Crime Overview Insurance Fraud

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According to the Coalition Against Insurance Fraud, it is estimated that insurance fraud costs Americans $875 per person each year. The financial loss is estimated at $80 billion annually. Additionally, Medicare estimates that health insurance fraud costs the government a whopping $179 billion per year.

Also referred to as false insurance claims, insurance fraud occurs most often when a person with insurance, or a business with insurance, makes a false or exaggerated insurance claim. These individuals and businesses are typically seeking quick cash for injuries or losses that do not exist. Customers can also be the victims of insurance fraud in two ways: through the sale of unlicensed or fake insurance coverage to unsuspecting clients, and by an insurance agent or broker who steals insurance premiums paid by customers.

There are many types of insurance fraud that exist, but the majority of them can be split into two categories, hard and soft.

Hard fraud consists of someone who stages a motor vehicle accident, commits arson, orchestrates a robbery of their premises, lies about an injury or falsifies medical insurance documents all for the purpose of receiving compensation from their insurance company. Hard fraud receives more media attention because it is easier to detect and is often committed for the purpose of stealing millions of dollars from insurance companies.

There are a number of ways that these schemes cost insurance companies millions of dollars throughout the year. Staged car accidents drain auto insurance companies out of billions of dollars by charging for unnecessary medical treatment of false injuries. Some businesses attempt to illegally avoid paying full workers' compensation premiums by hiring employees off of the books. They also attempt to avoid higher premiums by classifying higher risk workers as having jobs that hold a lower health risk. These schemes are classified as hard because they are deliberately structured to have the potential to drain a large amount of money out of insurance companies.

An example of a high-profile hard fraud insurance case is the case of Martin Frankel. Frankel was a former financier who was charged with stealing an alleged $200 million from insurance companies that he'd taken over within different states in the U.S. He had been prohibited from securities trading after carrying out a similar maneuver a few years prior, so he'd purchased these companies through a trust to hide his connection to them. He had taken money from these companies under the guise of investing in them, and instead used the money to purchase a multi-million dollar home.

Soft fraud is a lot more common and is often performed by everyday people who may exaggerate the extent of damage within an otherwise valid insurance claim.

The most common forms of insurance fraud are automobile, medical, life, workers compensation, fire, property and health care.

Insurance fraud is a felony which is punishable by five to seven years in prison or more. This means that if you are convicted of insurance fraud, you will likely spend time in jail or prison, you will have to pay fines, and it is almost guaranteed that you will be sued by the insurance company or individuals involved in the case.

If you are suing a convicted criminal for damages resulting from insurance fraud, you should hire a civil lawyer or attorney. If the person was not convicted and you want to sue for damages, you should still hire a civil lawyer or attorney.

If you have been accused of insurance fraud, whether you are guilty or not, you should hire a criminal lawyer or attorney. Criminal lawyers and attorneys represent individuals who have been charged with crimes by arguing their cases in courts of law. A criminal lawyer or attorney will typically have a private practice concentrating on criminal law.

A criminal lawyer retained after your arrest for insurance fraud will help you prepare the best defense possible. He or she will walk you through every step of the process, guiding you along the way.

When searching for a criminal lawyer or attorney, visit the American Bar Association. The ABA site offers free access to their lawyer locater to help you find a criminal lawyer or attorney in your area.