and over again.
An NICB Top 25 case, “Maxroy”, involved the use of identity theft in staging/causing
accidents in Texas, Louisiana, and California. The investigation revealed that the
perpetrators used fake or stolen identities to purchase insurance policies, and then
insisted on obtaining personal injury protection of $10,000 on their insurance policies.
One victim stated that his identity was stolen by the perpetrators after he lost his wallet
several years earlier.
The vehicles insured in “Maxroy” were older high-end vehicles, such as BMW, Infinity,
and Lexus. The perpetrators filed claims within thirty days of the policy inception. Most
of the accidents were one-car hit-and-runs. All vehicle occupants used fake or stolen
identities, claimed injury at the scene, and were taken to area emergency rooms. The
perpetrators then stated that they received additional treatment at a medical clinic and
received numerous tests.
Why It Works
Automobile accident schemes work for a number of reasons. First, it is the responsibility
of insurance companies to ensure timely payment on claims; therefore, the insurance
company may not have the time or resources available to effectively investigate a
questionable claim. Insurance companies also want to protect themselves against “bad
faith” claims. These occur when an insurance company refuses to pay a claim that
should be paid, settles a claim for less than it knows the claim is worth, or denies a claim
without adequate investigation.
Without a doubt, no-fault laws are the largest hindrance in fighting automobile accident
fraud. In no-fault states, all involved parties submit property damage and bodily injury
claims to their own insurance companies, regardless of fault. Currently, 12 states and
Puerto Rico have no-fault insurance laws: Florida, Hawaii, Kansas, Kentucky,
Massachusetts, Minnesota, Michigan, New Jersey, New York, North Dakota,
Pennsylvania, and Utah2. Consequently, Florida, New Jersey, and New York are among
the states with the worst automobile accident fraud. Certain conditions (thresholds) that
relate to the severity of the injury must be met in order for motorists to sue under current
Additionally, laws are lax for certain players involved in an automobile accident scheme.
Only a few states have laws that specifically target runners, including: California, Florida,
Minnesota, Nevada, New Jersey, and Utah. These states have “anti-runner” laws, which
make it a felony to solicit clients or patients for fraudulent purposes, or to hire anyone to
solicit clients or patients for fraudulent purposes.
Nonetheless, perpetrators have found ways to evade “anti-runner” laws. Cappers will
pose as reporters, who are allowed quicker access to police reports, and will even go so
far as to invent newspapers so that they receive the reports by fax or e-mail. Cappers
review the police reports and have a pretty solid idea of who would likely become a
participant and which insurance companies will pay quicker without investigations.
Additionally, cappers will partner with tow-truck drivers, who have access to an accident
victim’s information. Since telephone solicitation is illegal, cappers use cellular phones,
which are virtually untraceable, to seek accident victims.
2 Insurance Information Institute (III) – July 2005. Florida, Michigan, New Jersey, New York, and
Pennsylvania have verbal thresholds (no specified dollar amount; described in words). Hawaii, Kansas,
Kentucky, Massachusetts, Minnesota, North Dakota, and Utah use a monetary threshold (dollar amounts of
medical bills) Kentucky, New Jersey, and Utah have a “choice” no-fault law – “motorists may reject the
lawsuit threshold and retain the right to sue for any auto-related injury.”
The NICB has made enormous progress in identifying the scope of automobile accident
schemes. While automobile accident schemes are varied and changing, there are
actions that NICB members can take to fight these crimes. The NICB suggests that
Identify and photograph all individuals included on the policy before inception
Verify personal identifiers in public databases
Photocopy the drivers licenses of all individuals included on the policy
Prior to insuring, pre-inspect and photograph all vehicle(s) included on the policy
Advise policyholders to carry a disposable camera in their vehicles, and take
photos of all vehicles and occupants should they get involved in a suspected
After an accident, ask about the relationships among the involved parties from
Interview each individual separately so that their stories can be compared
Search the ISO database for additional claims/information on all involved parties
in the accident, including medical providers, attorneys, body shops, etc.
Perform a vehicle history on the vehicle(s) involved in the accident: prior/current
owners, claims activity, salvage records, theft records, etc.
Refer questionable accident claims to the NICB, including referral text stating the
specifics as to the identity of individuals and the details which generated the
Contact their local NICB office if they suspect a staged/caused accident
Finally, greater communication among the NICB, member companies, and law
enforcement agencies can play a key role in reducing the impact of automobile accident
fraud. There are many communication resources available to member companies,
including the ISO database, various public databases, and the NICB ForeWARN Alerts.
Member companies must capitalize on these resources when identifying and analyzing