Still, it's a good living, even at the bottom of the chain.

"The cappers are making more money than drug dealers," says Melchionni. "It's the hot, new street profession because there's no felony conviction involved, it's less risky and takes less time."

At this pace, "There is little doubt that New York state will catapult to the ignominious ranking of the most expensive automobile insurance state in the nation," Roger Schmelzer, vice president of regulatory affairs for the National Association of Mutual Insurance has said. But fraud has a chokehold on other states as well:

• When Colorado car insurance rates rose 20 percent in 2002, primarily to cover fraudulent claims, lawmakers in the Centennial state trashed its 30-year-old no-fault system to return to tort liability beginning in July 2003.
• More than 20 percent of auto premium dollars in Florida currently go to pay for fraud, according to that state's insurance department -- make that 80 percent in Miami. Drivers there were staring at a 55 percent premium increase in 2002 to keep pace with the crooks.
• Auto insurers, including State Farm -- the nation's largest -- fled screaming from New Jersey to escape its fraud claim volume. Until legislators there grabbed the bull by the horns in 2003, it cost insurers twice as much to treat auto accidents in the Garden State as in comparable states.

"I've read articles suggesting that insurers roll over, paying these claims because they don't want to investigate them. That's not true," says Kirk Hansen, director of claims for the Alliance of American Insurers in Downers Grove, Ill. But New York insurers, for instance, have only 30 days to challenge. After that short window, they can't raise fraud to deny the claim.

Industry's tied hands
Should the insurer take a claimant to arbitration, even if it wins 99 percent of the issues and loses just 1 percent, the company must pay the total bill submitted. Not to mention insurance companies don't carry prosecutorial authority. Their staffers can't throw folks in jail. The best they can do is spoon-feed information to law enforcement and pray for an arrest and conviction.

"First you look at the data and think it's an aberration," Hartwig explains. "Then you spend hundreds of thousands of dollars investigating before you can try to do something about it. All this takes a while, especially when you are not allowed to do much about it."

The industry is taking steps to shed its victim status, funding the National Insurance Crime Bureau to help law enforcement identify, detect and prosecute insurance criminals. Technology gurus have designed software that links each new claim to previous submissions to detect patterns faster.

Slow progress
A bust in September 2003 that grabbed 51 suspects off New York City's streets boosted insurance companies and consumers' hopes, as well. Liberty Mutual, Kemper, MetLife, Allstate and Progressive insurance companies are just a handful of the household names that cooperated with the New York Police Department behind the scenes to shut down what appears to be part of a national operation.

And lobbyists continue to pound on state legislators' doors, demanding changes ranging from mandatory medical protocols for vehicle accidents to felony status for arrested cappers. Lawmakers such as U.S. Sen. Chuck Schumer (D-New York) have pushed, unsuccessfully, to make auto insurance fraud a federal crime.

Ditching no-fault status altogether, however, remains unpopular.

"It's a good idea. Without it, people have to sue to get a legitimate injury covered," Hartwig says. "But it's been corrupted."