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

Legal Issues

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.

Filed Under: insurance, investigations, police