Florida Authorities: Insurance Fraud, a Booming Crime Ring

Officials say criminals stage accidents and fake medical treatments to collect insurance money.
7:26 | 10/24/13

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Transcript for Florida Authorities: Insurance Fraud, a Booming Crime Ring
stripmall may seem like a victimless crime, it its not. The victim is you. Personal injury fraud is a booming business costing the state of florida alone $1 billion a year. Arguably, the capital of this crime wave is miami where law enforcement its now cracking down hard and they brought us along for a very interesting ride. Here is abc's matt gutman. Reporter: Believe it or not, this fender-bender could be an $80,000 car crash. Beautiful. Reporter: And billion dollar problem. The man seen here on undercover video have staged this accident. For insurance fraud that no one got hurt. But there could be lots of victims like possibly you. These are surveillance photographs of the house. ♪ Reporter: It is 5:30 in the morning. We are going to go knock on the doors. Reporter: In the dark agents and police officers stage various meeting points around miami. she is being charged with staged accident, six counts of insurance fraud. Reporter: Today's mission, to sweep up and eradicate 20 people suspected of being involved in a personal injury insurance fraud ring. Among them, two medical clinic owners. Cops tell us it may not be glamorous, but it is lucrative. How much money is some one like this suspected of bringing in? What do you think, oscar? Millions. Easily. Reporter: For nine months agents front florida department of finance specializing insurance fraud have been unraveling what they believe is a complex racket of insurance fraud. Prosecutors allege medical clinic owners, physicians, therapists and alleged accident victims have all organized fake accidents to rake in money from insurance payments. From our investigation this has been going on for about over a year, two years. Reporter: On this morning the agents finally have them in their sights. Why so early in the morning? We look ike to catch these people while they're home. While they have got the guards down. And while -- sometime while they're still in bed. Reporter: It is estimated personal injury fraud cost the state of florida alone over $1 billion a year. A loss that is passed done to you, the consumer in the form of higher and hyperigher insurance premiums. How does it work? As seen in the undercover video shot by a detectiven a previously prosecuted case it starts with a faked accident. That's all it could take. That's beautiful. That's good. Police say it is perfectly orchestrated theater. The cars are now put in position on the street. The so-called passengers arrived on the scene. Finally a call goes out to the police. Yeah, I am on northwest, 1253. Reporter: The next step happens later when the passengers aren't injured at all, go to a personal injury clinic allegedly set up, and where they are paid. And the employees file up to $10,000 per person insurance claims for massage therapy or treatments that are never performed. One car, four passengers, could generate $40,000. Two cars, $80,000. For just one minor and fake collision. Tomorrow, we'll look to do this at 6:00 in the morning. Reporter: The day before the arrests go down, lieutenant rafael delgado briefs the team on the case, dubbed know mnomad services. Four clinics, two owners, various employees who allegedly organize the staged accidents, and people accused of participating as paid passengers. Del gado tells us five car accidents the suspects were allegedly involved in cost insurance companies more than $400,000. Place them under arrest x plain to them what is going on. -- Explain to them what is going on. They know what is going on. Many individuals have prior arrests for forgery, larceny, narcotics, also some of them have been arrest ford resisting law enforcement. So, again, safety number one. Happened from here to there. Reporter: The two men take me on a tour of where one accident took place. Soap this is where the magic happens. Street corners like this, residential areas? Pretty quiet. That's correct. Pretty quiet. No one sees it. How do they consistently find enough people to populate the cars and crash them. Tell you, sit in the car, be involved in the accident. For $2,000. Reporter: How big a business? Making a lot of money. We had in the past, my understanding, people who were into narcotics are into staging an accident. Reporter: The accident is really the first step. They need the clinic. They need the clinics. Without the clinics this is all useless. Reporter: We went to try to find magic hands one of the four clinics targeted in the operation. Magic hands, one of the pip clinics that was -- billing for services not rendered. Come here, sign paperwork. Never come back for the services. When we pulled into the parking lot it was pretty tough to spot. The place we are going is right here on the corner by the stairs. Really hidden. Reporter: This place is totally hidden. We walk by nondescript office doors. It's locked. According to the agents the clinics can generate big money. Hundreds of thousand. It is volume. You know, keep pumping them in. Volume, volume, volume. Making as much as possible. Reporter: Very possible in this nondescript, kind of hid ten little stripmall here, there is millions of dollars worth of billing going on. Yes. Yes. After months and months of following paper trails, tracking down suspects, conducting surveillance, delgado and the teams are fanning out in the predawn darkness to catch their suspects. Feeling nervous? Not nervous. Want few get it done. Reporter: At 6:00 a.M. It begins. They say you are a physicians assistant? Yeah. Reporter: They also say-up have been filing false insurance claims? False insurance? False insurance claims? Surprised? Yeah. I don't know what happened. Reporter: Within the hour. Nearly 20 suspects have been taken into custody and are on their way back to headquarters and questioning. Within days they' have all entered not guilty pleas. This crew may or may not be guilty. Our agents tell us personal insurance scams, show no signs of slowing down. For "nightline," matt gutman, in miami.

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