A three-member coalition that includes the American Trucking Associations has come together to combat both towing fraud and staged accidents that are costing the trucking industry millions.
The ATA joined with the American Property Casualty Insurance Association and the Coalition Against Insurance Fraud in the new coalition, which doesn’t yet have a name.
“While towing fraud and staged accidents are distinct issues, they are tied together because they both involve some sort of insurance fraud that is a real burden on carriers and members of the public, in addition to insurers,” spokesmen for the three groups jointly said in an email response to questions from FreightWaves. “Additionally, both staged accidents and predatory towing contribute to skyrocketing insurance costs so addressing these problems is one step in mitigating the future cost of insurance for carriers.”
However, the steps that the coalition might pursue indicate it believes there are more specific remedies that it sees for the towing issue than for the staged-accident problem. The sheer number of indictments in the Louisiana staged-accident scam makes clear that there are legal remedies for staged accidents. .
In its note to FreightWaves, the consortium discussed how it sees the modus operandi on “tow fraud.” Parts of it are perfectly legitimate; for example, tow companies can monitor police scanners and hustle to get out to the site of a crash — be it car or truck — when they hear about it.
The problem can come with law enforcement’s pressing need to get to the site and deal with issues from injuries to criminal acts. “Law enforcement just wants to help anyone injured in the accident and get the roads cleared so they don’t have time to determine the legitimacy of a towing company’s operations,” the group said in its email.
But law enforcement isn’t always acting in a legitimate manner either, the group believes. “There have been documented cases of officers setting up arrangements with companies to receive kickbacks for their referrals,” the email stated. Such a situation can occur when an officer is “given discretion over which tow company is called or has some sort of influence over the referral.”
The group does have specific recommendations for dealing with the issue of towing price gouging or fraud. It is drafting a “model law to stem tow truck price gouging,” with plans to offer it to state legislators. It is also drafting a guide for carriers on best practices for confronting excessive charges. “Given that both insurers and carriers are harmed by these type [of] scams, it seems only natural to pool resources and coordinate efforts to address these issues collectively,” the spokesmen said in the email.
The list of other steps that states might take to deal with towing is a long one, with a fair degree of specificity. In its email to FreightWaves, the group listed some of its goals: state regulation of towing that would supersede local laws; resources directed toward the agencies that would implement those laws; establishment of towing rates and transparency into their levels; and establishment of a process that would allow carriers to go after “unscrupulous towing operations.”
“Current anti-fraud laws have not effectively addressed the towing problem,” the group said in its email.
Jennifer Wieroniey, executive director of the National Accounting & Finance Council at ATA, on a conference call with FreightWaves said that Matthew Smith, executive director of the National Coalition Against Insurance Fraud, had been speaking with ATA officials. Those officials, she said, had heard “a lot of complaints” about the issue of towing, leading to ATA joining with the other groups in this new coalition.
As far as the type of initiative that the group might pursue on the issue of staged accidents, given that the act itself already is a crime, Smith cited Alice’s Law, legislation that was signed into law in 2019 in New York. Under that law, additional criminal charges can be brought against individuals who cause a staged accident that injures or kills another individual. It was named after Alice Ross, who was killed in a staged accident.
But Smith noted that while there was no organized opposition to Alice’s Law, it took almost five years to pass in the legislature, “just getting the ear and the attention of the legislators to realize this is an issue and a problem.”
Alice’s Law passed in 2019; Ross died in a staged accident in 2003.