Seven years ago, the city of Lawrence was justifiably labeled the Fraud Capital of Massachusetts. An epidemic of insurance fraud was exposed by a troubling number of staged accidents for profit. Insurance premiums had skyrocketed, yet due to some tempering of insurance rates in urban areas by the commissioner of insurance at the time, premiums were kept from going as high as they could have gone in Lawrence.
Gladly, that is in the past. Thanks to a concerted, coordinated effort by the Lawrence Police Department, the Insurance Fraud Bureau of Massachusetts and the Essex County District Attorney, along with assistance from the Attorney General's office, more than 400 people have been charged with various forms of insurance fraud crimes. From attorneys, to chiropractors, to runners, to staged accident "victims," the Community Insurance Fraud Initiative task force has seen its efforts pay off. This CIFI task force still operates in Lawrence today, despite the unfortunate pullback of resources by the Lawrence Police Department, a budgetary consequence we all hope is temporary.
Back in 2003, Lawrence was festering with a cottage industry of staged accident perpetrators, often orchestrated by a licensed professional medical practitioner or attorney. Indeed, back then, there were 22 chiropractic or physical therapy clinics in Lawrence that were labeled "high-volume clinics" for the unusually large number of auto accident victims they "treated" — some legitimately, of course, but many with non-existent injuries who were used only as a means to file fraudulent claims. Today there is only one large clinic remaining, which has not been accused of wrongdoing. Several lawyers who were implicated in the staged accident schemes have been prosecuted. It seems that a degree of normalcy has returned.
And the citizens of Lawrence have benefited. As a result of taking tens of millions of dollars of fraudulent claims out of the system, car insurance premiums have come down to levels well below the subsidized levels of six years ago. Citizens today pay more than $500 less per car on average each year, a savings of more than 30 percent from prior levels.
It is unfortunate that on the heels of the recent pullback of resources by the Lawrence Police Department from the various task forces that fight crime so effectively in the city, a handful of bad actors have returned to criminal behavior. This is seen in the recently reported increase in stolen cars. In the Fraud Bureau, we have seen that some of these were thefts arranged to perhaps get out of a car payment, or to unload a gas guzzler. And we are investigating those closely.
We hope that the small portion of the population that caused premiums to be so high in the past will not return to their ways, on the theory that nobody is watching. In fact, the task force that was formed in 2003 is still quite active, and will remain in Lawrence. Cases are still being investigated and prosecuted, and we hope that additional resources from the Police Department will return soon. In the meantime, we carry on the mission for the benefit of the law-abiding citizens of the city, who can help by reporting suspected insurance fraud on our hotline: 1-800-32FRAUD (1-800-323-7283).
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Daniel J. Johnston is Executive Director of the Insurance Fraud Bureau of Massachusetts.