Insurers Say Crash Scams Are Increasing : Automobiles: Companies and some law officers say fraud rings leaving L.A. may be preying on well-insured Ventura County drivers.

The insurance company considered it a suspicious auto accident from the start.

A car carrying two occupants hit a Ford Taurus carrying four people in Oxnard. Neither car had much damage, but five of the six occupants sought medical care and billed the insurance company for $3,000 to $4,000 apiece.

When a State Farm Insurance claims representative examined the August, 1991, accident, she noticed striking similarities to previous claims, with the same number of victims, identical injuries and the same physicians and attorneys.

When she confronted one of the attorneys with the information, the victims’ claims were quickly dropped.

Insurance industry officials and some law enforcement officers have detected a steady increase in suspected automobile insurance fraud. Some investigators believe that Los Angeles-based car insurance fraud rings are spilling into Ventura County to stage phony accidents and collect damages from insurance companies.

“It’s getting a little too hot in L.A.,” said Elena Stern, spokeswoman for the state Department of Insurance. In the past few years, law enforcement and insurers have become more aggressive in cracking down in Los Angeles, which is known as the insurance fraud capital of the nation, she said.

Meanwhile, Ventura County, with its pool of affluent, well-insured drivers and close proximity to Los Angeles, is proving attractive to such fraud rings, she and other industry officials say.

In 1990, only four suspected fraudulent claims from Ventura County were reported by the insurance industry, Stern said. Last year, the number doubled. So far this year, the industry has tallied 21 suspicious claims.

To be sure, this is a minuscule problem compared to 6,333 questionable claims reported in Los Angeles County last year, Stern said.

But the spillover has begun to attract the attention of some law enforcement officials in Ventura County. The California Highway Patrol office in Ventura has reported an increase in suspicious car accidents in the past six months.

And Jeffrey G. Bennett, head of the Ventura County district attorney’s fraud unit, said he has recently had several inquiries about auto insurance fraud rings. “There is evidence to suggest that there is this kind of ring,” he said.

Yet the district attorney’s office has not yet prosecuted a case involving an organized network of insurance scam artists. And the Ventura County Sheriff’s Department and every other police agency in the county said they have no active investigations of such fraud. Although some investigators said they have heard recent rumors about such groups, no department said it was considered a problem so far.

“The insurance companies employ their own investigators, and they’re the first to know,” Ventura Police Lt. Don Arth said.

State Farm spokesman Tom Cordova said his company has seen claims from Ventura County jump about 30% in the last year. Officials at Farmers Insurance Group and 20th Century Insurance Co. also report substantial claim increases in Ventura County.

“It’s crime coming to the suburbs,” Cordova said.

Industry officials estimate that 25% to 30% of premiums go to cover false claims. In 1992, auto insurance fraud will cost California policyholders more than $3 billion, and bogus claims are partly why insurance costs continue to rise, officials said.

Consumer advocates and insurance industry critics, however, are suspicious about whether fraud is as much of a problem as insurers claim.

John H. Howard, a Ventura plaintiffs attorney, said the industry frequently releases “phony statistics” to the public in an effort to shift the blame of rising insurance costs. “I haven’t heard that there are any L.A. rings that have gravitated to this area,” Howard said.

Insurance companies have a selfish interest in crying about fraud, Howard said. “The insurance industry has an agenda. They would like to make it more difficult for people who have injuries to bring claims.”

According to police and insurance officials, the most common scams are paper accidents, staged accidents and setup accidents.

The so-called “paper accidents” are those that never actually take place. The crash is manufactured on paper only, as unscrupulous doctors sign forms attesting to treatment that never occurs. Victims have prepared scripts and practice what to say to insurance companies.

Staged accidents are real, but carefully choreographed by all parties involved. Frequently poor immigrants in need of cash are solicited to take part in these schemes. For a few hundred dollars, participants deliver a well-rehearsed statement to the insurance company about the accident.

Setup accidents involve luring an unsuspecting motorist into a crash. A popular technique is called the “swoop and squat,” in which those staging the accident typically use an older vehicle with existing body damage to act as the squat car.

The squat car will position itself in front of the victim--usually someone driving a late-model car that is likely to carry insurance--and narrow the distance between them. A second vehicle--the swoop car--approaches in the next lane and suddenly changes lanes to cut off the squat car. The squat car’s driver then slams on the brakes, and causes the unwary motorist following to rear-end it.

In a swoop-and-squat scam, those staging the accident often have several passengers in the car. One of them gets out of the car and begins directing traffic to get rid of potential witnesses. Usually, no one claims an injury at the scene, and the victim exchanges insurance information with the stagers. Later, the victim receives a letter about whiplash, back pains or other injuries that are difficult to prove or disprove.

Car insurance fraud organizations, some as large as 100 people, are usually headed by doctors and lawyers, said John Millen, a spokesman for Farmers Insurance Group.

He said Ventura County motorists make excellent prey because they are more apt to let down their guard while driving in the suburbs. “There’s more naivete; you don’t expect it,” said Millen, who used to live in Simi Valley.

Auto insurance fraud rings are branching into the suburbs because they know that authorities and insurance investigators are too distracted with organized criminal groups in Los Angeles to worry about places like Ventura County, said CHP investigator Sue Mustafa, who is based in Los Angeles.

“A lot of times these crooks think, ‘I’ll get a policy in Santa Barbara and get into an accident in L.A., and the people in Santa Barbara won’t be familiar with the players,’ ” Mustafa said.

Rick Dinon, a senior vice president at 20th Century Insurance Co., advises motorists to drive defensively, and to call the police department and insurance company when an accident occurs.

One suspicious sign is a car carrying several passengers, he said. Dinon points out that Southern California drivers are not well-known for car-pooling. If a motorist suspects a staged accident, he recommends that the driver count the number of people involved and get identification for everyone.

Usually those staging an accident will claim “soft-tissue” injuries, such as neck pain or backache, that is difficult to verify, Dinon said.

“The medical bills are typically $3,000 to $5,000, and they’ll ask for $10,000 to $15,000,” said Donald Garrard, a Los Angeles attorney who specializes in defending insurance companies.

Garrard, who opened a branch office in Ventura four years ago, said that office’s caseload has quadrupled since then. He said Simi Valley and Camarillo have produced a number of cases that insurers suspect as auto fraud. “We’re so busy, we can’t hire lawyers fast enough,” Garrard said.

The insurance industry has only begun actively fighting suspected bogus claims in court in the last five years, Garrard said. Historically, it was cheaper--and often still is--to settle the claims rather than pay expensive legal fees to challenge bogus claims, he said.

On average, he said, it costs three to four times more to go to court than to settle.

“My clients won’t like me saying this,” Garrard said, “but the insurance industry is as much to blame as anybody. The insurance companies paid like slot machines. For years, and years, they just paid these claims.”