How adjusters can handle staged collisions

Staged collisions can be very lucrative for fraudsters managing treatment centres, an Insurance Bureau of Canada official says.

IBC has evidence that some clinics whose owners or managers are involved in organized crime are paying co-conspirators $2,000 to $3,000 for every person they recruit to participate in a staged collision, said Kathy Metzger, an IBC investigator.

Therefore, she suggested, some clinics are paying $16,0000 per staged collision.

“It’s the clinics that are making a lot of money here,” she said during a session at the Ontario Insurance Adjusters Association (OIAA) claims conference Wednesday in Toronto. “If that’s the cost of doing business to them, think of how much money they are making.”

She said there are four firms she is investigating that were billing one insurance carrier about $900,000 a month in 2010.

Metzger’s organization within IBC investigates “questionable claims” that involve injury from auto accidents resulting in multiple claims to multiple insurance companies.

In addition to staged collisions, there may be false employment claims from claimants seeking income replacement and medical centres that use signatures from medical professionals for treatment they did not provide.

She said criminals are getting involved in “vertical integration” of firms involved in auto claims, meaning a fraudster operating a treatment centre would also operate other firms such as paralegals, rehabilitation centres, assessment centres, towing firms and body shops.

“When I think of organized crime I think of a Sopranos kind of thing but it’s not just that,” she said, suggesting that under the Criminal Code of Canada if three or more persons conspire to falsify a claim or stage a collision, that would also fit into the category of organized crime.

She emphasized some staged collisions involve innocent parties, some of whom are judged to be at fault.

For example, Metzger said, an innocent driver is about to pull out of a spot in a parking lot when the driver of another vehicle who has the right of way stops and waves. The innocent person pulls out and then the driver of the other vehicle suddenly pulls ahead and collides with the vehicle not conspiring in the collision. After the accident, the driver of the second vehicle, who is conspiring to stage a collision denies having waved the innocent driver through, and so the innocent person is found to be at fault for failing to yield the right of way.

Although insurance firms and adjusters can reconstruct accident scenes, that can be expensive. Metzger asked the audience members how much it costs them to reconstruct an accident scene and one attendee said $8,000.

Metzger said that although claims professionals can use surveillance, this can cost $1,000 a day.

She advised adjusters to look for red flags, such as a claimant who cannot tell the claims professional the full names of the other people in the car.

Another example she provided of a red flag is where two cars, with multiple occupants, collide in an isolated industrial area at 11 p.m. She suggested adjusters should question what the claimant was doing driving though that area and what the other vehicle was doing driving through the area.

Metzger suggested IBC has been getting fewer referrals since the Ontario government implemented the $3,500 limit for claims under the minor injury guideline and carriers have taken a “hard line” on the MIG.

But she added that once the Financial Services Commission of Ontario clears its backlog of disputed claims under arbitration, “that could change everything.”