In a shocking criminal trial earlier this year, the Ontario Superior Court found a Peel police officer guilty of creating nine false motor vehicle accident reports for a fee (see R. v. Watson).
These accidents never happened. A tow-truck driver, who was a childhood friend of the officer, hired people to claim themselves as vehicle occupants who then put forward fraudulent insurance claims with cars brought to a secluded yard at night and crashed together to create damage. All told, insurers paid out almost $916,000 to the fraudsters and $272,000 in medical and legal expenses.
Last month, the court sentenced the offending officer to five years in jail for his part in the scheme.
Fraud also often takes the form of induced collisions involving innocent motorists. The Insurance Bureau of Canada’s investigative services team describes several typical scenarios. A swoop and squat involves the scammer pulling a vehicle in front of another car and slamming on the brakes to ensure the driver behind doesn’t have time to stop. A drive down takes place in a parking lot when a fraudster waves another vehicle to back out of a parking spot and then intentionally drives into it. In a left-turn bullet, an innocent driver is waiting to make a left-hand turn. The scammer approaches, waves at the driver to go ahead, and then intentionally drives into the vehicle. The innocent left-turning driver takes the blame.
The concern is that organized crime rings run much of motor vehicle accident insurance fraud. These rings may involve medical clinics, rehabilitation centres, paralegals, and practitioners such as chiropractors and massage therapists who bill insurers for treatment they never actually rendered.
“Organized crime, unfortunately, is very creative,” says Rick Dubin, vice president of the Insurance Bureau of Canada’s investigations unit.
“They keep changing their approach over time. But insurers are also getting better at fighting fraud. With the recent passing of Bill S-4, an amendment to the Personal Information Protection and Electronic Documents Act, insurance investigators can share information with other insurers if they have reasonable grounds to believe that there is fraud. Luckily, we have some effective new tools at our disposal.”
Three massive crime rings have emerged in the Greater Toronto Area in the past few years, each involving dozens of people. According to Dubin, certain people involved in a massive New York auto fraud crime ring may have entered Ontario and are suspected of links to several Toronto-area rehabilitation clinics.
Ben Kosic, chief executive officer of Canadian National Insurance Crimes Services, is no stranger to the tension between privacy concerns and fighting crime. His company is a relatively new data analytics business currently used by nine insurance companies making up about 75 per cent of Ontario’s market.
The company’s database takes claims information and then uses algorithms or rules to detect indicators of fraud with an alert sent to the insurer. The system doesn’t share personal information but instead uses a black box. Revisions to Ontario insurance claims forms provide for consent to this type of information sharing between insurers.
“Most people would probably consent to their claims information being shared if it leads to a reduction in fraud and, therefore, lower insurance premiums,” says Kosic.
“Currently, Ontario insurers could be losing up to an estimated $1.6 billion per year to auto insurance fraud and some believe that it’s even more.”
Lawyers and claims adjusters should watch for red flags denoting a possible fraudulent or induced crash.
A full vehicle may be a giveaway, especially if all occupants claim soft-tissue injuries. A vehicle containing occupants who have little to no connection to one another is another possible indicator of fraud.
Donald Dacquisto, a lawyer with Zuber & Co. LLP, says that if a defence lawyer finds a file to be suspicious, it will be important to question the circumstances. “They will obviously need to conduct a thorough examination for discovery on the issues surrounding the incident, even in a rear-end-type collision. The story of how the vehicle occupants came to be riding together and their personal relationships may prove to be implausible on careful examination. Even still, significant credibility issues are not sufficient to establish a staged accident, and we have to tread very carefully as lawyers with such assertions, as do the insurance adjusters, which makes it challenging.”
Canada might look to England for inspiration in the continuing fight against fraud. England has an Insurance Fraud Bureau devoted exclusively to investigations and enforcement. Its 2015 manifesto indicates that the fight against fraud begins at the front end with brokers. “The [bureau] is committed to supporting the counter-fraud capabilities of brokers. The most powerful weapon in the fight against insurance fraud is sharing information,” says director Ben Fletcher.
An indication of how seriously England treats insurance fraud is the recent case of a Gap model and football player who went to jail for two months for lying about her injuries. She filed a claim for whiplash, but investigators obtained photos of her skydiving and working out. She also posted announcements of her upcoming football matches and photos of herself riding a mechanical bull.
In Canada, the courts don’t often hand out jail sentences in these types of cases. As a result, it falls to defence lawyers to force the plaintiff all the way to trial. Such claimants often just disappear.
It’s important to get the message out that we must be vigilant. The more we discourage insurance fraud, the more we help to clear the way for genuine claimants with real injuries.
Chella Turnbull, a lawyer practising personal injury litigation at Zuber & Co. LLP, is available at 416-646-3129 or firstname.lastname@example.org.