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Insurance fraud cases not a priority
A surprising number of people don’t think making a false insurance claim is a big deal. In fact, one out of 10 adults surveyed would commit insurance fraud if they knew they would get away with it, a study by Progressive Insurance determined in 2001. One out of four Americans believe that committing insurance fraud is an acceptable practice, according to the Puget Sound Special Investigator’s Web site.
And when insurance fraud occurs, it is rarely prosecuted.
Adding to the problem is the apparent low priority assigned insurance fraud by busy prosecutors. According to James Quiggle of the Coalition Against Insurance Fraud, prosecutors choose to use their limited resources to combat drugs, violence and other high-profile crimes.
Mercer Island City Councilmember Sven Goldmanis was arrested last August on suspicion of insurance fraud. However, King County prosecutors have not filed charges in that case.
Police from the City of Redmond contend that Goldmanis took about $10,000 worth of watches and jewelry from his former residence to a family-owned cabin, then filed an insurance claim. They also allege he filed a false police report with Mercer Island police that stated the items turned up missing after his daughter hosted a party at the house.
According to state law RCW 4.16.080, there is a three-year statute of limitations to prosecute fraud crimes.
Insurance fraud is a Class C felony, punishable by a maximum of five year prison sentence and $10,000 fine.
According to the annual reports, the King County Prosecutor’s Office handled more than 10,500 cases in 2004. Of those, more than 4,000 were violent crimes or drug-related cases. However, there were only four cases of insurance fraud, two cases of attempted insurance fraud and one case of an attempted insurance fraud claim that same year. In 2003 the county prosecuted only two cases of attempted insurance fraud and in 2001 it had two cases of insurance fraud. There were no cases listed in 2002 or 2000.
The CAIF also reports that many prosecutors believe insurance crimes are often too complex and technical to successfully prosecute
Since a significant segment of the public doesn’t care about insurance fraud it becomes a very enticing crime, according to Quiggle.
“Probably, the largest single source of insurance fraud is from normally average people,” Quiggle said. “Normally honest people that wouldn’t even think of stealing a ball point pen from a convenience store don’t hesitate to rip-off insurance companies for a couple hundred dollars if they get a chance to. Many people think they won’t get caught or think that insurance companies deserve to be ripped-off because they make so much money.”
Most of the Island’s fraud cases involve identity theft, but police estimate that there was about 15 cases of fraud in 2005 that involved traditional fraud practices such as forgeries and swindles.
Yet most cases of insurance fraud don’t involve the police until after an insurance company approaches them with its own investigation’s findings.
Safeco Insurance, the business with which investigators think Goldmanis committed fraud, is a nationwide insurer based in Seattle with over 80 special investigators. Similar to the National Insurance Crime Bureau, who investigate possible fraudulent claims across the country, these special investigators determine whether fraud occurred and submit the evidence to the local police to persecute. As a paying member of the NICB since 2001, all of Safeco’s Special Investigations Unit members attend the NICB training academy. Safeco referred Goldmanis’ case to the NICB, who did an investigation and turned it over to the Redmond Police Department.
The NICB is a non-profit organization dedicated to investigating and preventing insurance fraud and receives its funding support from member insurance companies.
“We enlist our services when we have a member company that is either the victim of a fraud or has paid-out money and its determined later on that it’s fraudulent,” Frank Scafidi, director of public affairs for the NICB, said. “Single-claim investigations are not unheard of, although we tend to go for the ones that are more broad-reaching or have more impact, such as these theft-ring type investigations where you have a lot of people doing a lot of damage across a lot of carriers.”
The NICB estimates that there is over $30 billion lost per year throughout the nation because of insurance fraud. And fraud is the second most costly white-collar crime in America behind tax evasion. Add it all up and insurance fraud costs Americans billions of dollars each year — the equivalent of $300 in higher insurance premiums for the average household. The CAIF has an even higher estimate of lost dollars. It states that $80 billion is lost each year from people who lie to their auto, health, property and business insurance companies.
“There’s a lot of scams out there, people try and make a fast buck off phony claims and you and I end up paying for it,” Scafidi said.