While insurance fraud is as old as the insurance industry, insurers and government officials have found the costs for insurance fraud rising in the past several decades to the point that they are seeking higher penalties for those found guilty of insurance fraud, no matter what the form. Indeed, the Coalition Against Insurance Fraud developed a model for states to follow in developing their own laws against insurance fraud. The model statute is tough on insurance fraud, and many states have already adopted similar statutes.
Statute of Limitations for Insurance Fraud
While the laws against insurance fraud vary by state, many have already followed the model set forth by the Coalition Against Insurance Fraud. As a result:
- 45 states have adopted fraud bureaus to investigate and stop fraud
- States are taking a closer look at insurance companies to ensure that they are legitimate businesses providing insurance services and not sham organizations out to bilk the public
- 15 states have strengthened their consumer fraud statutes or adopted new laws to protect against insurance fraud
- Many states require insurance companies to have comprehensive plans for fighting fraud
Insurance Fraud Act Overview
The model insurance statutes developed for states are aimed at protecting insurance companies from the more than $80 billion in losses and families from the nearly $1,000 in additional costs insurance fraud entails. These consumer fraud statutes are aimed at both the claimants who practice soft fraud, by exaggerating already existing claims, or those committing hard fraud, which entails specifically planning acts to defraud insurance companies. In addition, they target the insurance companies that sell worthless policies, often preying on the poor and uneducated.
The states may follow this model in any way they deem appropriate, but the model encourages a penalty range that is tiered, providing higher penalties for multiple incidents of insurance fraud or extensive schemes costing insurance companies thousands or even millions of dollars.
Help from a Lawyer for Fraud Charges
Insurance fraud is a crime, and the penalties can begin at $5,000 per incident and increase to as much as $150,000. They can also include jail time of as much as 5 years, restitution of the money defrauded, and denial of the claim. In fact, even those who knowingly acquiesce to insurance fraud perpetrated by someone else can receive harsh penalties for that participation. Insurance fraud is receiving more attention from law enforcement officials and state governments; however, anyone who is the victim of fraud or is falsely accused of fraud should call a criminal lawyer immediately to learn their options and have their rights protected.
