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Auto insurance rates driven up by phony accidents

Posted On Mon, August 10, 2009

A growing number of states are cracking down on scam artists who make auto insurance more expensive for everyone by staging phony accidents.

New Jersey Attorney General Anne Milgram recently announced that three brothers from Newark have been jailed for running an auto insurance fraud ring that recruited so-called runners to stage the accidents and collect phony insurance payouts. The scam affected health insurers as well as auto insurance companies.

"The illegal use of runners to procure patients and clients drives up the cost of insurance in this state. As in this case, runners often urge people who are not injured to be treated for injuries and submit false accident claims. We will vigorously enforce New Jersey's statute making it a crime to employ runners," said acting prosecutor Riz Dagli.

A similar sentencing was reported in North Carolina this month as well, where insurance commissioner Wayne Goodwin reported that the ringleader of a staged accident ring was among those to be sentenced to prison.

The scheme in North Carolina was said to have netted $100,000 in fraudulent insurance payouts over the course of four years, with a total of eight people facing charges and jail terms.

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