CHECKER CABS FOUND UNINSURED POTENTIAL SCAM COULD AFFECT CLAIMS OF L.A. RIDERS.

Byline: Evan Pondel Staff Writer

Hundreds of Checker Cabs have been crisscrossing the city for six months without insurance, victims of an alleged insurance scam that could leave riders scrambling for a resolution to their claims.

The insurance broker representing Lennox-based Checker Cab supplied the wrong policy number to the city's taxi cab administrator in September 2005, the city discovered after a Daily News inquiry this week.

City transportation officials are now in the process of piecing together a potential insurance scam that not only put a decades-old cab company at risk of going bankrupt, but put people at financial risk if they've filed a claim against the livery in the last six months.

``We are scared to death. And we're looking into legal action,'' said Ken Spiker, an independent consultant who was hired by Checker Cab to represent its interests.

As of Thursday morning, all of Checker's 290 cabs were fully insured by Mercury Insurance Group. Checker Cab's original broker, who was identified by the city as Michael James, did not return phone calls made to his Alpine, Calif., office.

The California Department of Insurance is determining whether to open an official investigation on Checker Cab's dealings with its broker.

``If it's true, these allegations show that even larger companies (like Checker) can be taken for a ride by insurance fraud,'' Insurance Commissioner John Garamendi said via e-mail. ``I just tell people to avoid being a victim, take the extra step to verify your policy number with the insurance company, and you might save a lot of money down the line.''

Checker Cab had been paying James a premium of more than $100,000 a month for coverage under Acceptance Indemnity Insurance Co. since at least October. The premium covered each cab for up to $100,000 per rider.

But an impromptu meeting between James and city officials on Tuesday afternoon proved that Indemnity was not, in fact, supplying coverage to Checker. ``(James) was very apologetic that he didn't do his due diligence in notifying us,'' said Jeannine Brands, transportation engineer associate for the city of Los Angeles, who also noted that James has had a long- standing relationship with the city.

During the meeting, James supplied a new insurance policy number for Checker Cab that was supposedly underwritten by Ohio-based Century Surety Co. However, Century Surety was unable to match the policy number to Checker Cab. Instead, the number matched up with a company more than 300 miles north of Checker Cab's headquarters.

Christopher Timm, president and chief operating officer of Century, would not elaborate about the policy number mix-up. But he did say that James has ``nothing but the best reputation.''

Thomas Drischler, taxi cab administrator for the city, said he has been in touch with Timm and ``there are many things we need to get answered and verified.''

The same goes for Eugene Smolyar, president of Checker Cab, who feels as though he's been operating in the dark for several months. He was never notified that his insurance policy had changed.

``I thought our cars have been covered by Acceptance for all of this time. Why haven't I been notified? This makes me nervous,'' said Smolyar, who was recently named president of the Checker cooperative.

What isn't clear is how James paid the claims that have been filed over the last six months.

Greg Spiker, a licensed insurance broker and president of his brother's company, Ken Spiker and Associates, said some brokers hire third parties to process claims. ``Most of the claims are reported to the administrator, while the more serious ones are funneled out.''

Some brokers ultimately absorb the cost of claims on their own. For example, a cab company with a fleet of at least 215 cars will file anywhere from 25 to 30 claims a month that range between $1,000 and $3,000, Spiker said.

``But what's happened here with Checker is not common. In my 15 years in the business, I've never seen this type of situation,'' said Greg Spiker, who now administers the new insurance policy for Checker.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com