Insurance Fraud: A Costly Crime That Requires Early Legal Help
Insurance fraud is a serious crime, and far from being “victimless,” it impacts every consumer. From higher premiums to inflated prices for goods and services, the effects of insurance fraud reach far and wide. While the exact financial cost is hard to estimate, because much of it goes unreported, insurance fraud costs millions of dollars annually.
If you find yourself under investigation for insurance fraud, it’s critical to involve an experienced New York City insurance fraud defense attorney as early as possible. Insurance fraud cases are prosecuted aggressively in New York, with serious penalties. The sooner you involve a lawyer, the better the outcome of your potential case.
What Is Insurance Fraud?
At its core, insurance fraud involves any act of deception committed during the process of buying, selling, or using insurance policies. Insurance fraud can be committed by anyone involved in the insurance process, i.e., policyholders, brokers, agents, and even insurance companies. Fraudulent acts typically involve providing false information or withholding key details to secure undeserved payouts or lower insurance rates.
The State of New York treats insurance fraud very seriously. Law enforcement agencies such as the Department of Financial Services (“DFS”) are constantly working to uncover fraudulent activities and penalize those involved. The DFS, along with other government agencies, conducts thorough investigations and often works closely with insurance companies to detect fraud.
That being said, there are instances where a policyholder may be unfairly accused of fraud, and the penalties for such accusations can be severe. In these cases, getting help from an experienced New York insurance fraud attorney is crucial to navigating the complexities of these charges. Even if you believe you’re being wrongfully accused, you should seek legal counsel.
Common Types of Insurance Fraud
Insurance fraud can take many forms, and the specific fraudulent activities often depend on the type of insurance involved. Below are some of the most common forms of insurance fraud:
1. Auto Insurance Fraud
This is one of the most common types of insurance fraud and can involve anything from inflating damage claims after an accident to staging fake accidents or falsely reporting a vehicle as stolen. The following are some of the most common auto insurance fraud schemes:
• False or Inflated Repair Claims: A driver and a body shop may conspire to inflate the repair costs and split the profit from the payout.
• Staged Accidents: Individuals may deliberately crash vehicles or orchestrate accidents to collect insurance payouts.
• “Jump-in” Schemes: Individuals not present in the vehicle during an accident may claim they were to collect insurance benefits.
2. Health Insurance Fraud
This is a particularly costly type of fraud that often involves healthcare providers and patients. Some common forms of health insurance fraud include:
• Upcoding: Providers may bill for a more expensive procedure than the one provided.
• Double Billing: Submitting multiple claims for the same procedure or treatment, sometimes under different patient names or insurance policies.
• Billing for Services Not Rendered: Healthcare providers may bill insurers for services that were never provided or for medically unnecessary procedures.
3. Homeowners’ Insurance Fraud
It usually involves property damage or theft claims. Policyholders may exaggerate the extent of damage caused by a fire, burglary, or natural disaster. A few common examples of homeowners’ insurance fraud include:
• Exaggerated or Fabricated Property Damage: A homeowner may claim more significant damage than what occurred to secure a larger payout.
• Filing Inflated Claims after a Natural Disaster: Following a disaster, some homeowners will falsely claim that they suffered more damage than they did or that certain items were lost or stolen, even when not.
• Arson: In extreme cases, individuals set fire to their own homes or businesses to collect insurance money.
4. Workers’ Compensation Fraud
Affects both employees and employers. On the employee side, individuals may fake or exaggerate injuries to continue collecting workers’ compensation benefits. Some employers may misclassify employees or underreport payroll to reduce their workers’ compensation premiums. Some examples include:
• Faking Injuries: Employees may fake or exaggerate an injury sustained at work to collect workers’ compensation benefits.
• Employer Misclassification: where employers misclassify employees as independent contractors or lower-risk job categories to save money on workers’ compensation premiums.
5. Life Insurance Fraud
This can be particularly severe and often involves filing fraudulent claims for death or forging documents to secure payouts. Some common examples include:
• Submitting False Death Claims: where a beneficiary may file a claim for a deceased individual who is still alive or whose death was staged.
• Providing False Information on Life Insurance Policies: Policyholders may provide false information to secure lower premiums or larger payouts.
• Murder for Life Insurance Payouts: In rare but extreme cases, individuals may commit murder to collect on a life insurance policy.
6. Disability Insurance Fraud
It typically involves individuals faking or exaggerating injuries to collect benefits. Some fraudsters submit false documents to continue receiving benefits even after they’ve recovered. Examples include:
• Faking an Injury: this is self-explanatory. This is usually done to get benefits they otherwise will not be able to obtain.
• Extending Disability Claims: An individual may continue to claim benefits after they’ve recovered by submitting fraudulent medical documents or reports.
How Insurance Fraud Cases Are Prosecuted
In New York, insurance fraud is aggressively prosecuted under various sections of the New York Penal Law. Insurance fraud is categorized into several degrees, depending on the amount of money involved. The penalties can range from misdemeanors to felonies, with longer prison sentences for more significant amounts of fraud. Here’s a breakdown of how these cases are prosecuted:
• Fifth Degree Insurance Fraud (NY Penal Law 176.10)
This is the base-level insurance fraud charge and is classified as a misdemeanor. It applies when an individual commits a fraudulent insurance act, even if no money was obtained. A person convicted of this offense could face up to 1 year in prison.
• Fourth Degree Insurance Fraud (NY Penal Law 176.15)
This felony offense involves fraud in which the amount obtained (or attempted to be obtained) is between $1,000 and $3,000. Conviction of this offense can result in up to 4 years in prison.
• Third Degree Insurance Fraud (NY Penal Law 176.20):
This is a felony involving fraud where the amount exceeds $3,000 but is less than or equal to $50,000. Convictions carry a penalty of up to 7 years in prison.
• Second Degree Insurance Fraud (NY Penal Law 176.25):
This felony offense involves amounts over $50,000 but less than or equal to $1 million. A conviction could result in up to 15 years in prison.
• First Degree Insurance Fraud (NY Penal Law 176.30):
This is the most severe form of insurance fraud and involves amounts greater than $1 million. If convicted, the offender could face up to 25 years in prison.
Aggravated Insurance Fraud
Aggravated insurance fraud can occur when an individual commits fraud more than once within a five-year period. This is a class D felony and carries a penalty of up to 7 years in prison, regardless of the amount involved in the second offense.
Regardless of the amount involved, it’s important to retain a New York City insurance fraud defense attorney if you suspect you might need to fight these serious charges. Prosecutors often combine insurance fraud charges with related crimes such as grand larceny, forgery, and falsifying business records. Having a knowledgeable attorney who can navigate these complex legal waters is essential to your defense.
Federal Insurance Fraud Charges: When Wire Fraud Comes into Play
While most insurance fraud cases are prosecuted under state law, some insurance fraud cases cross state lines or involve federal entities, leading to federal prosecution. In such cases, insurance fraud may be prosecuted as wire fraud, especially if the fraudulent activity involved electronic communications, such as emails or phone calls. Penalties for wire fraud can include up to 20 years in prison per count, making it a serious offense that requires immediate legal intervention.
If you suspect you’re being investigated for federal insurance fraud or wire fraud, it is critical to contact a Federal wire fraud/insurance fraud defense attorney as soon as possible. Federal cases are complex and require an attorney with experience defending against these high-stakes charges. Federal prosecutors are known to be aggressive, and the sooner you get legal help, the better your chances of a successful defense.
What Should You Do If You Suspect You’re Under Investigation for Insurance Fraud?
If you suspect you are under investigation for insurance fraud, whether state or federal, it is critical to act quickly. Investigations often begin quietly, and by the time you are contacted by investigators or insurance companies, they may already have significant evidence against you. This is why getting legal representation early is essential.
Here are some suggestions if you believe you are under investigation:
• Don’t Speak Without a Lawyer: Anything you say to investigators, your insurance company, or law enforcement can be used against you. An experienced New York insurance fraud defense attorney will protect your rights and communicate on your behalf.
• Start Building Your Defense: The sooner you involve an attorney, the sooner they can begin gathering evidence and building a defense strategy that protects your interests.
• Avoid Making Admissions: Even casual conversations can harm your defense. Do not admit guilt, provide explanations, or even apologize without legal counsel present.
How Insurance Companies Are Fighting Fraud
Insurance companies have become increasingly vigilant in their efforts to fight fraud. They have implemented numerous methods to detect and prevent fraud before it significantly impacts their bottom line. Some of the strategies used by insurance companies include:
• Fraud Detection Technology: Many insurance companies now use advanced artificial intelligence (AI) and predictive analytics to detect patterns of fraudulent claims.
• Special Investigative Units (SIUs): Insurance companies employ specialized teams of investigators (often former law enforcement personnel) to investigate suspicious claims and refer cases for prosecution.
• Collaboration with Anti-Fraud Organizations: Insurance companies collaborate with organizations such as the National Insurance Crime Bureau (NICB) and the Coalition Against Insurance Fraud (CAIF) to raise public awareness and fight fraud on a broader scale.
If you suspect that your insurance company is investigating you for fraud, it is crucial to contact a New York insurance fraud attorney immediately. These investigations can lead to criminal charges, and early intervention by an attorney can help mitigate potential damage.
Final Thoughts: Don’t Wait Until It’s Too Late
Insurance fraud is far more than just a white-collar crime, it’s a costly problem that carries severe legal consequences. Whether you are accused of auto, health, home, or life insurance fraud, the penalties can be life-altering, and your future is at stake.
Protecting yourself starts with taking action. If you suspect you are being investigated for insurance fraud or have already been charged, don’t wait. Contact a skilled and experienced New York City insurance fraud defense attorney today. The earlier you get legal help, the better your chances of securing a favorable outcome.
Call us today for a consultation and let our team of experienced attorneys guide you through your defense. We’ll protect your rights and work tirelessly to achieve the best possible result for your case.