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It's a problem that insurance officials don't like to discuss, but it's impossible to ignore. Much of the insurance fraud in the United States involving organized groups of criminals is committed by recent immigrants who target fellow immigrants with a limited command of English.
“Immigrant groups are disproportionately victims of insurance fraud - whether it's insurance agents who pocket their premium dollars, or crooks who form a bogus company that rarely pays claims,” says Dennis Jay, executive director of the Coalition Against Insurance Fraud (CAIF). “That's what we saw after the 1992 riots in Los Angeles, when about 200 Korean business owners learned the hard way that the offshore companies they had bought insurance from were just shells.”
It's not surprising that bogus insurers flourish among limited- English speakers, says Ken McEldowney, executive director of Consumer Action, an advocacy group primarily for limited-English speakers based in San Francisco. “They have the advantage of being able to speak the same tongue as their potential policyholders. Established insurance companies often don't have bilingual or multilingual agents. Also, insurance regulatory agencies may lack staff investigators or consumer advocates who speak the language of the immigrant community.”
“A popular scam involving life insurance is the faking of deaths of foreign nationals, who purchase insurance in the United States, return to their home country and 'die' suddenly,” wrote Philip E. Stano, senior counsel at the American Council of Life Insurance. “This scenario is often referred to as a 'white van' case, due to the numerous 'white vans' reported to have taken the lives of so many foreign nationals on back roads. Of course, these white vans mysteriously disappear after the accident and are never located.”
Recent immigrants are implicated in many fake-death cases, Jay says, because “It's often very easy to get a fake death certificate in your native country, as well as other 'proof ' of death and burial. And the country is likely to be far away, making it very expensive for an insurance company to establish fraud. The life insurance industry has really been way behind the curve in rooting out this kind of scam.”
Staged motor-vehicle accidents are also common among poor immigrants. In a typical incident, two or three cars will box in a late-model auto that likely has good insurance coverage. The driver of the lead car brakes suddenly, forcing the victim into a collision. Injury claims then are filed against the victim's insurer, alleging various internal injuries.
A variant of the staged-accident scam involves “ghostriders.” In a sting operation lasting three years, the fraud division of New Jersey's insurance department staged more than a dozen fake bus accidents. The investigation led to the arrests of 107 people who jumped aboard after the accidents with the intent of collecting on a false-injury claim.
The crime rings specializing in staged auto and truck accidents “generally consist of three different levels,” according to Mother Jones magazine. “At the top, there are the professionals - doctors or lawyers - who make the schemes profitable by diagnosing false injuries or filing fraudulent claims. Next are the 'cappers' or 'runners,' the middlemen who obtain the cars to crash, farm out the claims to the professionals at the top and recruit the bottom-rung participants - people desperate enough to be in a car when it actually wrecks. According to investigators, cappers usually hire within their own ethnic groups.”
Though better law enforcement is needed to reduce the incidence of insurance fraud, McEldowney says, improved educational efforts also would be useful. “All too often, limited-English immigrants lack access to information about insurance laws. The consequences can be seen in the workers' compensation area when job layoffs occur. Scam artists show up at the back door, recruiting folks to file fraudulent workers' comp claims. They probably score most heavily in workplaces where there's nothing posted about worker comp laws in languages other than English, and the scam artists speak the language spoken by the laid-off employees.”
Ingrained attitudes shared by many poor immigrants may be harder to address effectively. According to Don Garrard, a Los Angeles lawyer who defends insurers against bogus claims, insurance fraud is rampant in the city because “there are a lot of people from poor backgrounds and from [countries] where corruption runs rampant, from the government on down. People don't see insurance fraud as corrupt. It's just another way to get money.”
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