Insurance fraud happens when a person makes a fake insurance claim to obtain benefits or compensation to which they are not entitled. Insurance fraud can be committed in many ways, but regardless of type, it is a serious crime. You can face years in prison for some types of insurance fraud, depending upon the money involved.
The major reason people engage in insurance fraud is to make a financial gain illegally. Many people who keep an insurance policy for many years think that because they have paid premiums, they should be compensated with an insurance claim. In some cases, this claim is legitimate, but the person may try to boost them amount of payment by making a claim for more serious injuries or greater losses than they had. In a few cases, people might even attempt to destroy their property to make a claim, if the payment they think they will receive is worth more than the property.
Types of Insurance Fraud
There are many types of this fraud, but law enforcement usually categorizes them as hard or soft fraud. Hard fraud happens when the person fakes having an accident, injury or theft to college funds from the insurance company.
For instance, say a workers has not had a job for months, and when his car breaks down, he is desperate for the money to fix it. He decides to make it look as if a person broke into his home, and then he reports to the police several expensive items were stolen. This is a form of hard insurance fraud that is common. It is one of the reasons insurance companies use insurance fraud investigators. A hard fraud case will usually result in a felony charge if you are caught.
On the other hand, soft fraud happens if you have a valid insurance claim, but you falsify part of it, or exaggerate damages to get the most benefits. Most people do not think this is a serious crime, but it is still a crime, and can result in higher insurance costs for all clients.
Say that a woman is involved in a minor accident when someone hits her car in the parking lot. There is serious damage to one part of the car, and she is not injured. When filing the insurance claim though, she claims to have back and neck pain and may seek treatments from a chiropractor to support her injury claims.
Fraud Losses
The amount of money that is lost from insurance fraud is difficult to say. The crime may go completely unnoticed in many cases. Some estimates say that at least $80 billion are lost every year from fraudulent insurance claims in the US. It is thought that at least 10% of the total yearly losses for insurance companies are due to phony claims.
Life Insurance Fraud
Life insurance fraud is when a person fakes their own demise or the death of another individual. They do this to obtain life insurance payments. This fraud usually involves more than one person. When the life insurance company is told of the death, the beneficiary will receive the settlement from the insurance company. Many people who commit this type of fraud may resurface years after the fake death took place. If you are caught, the person who helped in the fraud scheme will be charged too. This is a form of a hard fraud and is a felony.
Health Insurance Fraud
Fraud is common in the health insurance industry. Health insurance fraud is defined as the acit of misrepresenting information, deceiving or hiding information with the idea to receive health insurance benefits. Patients and providers can engage in this type of fraud. If a patient commits health insurance fraud, it normally involves faking or altering forms, hiding pre-existing conditions or not reporting information.
Health care providers also commit health insurance fraud when they make false claims, bill for services they did not do, or alter current claims. It is thought that healthcare providers who commit this type of fraud do it to get more compensation from Medicare and Medicaid. This can be accomplished in many ways:
- Billing for medical procedures that were not performed
- Billing for an exam that was higher rated when a minor exam was actually performed
- Billing for a psych exam of one hour when a 15 minute exam was done
- Referring patients to medical specialists when it is not needed
- Billing the insurance policy of a family member that the patient is not a part of
- Scheduling follow up visits with patients that are not needed
- Ordering medical tests that are not needed
Auto Insurance Fraud
This type of insurance fraud is very common. It happens when people fake car accidents, inflate insurance claims and some have even faked deaths in car accidents to get payouts from insurance companies. There have even been cases where insurance adjusters got in on the scam for a fee.
Property Insurance Fraud
This type of insurance fraud happens when a person destroys or makes a false report of theft of personal property, such as a car, to get benefits from the insurance provider. This is often done because the person needs cash and the payout from the insurance is more than the property would be worth if it were just sold. Also, if someone reports a property loss or damage claim, the claim may be inflated. A particularly common type of property insurance fraud is loss of home to fire.
Facing an Insurance Fraud Charge?
If you are facing an insurance fraud charge in the state of Massachusetts, you should obtain a strong criminal defense attorney as soon as you can.
Attorney Geoffrey Nathan has years of success fighting insurance fraud charges for his clients Attorney Nathan is the best legal advocate for you if you face an insurance fraud charge. For a criminal defense legal consultation, please text him at (617) 905-1433.
References
- Insurance Fraud Overview. (n.d.). Retrieved from https://legaldictionary.net/insurance-fraud/
