Watch CBS News

New Laws Aim To Prevent Insurance Fraud, Fake Medical Claims

MINNEAPOLIS (WCCO) -- Minnesota is one of the fastest growing states in the country for insurance fraud, but that could change soon because of tough new laws that go into effect Aug. 1.

Last year, the number of staged crashes and fake medical claims in Minnesota rose an alarming 22 percent. That's 3rd in the nation behind Florida and New York.

"There's a marked increase in the number of staged accident rings," Mark Kulda of the Insurance Federation of Minnesota said. "So these are professionals who have come out to the roads  and they actually fake an accident."

The most common staged highway crash? The "swoop and squat."

"A car pulls up in front of you and all of a sudden hits the brakes and you don't have any escape route," Kulda said. "So you hit them in the rear end. That's usually an indication that you could be an unwilling pawn in this insurance fraud game."

Last year, fake crashes and medical claims in Minnesota jumped 22 percent, behind just Florida and New York.

"We saw major rings from New York, from eastern Europe, from Florida," Tim Lynch of the Chicago-based National Insurance Crime Bureau said. "That were coming here because of a less aggressive environment and the absence of key laws."

Starting Aug. 1, Minnesota has new powers to levy fines on criminals convicted of insurance fraud, drain their bank accounts and target medical insurance crime rings that follow a pattern found in other parts of the country.

"Hardened criminals have moved here to Minnesota to steal money out of our pockets through insurance fraud," Kulda said.

There's no central clearing house to exactly measure how many fraud crimes occur in Minnesota, but insurance experts estimate there were 1,700 fake car crashes or questionable medical claims in 2013.

They say insurance premiums are higher because of it -- as much as $1,400 a year.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.