Insurance Fraud Scheme For $3 Million A Reminder To Be Vigilant

Two men from Bryan, Texas, were recently sentenced for their roles in a scheme that authorities attest defrauded insurance companies for more than $3 million, reports the industry news site Insurance Journal.

Former office manager Earlie Dickerson received a 14-year sentence from a Houston federal court for “recruiting individuals involved in auto accidents,” the site noted, adding that “According to U.S. Attorney Kenneth Magidson, Dickerson worked out of the Bryan office of Houston-based Sanjoh & Associates.”

Federal prosecutors convicted Dickerson of sending individuals he recruited to specific chiropractic clinics, “where they received medically unnecessary therapeutic treatments” and “used fraudulent bills from the treatments to obtain settlement checks from auto insurance companies,” the site added. Marion Young was also convicted in the scheme, which according to the U.S. Attorney’s Office, “resulted in the submission of more than $3 million in false billing claims on which the companies paid out at least $1.2 million during 2007-2009.”

Young and Dickerson were ordered to pay that $1.2 million back as restitution. Additionally, chiropractor Edward Graham, 38, was convicted in the scheme. He awaits sentencing, which is set for Oct. 14, 2014. Also, chiropractor Chase Lindsey, 46, and Brittany Jessie, 24, pleaded guilty in advance of trial and were sentenced previously to 2 years and 2.5 years, to be served at a federal prison.


Insurance Fraud Awareness: Be On Alert

Some cases of insurance fraud, like the one detailed above, result in a significant sum for the thieves if they’re never caught. Until the action can be found out and made whole, the burden for that cost falls not only on the insurance company’s back, but on the customer’s as well. According to the National Insurance Crime Bureau (NICB), “10 percent or more of property/casualty claims are fraudulent.”

Add those up, and it doesn’t matter if the crime results in a $1.2 million “score” or simply $12,000. It can quickly get out of control causing rates for everyone to push upward.

It’s in everyone’s best interests to fight against the type of fraudulent behavior detailed by IJ. However, it requires a degree of alertness and an attitude that you can make a difference. Here are some common scenarios where auto insurance fraud might occur.


Stolen Car Scenario

According to Business Insurance, committers of insurance fraud might use two specific methods for pulling off the “stolen car” scenario. First, they might arrange with a body shop to cut the car down for parts. In this case, the body shop would be in on it, not reporting the stolen parts to authorities, while the thief would collect the payout. A second way involves a cash transaction to a foreign buyer, after which the car is reported stolen.


Car Damage Scenario

In the “car damage” scenario, BI notes, “Some people will report a small car accident, get an estimate for damages, collect the insurance check and then not get the car fixed.” The site notes that this is the “single most common form of auto insurance fraud.”

“The people doing it see no harm in it, but the money the insurance company pays out comes from premiums paid by other customers, which will go up the more often this fraud is committed,” the website states.


Car Accident Scenario

In the “car accident” scenario, “the driver and accident victim are the only ones in on the scheme,” states BI, adding that in other cases, “the driver, victim, insurance investigators and even some of the bystanders that give statements are in on the fraud.”

“The value of the vehicles is greatly inflated and the insurance payoff is for two totaled vehicles.”


In Summary

Insurance fraud is a serious offense, and along with significant jail time and financial penalties, it victimizes companies trying to do business and protect their honest customers. It also affects the customers themselves in the form of higher premiums.

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