When police showed up at Harry Schmidt’s home on the outskirts of Pittsburgh, he thought they were there to help. He was still mourning the disappearance of the beloved forest green Ford F-150 pickup that he’d customized with a gun storage cabinet, and he hoped the cops had solved the crime.
Instead, the officers accused him of faking the theft. The Vietnam veteran was now facing up to seven years in prison.
Schmidt was stunned, but he was even more upset when he found out who had turned him in.
Erie Insurance, one of the nation’s largest auto insurers, had not only provided the cops with evidence against its own loyal customer — it had actively worked with them to try to convict him of insurance fraud.
Erie had even paid part of the salary of the lead detective who knocked on Schmidt’s door that day, as well as that of the prosecutor who went on to charge him with felony insurance fraud. And it would also secretly cover the costs of an expert witness to testify against Schmidt in court.
Schmidt, a grandfather living on disability benefits from his war-related injuries, had no history of theft or fraud. But he found himself the target of an extraordinary alliance between private insurers and public law enforcement agencies — one that transforms routine claims into criminal evidence, premium-paying customers into suspects, and the justice system into a hired gun for a multibillion-dollar industry. It’s an arrangement essentially unheard of in other businesses, and one rife with potential conflicts of interest, as well as grave consequences for law-abiding customers.
If the above is scary, just think about how insurance companies literally have power over whether you live or die when they deny your medical coverage.