Automobile insurance fraud rings have become a booming business in Canada, according to the experts of insurance industry.
It starts with a seemingly courteous gesture behind the wheel: an innocent driver signals to turn left, and a driver in an oncoming lane waves for him to go ahead -- when another vehicle speeds up and crashes into the turning car.
Unbeknownst to the person just hit, the collision was staged in order to collect hefty insurance payouts under provincial no-fault insurance programs. The scammers first collect insurance for their car's replacement value then submit bogus injury claims at health clinics.
Ken Bowman, Vice-President of RBC Insurance, said the growing trend of staged accidents involves buying vehicles, often luxury cars such as Mercedes, and having "seat sales", in which fraudsters "pay 1,000 dollars for every person recruited to be in the car."
In some cases, four people will agree to participate in a staged accident and will go on to submit multiple injury claims, billing for costly healthcare assessments and treatments.
Sometimes, legitimate injuries arise from accidents -- especially if an innocent person is involved -- but in many cases, the accidents are simply "bump and runs, and quick stops."
"It's a billion dollar business," Bowman said. "And there is minimal deterrence for criminals. I think it's quite obvious that there needs to be stiffer penalties and consequences for those who commit insurance fraud."
Officials say that the rings are sophisticated, highly profitable, and almost untouchable, thanks to poor government regulation, weak law enforcement and the absence of a national database to track suspect claims.
Insurance companies themselves are seen as partly to blame for not sharing information in a collective data base. Bowman said there have been concerns in the past around "privacy and data that insurers may conceive as a competitive advantage."
Insurance companies have long found it cheaper to settle a suspicious claim rather than investigate and prosecute. But faced with more complex schemes to bilk insurance companies -- and the hike in premiums passed onto consumers -- the industry is now calling for greater regulation of health clinics and a task force comprised of insurance investigators, police officers and lawyers to tackle the problem.
In 2009, insurance fraud accounted for between 10 and 15 percent of premiums -- or an estimated 1.3 billion dollars, according to the Insurance Bureau of Canada (IBC), the industry watchdog.
The scams are most rampant in Toronto, where at least 30 staged collision rings have been identified.
The IBC said in a number of cases, individuals have come from New York to Ontario to open clinics because provincial oversight is so lax. In Ontario a person does not have to be a medical practitioner to own or operate a clinic.
The fraud commonly involves identity theft in clinics operated by fraudsters. "They are taking ownership of a medical clinic and that's where we're seeing this organized activity taking place," said Rick Dubin, vice president of Investigative Services at IBC.
On average the IBC gets three calls a week from bonafide medical practitioners such as chiropractors or physiotherapists who are worried that their registration numbers are still being used or their signatures are being forged at clinics where they formerly worked.
The fraud most often occurs in billing and invoicing at the clinics, if the clinics exist at all. In some cases, the clinics are registered only on paper.
For an injury such as whiplash, an individual might submit fraudulent claims for assessments from a myriad of experts, which could include kinesthesiologists, neuropsychological experts, orthopedic doctors, nutritionists, chiropractors and physiotherapists. In most cases, the assessments or treatments haven't been provided, according to the IBC.
Desperate for reform, the industry launched a major investigation dubbed Project 92. The investigation was carried out by a task force of insurance investigators, a Toronto police officer, and two Ontario prosecutors, who uncovered a complex, 25-million-dollar fraud ring.
Dubin said Project 92 is a "proof of concept" case that resulted in 300 charges laid and 20 criminal convictions. Two individuals were convicted of participating in a criminal organization.
"We wanted to prove how successful it would be by taking a task force approach and show the success that could be achieved," Dubin said.
In December, State Farm Mutual Automobile Insurance Company launched a lawsuit in Ontario against a group of Toronto clinics. The lawsuit alleges that false claims were submitted by medical practitioners who did not work at the clinics.
John Bordignon, media specialist at State Farm in Ontario, told AFP that "with the issuance of this statement of claim and this court case, we are now in the process of taking a pro-active approach to go after those who wish to defraud the system."
"It's very important to let these groups understand that it's not carte blanche. We are not going to sit there and continually just pay."