Twelve people were arrested in April and May in the Miami area for allegedly filing fraudulent auto insurance claims or staging car accidents, Florida’s chief financial officer reported, suggesting that such crimes remain a lucrative endeavor in the state.
In the latest incident, Florida CFO Jimmy Patronis’ office reported on May 24 that four people were taken into custody after an investigation by the CFO’s Criminal Investigations Division (CID). Those arrested – Bryan Carlos Hernandez, Rusland Rivero Tellez, Juan Fonseca Lauzao and Elvis Fonseca Lauzao – allegedly intended to defraud National General Insurance and Progressive Insurance Co. by exploiting their auto policies, according to the CFO’s office.
The foursome allegedly staged an auto accident with no injuries and then went to physical therapy clinics for treatment of bogus afflictions, leading to Progressive paying out $28,000 to two clinics and National General paying out more than $24,000.
“(Personal injury protection) fraud not only undermines the integrity of our insurance markets but also imposes an undue financial burden on every Florida resident in the form of inflated insurance premiums,” Patronis said in a prepared statement at the time.
The incident was similar to another staged accident that occurred in the Miami area in December of 2022. In April, another foursome – Abel Vera, Nancy Mercedes Pena, Yuniesky Betancourt and Maura Perez – was arrested for the 2022 staged accident, which led to Kemper Insurance being billed for $61,000 by two clinics and the insurer paying out $22,800 for therapy for nonexistent injuries, according to the CFO’s office.
An Insurance Research Council (IRC) report published last year indicated that in Florida, auto insurance tends to be more than 30% higher than the nationwide average. And last year, Florida drivers saw their auto insurance rates shoot up 15%, the highest rate increase among the 50 states, the council said.
““Auto insurance fraud is a key factor why Florida drivers are paying amongst the highest average premiums in the U.S.,” Mark Friedlander, the Florida spokesman for the Insurance Information Institute, told the Florida Record in an email. “Staged accident schemes also make Florida’s highways more dangerous for everyone. We commend the Florida CFO’s office for cracking down on these schemes and arresting the perpetrators.”
The IRC report found that multiple factors were driving up rates in Florida. Floridians who file auto claims are more likely to hire attorneys than policyholders in other states (59% in Florida vs. 45% in the U.S. as a whole), the IRC said.
In addition, Florida has among the highest uninsured motorist rates in the country, and Floridians who file claims are more than twice as likely to receive diagnostic procedures, including magnetic resonance imaging, than Americans in general, the report states. Injury claim frequency in the Sunshine State also outpaces the U.S. average.
“The percentage of all auto injury claims with the appearance of claim fraud and/or buildup is evidence of Florida’s culture of fraud,” the report says. The term “buildup” refers to when a claim has a legitimate basis but is inflated.
The IRC also sees the auto insurance situation in Florida as influenced by its litigation climate, which has been characterized by business groups as unfair or unreasonable. State lawmakers have passed tort reforms in recent years, but observers say the reforms may take time to produce benefits for consumers and businesses.
Another Miami incident reported by the CFO’s office on May 14 indicated four additional arrests for alleged attempts to defraud United Auto Insurance Co. by gaming auto insurance policies. In this case, three people – Isabella Mendez, Madison Martinez and Krystal Arbona – were arrested for insurance fraud after being involved in a non-injury auto accident. A therapist, Maria Campos, who allegedly gave the three others blank physical therapy forms to sign, was also arrested.
Like the others who are being held on insurance fraud charges, each defendant could be sentenced to up to 10 years in prison.