Lynn targeted for insurance fraud

LYNN – In September 2003, a 65-year-old grandmother was killed in what was later proven to be a staged accident in Lawrence, an event that led to the creation of an insurance fraud task force throughout Essex County.The task force, known as the Community Insurance Fraud Initiative, described Lawrence as a hotbed of insurance fraud. In all, 13 communities including Lynn and Revere were targeted. The others were Boston, Brockton, Chelsea, Fall River, Holyoke, Lowell, New Bedford, Randolph, Springfield and Worcester.The progress of that task force the past five years was summarized Wednesday in a report issued jointly by the Insurance Fraud Bureau of Massachusetts (IFB) and the Automobile Insurers Bureau of Massachusetts (AIB).Daniel Johnston, executive director of the IFB, said prior to the formation of the task force, for every 100 accidents in Lawrence there were 141 injuries reported to insurance companies – nearly four times the statewide average.”This inflated number of injuries was the result of a cottage industry of staged accidents in the city,” he said. “By 2008, that statistic had dropped to only 48 for every 100 accidents.”According to Johnston, the task force’s success in reducing fraud and the number of insurance claims in Lawrence translated to a reduction in premiums for policyholders.”(More than) $40 million has been saved in auto insurance premiums by Lawrence residents,” he said.Given the Lawrence task force’s immediate results, the investigative groups – comprised of local police officers, members of the Essex County District Attorney’s Office, the state Attorney General’s Office and insurance industry representatives – were replicated in the other communities between 2004 and 2006.In Lynn, the anti-fraud initiative saved policyholders $28.5 million from its inception to 2008. In Revere, where the task force was not implemented until December 2006, policyholders saved $9.4 million.The grand total for all 13 communities from inception to 2008 was $456 million in policyholder savings.Johnston said the task force has charged 369 people with insurance fraud and has seen convictions involving chiropractors, attorneys, physical therapists, runners and average citizens, many of them part of the loose network of collaborators turning a profit from their respective roles.The strategy clearly worked in Lawrence, where the larger chiropractors decreased by up to 90 percent their clinic counts and billings.”Staged accident activity in Massachusetts has reduced dramatically,” said Johnston, crediting the crackdown as the reason. The state Division of Professional Licensure also helped ensure cooperation from chiropractors, physical therapists and other professionals.For example, high-volume billing by chiropractors and physical therapists in Lynn decreased from $5 million to less than $3 million between 2003 – when the task force went into operation – and 2008.The study explained that when accidents were staged in Lawrence, they typically involved two cars, each with a large number of occupants – presumably to maximize the payback. “This drove the injuries to accidents ratio statistic through the roof,” Johnston said.Although the situation in Lynn was not as rampant as that in Lawrence, the statistics were still significantly higher than the statewide average. Prior to the task force’s arrival in Lynn, there were nearly 70 injuries reported for every 100 accidents, while the state average was 38. By 2008, there were 40 injuries per 100 accidents in Lynn – still above state average.As of 2008, the statewide average of injuries per 100 accidents had decreased from 38 to 26, a reduction law enforcement authorities and insurance industry representatives attributed to the task force success.Task force investigations since 2003 led to 1,189 arrests for insurance fraud and related crimes statewide. Of those, 99 were in Lynn and 10 in Revere. The Lawrence task force arrested members of a Methuen family that allegedly staged phony