Insurance Fraud Hits Everyone And The Problem Is ‘Not Going Away’

Oct. 14--NAPLES, Fla. -- The rear-end crash at a stop sign really did happen. The medical bills checked out. And the patients even visited the chiropractic clinic a few times for treatment.

But state fraud investigators later learned that crash had been staged.

The mastermind behind it -- and a slew of others on Florida's east coast -- was a 42-year-old man named James William Lloyd, Jr. who was tracked to Maryland and arrested by authorities there Sept. 30.

Lloyd had earned a spot on the top 10 most wanted for the state's Division of Insurance Fraud under the Department of Financial Services.

"We take particular interest in runners and people that are more involved in multiple insurance frauds," said Maj. Glenn Hughes, of the state's Department of Financial Services. "This guy was part of an organized ring perpetrating multiple staged vehicle frauds."

Experts say bad insurance claims -- ones as elaborate as Lloyd's or less sophisticated like that of a Collier County woman who recently faked medical bills for a spilled coffee incident -- make insurance rates go up for everyone. In addition, technology has made it a cinch to file false claims that are difficult to investigate.

"Each case may increase your premium a penny, but when you've got thousands of cases, all the sudden it adds up," said Lee Hollander, a Naples defense attorney. "The insurance company pays out these fake losses."

Lloyd was known for allegedly staging several crashes, but Hughes said there isn't a firm number.

"He found people that he became acquaintances with in bars and clubs and restaurants, and found people maybe out of a job or down on their luck or needed a little extra cash," Hughes said. "He promised if they participated in one of these staged crashes, which are usually very minor, they'd make some money."

After staging a crash, each participant would report the crash to their insurance providers then begin attending treatment sessions at a local clinic. A worker there who knew Lloyd helped to process phony treatment bills that each participant showed their insurance companies and later pocketed the money after giving Lloyd a cut, investigators say.

Maryland authorities wanted Lloyd in a theft ring case and learned he was also known for crimes in Florida, Hughes said.

An East Naples woman recently filed false claims for a less involved scheme. Jennifer Faye Sanders, 34, used letterheads from her doctor to make fake bills she sent to her insurance company after she said she spilled hot coffee from Dunkin' Donuts on her lap.

Her insurance company thought the bills seemed fake and notified the Division of Insurance Fraud, which later arrested her on charges of filling a false claim and scheming to defraud.

But not all cases are so easy to crack.

"Staged crashes aren't identifiable to the insurance carriers," Hughes said. "They look like any other crash really, they'll have a police report, they'll have billings from a chiropractic or physicians clinic, so from an insurance company standpoint they're very hard to detect."

Technology has made it easy for criminals to file false claims from home and has given them a sense of security in doing so.

"Technology provides people with some sort of insulation because they think they think 'I can apply for auto insurance online, I can file a claim online, I can now take a picture of my damaged car on my iPhone and send it directly to my insurance company and they'll send me a check," Hughes said. "We have to prove a certain person on a certain day at a certain time committed these acts, so when you're insulated ... there can be a challenge on the investigative side."

Hollander said sometimes insurance companies will send investigators to check on people who have filed for workers' compensation claims but are seen lifting heavy loads or not using their wheelchairs. In cases such as staged crashes, agencies rely on tips.

"Usually it's somebody who rats out somebody else," Hollander said.

Hughes said that despite some legislative changes made in recent years, he doesn't expect such cases to decrease. A law on personal injury protection, which went into effect in 2013 gave a shorter time limit and a smaller coverage limit for those in crashes, hoping to curb fraud.

"It's a problem that's not going away," he said.

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