New state office delves into vehicle insurance scams
| • | Cut-rate health insurer's license in jeopardy |
By Rod Ohira
Advertiser Staff Writer
One week after his stolen car was found undamaged, the owner filed an insurance claim seeking more than $2,000 for customized tire rims he said were missing.
Although he could not offer proof to the contrary — such as a receipt of purchase — the man claimed the standard-stock rims and tires that were on the car when it was found were not his.
Because of the suspicious nature of the claim, the insurance company reported the case to a new branch of Hawai'i Insurance Commissioner Wayne Metcalf's office that specializes in investigating and prosecuting fraudulent auto claims.
When the owner produced a photo, which he said was taken on the Mainland, of himself in front of a car with customized rims, investigators saw something else in the picture that exposed the fraud.
By enhancing a street sign in the background of the photo, it was determined the picture was taken locally at Schofield Barracks. Investigators also discovered that the car in the photo was not the one the insurance claim was for. The owner has been indicted on charges of insurance fraud and attempted theft.
This is typical of the type of scams that are driving up the cost of auto insurance in Hawai'i, said Metcalf.
"It's costing each family $165 more in annual premiums," the commissioner said. "Based on 628,000 auto insurance policies in Hawai'i, my estimate is fraud is costing us over $100 million."
The Coalition Against Insurance Fraud, a Washington, D.C.-based nonprofit organization, says one out of every six auto-insurance claims nationally is fraudulent. "Fraud crimes are an epidemic on the Mainland," Metcalf said. "We're dealing with the problem in Hawai'i before it becomes an epidemic."
Five full-time investigators have been assigned to the new motor vehicle insurance fraud investigation branch, headed by former Pu'uhonua Domestic Violence Drop-In Center and Domestic Violence Clearinghouse attorney Lei Fukumura. They have been actively working cases since August. In seven months, they have obtained 11 indictments against 13 people and successfully resolved six cases.
Fukumura prosecutes most of the cases, which are mainly felony theft or attempted theft offenses. Her investigators are working about 75 cases, but each has a total load of about 20 to 30 complaints that need to be checked out.
"The general public doesn't see fraud as a real crime," Fukumura said. "They pay premiums and never make a claim, so when they do, the attitude is I might as well get some money back."
"Owner give-up" and "soft tissue" claims are common frauds in Hawai'i.
The first involves a registered owner who can no longer keep up payments on a vehicle, which is then reported stolen and winds up being burned in a cane field. A claim is made with the insurance company to pay off the loan balance.
"Soft tissue" claims involve accident injuries "blown out of proportion," say investigators. It's tough to prove that someone is faking an injury but investigators have caught people who continue to work despite claiming disability. This type case demands a lot of surveillance work, investigators say.
Metcalf permitted investigators to be interviewed but did not want them identified for security reasons.
Other common cases involve car owners purchasing insurance shortly before an accident occurs. "This is very common because a lot of insurance is purchased by phone," Metcalf said.
The new investigative branch can make a significant impact on auto insurance rates if it can be a successful deterrent to fraudulent claims, the commissioner said.
"The crime itself is capable of being deterred because of it's premeditated nature," he said. "It's not a spontaneous crime, like assault.
"But by its nature, it's also difficult to solve since the perpetrator is long gone by the time the crime is discovered."
And until now, it has been easier for insurance companies to pay claims than to spend time investigating frauds, Metcalf said.
"We don't ever want to reach the point," Metcalf warned, "where the public generally accepts this kind of criminal activity as right."
