Insurance Fraud – Brazen and Big - Insurance News Magazine

Anyone who believes insurance is a dull industry is unfamiliar with recent fraud schemes so macabre they could be turned into gripping adventure movies.

One such caper is the staged accident scheme perpetrated by the family of ringleader William Mize. Mize went to extraordinary lengths to make it appear that allegedly injured vehicle passengers were actually injured in intentional accidents. In fact, their injuries were caused by self-mutilation, sandpapering open wounds, dousing themselves with urine, and breaking of teeth with pliers. For several years Mize orchestrated six accidents per year netting a cool $6 million until he was apprehended. He was on the lam for several years, recently discovered, arrested, and is now doing time.

A more pathetic story, reminiscent of the 1971 movie ‘The Gang Who Couldn’t Shoot Straight,’ which featured a young Robert DeNiro impersonating a priest, had a California man impersonating a bear. Bear-man wore a bear suit while crawling around and damaging the interior of a Rolls Royce Ghost and other luxury vehicles. The mob claimed $142,000 from insurers. The brazen con was captured on tape by a member of the bear gang, who submitted it to the insurance company, where it was judged to be a scam.

While insurance fraud through animal impersonation may be an outlier event, there are recently uncovered insurance fraud schemes many times larger than bear-man or Mize. In fact, these schemes are so large that they are responsible for significant premium increases for all insurance buyers.

The business line that has been most impacted by staged accidents is commercial auto liability insurance, which covers truck fleets and trucking companies for bodily injury to third parties. Insurance fraudsters gravitate to this product because injuries (or alleged injuries) in accidents involving trucks and other commercial vehicles can be very severe, justifying large courtroom awards or settlements. The most common scam is the staged accident, a la Mize.

This variety of fraud involves a “slammer,” who intentionally hits a large truck with their vehicle. The car with a slammer has several passengers, who are in cahoots with attorneys who file claims and lawsuits. The passengers are directed by the complicit attorneys to medical service providers who render unnecessary expensive surgeries, overcharge for them, or do nothing at all except produce phony bills for services not rendered. This phenomenon has reached near-epidemic proportions, notably in New York and Louisiana. One recent case even involved the murder of a ring member turned witness for the FBI, who investigated the scam.

Staged accidents and the related practice of phantom damages have long been sources of claims leakage for insurance companies. Phantom damages are the difference between the cost of medical services billed and the cost of medical services actually rendered. For example, a crooked medical facility may fabricate a bill for fictional imaging and for several back surgeries in the six-figures, whereas no medical procedures were performed. In order for staged accident schemes to work, there must be collaboration between complicit attorneys, medical providers, the actors in the scheme, and the masterminds. Such a complex scam was alleged in two recent Racketeer Influenced and Corrupt Organizations Act (RICO) suits. One was the civil lawsuit brought on December 17, 2024 by American Transit Insurance Company (ATIC) in the U.S. District Court for the Eastern District of New York. Plaintiffs sought $153 million in compensatory damages and $459 million in treble damages. The 698-page suit named 186 defendants. In January 2025 it was reported that 141 defendants agreed to settlements.

Separately, in January 2025, ridesharing company Uber brought a 60-page suit against three plaintiff attorney firms, alleging they colluded with medical providers to “exploit passengers in purported or actual minor vehicle collisions and provide them with medical unnecessary and/or casually unconnected treatments.”

Insurance fraud is not victimless. The magnitude of the schemes targeted by the recent RICO suit shows that insurance fraud can be a major organized crime. When health insurance fraud, fake trip and fall and phony workers’ compensation insurance fraud are added to commercial auto fraud, some sources have estimated that over $300 billion in reported insurance claims are fraudulent.

As we reported in our previous article on insurance fraud, primary research has found that older generations (aged 45 and above) have more compunctions about stealing from insurance companies. Younger generations have fewer qualms about cheating on claims. But as those older generations age out of the workforce they will be replaced by the younger cohorts who are more comfortable ripping off insurance companies.

Insurance fraudsters often justify their actions by calling them “victimless.” Beyond insurance companies that are defrauded, the cost of insurance fraud is borne by honest insurance buyers whose premiums are driven higher to recoup what was stolen. At a time when insurance buyers and congressional hearings are turning the spotlight on insurance affordability, efforts to combat insurance fraud must be high on the list of policy prescriptions.

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Fraud