By: Onisuru Ojegba Legal Intern to the firm
Insurance fraud consists of crimes where an individual consumer or insurance company, agent, or adjuster commits deliberate deception to obtain illicit profits or benefits. While the classification of insurance fraud is broad and consists of many different variations, including health care fraud, life insurance fraud, and unemployment fraud, the crime occurs in the same manner; during the process of buying, selling, or underwriting insurance.
While every state has its own laws which criminalize insurance fraud, federal law does not specifically address the crime. Instead, federal law addresses insurance fraud through The Violent Crime Control and Law Enforcement Act (1994), which gives the Federal Government jurisdiction over insurance fraud once a transaction crosses state lines (either physically or through wire). The alleged fraud then falls into the federal government’s jurisdiction and will be prosecuted at the federal level. Title 18 U.S. Code § 1033: specifically outlines this jurisdiction as Crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce. This law separates insurance fraud into 5 categories including:
* Knowingly making any materially false statement or report or willfully overvaluing the value of land, property, or security for insurance purposes.
* Willfully embezzling, abstracting, or misappropriating premiums, credits, or other money or property of an insured.
* Knowingly falsifying information about the financial state of a business with the intent to deceive insurers, examiners, or regulatory agencies.
* Making threats or attempting to impede the efforts of insurance examiners or regulatory agencies from the “due and proper administration of the law”.
* Engaging in the business of insurance if you have been previously of convicted any criminal felony involving dishonesty or a breach of trust
Insurance fraud is investigated internally, through private companies, and through state and federal law enforcement agencies like the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS). Insurance companies that investigate internally have special divisions responsible for identifying fraud, denying insurance claims, and reporting suspicious activity to law enforcement.
Insurance fraud is a serious crime that carries severe penalties both legally and peripherally.
Depending on the nature of the offense, a conviction for this crime may have you facing anywhere from 10 to 15 years in prison, and the disqualification of ever working within the insurance business. Navigating these charges should not be endured alone. The moment you become the target of a federal insurance investigation, contact our team of experienced federal criminal defense lawyers to learn how you can protect your freedom.