You, An Honest Driver, Are Paying For Insurance Fraud Schemes: What You Can Do About It

I came across a video recently from personal injury attorney Mike Rafi that laid out one of the most blatant insurance fraud schemes I can remember seeing — minus the guy dressed in a gorilla suit tearing up a car.

It's called Operation Sideswipe, and if you're wondering why, at least in part, your insurance premiums keep going up, this case is a pretty good place to start.

Here's what happened. Going back as far as 2011, a network of people called "slammers" would intentionally crash their vehicles into 18-wheelers. These were not accidents, you see. They were staged collisions, choreographed to make it look like the truck driver was at fault. The truck drivers had no idea this was happening.

After the impact, the passengers in the slammer's car would claim they'd been injured. Then a group of corrupt personal injury lawyers would file claims, push for settlements and cash out.

Why the insurance companies would pay

The trucking companies and their insurers would pay up, because settling was less expensive than fighting every single case in court.

And it went deeper than that. Like six-feet-under deeper. In 2020, a federal witness who was secretly cooperating with the FBI was shot 10 times on his mother's doorstep just four days after his indictment was made public.

The person who allegedly paid for the hit was a disbarred attorney living in a $1.2 million home with a former Hollywood stuntwoman.

All this reads like a novel you might buy at an airport bookstore. However, by the time federal authorities finally got the case under control, 63 people had been charged, and a key witness was dead.

This went on for years. And here's the part that affects you: Every one of those fraudulent claims got paid:

• Every inflated medical bill
• Every bogus lawsuit settlement
• Every fake injury claim

That's how insurance works

The insurance companies paid it all. And when insurance companies pay out billions in fraud, they don't just absorb the loss. They raise rates.

That's not greed. That's math. That's how insurance works.

The money has to come from somewhere, and it comes from you. From me. From every honest driver who has never filed a fraudulent claim in their life.

You pay your premium every month, on time, year after year. You've never caused an accident. You've never exaggerated a claim. And yet, your rates will go up partly because a ring of crooks in New Orleans intentionally crashed cars into trucks and walked away with settlement money.

The fraud gets baked into the system. The insurers raise prices to cover the losses, and the cost spreads across the entire risk pool. You end up paying the bill for somebody else's crime.

Just imagine what we don't even know about

Now, here's the thing. Operation Sideswipe is a case we know about. But I want you to think about what I call the coconut theory.

If you're sitting on an island, and a coconut falls on your head, the chances are there are lots of coconuts falling all around that island. You were hit with just this one.

We learned about this one massive scheme because it got big enough to attract federal attention. But that means — and think about this — there are many similar scams, or even larger ones, happening all over the place that we don't know about.

Smaller operations. Individual fraudsters. Staged accidents in cities across the country that never make the news.

And I'll bet Operation Sideswipe is not the first insurance fraud case you've heard about, so plenty do make the news. Each one is a coconut hitting the insurance system, and each one costs all of us money.

If one scheme in one city involved 63 people and went on for years, how many are running right now that haven't been caught? How many fraudulent claims are being paid today that will never be investigated?

Every one of those payments ends up as part of the rate calculations that determine what you and I pay for coverage.

Insurance fraud is not a victimless crime. It's a tax on every honest driver in the country, collected one premium increase at a time.

What you can do

So what can you actually do about it? How can you help put an end to this insanity? A few things.

1. After an accident, the single most important thing you can do is document everything.

I mean everything. Not most things. Getting the hint? Everything with a capital E.

Take out your phone and take pictures and/or record video of every angle of:

• Both vehicles
• The road conditions
• The traffic signs
• The weather
• The license plates
• The other driver
• Their insurance card
• Any debris on the road
• The positions of the vehicles before they get moved

Take more pictures than you think you need. You can never go back and take the ones you missed.

2. Walk around the scene, too, recording video.

Capture the other driver's demeanor.

• Are they limping?
• Are they on the phone with someone who seems to be coaching them?
• Is there a passenger who's silent at the scene but could later claim they were thrown forward and hurt?

Record all of it. Your phone's camera is the best witness you will ever have. It doesn't forget. It doesn't get intimidated. It doesn't change its story three months from now.

3. Open the Notes app on your phone and list every detail.

• The time
• The exact location
• Which lane you were in
• What the other driver said — word for word
• The names of any witnesses
• The badge numbers of responding officers

Also, note anything that seems unusual:

• A passenger who is jumping around and yelling at the scene (they could claim later to have a broken leg)
• A driver who seems oddly calm for someone who just got rear-ended
• A car that pulls up and someone gets out who wasn't involved in the crash

Write it all down. Three months from now, when the claims adjuster asks you about the details, you might not remember, but your notes will.

Why you can't just trust the system

Is it unfortunate that we have to be this diligent? Heck, yeah. Absolutely. It would be nice to just exchange insurance information, shake hands and trust the system. But the system is being abused, and we're all paying the price, literally.

Operation Sideswipe worked because there was no evidence to contradict the fraudsters. The slammers and their passengers could say whatever they wanted, and without contradicting evidence, the system believed them.

The only reason the scam finally got exposed was that federal investigators spent years building a case with resources you and I don't have.

What we do have is a phone in our pocket that takes pictures, records video and lets us type notes.

• Every picture you take is evidence
• Every video clip is a record
• Every note you write is a real account that carries weight in a way that a vague recollection months later can't

Your evidence can help protect you from being accused of causing something you didn't cause. And it's what helps your insurance company pay the honest claims quickly and fight the fraudulent ones.

Insurance fraud costs every single one of us, every single year, in higher premiums. The best defense we have isn't law enforcement.

It's you, at the scene, with your phone out, paying attention.

Want to learn more about insurance? Visit KarlSusman.com.

Related Content

• Are You Committing Insurance Fraud Without Realizing It?
• 5 Top Insurance Scams to Watch Out For
• Making Fraudulent Insurance Claims Can Land You in Jail
• The Sneaky Scams Driving Up Every Driver's Insurance Bill
• 5 Tips to Help Avoid a Denial on Your Insurance Claim

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.