What is Insurance Fraud?
Insurance fraud is generally defined as an act committed on the part of an insured individual to fraudulently obtain a payment or benefit from an insurer. Insurance fraud takes many forms and can occur in any context where there is some type of insurance policy. This crime is a serious offense, and insurance companies are powerful companies that will push for large fines and significant penalties for anyone accused of insurance fraud.
If you find yourself accused of insurance fraud, you need an insurance fraud defense attorney who has a thorough understanding of trial advocacy and insurance law.
What is Insurance Fraud?
When most people think of insurance fraud, they think of auto accidents, where the perpetrator of the fraud claims that a vehicle was damaged by another party. In reality, there are many different types of insurance fraud.
One example could be when someone claims to have a chronic condition in order to receive extended Workmen’s Compensation or Long Term Disability. Medicaid fraud and Medicare fraud are also types of insurance fraud that may occur when a physician takes advantage of the fee-for-service structure by upgrading or downgrading the medical codes in order to receive more money for services or to aid their patients by giving them services to which their insurance may not cover.
On the flip side, insurance fraud can also be perpetrated on the part of the insurer. There have been many instances of insurance fraud committed by insurance agencies or their agents. These offenses can also lead to criminal charges for the company, or for individuals working for the insurer who are personally responsible for fraud schemes.
Types of Insurance Fraud
Different types of insurance fraud can lead to different kinds of criminal charges and penalties. Some of the most common types of insurance fraud include:
- Car insurance fraud or auto insurance fraud
- Health insurance fraud
- Dental insurance fraud
- Life insurance fraud
- Employment insurance fraud
- Home insurance fraud
- Mortgage insurance fraud
- Title insurance fraud
- Disability insurance fraud
- Renter’s insurance fraud
- Travel insurance fraud
- Phone insurance fraud
- Medicare insurance fraud
- Arson insurance fraud
- Jewelry insurance fraud
No matter what type of insurance fraud you have been accused of, a prosecutor will have the burden of proving that you provided false information or made misleading statements about a material fact to an insurance company in order to gain something of value. Any attempt to exploit an insurance contract and enrich yourself at the expense of the insured could lead to charges.
Auto Insurance Fraud
Auto insurance fraud offenses may include:
- Vehicle dumping: An owner leaves a vehicle somewhere, like a bad neighborhood, so it will be stolen. An owner may also sell the vehicle or burn it. The owner claims the car is stolen and makes an insurance claim for its value.
- Staging or faking accidents: Auto accidents can be staged in different ways including a scoop and squat, a drive down, or a sideswipe. A scoop and squat involves one car cutting another off suddenly, causing the rear car to cause a rear-end collision. A drive down occurs when a driver at an intersection waves a car forward and then intentionally drives into that vehicle. A sideswipe involves drifting into a vehicle making a turn when there are dual turning lanes.
- Exaggerating or faking accident injuries: Injuries such as soft tissue damage can be easy to fake because there is no concrete medical test showing the damage to the body. Often, doctors are in on these insurance fraud scams with drivers. The injuries may be exaggerated after a legitimate accident or may occur in a staged accident.
- Registering with a false address: Insuring your vehicle costs much more in some locations than others. Many areas of New York have very high auto insurance costs. Some drivers register with a different address in order to lower their insurance premiums.
- Exaggerating repair costs: Drivers take their vehicles to repair shops who give them high estimates, which the insurance company pays. The motorists then get their repairs done for less or, in some cases, don’t even get repairs done at all. The body shop may be the one perpetrating the scam on its own, or may work with the insured.
- Faking airbag repairs: This type of insurance fraud occurs when a body shop or mechanic charges an insurance company for replacing an air bag and never actually does make the replacement.
Auto insurance fraud is generally prosecuted at the state level. Licensees of the insurance department, including brokers, agents, and insurers, are required to report any suspected insurance fraud to the Insurance Department’s fraud bureau.
Those who commit motor insurance fraud can face serious car insurance fraud penalties. Article 176 of the New York Code addresses the crime of insurance fraud within the state of New York. A defendant can be charged with insurance fraud in the first, second, third, fourth, or fifth degree depending upon the value of the funds wrongfully obtained. While insurance fraud in the fifth degree is a Class A misdemeanor for those whose fraud schemes involve less than $1,000, other insurance fraud crimes rise to the felony level.
Health Insurance Fraud and Dental Insurance Fraud
Health insurance fraud and dental insurance fraud are serious offenses that may be perpetrated by insured policyholders or by care providers who bill insurance companies. Health care fraud or dental insurance fraud can include:
- Performing services that aren’t medically necessary in order to bill for them.
- Billing for services that weren’t ever provided or for services that were more costly than those actually offered to the patient.
- Lying about the types of treatments performed to get treatments covered that shouldn’t be.
- Falsifying patient reports to get coverage for treatments that shouldn’t be covered
- Unbundling, or billing for multiple insurance codes for procedures that should be billed under one combination code
- Offering kickbacks for referrals or accepting kickbacks for referring patients
- Overbilling insurers and waiving patient deductibles
- Lying about health status to obtain insurance coverage for lower premiums
- Using someone else’s insurance to get medical care
Penalties for insurance fraud can be very stringent, especially if the fraud involves Medicaid or Medicare. When fraudulent health insurance or dental insurance claims are made against any government programs, this usually leads not to state insurance fraud charges but to federal charges. Federal laws related to insurance fraud include:
- 42 U.S. Code Section 1320a-7a, which imposes a maximum $10,000 civil fine for making false claims to secure payment for health care services.
- 42 U.S. Code Section 1320a-7B, which imposes a penalty of five years in jail for misrepresenting material facts or making false statements to secure improper payments from federal health insurers.
- 18 U.S.C. Section 1347, which imposes a penalty of up to 10 years imprisonment for trying to defraud health care programs or improperly obtain money from health insurers.
- 18 U.S.C. Section 1035, which imposes a penalty of five years imprisonment for false statements made in connection with health insurance payments or benefits.
The federal government can freeze the assets of providers suspected of being involved in health care fraud under 18 U.S.C. Section 1035. The permanent forfeiture of money obtained through fraud is also likely if convicted of health insurance or dental insurance fraud. Arkady Bukh has a long track record of representing clients accused of serious federal and state crimes in NYC TOP RATED ON:
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Top Rated Criminal Lawyer
Arkady Bukh has a long track record of representing clients accused of serious federal and state crimes in NYC
TOP RATED ON: SUPER LAWYERS, AVVO, NATIONAL TRIAL LAWYERS
Life Insurance Fraud
Life insurance fraud could involve faking someone’s death, or buying an insurance policy for someone who never existed and then claiming death benefits. Killing someone to collect insurance benefits is also a type of life insurance fraud; however, since this can lead to homicide charges, the insurance fraud offense is usually a secondary concern.
There are other more common types of insurance fraud as well, which can be committed either by policyholders or by insurance agents. Examples can include:
- Stealing premiums: An insurance agent personally takes the money paid for a life insurance policy, rather than sending the money to the insurer to secure or maintain coverage.
- Fraudulent up-selling: An insurance agent makes material misleading statements to convince a policyholder to buy a more expensive policy that does not provide any better coverage.
- Life insurance annuity fraud: Insurance agents sell clients annuities at inflated prices using material misstatements and without explaining limitations. Seniors may be especially vulnerable to these types of scams.
- Stranger-oriented life insurance funds. Seniors purchase life insurance policies for purposes of selling them to hedge funds. Typically, settlement companies facilitate these transactions and make misleading statements to seniors or don’t disclose that policies cannot legally be sold.
- Seniors with legitimate policies may also be offered money to sell their policies, often for above-market value. Investors will pay premiums and collect when the senior dies. The Senior Life Settlements (SLS’s) may be packaged and sold as “death bonds.”
Like motor vehicle insurance fraud, life insurance fraud usually leads to state level prosecutions. Life insurance policies are usually costly and pay large death benefits, so often many thousands of dollars are at stake in these types of fraud scams.
Insurance fraud involving an attempt to obtain property valued at $3,000 or more is a Class D felony under New York Penal Code Section 176.20. If there is more than $50,000 at stake, insurance fraud is a Class C felony under Code Section 176.25. If more than $1 million is involved in the fraud, Class B felony charges can be pressed under Code Section 176.30.
New York law also prohibits fraud involving senior life settlements. In Code Section 176.40, life settlement fraud is defined to include presenting a life settlement provider, broker, intermediary or agent an application for a life settlement contract that conceals material information or that contains material misleading information.
Other Insurance Fraud Penalties
Because there are many types of insurance fraud, it is always best to talk to an experienced New York insurance fraud lawyer to understand the specific charges against you as well as the penalties you face for the crimes you have been charged with. You typically face the most serious penalties when you try to defraud a federal insurer. However, there are other situations where you could face federal penalties as well. For example, you could be charged with:
- Wire fraud, if you use radio, television, or wire communications as part of an insurance fraud scheme.
- Postal fraud or mail fraud if you use the mail as part of the insurance fraud scam.
Both mail and wire fraud have maximum penalties of 20 years incarceration. Federal offenses related to insurance fraud, in general, can result in decades of imprisonment.
Challenges in Defending an Insurance Fraud Case Against You
Politics can play a huge part in how insurance fraud is treated by the courts. Previously, most insurance fraud cases were considered civil matters, instead of criminal prosecutions. But cases of insurance fraud are now prosecuted in criminal court, which can have a much more permanent and detrimental effect on the life and future of the person accused of the fraud crime. Large insurance companies have lots of political power, so a conviction can result in serious penalties.
If you have been accused of insurance fraud or have been a victim of it, we can help. You will need a seasoned New York City criminal attorney who can walk you through your options and help you better understand complications and associations that result in cases of insurance fraud. At Bukh Law Firm, we have the skills and the expertise to help with complicated fraud cases.
How Insurance Fraud Attorneys Can Help
Insurance fraud is a serious offense with potential long-term consequences including jail time. When your future is at stake, contact the best New York criminal law firm. Attorneys at Bukh Law Firm are hands on throughout all stages of the legal criminal process from pretrial investigations and negotiations to trial.
Our team of some of the best NYC defense attorneys has extensive experience to help you negotiate with the prosecution. Call today to learn how we can help.
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