It was on June 17, 1992, that the phrase swoop &squat became a household name. This form of staged accidentswas commonplace on the highways and byways of Los Angeles where Iwas a claims investigator. But this was the day the phrase wentviral.

The catalyst was an accident that occurred on the 5 freeway inthe San Fernando Valley just north of Los Angeles. A black Firebirdhad been rear-ended by a semi that subsequently jack-knifed anddumped its load of cars across the freeway.

In the Firebird, passenger Rubidia Lopez had been partiallyejected and was seriously hurt, requiring the Jaws of Life to saveher. One of the other passengers, Jose Perez, was not quite solucky, losing his life in this vain attempt to cash in on thetruck's lucrative insurance policy. It was this accident thatbrought nationwide attention to organized crime rings that stageswoop and squats from coast to coast.

While there are various iterations of the infamous swoop andsquat, the common theme is to target vehicles with large insurancepolicies such as luxury cars or commercial vehicles. The squat caris stuffed with passengers who have been paid by a “capper” toperform the feat of slamming on their brakes in order to getrear-ended. In order to make the story plausible, a swoop car isusually involved. When the squatter positions their car in front ofthe intended target, the other vehicle swoops in and hits theirbrakes making the squat car's story believable. In more complexschemes, other vehicles are used to pull alongside the intendedtarget to impede any ability to change lanes.

The organized criminal enterprise usually has a hierarchy. Thebosses tend to be professionals, such as doctors and lawyers. Theywork with the cappers who identify the parties to take part in theswoop and squats and other forms of staged accidents.

The claimants are often poor, frequently illegal immigrantslooking for an opportunity to make money. The cappers fulfill thisneed by paying them a sum of cash, usually a few hundred dollarseach, to be hit by another car. The capper provides each of theparties with a “script” so that when questioned by law enforcementor claims adjusters, there are no discrepancies.

The capper then sells the rights to the claim to the lawyer atthe top of the hierarchy. The lawyer refers the claimants, orpeople who were in the squat vehicle, to a medical provider. Themedical provider will document, fraudulently, that a number ofdiagnostic and therapeutic procedures were performed on theclaimants. In many instances the claimant never goes to the medicalfacility or meets the doctor.

The 1992 case took on a different twist since the investigatingofficer believed that not only was this a staged accident, but thatthere was sufficient evidence to pursue the lawyer who orchestratedthe entire charade.

According to various investigative reports, the officer'sinvestigation led him to the Beverly Hills office of attorney GaryMiller. Prosecuting attorneys involved in fraud is always achallenge since the attorney will invariably say, “I didn't knowthis was a fraudulent claim.”

During the course of his probe into Miller, the investigatingofficer enlisted the help of an insurance investigator who wore awire and captured damning information directly from the attorney.Miller was arrested and charged with conspiracy and second-degreemurder, along with several other people involved in this particularstaged accident ring.

Records from the California Bar show that Miller was ordered tostop practicing law and four years later resigned from the statebar. After the jury deadlocked on the second-degree murder charge,prosecutors refiled with a lesser charge and the attorney pled nocontest to involuntary manslaughter and received a six-year prisonsentence. He was also convicted of nine other felonies forinsurance fraud and conspiracy, and received a concurrent six-yearterm.

Investigative records show that Miller typically cleared up to$20,000 dollars for each crash, netting over $1.6 million in theyear prior to his arrest. The claims nearly always involved softtissue injuries, which are hard to disprove. So the question is howcan we as claims investigators effectively fight swoop and squatsand other staged accidents.

It's tough. While most attorneys and medical providers arelaw-abiding, the reality is that a subset of each profession isinvolved in such scams from coast to coast and yet there are only ahandful of prosecutions, making success seem akin to finding aneedle in a haystack.

In my insurance fraud thriller, Swoop & Squat, manyof the insurance-related scams were based on personal experiencegained during my years of investigating fraudulent claims inSouth-Central Los Angeles. To be successful, an investigation needsto be highly detailed and well documented.

Illustration courtesy of theCoalition Against Insurance Fraud

The first critical element is to inspect the damaged vehicles.If the damage, paint transfers or metal striations don't match, thecollision probably never took place. These are the easiest claimsin the staged accident realm to disprove. In a classic swoop andsquat, the damages will match because the accident actuallyhappened.

The next key step is to look for patterns of known associates.Each of the claimants probably has prior claims since cappers tendto recycle their clientele. Sometimes they are drivers, and othertimes passengers or witnesses. They all play a role in these sordidtales. Index returns will often provide some basic insight, as willlink analysis tools.

Demanding to speak to the claimants is critical. Attorneys willoften fight this request, but the reality is that everyone can bedeposed should the matter be litigated. The claimants will beforced to sit down and recount the tale of what happened, and truthbe told, many of these claimants will disappear.

When the attorney capitulates, it is important that thesestatements be in person. Invariably, the claimant will take out thescript to recount what transpired. Simply taking away that scriptcan be enough to not only throw claimants off their talking points,but to convince the attorney to drop the claim.

Even if they refuse to give up the script or don't have one,asking basic questions can yield a similar result. What did thedoctor look like? Describe the medical facility? How did you getfrom your home to the doctor's office? These are basic questions towhich the claimant will not have a good answer. Another trick ofthe trade is to carry photographs of random people dressed asdoctors, show them to the claimants and ask them to point to theirmedical provider. They usually get it wrong and the claim oftengoes away.

Clinic inspections are another key tool in the investigationprocess. Some clinics will allow these, while others will resist.Having a medical authorization is very important and cannot alwaysbe obtained short of litigation. During my years investigatingclinics, we often traveled in pairs. Aside from these beingpotentially dangerous criminal enterprises, splitting the attentionof the clinic administrator was crucial.

In one instance, my partner was gathering copies of the clinicsign-in forms in order to compare signatures and look for evidencethat all of the forms were signed on a single date. I used this asan opportunity to snoop around the clinic unattended. Aftercapturing photographs of unplugged and inoperative equipment thatcould be used to not only deny the claim, but likely get an activestate fraud investigation going, we were confronted by staff in theclinic who threatened us if we did not give them the film. After aphysical altercation, we managed to get out of the clinic and turnthe evidence we had gathered over to both SIU and law enforcement.

Another key step is to actively canvass the neighborhoods wherethe claimants live. Talking to neighbors can yield a significantamount of information. In addition, digging into claimant historyand talking to ex-spouses can provide telltale clues as to whetheror not you are dealing with potentially fraudulent claims. Ofcourse any claimant should also have their criminal recordschecked, since these can provide not only valuable information toimpeach credibility, but they can also highlight prior convictionsfor various types of fraud or other illegal activities.

The reality is that proving fraud is hard, especially when thereis real damage as in the case of a swoop and squat. Often the besthope is to convince the attorney that dropping the claim is in hisbest interest. Attorneys and medical providers are largely shieldedfrom prosecution due to simple plausible deniability.

The more information that can be gathered to link the attorney,provider, capper and claimants together, the higher the probabilityof success. The perpetrators of insurance fraud don't likeaggressive investigations. Just as they are aware of who does anddoes not reduce medical bills, pay for hot packs or assesscomparative negligence, they are aware of carriers that are toughto deal with. Carriers should strive to be in that bucket, aseffective investigative tactics tend to keep at least some of thefraudsters at bay.

Christopher Tidball is a casualty claims consultant andauthor of multiple books including Re-Adjusted: 20 EssentialRules to Take Your Claims Organization From Ordinary toExtraordinary! He spent more than 20 years as an adjuster,manager and business leader with multiple top tier insurancecompanies. To learn more, visitwww.christidball.com.