State officials and insurance experts say the scam illustrates a problem that goes far beyond the damage inflicted on transit companies. "The bus scam gives us a view of one kind of fraud," Samuel Fortunato, New Jersey's insurance commissioner, said. "But you have vast amounts perpetrated by providers, customers and all sorts of others who see the system as vulnerable."

He noted that "the issue of insurance fraud had not been addressed in the health care debate and it is something that must be."

Of the more than $13 billion paid out in medical bills for automobile and other vehicle accidents annually, more than $1.3 billion -- and perhaps three times that amount -- is paid out to cover fraudulent or abusive claims, according to the National Insurance Crime Bureau, an industry trade group.

Insurance company executives say that plans by the Clinton Administration to increase managed care oversight of such claims will not be enough to stem the problem. Some are calling for a Federal health care fraud statute and other measures that would help make prosecution of fraud against private insurance companies easier. 'No Magic Bullet'

"One of the misconceptions of health care reform is that once the new system is in place, it will be so tightly controlled that you will limit the opportunity for fraud," said James L. Garcia, an assistant vice president at Aetna Insurance who supervises the company's anti-fraud efforts. "But such programs are not that effective. Managed care is no magic bullet."

The New Jersey bus investigation began in 1990 when the department's insurance-fraud division began receiving reports from bus companies around the state that they were being victimized by rings of insurance cheats and by passers-by at bus accidents. Incidents involving ghost riders have also been reported in New York, Chicago, Cleveland, Los Angeles, Philadelphia, Dallas and Broward County, Fla., among other locations.

In New Jersey, transit companies reported that when buses had collisions in urban areas they would often be surrounded by "runners" for doctors and lawyers who would get on the bus, hand out leaflets with phone numbers, and encourage passengers to say they suffered from back or neck injuries that are hard to disprove. The most sophisticated runners spent their days scanning police radio frequencies for word of traffic accidents.