New York Insurance Fraud is an all-encompassing term that covers a wide range of white-collar criminal conduct that is aggressively prosecuted by Assistant District Attorneys all across New York State. If you believe that you are under investigation for committing New York Insurance Fraud, it is essential that you consult an experienced criminal defense attorney for assistance as soon as practicable. These types of cases can not only result in substantial civil fines and penalties, but also in felony charges being filed against you.

What Are Examples of New York Insurance Fraud?

Common examples of cases that are prosecuted as New York Insurance Fraud include:

  • Falsifying health information to qualify for insurance,
  • Obtaining fraudulent loans,
  • Falsifying a death to collect life insurance proceeds,
  • Reporting a car stolen, when in fact it has been sold to a “chop shop” to commit fraud against the insurance company,
  • Staging car accidents in order to recover damages for alleged bodily injuries,
  • Medical providers billing for services that were never provided,
  • Falsely claiming property damage to collect home insurance,
  • Faking a disability and collecting Workers Compensation.
  • Claiming to be out of work to collect unemployment benefits, while working “under the table.”

What Criminal Law Charges Apply to New York Insurance Fraud?

Under New York Penal Law, there are six different charges that apply to Insurance Fraud. Specifically, they are:

Insurance Fraud in the First Degree is the most serious of these charges, while Insurance Fraud in the Fifth Degree is the least serious. Additionally, the Aggravated Insurance charge can be filed against individuals who has committed another fraudulent act in the past 5 years. Nonetheless, prosecution for any of these charges can subject you to a permanent criminal record. The difference in these charges is explained in greater detail below, but generally depends on the value of the dollar amount obtained through the fraud.

New York Insurance Fraud in the Fifth Degree

Insurance Fraud in the Fifth Degree is codified in NY Penal Law Section 176.10. Under this statute, a person is guilty of Insurance Fraud in the Fifth Degree when s/he commits a fraudulent insurance act.

What is considered to be a Fraudulent Insurance Act?

The term “Fraudulent Insurance Act” has a legal definition, which is codified New York Penal Law § 176.05. It is an act, which is committed by any person who “knowingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer” and includes the following:

  1. Any written statement as part of, or in support of, an application for the issuance of, or the rating of a commercial insurance policy, or certificate or evidence of self insurance for commercial insurance or commercial self insurance, or a claim for payment or other benefit pursuant to an insurance policy or self insurance program for commercial or personal insurance that s/he knows to:
    1. contain materially false information concerning any fact material thereto; OR
    2. conceal, for the purpose of misleading, information concerning any fact material thereto; OR
  2. Any written statement or other physical evidence as part of, or in support of, an application for the issuance of a health insurance policy, or a policy or contract or other authorization that provides or allows coverage for, membership or enrollment in, or other services of a public or private health plan, or a claim for payment, services or other benefit pursuant to such policy, contract or plan that he or she knows to:

(a) contain materially false information concerning any material fact
thereto; or

(b) conceal, for the purpose of misleading, information concerning any
fact material thereto.

Such policy or contract or plan or authorization shall include, but
not be limited to, those issued or operating pursuant to any public or
governmentally-sponsored or supported plan for health care coverage or
services or those otherwise issued or operated by entities authorized
pursuant to the public health law. For purposes of this subdivision an
“application for the issuance of a health insurance policy” shall not
include (i) any application for a health insurance policy or contract
approved by the superintendent of financial services pursuant to the
provisions of sections three thousand two hundred sixteen, four thousand
three hundred four, four thousand three hundred twenty-one or four
thousand three hundred twenty-two of the insurance law or any other
application for a health insurance policy or contract approved by the
superintendent of financial services in the individual or direct payment
market; or (ii) any application for a certificate evidencing coverage
under a self-insured plan or under a group contract approved by the
superintendent of financial services.

Sentencing and Penalties for Insurance Fraud in the Fifth Degree

Insurance fraud in the fifth degree is a class A misdemeanor.

New York Insurance Fraud in the Fourth Degree

(NY Penal Law Section 176.15)

A person is guilty of insurance fraud in the fourth degree when he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold
property with a value in excess of one thousand dollars.

Sentencing and Penalties for Insurance Fraud in the Fourth Degree

Insurance fraud in the fourth degree is a class E felony.

New York Insurance Fraud in the Third Degree

(NY Penal Law Section 176.20)

§ 176.20 Insurance fraud in the third degree.

A person is guilty of insurance fraud in the third degree when he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold
property with a value in excess of three thousand dollars.

Sentencing and Penalties for Insurance Fraud in the Third Degree

Insurance fraud in the third degree is a class D felony.

New York Insurance Fraud in the Second Degree

(NY Penal Law Section 176.25)

§ 176.25 Insurance fraud in the second degree.

A person is guilty of insurance fraud in the second degree when he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold
property with a value in excess of fifty thousand dollars.

Sentencing and Penalties for Insurance Fraud in the Second Degree

Insurance fraud in the second degree is a class C felony.

New York Insurance Fraud in the First Degree

(NY Penal Law Section 176.30)

A person is guilty of insurance fraud in the first degree when he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold
property with a value in excess of one million dollars.

Sentencing and Penalties for Insurance Fraud in the First Degree

Insurance fraud in the first degree is a class B felony.

New York Aggravated Insurance Fraud

(NY Penal Law Section 176.35)

§ 176.35 Aggravated insurance fraud.

A person is guilty of aggravated insurance fraud in the fourth degree
when he commits a fraudulent insurance act, and has been previously
convicted within the preceding five years of any offense, an essential
element of which is the commission of a fraudulent insurance act.

Sentencing and Penalties for Aggravated Insurance Fraud

Aggravated insurance fraud in the fourth degree is a class D felony.

Which Agencies Investigate New York Insurance Fraud?

Insurance companies have private investigators who work for them to investigate the claims. Accountants investigate unusual spending.

How Are New York Insurance Fraud Investigations Handled?

What Should I Do If I Accidentally Committed Insurance Fraud?

KEY TERMS IN UNDERSTANDING INSURANCE FRAUD: NEW YORK PENAL LAW 176.05

Fraudulent Insurance Act

A fraudulent insurance act is defined as any act committed by an individual with the intent to defraud. In doing so, this person must either present, cause to be presented, or prepare a written statement either as part of or in support of any application for insurance, proof of self-insurance, a claim of payment and other documents. The accused must also commit this act knowing or under the belief that this written statement will be presented to or by an insurer whether real or purported. Additionally, the accused must also know that the written information contains materially false information concerning a material fact or that the written information will conceal the material fact by misleading the person(s) who receive the information.

Fraudulent Health Insurance Act

Very similar to the definition of a fraudulent insurance act, a fraudulent healthcare insurance act addresses membership, enrollment, and coverage in a health care plan. Additionally, an “application for the issuance of a health insurance policy” is also subject to this definition.

POTENTIAL PUNISHMENT & ASSOCIATED CRIMES INVOLVING INSURANCE FRAUD

Insurance Fraud, regardless of the degree, rarely is a standalone crime. That is, the end game and the offenses perpetrated to get there incorporate additional criminal activity. For example, a person seeking to obtain money and who fills out paperwork fraudulently may face Grand Larceny charges and allegations of the falsification of certain records. Although not a complete list of offenses, the following are common felony charges contained in indictments alleging New York Insurance Fraud:

  • Enterprise Corruption
  • Grand Larceny
  • Forgery
  • Falsifying Business Records
  • Offering a False Instrument for Filing

As proof that Insurance Fraud is often connected to Grand Larceny, both statutes mimic each other in terms of the amount of the theft and the degree of the crime. Like Grand Larceny, Insurance Fraud is punishable as a misdemeanor by up to one year in jail and as much as twenty-five years in prison if the offense committed is the “B” felon of Insurance Fraud in the First Degree.

For additional information on White Collar crimes in New York, follow the respective links. A wealth of information on these and other crimes can also be found by searching the New York Criminal Lawyer Blog.

TYPES OF INSURANCE FRAUD

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 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 to bill for them.
  • Billing for services that weren’t ever provided or for services that were more costly than those 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-7awhich 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.

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.

You need to get legal advice from an insurance fraud lawyer with experience in these types of cases if you have been charged.

WHAT MAKES INSURANCE FRAUD INVESTIGATIONS DIFFERENT FROM OTHER TYPES?

Such investigations are different from other criminal or semi-criminal investigations because often they are conducted not by government law-enforcement agencies but rather by insurance companies themselves. Based on our experience in dealing with insurance providers inquires, we can say that these companies often engage in “audits” and “investigations” not because they act on suspicion of fraud but because they use the investigative process to avoid payments by using the power of intimidation.

This of course does not suggest that all such inquiries are baseless. There are many legitimate investigations that result in criminal prosecution and conviction. However, an experienced insurance fraud defense attorney may be able to prevent extreme results and provide protection to the client who is subject to such inquiry.

The New York insurance fraud criminal lawyers with Norman Spencer Law Group PLLC have represented individual and corporate clients in insurance audits and inquiries with a high degree of success.

In all inquiries conducted by the insurers, it is our primary goal to protect the client and the client’s business. In several recent cases we represented physicians who were targeted by the insurance companies’ investigators for alleged fraudulent billing practices. After mounting an aggressive defense strategy, the cases were terminated and no referrals to law enforcement agencies were made.

INSURANCE AUDITS OF HEALTHCARE PROFESSIONALS

Insurance companies in the United States are extremely aggressive when pursuing fraudulent claims, but they often abuse policyholders and enrolled providers where they feel they can get away without paying. A common practice used by many major carriers is to target a healthcare provider, usually a small to medium size medical practice. Normally, the practitioner receives a request from the insurer asking to provide records for a limited number of patients, from 10 to 20 in total. They justify the request by real or assumed provision in the provider agreement (in cases it exists). When the providers complies, whether or not they have the authority to make such demands, the carrier’s auditors examine the files, always find some inconsistencies, irregularities, errors, real or perceived, and determine that the provider overbilled the insurer. Then they extrapolate these numbers and apply them to all or most patients of the practice, demanding huge payments. Our insurance attorneys have successfully represented a number of physicians and medical practices in cases like this, achieving great results. We recommend that healthcare practitioners audited by any carrier speak with an experienced insurance lawyer before turning over any documents to the investigators and auditors.

In cases involving healthcare insurance, especially if government programs such as Medicaid and Medicare are involved, regular audits may and do often turn into full scale criminal investigations that can jeopardize the practitioner’s ability to practice. Speak to us before discussing the case with the auditors.

In New York, related offenses can be charged as a misdemeanor or a felony, depending on the circumstances of the case. With felony charges, it depends on the scale of crime, charges ranging from a Class E felony to Class B felony.

Anyone under investigation for related criminal offenses in New York should contact an experienced New York insurance fraud defense attorney as soon as they find out that they are being targeted. 

WHY PEOPLE COMMIT INSURANCE FRAUD?

We’ve seen a few reasons in our practice (and we’ve handled many of them). Sometimes, it’s just greed, plain and simple. After all, everyone knows that insurance companies are rich, so it’s not a big deal if they lose some money. Many people commit this crime because of financial necessity because they are just struggling making ends meet. Others simply don’t view it as something wrong because it’s hard to identify an insurance company as a “victim”. In their mind, robbing a bank is clearly wrong, but taking a claim to which one is not entitled is not necessarily bad.

HOW SERIOUS OF A CRIME IS INSURANCE FRAUD IN NEW YORK?

Under New York Penal Code, insurance fraud can be anything from a Class A Misdemeanor to a Class B Felony. It all depends on how much money the insurance carrier lost as the result of the crime. So, in more serious cases involving large amounts of money, a conviction can result in prison time. If you are not a US citizen and the claim is over $10,000, you are likely to be deported. Even if the claim is smaller than that, you can be deported because insurance fraud is a crime of moral turpitude.

WHAT CAN I DO IF I’M INVESTIGATED FOR INSURANCE FRAUD IN NYC?

The first thing to remember is not to speak with investigators. If they come to you with questions, you can assume that they already know most answers. Don’t make it worse by making statements that will incriminate you. Besides, it won’t even help you to “spill” everything to the investigators.

The way to handle it is to ask for the investigator’s contact information and tell them (politely but firmly) that you will speak with your attorney first and the attorney will get back to them.

We’ve had countless cases where we intervened on behalf of our clients early in the process and were able to prevent arrest and prosecution. There were so many cases where our clients were already arrested but the outcome was much better than it could have been.

Contact Top Rated New York Insurance Fraud Defense Attorneys

If you suspect that you are under investigation for New York Insurance Fraud, you need to consult a top rated New York Insurance Defense attorney as soon as possible. We have defended many Insurance Fraud cases both in New York State and federal courts and look forward to sharing our knowledge with you. Contact us today to schedule your initial consultation.