Federal Insurance Fraud
Insurance fraud generally involves using a fraudulent insurance claim in order to obtain insurance benefits. This could include trying to gain financial benefit from the insurance company, another insured party, or from state or federal governmental agencies.
Insurance permeates many aspects of our daily lives, and wherever there is insurance there is the possibility of insurance fraud. Insurance fraud can take many forms, and can involve a simple false statement on an insurance claim, or it can be a complex criminal enterprise involving a number of other people. This can include:
- Workers' Compensation Fraud
- Auto Insurance Fraud
- Property Insurance Fraud
- Renters Insurance Fraud
- Health Insurance Fraud
- Life Insurance Fraud
- Unemployment Fraud
One of the most common areas of insurance fraud involves health care insurance. This can include fraud on behalf of the patient as well as the healthcare provider. For example, a doctor can bill the insurance company for procedures that were never performed. It can also be difficult to detect because health care bills often involve complicated codes that are difficult for the patient to decipher. In some cases, such as a staged auto accident, the patient and health care provider can be working together to defraud the victim, the auto insurance, and the health insurance companies.
Medicare fraud is health care fraud involving the national social insurance program. Medicare covers more than 40 million people, including adults over the age of 65 as well as people with disabilities. The Government Accountability Office (GAO) considers Medicare to be a high-risk program subject to widespread fraud and abuse. Few Medicare claims ever get audited, leading to tens of billions of dollars that have been improperly paid out.
Workers' compensation fraud usually involves making misrepresentations in order to obtain benefits. Government investigators have found that employee compensation programs are often subject to abuse by federal employees. Under the Federal Employees' Compensation Act (FECA), the government pays out more than $2 billion per year for lost wages, death benefits and medical care. According to a Department of Labor investigator, the Office of the Inspector General has identified high amounts of compensation and medical fraud involving federal employees.
Insurance Fraud Investigation
Insurance fraud can be investigated by private insurance companies, local law enforcement, or federal agencies. Insurance companies have a financial incentive to prevent and limit insurance fraud. They also have a lot of experience identifying fraudulent activity, and will report fraud to law enforcement. Companies even have sophisticated computer models to identify suspicious claims with certain types of insurance.
Things like multiple insurance claims, claims for losses that come shortly after the insurance coverage goes into effect or looking for a fast settlement may be red flags for the insurance companies. The insurance company may further audit and investigate large or suspicious claims. Insurance companies have special investigative units, and if they think there is something fraudulent about the event, they may deny the insurance claim and report their suspicion to the police.
In some cases, the public will report suspected insurance fraud to state or government agencies. The National Insurance Crime Bureau (NICB) is an organization that works with law enforcement agencies to combat insurance crime, and provides a hotline to report suspected fraud. The Government Accountability Office's FraudNet program provides for phone, mail, fax or e-mail reporting of federal insurance abuse and fraud.
There are a number of state and federal law enforcement agencies that can be involved in investigating insurance fraud. This includes the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), Department of Labor, and even the Postal Service's Office of Inspector General. Federal investigators and prosecutors usually get involved in cases involving violations of federal or interstate fraud, or where there is fraud against the government.
Insurance Fraud Penalties
The penalties for insurance fraud will depend greatly on the individual case, the value of the fraud, extent of fraud, and specific type of fraud. For people charged with federal insurance fraud crimes, they will likely face serious fines, and jail time. In addition, individuals may face civil penalties, including restitution with increased damages as well as additional fines.
Under 18 U.S.C. § 1033, criminal insurance fraud involving people who are in the insurance business, such as making false statements, using deception or overvaluing property may face up to 15 years in prison.
Health care fraud, under 18 U.S.C. § 1347, involves defrauding any health care benefit program in connection with health care benefits, items, services or payments faces a fine and up to 10 years in prison. If the fraud resulted in serious bodily injury, the penalties increase to a maximum of 20 years in prison.
Federal workers' compensation fraud that involves false or fictitious statements in connection with compensation or other benefit is considered perjury. The penalties include a fine and up to 5 years in prison. See 18 U.S.C. § 1920.
Some people think that by only playing a minor role in insurance fraud, they face a lesser risk of prosecution. However, many federal prosecutors will charge anyone involved in attempting or assisting with insurance fraud, which can result in lengthy prison sentences and a felony conviction on their criminal record.
Insurance Fraud Defense
Insurance fraud is taken very seriously by federal prosecutors. A conviction can result in severe penalties, including fines and jail time. Some people are surprised to find themselves involved in an insurance fraud investigation, or holding a subpoena in relation to an insurance claim. As soon as you become aware of an insurance investigation, you should consider contacting federal criminal defense attorneys with experiences successfully defending their clients facing insurance fraud charges.
Some people may consider cooperating with government investigators; however, this could also lead to exposure for criminal and civil liability. This can be a critical decision, and your criminal defense lawyer can advise on whether to work with investigators, and other potential risks.
Insurance fraud cases can be complex, involving a number of alleged activities, state and federal laws and multiple federal agencies. With serious potential penalties and lifelong repercussions at stake, knowledgeable lawyers with experience defending individuals charged with insurance fraud will be able to identify the issues facing their client and develop a successful defense strategy.