Now and then Mark Kulda will come across a handful of people who say they were all injured in the same car accident. They complain of serious — though undetectable — pain. The kind that takes months of massage therapies costing about $15,000 per person to remedy.
If the accident sounds suspicious, he'll take a look at the car. Chances are he'll find a dent in the front bumper that looks like it could be fixed for $500 — and may have been caused by someone gently crashing into a tree or a light pole.
That would be a relatively primitive way to stage an accident, says Kulda, Insurance Federation of Minnesota spokesman. The more complex ploys include unsuspecting victims, planted witnesses, and fleets of cars driven by multiple people who sometimes cut, gouge, or beat themselves prior to the intended crash.
The popular "swoop and squat" involves variations of cutting in front of another driver and slamming on the breaks, he says. In a different setup, one car purposely rakes another in a double turn lane, while an aptly positioned witness fingers the innocent driver. In one scheme common to four-way stop signs, a criminal politely beckons a victim to go first, then charges up to cause a crash.
Then there are the guys who will torch their own vehicles, blaming imaginary arsonists because they don't want to repay their car loans. Or those with more insurance on the car than it's worth, who drive it into a lake in order to pocket the difference.
Kulda has seen it all. Staged accidents are a lucrative scheme, he says, because Minnesota is one of only nine states with no-fault auto insurance. Under this model, insurance companies will pay up to $20,000 in medical bills without having to find out who’s at fault.
It's bred a crop of criminal organizations whose sole purpose is to stage accidents and file false claims, he says.
Posing as semi-professional chiropractors, massage therapists, acupuncturists, and diagnostic imaging businesses, they'll set up shop in high density areas with lots of traffic and a barrage of billboards for pain treatment and crooked lawyers. They'll make home visits to folks who have been in minor crashes and convince them to spend an hour filling out paperwork at a clinic in return for $100. These therapists then make up a bogus treatment plan, for which they can bill the insurance company enormous amounts of money.
Last week, the FBI raided a bunch of Minneapolis chiropractor clinics, looking for evidence of insurance fraud. They won’t confirm how many businesses are being investigated.
“We’re been talking about this type of fraud for a dozen years or more, and [this] raid is the first big raid we’ve seen,” Kulda says. “It’s a cesspool. [These businesses] are literally 100 percent fraudulent billing. They do no treatment. These are criminal organizations whose sole purpose is to literally steal money from the auto insurance system in Minnesota because it’s easy to do.”
Minnesota's auto insurance premiums average $800, growing 9 percent within the past four years. Nationally, rates have have risen only 1.5 percent in the same time.