2009 Finalist
City of Lawrence, Massachusetts
Innovations in American Government Awards
Innovations in American Government Awards

In the summer of 2003, a grandmother in Lawrence, Massachusetts, died from injuries she sustained while participating in a staged auto accident. Chief John J. Romero of the Lawrence Police Department, with the assistance of the Essex County District Attorney’s Office, successfully prosecuted this case. Auto insurance fraud was usually prosecuted by the state, and was not often vigorously pursued. With this success, Chief Romero went on to establish the Auto Insurance Fraud Task Force. The task force crosses jurisdictional lines, bringing together the Lawrence Police Department, the Massachusetts Insurance Fraud Bureau, the Massachusetts Attorney General, the Essex County District Attorney, and private insurance companies.

Prior to the task force’s inception, Lawrence, Massachusetts, had earned the title “auto insurance fraud capital of the state” by the auto insurance industry, and staging accidents was referred to as a “cottage industry.” The overall cost of insurance fraud to the city was enormous. In addition to the risk of real injury due to these staged accidents, as well as wasted police and court resources, there were significant monetary costs involved. With twice the number of injury claims filed than in the rest of the state, the auto insurance industry considered Lawrence a bad risk. This meant significantly higher premiums for Lawrence and area residents.

Historically, it was up to the Insurance Fraud Bureau and the Massachusetts Attorney General's Office whether to prosecute insurance fraud cases. And, they typically focused on select, high profile cases that involved professionals. Now, the Auto Insurance Fraud Task Force, coordinated by the Lawrence Police Department, investigates everyone involved in fraudulent accidents at the municipal level while preparing and referring cases to a local court for prosecution. By 2008, the task force's work had led to the arrest of 345 lawyers, chiropractors, and other middlemen suspected of fraud.

The task force also helped get a new state law passed, in 2004, that makes hiring or acting as a “runner” a felony, punishable by up to five years in prison and a $4,000 fine. The law also enables state medical licensing boards to oversee chiropractic and physical therapy clinics, where runners often send crash “victims” to bolster their bogus insurance claims.

The program has led to a significant reduction in insurance fraud in the city and the large monetary costs associated with it. Insurance premiums have dropped 30 percent for the residents of Lawrence, yielding an annual savings of over $620 per policy over the last several years. Insurance companies operating in the city saw payouts in claims decrease from $50 million to $20 million. In addition to the financial savings, the city has seen other benefits: Since 2003, auto thefts are down 69 percent; vehicle accidents are down 37 percent; and, overall crime in the city is down 15 percent. The success of the Auto Insurance Fraud Task Force has caught the attention of other jurisdictions. Thirteen major cities in Massachusetts have created similar programs, and the task force is starting to garner national attention.