insurance fraud
A scheme to defraud an insurance company by making false claims, staging losses, or misrepresenting facts to obtain insurance payouts. In U.S. federal law, prosecuted primarily under mail fraud and wire fraud statutes.
Definition
Insurance fraud is the deliberate attempt to defraud an insurance company by submitting false or exaggerated claims, concealing material facts, staging accidents or losses, or using fraudulent documentation to obtain insurance payments to which one is not entitled. Under U.S. federal criminal law, there is no single standalone statute titled "insurance fraud." Instead, prosecutors charge insurance fraud schemes under general federal fraud statutes that apply whenever the mails or interstate electronic communications are used to execute the fraudulent scheme.
The two primary federal statutes used to prosecute insurance fraud are mail fraud and wire fraud. Mail fraud applies when any use of the U.S. Postal Service or private interstate carrier occurs in furtherance of the scheme, such as mailing a fraudulent claim form or receiving a fraudulent payment check. Wire fraud applies when interstate telephone calls, emails, electronic fund transfers, or other wire communications are used as part of the fraudulent scheme. Both statutes require proof of a scheme or artifice to defraud and the specific intent to defraud the insurer.
Common forms of insurance fraud prosecuted federally include staging automobile accidents to generate false injury claims, arson-for-profit schemes where property owners burn their own buildings to collect insurance proceeds, healthcare providers billing insurers for services never rendered, and individuals faking injuries or deaths to collect life or disability insurance. The fraud may involve a single claimant acting alone or sophisticated criminal networks involving multiple conspirators including doctors, lawyers, and staged accident participants.
When the fraudulent insurance claims involve healthcare benefits, federal prosecutors may also charge violations under the specific health care fraud statute, which criminalizes knowingly executing a scheme to defraud any healthcare benefit program or obtain money from such programs through false pretenses. This statute is frequently used in cases involving Medicare, Medicaid, or private health insurance fraud. Penalties for federal insurance fraud convictions can include substantial prison sentences, fines, restitution orders requiring repayment of fraudulently obtained funds, and forfeiture of proceeds from the criminal activity.
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