LAWRENCE — The racket of fake accidents and getting away with them had become routine in the city on Sept. 4, 2003, when Altagracia Arias got in the backseat of a 1992 Acura Legend with hopes of making some money in a staged crash with another car.
There wasn’t much chance of getting arrested or hurt and it was quick, easy money, or so she thought as she was trying to sell seats for $200 apiece to friends at the Lawrence Senior Center just hours before that night’s crash at the intersection of Ferry and East Haverill streets.
Passengers filing phony injury claims with insurance companies could earn several thousand dollars for their participation in staged accidents. So, the 65-year-old great-grandmother was a willing participant in a scheme to scam insurance companies that had become a multi-million-dollar-a-year cottage industry in the city.
But Arias never lived to collect the $1,000 or more she would have made off a bogus insurance claim. She suffered a fatal brain injury when the accident didn’t go as planned. The “bullet” car she was riding in kept going through the intersection and crashed into a wooden utility pole after colliding with the target car. Arias’ head snapped forward violently, causing her brain to hemorrhage.
While Arias died committing fraud, her death was the catalyst for the state’s biggest crackdown on auto insurance fraud. Among the major results:
The auto insurance fraud task force assembled by Lawrence Police Chief John Romero in partnership with the Insurance Fraud Bureau of Massachusetts within weeks of the fatal staged car crash was so successful it became a model for nine additional task forces called Community Insurance Fraud Initiatives (CIFI) in a dozen other communities.
The practice of lawyers or health care professionals hiring “runners” to recruit accident victims involved in phony crashes has been outlawed.
Nearly 2,000 individuals have been charged with auto insurance fraud; almost 500 in Lawrence.
Three Lawrence area lawyers and five local chiropractors have been convicted of fraud.
By year’s end, the 13 cities with CIFIs will see a cumulative savings in auto insurance premiums of close to $1 billion.
Lawrence drivers will have saved about $75 million since the fraud crackdown. The average premium in Lawrence for 2012 was $1,291, down from $1,678 in 2004. That’s a drop of almost $400 per car for families in Lawrence, the fraud bureau said.
“Sometimes it takes a tragedy and a personal face to pass a law or bring attention to a particular issue,” said former state Sen. Susan Tucker, the architect of a state law passed in 2002 which made auto insurance fraud a felony. “In this case, the great-grandmother became the face of auto insurance scams going on all over Lawrence and other cities.”
Tucker was one of five people interviewed by The Eagle-Tribune who played significant roles in the city’s historic auto insurance fraud crackdown which began 10 years ago today with the fatal crash that took Altagracia Arias’ life.
The police chief
Police Chief John J. Romero said his commitment to root out auto insurance fraud initially developed from an anonymous letter published by Massachusetts Lawyers Weekly in March of 2003 that was headlined “Unethical Practices in Greater Lawrence Area?”
“The practice of personal injury law in the area has become a business, and the obtaining of clients is determined by who pays the most for the cases,” the writer said, adding that the practice had reached “runaway proportions.”
“It is my understanding that the ‘salespeople’ approach attorneys to bid on cases, and if the lawyer or the chiropractor does not pay, he does not get the case,” the writer said.
Romero was initially eager to proceed with an investigation into the shadowy world of “case running,” which was the key to proving any kind of fraudulent activity involving lawyers and chiropractors.
“Everyone knew what was going on in Lawrence. Yet, on the local level, there was no protocol on how to address it,” said Romero, who coincidently retired yesterday after 15 years as chief. “The way things were set up, it was more on the state level, dealing with the AG’s (Attorney General) office regarding prosecution. The police really weren’t involved.”
But that approach drastically changed soon after Arias’ death. Within days, police got tips that the accident was staged and learned that Arias had openly discussed it at the Lawrence Senior Center. One of those approached was the mother of then-police Officer Ricky Santiago, one of those assigned to investigate the crash.
“I along with two investigators, went to the senior center and developed information that this had in fact been a staged accident,” Romero said. “At this point, working with the state police, we were able to go after the participants criminally, particularly the two drivers, who were charged with manslaughter.”
Romero assigned two of his detectives to team up with investigators from the fraud bureau, the special investigative units of several insurance companies doing business in Lawrence, the Essex County District Attorney’s Office and the State Attorney General’s Office. He reached out personally to District Attorney Jonathan W. Blodgett and state Attorney General Thomas F. Reilly to get involved.
“Really, it’s unfortunate that it took somebody dying in a staged accident for this initiative to develop. But looking back 10 years ago, this was the catalyst that propelled us. And the results have been astounding. That cottage industry has been virtually eliminated. That’s not to say there may be car accidents that take place that people may exaggerate the injuries. But in terms of staged accidents, I would say it’s virtually eliminated in Lawrence. We’re not seeing them at this time,” Romero said.
‘The Lawrence Model’ excelled
Daniel J. Johnston, executive director of the fraud bureau was already well-versed on Lawrence’s auto insurance fraud problems. In 1991, he played a key role in creating the fraud bureau. Over the years, the bureau invested financial resources and manpower to fighting the fraud problems of his hometown.
But that didn’t stop the city from getting the dubious nickname “the auto insurance fraud capital of Massachusetts.”
“It all goes back to this one accident. It has certainly helped the fraud fight. It changed the way we conduct fraud-fighting in Massachusetts. Our investigation went after not only the staged accident people, but also the network of lawyers and health professionals who were involved,” Johnston said.
Armed with some information obtained from the bureau’s Detailed Claims Database, Johnston said he met with Romero “to talk about what was going on and see what we could do.”
The database tracks every claim in the state and enabled investigators to identify suspicious patterns in Lawrence, like “frequent flyers” – drivers or passengers who are often suspected of participating in the insurance fraud schemes because of the high number of accident and injury claims they file. The claims files also reveal billing histories of law firms and chiropractic or physical therapy clinics.
Use of the data and the new partnership with local police and prosecutors proved more effective than previous investigations by the fraud bureau.
“Up until that time, the fraud bureau took referrals,” Johnston said.
“The switch that was flipped. Instead of waiting until the cases were developed, we took a proactive approach by working with the police and arresting a lot of people. It definitely was a model way of attacking the problem of insurance fraud,” Johnston said.
“Because of the great success of the Lawrence task force, we branched out and set up nine other task forces throughout the state. Chief Romero and I went around the state and talked to other police chiefs,” he said.
The impact of the Lawrence task force on reducing fraud continues to draw national interest, too, according to Johnston.
“This year alone, the IFB has been asked to visit Maryland, Illinois, Michigan and even Australia. So, this effort has had wide-reaching impact,” he said.
Chasing the runners
Lawrence Police Sgt. Michael Simard, once the lead detective on the auto insurance fraud task force, traveled out-of-state several times with other investigators and the U.S. Marshals to track down runners who were hiding out in Allentown, Pa.; Tampa, Fla.; Savannah, Ga.; and New York City.
“Once we got the runners, we knew we could tie in the professionals — lawyers and chiropractors. Without the professionals, there would be no staged accidents. They’re the ones who fueled them. But without the runners, the professionals would have been untouched. It was easy catching the crash test dummies who sat in the cars. It was a little harder going up the chain of command,” he said.
The troubles and expense of traveling across country to catch a runner was usually worth it, according to Simard.
Especially Carlos M. Pinales, who police found crying in a closet of his apartment in Allentown, Pa.
“We were able to flip Pinales and use him as a huge witness for the prosecution. His testimony was instrumental in convicting several attorneys and chiropractors,” Simard said. “The most satisfying part of the job for us was when we were able to convict the lawyers and the chiropractors. We knew our work was validated at that point because all those professionals think they are smarter than everyone else. But, we proved they weren’t. We proved they were just greedy.”
A politician keeps her promise
Former state Sen. Susan Tucker actually set the stage for insurance fraud crackdown by authoring laws that gave law enforcement agencies tougher weapons to fight fraudulent claims.
She was initially elected to the Senate on a promise to Lawrence residents that she would work to lower auto insurance rates, which were among the highest in the state at the time.
Two years after the passing of her legislation to make auto insurance fraud a felony, Tucker was a key author of the so-called “anti-runner law,” which made it illegal for people to act as or hire “runners” — independent contractors who stage accidents and provide clients for lawyers, chiropractors and other professionals for phony insurance claims.
Tucker also called for investigations of Alan K. Cohen, the ex-Lawrence chiropractic clinic operator who made millions before he was convicted for auto insurance fraud. For years, she felt frustrated that law enforcement and state officials weren’t doing enough to eliminate the rampant auto insurance fraud that caused her constituents’ claims to soar
“But I knew there had to be a solution. What I learned through this was that team work was the key. That it would take so many agencies to address this: the DA, the state government, the local police, the detectives, the fraud bureau and the the media. It was a great lesson in problem solving for many, many agencies,” Tucker said.
DA escalated fraud fight
Essex County District Attorney Jonathan W. Blodgett heightened the anti-fraud efforts by convening a special grand jury to investigate the network of runners, chiropractors, lawyers and others believed to be behind the fraud in Lawrence.
Three lawyers and four chiropractors were among 16 people indicted. Charges were later dropped against one of the lawyers. But the other two attorneys and all four chiropractors were convicted.
“It was certainly a defining moment in the city of Lawrence in what Chief Romero aptly described as a cottage industry,” Blodgett said of Arias’ death.
“It sent shock waves through the Merrimack Valley. That gave a huge impetus for the whole law enforcement community, the ability to collaborate in a strong way. It just had a real impact. The accident became the impetus to a lot of spotlight focused on the problem. We went after everybody,” the prosecutor said.
Blodgett credited Romero for his aggressive efforts to eliminate auto insurance fraud.
“It was a good partnership that John and I had. Two prosecutors were assigned as point people for every single investigation that went through the District Attorney’s Office. The results are clear. It put everybody on alert: chiropractic offices and law offices. People understand if you engage in this fraudulent conduct, it will not be tolerated. Once the spotlight is on somebody, it usually drives away the bad actors,” he said.