This is a case review of a criminal and civil case involving the payment of fraudulent workers comp settlements. The action was initiated by the District Attorney's office and a major insurance carrier.
The cases began when the District Attorney's office contacted the insurance carrier and laid out a criminal scheme perpetrated by a group of individuals who would use an insured company vehicle to stage an accident and then collect the resulting workers comp settlement.
The DA's office claimed that this group of individuals had conducted the scam numerous times and had defrauded the insurance carrier out of thousands of dollars. The DA also informed the carrier that the group had paid premiums to the carrier, but those premiums were paid using either stolen credit cards or bounced checks.
The carrier responded by working with the DA to gather enough evidence to file lawsuits against each individual of the group. The suits sought to recover both the money lost in the fake premium payments and any money lost in fraudulent workers comp settlements.
In January of 2010, a True Fidelity Insurance senior claims adjuster was contacted by a member of the District Attorney's office. The DA's office said they recently arrested a person named Susan Johns who wanted to exchange information about fraudulent insurance claims, some involving True Fidelity, in return for a probated sentence.
The DA's office wanted to know if the information Johns was offering them was true, and if it was, would True Fidelity consider the information substantial enough for the DA's office to offer Johns a probated sentence. Johns at the time was facing a ten year sentence in prison, so it was very important to the DA that the information she provided was worthwhile before they recommended probation.
True Fidelity considered the situation. They told the DA if Johns would communicate to them the specific acts in enough detail that they could sue each participant in the scheme, then they would endorse the probated sentence.
True Fidelity was allowed to interview Johns while she was at the District Attorney's office. During that interview, Johns listed every criminal act involving insurance fraud she was aware of.
After interviewing Johns, True Fidelity told the DA's office they would agree to a probated sentence if Johns would testify in a civil trial against her other conspirators. Johns agreed to testify and the DA's office entered into a plea bargain agreement of 10 years probated for Johns.
The actual frauds Johns described to True Fidelity and the DA involved a criminal group of over twenty individuals led by one Elizabeth Helig. Heilig orchestrated a scheme in which she sought out individuals who would agree to participate in scams to defraud various insurance companies. Participating in the scheme included agreeing to be passengers in specific vehicles. Those vehicles would be rammed by separate vehicles driven by other members of the group.
Once the collision occurred, Heilig or other participants would call 911. When Fire and Rescue arrived, the passengers would each claim to be seriously injured. Some would say they required hospitalization. Others would agree to be driven home only to contact attorneys days later claiming they had been seriously injured in a car accident.
Once released from the hospital, the other injured persons would also contact personal injury attorneys. They too, would claim to be seriously injured in a recent car accident. The Heilig participants would all eventually seek out legal representation by attorneys. The group members would be referred by their attorneys to various medical doctors, osteopathic doctors, and chiropractors.
Over time, the attorneys for the Heilig group would file numerous personal injury and workers compensation claims with various insurance carriers. One of those carriers was True Fidelity since they insured the drivers of the Heilig group.
In the past 2 years, the Heilig group filed two hundred insurance injury claims. Each of those claims was said to be fraudulent. Some were concluded in workers comp settlements, and others in personal injury settlements. True Fidelity paid out over $100,000 in false claims over the two year period.
In addition to the fraudulent claims, the insured Heilig group members also used stolen credit cards and insufficient checks to pay their insurance premiums. As a result over the two year period, the Heilig Group failed to pay any insurance premiums to the insurance carrier.
After the arrests of each member of the Heilig group, True Fidelity decided to begin by suing their insured, and then the other members of the group. They especially targeted those members who received thousands of dollars in insurance proceeds for their faked injuries.
The first lawsuit filed by True Fidelity was against Elizabeth Heilig and four other of their insured.
Those defendants all were sued for reimbursement of the insurance premiums they defrauded True Fidelity out of, as well as all the money True Fidelity paid out in fraudulent claims.
Since all the members of the Heilig group had already been tried and convicted of the frauds they had perpetrated against True Fidelity, Heilig could not invoke her 5th Amendment right not to testify against herself. The presiding Judge ordered her and each of the other defendants to tell the truth or face criminal contempt which would result in additional time on their prison or probated sentences.
The Judge found that the defendants defrauded True Fidelity out of $120,000 in premiums and insurance payouts. The Judge ordered the defendants individually and collectively to pay the full amount of those damages. With that the first of many civil trials ended.
*This case example is for educational purposes only. It is based on actual events although names have been changed to protect those involved. Any resemblance to real persons or entities is purely coincidental.
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