Insurance Companies Are Destroying People's Lives And Cops Are Being Paid To Help Do It

from the all-hail-your-corporate-law-enforcement-overlords dept

Insurance claims result in investigations. This much is a given. Sometimes it involves both insurance companies and law enforcement agencies, depending on what’s being investigated. But in many cases, insurance companies are doing the investigative work for law enforcement agencies and pushing prosecutors towards bringing fraud charges against claimants just trying to be compensated for valuables damaged or lost.

The combined power of these two forces is enough to obliterate lives and livelihoods. Kendall Taggart’s report for Buzzfeed is a long, horrifying read. It details the close relationship between insurance companies and cops — one that extends so far as companies paying cops, prosecutors, and expert witnesses to turn valid insurance claims into insurance fraud charges.

A BuzzFeed News investigation has found that Erie, State Farm, Farmers, and other giant home and auto insurers around the country have co-opted law enforcement to intimidate and prosecute their own customers — tactics that can help companies boost their profits and avoid paying claims.

Insurance companies provide financial incentives to scores of police departments, prosecutors, and other public agencies to encourage them to focus on insurance fraud, a crime that has traditionally not been a priority for local law enforcement. In some cases, insurance giants even cover the salaries of dedicated prosecutors, detectives, and investigators whose caseloads consist primarily of referrals from those same companies.

The result is that dozens of premium-paying customers across the United States have faced jail for doing nothing more than filing insurance claims for damages to their property.

In one particularly horrendous case, State Farm destroyed a man’s construction business. A 2006 hailstorm in Indiana resulted in 50,000 claims being filed with the insurer. State Farm wasn’t happy with the uptick in business, which resulted in hundreds of complaints being filed against the insurer with the state’s Department of Insurance.

From all appearances, the insurer decided to scapegoat Joe Radcliff, a contractor who was very busy performing hail damage inspections. Two years after the hailstorm, police arrested Radcliff, telling him he was being charged with 14 felonies.

The insurance company accused Radcliff of deliberately damaging shingles and siding, presumably in hopes of being hired to repair the damage once the insurance check came in. After losing almost all of his customers over the bad press, Radcliff found out State Farm was behind the criminal investigation. The railroading began in earnest one year prior to his arrest, shortly after he spoke to a TV reporter about State Farm’s foot-dragging.

State Farm went after Radcliff’s customers to try to build its case… but not by asking them if they’d noticed any possible criminal activity. No, State Farm TOLD them they had observed criminal activity and that it would fuck them up too if they refused to help put the contractor away.

State Farm tried to pressure at least four of those homeowners into accusing Radcliff of fraud — telling three of them it would pay for the repairs only if they filed police reports alleging that it was the contractor who had damaged the roofs. In another case, State Farm reversed its own determination that a homeowner’s roof was damaged in the storm after it learned Radcliff was involved, locating new experts who now claimed the contractor had vandalized the property.

The company couldn’t get any of Radcliff’s customers to testify against him. So it took the info it did have to the state’s insurance industry/law enforcement liaison. And it left out everything customers said that refuted the allegations State Farm was making against Radcliff. It took Radcliff until 2013 to clear his name. All charges were dropped when it became apparent State Farm had deliberately withheld exonerative information.

But the damage was done. A business destroyed by a much larger business that didn’t want to do the thing it’s actually in the business of doing: selling insurance and paying out claims.

It’s not so much that insurance companies work with law enforcement during investigations. That’s to be expected. But there needs to be a clear line dividing the two and there isn’t. The surreptitious purchase of witness testimonies and the direct funding of fraud investigators is only part of the problem. Various government bodies are mixing public and private entities, allowing them to intermingle freely, much like the attendees of the annual insurance fraud conferences they hold.

The public may pay the salaries of public servants, but when it comes to insurance fraud, insurance companies are paying the salaries of investigators and prosecutors.

Insurance company officials make up the majority of [Pennsylvania’s Insurance Fraud Prevention Authority] board, which last year doled out $14 million in targeted grants to fund the work of roughly 100 prosecutors, investigators, and support staffers across the state dedicated exclusively to rooting out insurance fraud.

Those law enforcement officials collected $5.6 million in restitution from people accused of insurance fraud in 2018, money that went back to the insurance companies. According to the IFPA’s annual report, the most commonly investigated cases don’t involve sophisticated organized crime rings, but individual policyholders ages 18 to 34 with no prior criminal record.

The incentives are skewed in favor of everyone but the premium payers. Paying customers are being dragged to court, arraigned on charges, and otherwise made miserable simply because they asked for what’s owed to them. Rather than just being blown off by shitty customer services reps, they’re having their lives ruined by companies that withhold exculpatory evidence and law enforcement personnel who are only too happy to carry their courtroom water for them.

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Comments on “Insurance Companies Are Destroying People's Lives And Cops Are Being Paid To Help Do It”

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29 Comments
Bruce C. says:

Re: 3x enforcement cost vs recoup cost?

Well, there could be additional savings from people who were intimidated into dropping a claim or other settlements that didn’t involve actual restitution.

But yeah, sounds like something the shareholders should take a closer look at, especially if that ratio is consistent nationally. It doesn’t even account for the ill will that it incurs from consumers.

Anonymous Coward says:

Re: Re: 3x enforcement cost vs recoup cost?

to limit liability from drivers across country insurance makes states and counties put so much fucking salt on the roads even when there is no snow it completey rusts out vehicles bodies in three short years. insurance should be paying for that bullshit damage to the nation’s drivers. I buy snow tires and slow down when roads are bad.

Whoever says:

The big issue:

Here is the big issue:

Insurance company officials make up the majority of [Pennsylvania’s Insurance Fraud Prevention Authority] board, which last year doled out $14 million in targeted grants to fund the work of roughly 100 prosecutors, investigators, and support staffers

Law enforcement needs to remain independent. That means not being funded by anyone except the government, even indirectly. It’s part of why the asset seizure laws have been abused.

Anonymous Coward says:

Insurance companies provide financial incentives to scores of police departments, prosecutors, and other public agencies to encourage them to focus on insurance fraud,

This sounds an awful lot like bribery to me.

stuff about Joe Radcliff

Corporation executives will do this because most of the time, nothing comes back on them. Or, the company pays out a settlement and goes back to business as usual. There needs to be something like a corporate death penalty – the assets are sold off, the business is closed, and all parties found to be directly involved are permanently forbidden from serving on a board or in any kind of management position.

In 2014, Radcliff received a $14.5 million verdict — one of the largest defamation verdicts in US history. Much of it went to covering his legal bills and loans he’d taken out to survive during the years the lawsuit was pending.
He says it’s hard to think of the money as much of a victory.
“For State Farm, that’s nothing,” Radcliff said. “If you or I did that, we’d be in prison.”

Good on him… but he’s right. $14 million for State Farm is nothing. They’ll just raise their rates and make that back in a year or two.

Diogenes says:

Still looking for an honest man

I worked as an insurance inspector for five years in my younger days, decades ago, one of my first jobs after years of service in the Marine Corps. I bailed out as a burn out and have never regretted it… as I watched, over the decades, various sacred cow industries morph into scam industries, including insurance, education, police, political parties, etc.

Lessons from the road: Avoid hospitals. Don’t call the police, get rid of your car, avoid crowds, mark your own way (and turn off the TV).

Guydrummen says:

Re: Re: Re:2 Still looking for an honest man

Well, you think it’s a joke. You are a joke and don’t understand anything. Fact of the matter is that companies like SF make more money than Davey Crocket, rule the insurance delta all across the nation and don’t care about anyone but their own. You’re a duck with an “i”. go fuck yourself because you don’t even know the basics of what is going on. I come from a top level adjusting position as a manager with a staff position after working as an IA for yrs. Like special warfare teams (black ops – which I was also involved in 20 yrs ago), you only know what you are told unless you were in the middle of the mess first hand. I have been in the middle of the mess first hand and can tell you this….insurance companies, as stated from another post above, are concerned about their yearly bonuses their top levels get, nothing else. That’s what drives their decisions claim to claim. Additionally, each adjuster makes decisions based on what they have been told to do rather than what they are morally obligated to do. So in the end, carriers ARE destroying lives over the bonuses they get at the end of the yr. that’s the reason I left the industry and started supporting the work the contractors do and the work the insureds do to get their homes and businesses back to preloss condition. For me, I made a moral decision that doesn’t pay as much but allows me to do what is right rather than what benefits me the most…. helping insureds battle the carriers our there to obtain what is rightfully theirs.

You… a wrench in the wheel and one that is easily pulled out of the wheel…. have no clue or first hand knowledge of what you speak about. Tech dirt Daily. Your name should be Daily Mislead and TechnIcally Deficiant.

TRX (profile) says:

I haven’t read anything about it for some years now, but back in the 1990s Microsoft used to use local police to serve warrants for "suspected license violations" of Microsoft products. Microsoft investigators rode along with the police, and Microsoft "reimbursed" or "contributed to" the PDs involved.

Widely reported in the industry newspapers like Inforworld and PC Week at the time; Google isn’t turning anything up with various combinations of keywords. Interesting.

R,ogs/s says:

Theres another story within this story, namely that many cities/states are pushing for licensed home repair personel, and more clear delineation of what constitutes independent contractors.

And within THAT story, is the fact that many contractors employ immigrant labor, and pay below market hourly rates to guys who have zero workers comp.

So, in roofing, a licensed contractor signs the contract, but outsources the actual job to a crew of Latinos for half the price, whose workers all sign statements claiming they have workers comp and insurance, but actually dont have it.

All of that comes together in this case, targeting the contractor/worker/labor as a criminal.

All of that started back in the 1980s when unions went bust, and began to farm labor out to scabs, and it continues today, because the unions are busted.

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