How Staged Accidents Work

(AN UNDERCOVER PERSPECTIVE)

by Thomas Sarinana

'Capping'-the unlawful solicitation and referral of staged auto accident cases to medical providers and attorneys for a fee-is a violation of Business and Professions Code 6152 and the California Insurance Code. As an investigator, I've worked undercover and have personally been paid capping or front monies by people working on behalf of doctors' and attorneys' offices. In every case, I was paid for my solicited participation in a staged auto accident or for referring other participants (other undercover officers) for the purpose of staging accidents. For the use of our Auto or other insurance, these other participants and I were paid $1,500 to $3,500 (cash) in every case, and $1,500 to $2,000 for referring another person to participate in the staged accident.

In my experience, the crime of capping is usually tied in with the more serious criminal felonies of insurance fraud, grand theft, conspiracy, and other crimes. Cappers associate with attorneys and doctors, referring clients and patients to them for a fee. These unscrupulous doctors and attorneys currently pay capping or referral fees ranging from $800 to $2,000 per client referral.

Most staged-accident rings are highly organized and controlled by an attorney or by one or several individuals closely associated with a law office or medical clinic. The rings tend to operate in similar patterns.

The stager/capper handles the actual planning and details of each collision. He or she arranges the participation of other individuals to become players-that is, the drivers and passengers of vehicles involved in the phony accident. The stager/capper often provides actual scripts or information sheets complete with every detail of the accident. They include diagrams of the supposed accident scene; the names, addresses, and seating positions of the players; the insurance company information; how, when, and where the accident supposedly occurred; and the alleged drivers' driver's license information. The capper distributes these scripts to the plotters and rehearses each person's role in the accident.

There are various types of staged accidents. In what's called a 'swoop and squat' accident, an innocent victim is set up in a deliberate, intentionally caused collision. Two vehicles are used. One vehicle, usually an older vehicle with multiple occupants, is set up to receive the impact. This is sometimes called the 'receiver.' The second vehicle usually has a single driver and acts as a non-impact vehicle that will swoop in front of the receiver and be a contributing cause to the accident. These two vehicles travel the roadways looking for an unsuspecting victim driving a vehicle that appears to be insured. When the proper victim is found, the receiver positions his vehicle in front of that person's vehicle. At a given moment, the second suspect vehicle, driven by the lone occupant, performs some type of traffic maneuver to give the receiver an excuse to slam on his brakes and cause the unsuspecting victim to rear-end the receiver. After the collision, the suspects obtain the victim's license number and insurance information and then quickly leave the scene before the police are summoned to investigate. The occupants of the receiving vehicle contact their attorney to pursue a claim for bodily injuries and damages.

A variation of this scenario occurs on the freeways, where suspects engage in the swoop and squat technique and then provide their information to the Highway Patrol.

A second type of staged collision is called a 'paper accident,' and can be accomplished in different ways. In some cases, two people with their own vehicles conspire to report that they were involved in an accident together. Usually a capper has recruited these individuals and orchestrates the 'accident.' One driver, usually the insured, will be at fault and will claim liability for hitting the other vehicle. The criminals commonly refer to the insured vehicle as the 'bull car' or 'the hammer'; the claimant car is the 'cow car' or 'the nail.' The damage on the claimant car may already exist, or it may be intentionally inflicted to make it appear as if the two cars actually collided. This is accomplished by simply taking the two cars and crashing them together in such a way as to simulate the intended collision described in the claim. The drivers who actually crash the cars may be the ones who later claim to be the insured and the injured driver, or they may be the capper assistants. Once the damage has been done, the cappers and assistants designate who the drivers and occupants will be for each car.

A popular type of paper accident is the alleged hit and run. The scheme is accomplished by obtaining or possessing an insured vehicle with existing damage or with damage inflicted on it. The vehicle is then filled with the players (driver and passengers), who are briefed on the details of the 'accident.' They then park the insured vehicle on a public street and summon the police, or drive to a police station to report the hit and run. Having authenticated their phony accident with a police report, the suspects then pursue their fraudulent injury claims against the driver's insurance company.

After the players conspire to report the nonexistent or staged collision to the insurance companies, the stager/capper then sells the accident case to either an attorney's office, a doctor, or a medical clinic for a negotiable or fixed price. Usually the attorney or buyer of the cases pays the capper $800 to $2,000 per player.

I've found that the capper usually has a close working relationship with one or more attorneys, legal office administrators, doctors, medical office administrators, or medical clinics. If the buyer of the accident case is an attorney's office, the attorney or administrator sends the players to a doctor or clinic with which the law office has an arrangement. After enough time has gone by for the players to have received medical treatment, the attorney negotiates settlements for them with the insurance company. If the buyer is a doctor's office or medical clinic, the doctor or administrator refers the case to a law office to file the insurance claim. The law office then collects the amount due the doctor for the treatment supposedly rendered. Additionally, the buyer generally receives a 25% to 70% kickback on the insurance settlement monies from the other professional's office simply for using its services and allowing it to profit, too.

The stager/capper always tells the players not to mention to the attorney or doctor the fact that the accident or injuries were nonexistent. This insulates the attorney or doctor from prosecution.

The office administrator may act either as a buffer between the stager/capper and the doctor, or the administrator may actually be acting as the doctor or attorney. If the administrator is actually in charge, he or she generally employs a doctor or attorney to sign papers and give the business an air of legitimacy. In either case, the administrator is usually the person who processes the paperwork on the insurance claim and deals directly with the insurance company.

The players in each vehicle usually claim soft-tissue injuries and receive or claim to have received extensive medical treatment (normally, physical therapy such as heat treatments). Soft-tissue injuries are not visible on an x-ray and are typically diagnosed on the basis of the patient's complaint of pain.

In my experience, claimants often don't receive the treatments the clinic bills for. I've seen many undercover operations in which I've posed as a client, shown up at a clinic, and signed in for a week or more without ever seeing a doctor or receiving treatment.

The doctor or medical clinic plays an important role in these fraudulent schemes because they provide medical treatment and billing for injuries that never occurred. The amount of this alleged treatment billing is the basis for determining the claim's total settlement from the insurance company.

I've participated in search warrants on cappers' residences and participating doctors' and attorneys' offices. In each instance, officers found evidence supporting the underlying felony violations under investigation, as well as evidence that the capping had occurred between the cappers and the doctors or attorneys.

During undercover investigations, I've seen elaborate records kept by cappers of their financial dealings with both the street-level participants (players) and the doctors and attorneys to whom the cappers refer the cases. They maintain records relating to referrals and the people they've done business with. These individuals often operate on a volume basis, making record keeping a necessity. Records may include:

• Insurance and claim documents
• Documents with names, addresses, telephone numbers
• Documents listing the who, what, where, and when of a claim, including diagrams of alleged accidents

Suspects often possess business cards of the professionals dealing with the claims.

The doctors and attorneys to whom capped cases are referred also keep some type of record as to who referred the cases and how much was paid for the referral. Often the name of the capper is written somewhere in the patient or client folder. Records of capping or referral-fee payments are often found in a separate book, notepad, or journal (called 'capping ledgers') kept by the suspected doctor or attorney. I've found that when suspect cappers, doctors, and attorneys keep records of capping payments, they're often disguised as investigative costs or other professional services.

In my experience, these records are often kept on computer, especially in doctors' and attorneys' offices. They may be protected by computer encryption or password. It's also possible to hide a file so that it doesn't appear on the computer's directory without the use of a password or special software. It then becomes necessary to seize the computer, electronic storage devices, central processing units, monitors, disks and tape drives, printers and manuals, and handwritten or printed materials to ensure proper, safe recovery of the material.

While assisting on search warrants, I've found such documents on private persons, in residences, in vehicles, in places of business and professional offices, in briefcases, and on computers. Documents may relate to current criminal activity or crimes that took place as long as four years previously. Some law firms target certain types of commonly staged accident scenarios that are almost exactly the same. I don't believe that an attorney can handle all these cases without realizing that they're repeated staged-accident scenarios.

Almost all the monies used to finance these illegal operations are derived from insurance companies in the form of injury-claim payouts on the phony accidents. The sums are usually deposited into the law office trust account and then withdrawn to be available to make payments to the cappers, doctors, and other participants.

Attorney and medical offices' bank records often reflect the cash flow used to finance the entire illegal operation. Sometimes the office is careful to keep the Attorney Client Trust Account clean, so that it won't reflect any illegal activity-but the general account won't be kept as carefully.

The usual method of payment is cash, because it leaves no paper trail. It's not unusual for attorneys, doctors, and their employees to maintain cash on hand to pay cappers.

Sometimes, the attorney deposits the settlement check from the insurance company into the trust account. Then the attorney writes a check for the client's settlement amount on the trust account and gives the check to the office administrator, who gives it to the capper. The capper then forges the client's signature and deposits the check into his or her own personal account, or cashes the check at a check-cashing service store. The capper writes the client a check on his or her own account or pays the client cash for whatever the agreed-upon amount was-and keeps the difference as profit. Sometimes the attorney won't pay the capper directly with a check from the trust account but will do so from the general account.

In other law offices, the trust account is used indiscriminately and reflects payments to stagers/cappers and kickbacks. The office accounts also often show when an office administrator is actually the person in charge. If the administrator owns the office, at least one of the office checking accounts will generally be treated as if it were the administrator's personal account.

While the administrator handles the trust account properly, often all the money transferred to the general account is then used as the administrator's own. Frequently, an administrator will make real estate, vehicle, and other purchases directly from the law office's general account. Seizure of all bank records, financial records, records of deposits and withdrawals, checkbooks and check registers, monthly bank statements, cash receipts, journals, and accounting documents are necessary to determine actual ownership of a law office and trace the flow of funds between individuals engaged in handling fraudulent insurance claims. These records also frequently show that capping has occurred.

The homes of attorneys, cappers, and other participants almost always contain evidence that links the suspects to the crime. Sometimes, evidence of insurance fraud and conspiracy has been recovered at suspects' homes or garages. It's common practice for attorneys to work at home as well as at the office, and the attorney may feel that a home is a safer repository of incriminating evidence than a law office.

Suspects' motor vehicles are also likely to hold evidence of insurance fraud or conspiracy. Cappers often use their cars to visit and sign up potential clients. One capping journal was recovered in the capper's own car.

I know some law offices in which the administrator has contractual agreements with an attorney to use the attorney's name for business purposes, and has in fact set up the law office solely for the purpose of generating and submitting fraudulent claims to insurance companies, conducting no legitimate business. This type of business is referred to as an 'insurance fraud mill.' It solicits cases or accidents that are staged, set up, or nonexistent. The accident scenarios described in the client files found in these offices are often the same, with only the names, dates, and accident locations changed. In one office that I visited many times, I've never seen or spoken with an attorney, but I've watched new clients brought to the administrator by cappers. Once, the administrator bragged that he employed the lawyer and that the lawyer would not even come to the law office without asking the administrator's permission-to avoid being arrested for trespassing!

Law firms willing to engage in the knowing representation of a client who had participated in a staged accident are usually engaged in handling other staged-accident cases. Similarly, medical clinics that allow patients to sign in for treatment that doesn't occur are usually allowing that practice to occur frequently with other patients. A law office that engages in capping is likely to have a large percentage of fraudulent accident cases in its business.