New York’s ‘Filthy Five’ Spotlights Major Insurance Fraud Schemes, Including Southern Tier Arson Ring

The New York Alliance Against Insurance Fraud is highlighting what it calls five of the most outrageous alleged insurance fraud schemes uncovered across the state this year, including a Southern Tier arson ring, a $120 million healthcare fraud case in Queens, and millions of dollars in allegedly fraudulent medical transportation claims.

The cases are part of the organization’s annual “Filthy Five” list, which is intended to draw attention to the scope and cost of insurance fraud in New York.

Frank Sztuk, spokesperson for the New York Alliance Against Insurance Fraud and Senior Vice President of Investigative Services for the Delta Group, told Radio Catskill that insurance fraud can involve individuals, businesses and organized operations.

“The simplest way to explain insurance fraud” is the abuse of the insurance system for financial gain, Sztuk said. He said fraud can be committed by individuals, corporations and, in some cases, even insurance companies.

One of the largest cases highlighted by the Alliance involves an alleged $120 million Medicare and Medicaid fraud operation in Queens.

Sztuk called the case an “egregious abuse” of the healthcare insurance system and said losses from large fraud schemes can ultimately affect consumers through higher insurance costs and the prices they pay for goods and services.

Other cases on the Alliance’s list include an alleged $35 million Medicaid transportation scheme on Long Island, an alleged $9 million phantom eye surgery scheme and an alleged arson-for-insurance operation in Franklin County.

Southern Tier Arson Case

The fifth case highlighted by the Alliance involves a Southern Tier multi-fire arson ring, in which multiple structure fires were allegedly arranged as part of an insurance scheme.

Sztuk said arson connected to insurance fraud can put far more than property at risk.

He recalled other cases in which deliberately set fires caused extensive damage and injuries. In one previous case, he said two brothers allegedly collaborated to burn a house and the resulting fire damaged several neighboring homes and caused injuries.

Financial difficulties, including mortgage problems, can sometimes be a motivation behind arson-for-profit schemes, Sztuk said.

Staged Crashes an Emerging Concern

Another growing concern is staged automobile accidents.

Sztuk said some staged crashes involve highly organized operations and can be connected to networks of medical providers, attorneys and others seeking to profit from insurance claims.

He said staged accident fraud is not limited to New York City or downstate communities.

“It’s not just downstate. It’s upstate as well,” Sztuk said.

One common scenario can involve a driver deliberately braking in front of another vehicle, particularly when the second driver is following too closely. The resulting rear-end collision may initially make the unsuspecting driver appear responsible.

Sztuk recommended that drivers consider installing dashboard cameras, avoid tailgating and remain aware of surrounding vehicles.

Following a crash, he said drivers should photograph the vehicles, damage and people involved and contact police, even when the damage appears relatively minor.

Consumers Urged to Watch for Red Flags

Consumers should also be cautious when someone immediately directs them toward a particular repair shop, attorney or healthcare provider following an accident, Sztuk said.

He pointed to what he described as “predatory towing,” in which an unscrupulous operator may steer an accident victim toward a particular body shop. He emphasized that most towing companies and repair shops are legitimate businesses, but said consumers should remain alert to possible schemes.

Sztuk also warned consumers to be cautious about unsolicited approaches from attorneys or other third parties who appear to already know they were involved in an accident.

The New York Alliance Against Insurance Fraud estimates that insurance fraud costs the U.S. economy about $308.6 billion annually, while New Yorkers pay more than $920 per year through higher premiums, healthcare costs and increased prices for goods and services.

Sztuk said stronger enforcement and greater public awareness are important parts of reducing those costs.

“Fighting insurance fraud is a distinct way that we can try to help people make their lives more affordable,” he said.

Photo by Markus Winkler on Unsplash