Insurance fraud

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Insurance fraud is any act committed to defraud an insurance process. Insurance fraud_sentence_0

It occurs when a claimant attempts to obtain some benefit or advantage they are not entitled to, or when an insurer knowingly denies some benefit that is due. Insurance fraud_sentence_1

According to the United States Federal Bureau of Investigation, the most common schemes include premium diversion, fee churning, asset diversion, and workers compensation fraud. Insurance fraud_sentence_2

Perpetrators in the schemes can be insurance company employees or claimants. Insurance fraud_sentence_3

False insurance claims are insurance claims filed with the fraudulent intention towards an insurance provider. Insurance fraud_sentence_4

Insurance fraud has existed since the beginning of insurance as a commercial enterprise. Insurance fraud_sentence_5

Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions of dollars annually. Insurance fraud_sentence_6

Types of insurance fraud are diverse and occur in all areas of insurance. Insurance fraud_sentence_7

Insurance crimes also range in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Insurance fraud_sentence_8

Fraudulent activities affect the lives of innocent people, both directly through accidental or intentional injury or damage, and indirectly by the crimes leading to higher insurance premiums. Insurance fraud_sentence_9

Insurance fraud poses a significant problem, and governments and other organizations try to deter such activity. Insurance fraud_sentence_10

An epigram by the Roman poet Martial provides a clear evidence the phenomenon of insurance fraud was already known in the Roman Empire during the First Century AD: Insurance fraud_sentence_11

Insurance fraud_description_list_0

  • "Tongilianus, you paid two hundred for your house;Insurance fraud_item_0_0
  • An accident too common in this city destroyed it.Insurance fraud_item_0_1
  • You collected ten times more. Doesn't it seem, I pray,Insurance fraud_item_0_2
  • That you set fire to your own house, Tongilianus?"Insurance fraud_item_0_3

Causes Insurance fraud_section_0

The "chief motive in all insurance crimes is financial profit". Insurance fraud_sentence_12

Insurance contracts provide both the insured and the insurer with opportunities for exploitation. Insurance fraud_sentence_13

According to the Coalition Against Insurance Fraud, the causes vary, but are usually centered on greed, and on holes in the protections against fraud. Insurance fraud_sentence_14

Often, those who commit insurance fraud view it as a low-risk, lucrative enterprise. Insurance fraud_sentence_15

For example, drug dealers who have entered insurance fraud think it's safer and more profitable than working street corners. Insurance fraud_sentence_16

Compared to those for other crimes, court sentences for insurance fraud can be lenient, reducing the risk of extended punishment. Insurance fraud_sentence_17

Though insurers fight fraud, some pay suspicious claims anyway, as settling such claims is often cheaper than legal action. Insurance fraud_sentence_18

Another basis for fraud is over-insurance, in which someone insures property for more than its real value. Insurance fraud_sentence_19

This condition can be difficult to avoid, especially since an insurance provider might sometimes encourage it to obtain greater profits. Insurance fraud_sentence_20

This lets fraudsters profit by destroying their property, because they receive an insurance payout greater that the value of the property. Insurance fraud_sentence_21

The most common forms of insurance fraud are re-framing a non-insured damage to make it an event covered by insurance, and inflating the value of the loss. Insurance fraud_sentence_22

Insurance companies are also susceptible to fraud because it's possible for fraudsters to file claims for damages that never occurred. Insurance fraud_sentence_23

Losses due to insurance fraud Insurance fraud_section_1

It is hard to place an exact value on the money stolen through insurance fraud. Insurance fraud_sentence_24

Insurance fraud is deliberately undetectable, unlike visible crimes such as robbery or murder. Insurance fraud_sentence_25

As such, the number of cases of insurance fraud that are detected is much lower than the number of acts that are actually committed. Insurance fraud_sentence_26

The best that can be done is to provide an estimate for the losses that insurers suffer due to insurance fraud. Insurance fraud_sentence_27

The Coalition Against Insurance Fraud estimates that in 2006 a total of about $80 billion was lost in the United States due to insurance fraud. Insurance fraud_sentence_28

According to estimates by the Insurance Information Institute, insurance fraud accounts for about 10 percent of the property/casualty insurance industry's incurred losses and loss adjustment expenses. Insurance fraud_sentence_29

The National Health Care Anti-Fraud Association estimates that 3% of the health care industry's expenditures in the United States are due to fraudulent activities, amounting to a cost of about $51 billion. Insurance fraud_sentence_30

Other estimates attribute as much as 10% of the total healthcare spending in the United States to fraud—about $115 billion annually. Insurance fraud_sentence_31

According to the FBI, non-health insurance fraud costs an estimated $40 billion per year, which increases the premiums for the average U.S. family between $400 and $700 annually. Insurance fraud_sentence_32

Another study of all types of fraud committed in the United States insurance institutions (property-and-casualty, business liability, healthcare, social security, etc.) put the true cost at 33% to 38% of the total cash flow through the system. Insurance fraud_sentence_33

This study resulted in the book title "The Trillion Dollar Insurance Crook" by J.E. Smith. Insurance fraud_sentence_34

In the United Kingdom, the Insurance Fraud Bureau estimates that the loss due to insurance fraud in the United Kingdom is about £1.5 billion ($3.08 billion), causing a 5% increase in insurance premiums. Insurance fraud_sentence_35

The Insurance Bureau of Canada estimates that personal injury fraud in Canada costs about C$500 million annually. Insurance fraud_sentence_36

Indiaforensic Center of Studies estimates that Insurance frauds in India costs about $6.25 billion annually. Insurance fraud_sentence_37

Hard vs. soft fraud Insurance fraud_section_2

Insurance fraud can be classified as either hard fraud or soft fraud. Insurance fraud_sentence_38

Hard fraud occurs when someone deliberately plans or invents a loss, such as a collision, auto theft, or fire that is covered by their insurance policy so they can claim payment for damages. Insurance fraud_sentence_39

Criminal rings are sometimes involved in hard fraud schemes that can steal millions of dollars. Insurance fraud_sentence_40

Soft fraud, which is far more common than hard fraud, is sometimes also referred to as opportunistic fraud. Insurance fraud_sentence_41

This type of fraud consists of policyholders exaggerating otherwise-legitimate claims. Insurance fraud_sentence_42

For example, when involved in an automotive collision an insured person might claim more damage than actually occurred. Insurance fraud_sentence_43

Soft fraud can also occur when, while obtaining a new health insurance policy, an individual misreports previous or existing conditions to obtain a lower premium on the insurance policy. Insurance fraud_sentence_44

Types of insurance fraud Insurance fraud_section_3

Life insurance Insurance fraud_section_4

See also: :Category:Murderers for life insurance money Insurance fraud_sentence_45

The majority of life insurance fraud occurs at the application stage, involving applicants misrepresenting their health, their income, and other personal information in order to get a cheaper premium. Insurance fraud_sentence_46

As more and more insurance amendments can be performed online or over the telephone, identity theft has become an enabling crime that can lead to the amendment of life insurance terms to benefit a fraudster - for example, adding a second stolen identity as a new beneficiary. Insurance fraud_sentence_47

Life insurance fraud may involve faking death to claim life insurance. Insurance fraud_sentence_48

Fraudsters may sometimes turn up a few years after disappearing, claiming a loss of memory. Insurance fraud_sentence_49

An example of life insurance fraud is the John Darwin disappearance case, which was an investigation into the act of pseudocide committed by the British former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was thought to have died in a canoeing accident. Insurance fraud_sentence_50

Darwin was reported as "missing" after failing to report to work following a canoeing trip on March 21, 2002. Insurance fraud_sentence_51

He reappeared on December 1, 2007, claiming to have no memory of the past five years. Insurance fraud_sentence_52

Another example is former British Government minister John Stonehouse who went missing in 1974 from a beach in Miami. Insurance fraud_sentence_53

He was discovered living under an assumed name in Australia, extradited to Britain and jailed for seven years for fraud, theft, and forgery. Insurance fraud_sentence_54

Health care insurance Insurance fraud_section_5

See also: Medicare fraud and Health care fraud Insurance fraud_sentence_55

Health insurance fraud is described as an intentional act of deceiving, concealing, or misrepresenting information that results in health care benefits being paid to an individual or group. Insurance fraud_sentence_56

Fraud can be committed either by an insured person or by a provider. Insurance fraud_sentence_57

Member fraud consists of claims on behalf of ineligible members and/or dependents, alterations on enrollment forms, concealing pre-existing conditions, failure to report other coverage, prescription drug fraud, and failure to disclose claims that were a result of a work-related injury. Insurance fraud_sentence_58

Provider fraud consists of claims submitted by bogus physicians, billing for services not rendered, billing for higher level of services, diagnosis or treatments that are outside the scope of practice, alterations on claims submissions, and providing services while medical licenses are either suspended or revoked. Insurance fraud_sentence_59

Independent medical examinations debunk false insurance claims and allow the insurance company or claimant to seek a non-partial medical view for injury-related cases. Insurance fraud_sentence_60

According to the Coalition Against Insurance Fraud, health insurance fraud depletes taxpayer-funded programs like Medicare, and may victimize patients in the hands of certain doctors. Insurance fraud_sentence_61

Some scams involve double-billing by doctors who charge insurers for treatments that never occurred, and surgeons who perform unnecessary surgery. Insurance fraud_sentence_62

According to Roger Feldman, Blue Cross Professor of Health Insurance at the University of Minnesota, one of the main reasons that medical fraud is such a prevalent practice is that nearly all of the parties involved find it favorable in some way. Insurance fraud_sentence_63

Many physicians see it as necessary to provide quality care for their patients. Insurance fraud_sentence_64

Many patients, although disapproving of the idea of fraud, are sometimes more willing to accept it when it affects their own medical care. Insurance fraud_sentence_65

Program administrators are often lenient on the issue of insurance fraud, as they want to maximize the services of their providers. Insurance fraud_sentence_66

The most common perpetrators of healthcare insurance fraud are health care providers. Insurance fraud_sentence_67

One reason for this, according to David Hyman, a Professor at the University of Maryland School of Law, is that the historically-prevailing attitude in the medical profession is one of "fidelity to patients". Insurance fraud_sentence_68

This incentive can lead to fraudulent practices such as billing insurers for treatments that are not covered by the patient's insurance policy. Insurance fraud_sentence_69

To do this, physicians bill for a different service that the policy covers, rather than the service they rendered. Insurance fraud_sentence_70

Another motivation for insurance fraud is a desire for financial gain. Insurance fraud_sentence_71

Public healthcare programs such as Medicare and Medicaid are especially conducive to fraudulent activities, as they are often run on a fee-for-service structure. Insurance fraud_sentence_72

Physicians use several fraudulent techniques to achieve this end. Insurance fraud_sentence_73

These can include "up-coding" or "upgrading", which involve billing for more expensive treatments than those actually provided; providing, and subsequently billing for, treatments that are not medically necessary; scheduling extra visits for patients; referring patients to other physicians when no further treatment is actually necessary; "phantom billing", billing for services not rendered; and "ganging", billing for services to family members or other individuals who are accompanying the patient but who did not personally receive any services. Insurance fraud_sentence_74

Perhaps the greatest total dollar amount of fraud is committed by the health insurance companies themselves. Insurance fraud_sentence_75

There are numerous studies and articles detailing examples of insurance companies intentionally not paying claims and deleting them from their systems, denying and cancelling coverage, and the blatant underpayment to hospitals and physicians beneath what are normal fees for care they provide. Insurance fraud_sentence_76

Although difficult to obtain the information, this fraud by insurance companies can be estimated by comparing revenues from premium payments and expenditures on health claims. Insurance fraud_sentence_77

In response to the increased amount of health care fraud in the United States, Congress, through the Health Insurance Portability and Accountability Act of 1996 (HIPAA), has specifically established health care fraud as a federal criminal offense with punishment of up to ten years of prison in addition to significant financial penalties. Insurance fraud_sentence_78

Automobile insurance Insurance fraud_section_6

Fraud rings or groups may fake traffic deaths or stage collisions to make false insurance or exaggerated claims and collect insurance money. Insurance fraud_sentence_79

The ring may involve insurance claims adjusters and other people who create phony police reports to process claims. Insurance fraud_sentence_80

The Insurance Fraud Bureau in the UK estimated there were more than 20,000 staged collisions and false insurance claims across the UK from 1999 to 2006. Insurance fraud_sentence_81

One tactic fraudsters use is to drive to a busy junction or roundabout and brake sharply causing a motorist to drive into the back of them. Insurance fraud_sentence_82

They claim the other motorist was at fault because they were driving too fast or too close behind them, and make a false and inflated claim to the motorist's insurer for whiplash and damage, which can pay the fraudsters up to £30,000. Insurance fraud_sentence_83

In the Insurance Fraud Bureau's first year or operation, the usage of data mining initiatives exposed insurance fraud networks and led to 74 arrests and a five-to-one return on investment. Insurance fraud_sentence_84

The Insurance Research Council estimated that in 1996, 21 to 36 percent of auto-insurance claims contained elements of suspected fraud. Insurance fraud_sentence_85

There is a wide variety of schemes used to defraud automobile insurance providers. Insurance fraud_sentence_86

These ploys can differ greatly in complexity and severity. Insurance fraud_sentence_87

Richard A. Derrig, vice president of research for the Insurance Fraud Bureau of Massachusetts, lists several ways that auto-insurance fraud can occur, such as: Insurance fraud_sentence_88

Staged collisions Insurance fraud_section_7

In staged collision fraud, fraudsters use a motor vehicle to stage an accident with the innocent party. Insurance fraud_sentence_89

Typically, the fraudsters' vehicle carries four or five passengers. Insurance fraud_sentence_90

Its driver makes an unexpected manoeuvre, forcing an innocent party to collide with the fraudster's vehicle. Insurance fraud_sentence_91

Each of the fraudsters then files claims for injuries sustained in the vehicle. Insurance fraud_sentence_92

A "recruited" doctor diagnoses whiplash or other soft-tissue injuries that are hard to dispute later. Insurance fraud_sentence_93

Other examples include jumping in front of cars as done in Russia. Insurance fraud_sentence_94

The driving conditions and roads are dangerous with many people trying to scam drivers by jumping in front of expensive-looking cars or crashing into them. Insurance fraud_sentence_95

Hit and runs are very common and insurance companies notoriously specialize in denying claims. Insurance fraud_sentence_96

Two-way insurance coverage is very expensive and almost completely unavailable for vehicles over ten years old–the drivers can only obtain basic liability. Insurance fraud_sentence_97

Because Russian courts do not like using verbal claims, most people have dashboard cameras installed to warn would-be perpetrators or provide evidence for/against claims. Insurance fraud_sentence_98

Exaggerated claims Insurance fraud_section_8

A real accident may occur, but the dishonest owner may take the opportunity to incorporate a whole range of previous minor damage to the vehicle into the garage bill associated with the real accident. Insurance fraud_sentence_99

Personal injuries may also be exaggerated, particularly whiplash. Insurance fraud_sentence_100

Insurance fraud cases of exaggerated claims can also include claiming damage to the car that is not from the accident reported in the claim. Insurance fraud_sentence_101

Examples Insurance fraud_section_9

Examples of soft auto-insurance fraud include filing more than one claim for a single injury, filing claims for injuries not related to an automobile accident, misreporting wage losses due to injuries, and reporting higher costs for car repairs than those that were actually paid. Insurance fraud_sentence_102

Hard auto-insurance fraud can include activities such as staging automobile collisions, filing claims when the claimant was not actually involved in the accident, submitting claims for medical treatments that were not received, or inventing injuries. Insurance fraud_sentence_103

Hard fraud can also occur when claimants falsely report their vehicle as stolen. Insurance fraud_sentence_104

Soft fraud accounts for the majority of fraudulent auto-insurance claims. Insurance fraud_sentence_105

Another example is that a person may illegally register their car to a location that would net them cheaper insurance rates than where they actually live, sometimes called rate evasion. Insurance fraud_sentence_106

For example, some drivers in Brooklyn have Pennsylvania license plates, because insurance rates for a car registered to an address in rural Pennsylvania are much less than they are in Brooklyn. Insurance fraud_sentence_107

Another form of automobile insurance fraud, known as "fronting", involves registering someone other than the real primary driver of a car as the primary driver of the car. Insurance fraud_sentence_108

For example, parents might list themselves as the primary driver of their children's vehicles to avoid young driver premiums. Insurance fraud_sentence_109

"Crash for cash" scams may involve random unaware strangers, set to appear as the perpetrators of the orchestrated crashes. Insurance fraud_sentence_110

Such techniques are the classic rear-end shunt (the driver in front suddenly slams on the brakes, possibly with brake lights disabled), the decoy rear-end shunt (when following one car, another one pulls in front of it, causing it to brake sharply, then the first car drives off) or the helpful wave shunt (the driver is waved into a line of queuing traffic by the scammer who promptly crashes, then denies waving). Insurance fraud_sentence_111

Organized crime rings can also be involved in auto-insurance fraud, sometimes carrying out schemes that are very complex. Insurance fraud_sentence_112

An example of one such ploy is given by Ken Dornstein, author of Accidentally, on Purpose: The Making of a Personal Injury Underworld in America. Insurance fraud_sentence_113

In this scheme, known as a "swoop-and-squat", one or more drivers in "swoop" cars force an unsuspecting driver into position behind a "squat" car. Insurance fraud_sentence_114

This squat car, which is usually filled with several passengers, then slows abruptly, forcing the driver of the chosen car to collide with the squat car. Insurance fraud_sentence_115

The passengers in the squat car then file a claim with the other driver's insurance company. Insurance fraud_sentence_116

This claim often includes bills for medical treatments that were not necessary or not received. Insurance fraud_sentence_117

An incident that took place on Golden State Freeway June 17, 1992, brought public attention to the existence of organized crime rings that stage auto accidents for insurance fraud. Insurance fraud_sentence_118

These schemes generally consist of three different levels. Insurance fraud_sentence_119

At the top, there are the professionals—doctors or lawyers who diagnose false injuries and/or file fraudulent claims and these earn the bulk of the profits from the fraud. Insurance fraud_sentence_120

Next are the "cappers" or "runners", the middlemen who obtain the cars to crash, farm out the claims to the professionals at the top, and recruit participants. Insurance fraud_sentence_121

These participants at the bottom-rung of the scheme are desperate people (poor immigrants or others in need of quick cash) who are paid around US$1000 to place their bodies in the paths of cars and trucks, playing a kind of Russian roulette with their lives and those of unsuspecting motorists around them. Insurance fraud_sentence_122

According to investigators, cappers usually hire within their own ethnic groups. Insurance fraud_sentence_123

What makes busting these staged-accident crime rings difficult is how quickly they move into jurisdictions with lesser enforcement, after a crackdown in a particular region. Insurance fraud_sentence_124

As a result, in the US several levels of police and the insurance industry have cooperated in forming task forces and sharing databases to track claim histories. Insurance fraud_sentence_125

In the United Kingdom, there is an increasing incidence of false whiplash claims to car insurance companies from motorists involved in minor car accidents (for instance; a shunt). Insurance fraud_sentence_126

Because the mechanism of injury is not fully understood, A&E doctors have to rely on a patient's external symptoms (which are easy to fake). Insurance fraud_sentence_127

Resultingly, "no win no fee" personal injury solicitors exploit this "loophole" for easy compensation money (often a £2500 payout). Insurance fraud_sentence_128

Ultimately this has resulted in increased motor insurance premiums, which has had the knock-on effect of pricing younger drivers off the road. Insurance fraud_sentence_129

Property insurance Insurance fraud_section_10

Possible motivations for this can include obtaining payment that is worth more than the value of the property destroyed, or to destroy and subsequently receive payment for goods that could not otherwise be sold. Insurance fraud_sentence_130

According to Alfred Manes, the majority of property insurance crimes involve arson. Insurance fraud_sentence_131

One reason for this is that any evidence that a fire was started by arson is often destroyed by the fire itself. Insurance fraud_sentence_132

According to the United States Fire Administration, in the United States there were approximately 31,000 fires caused by arson in 2006, resulting in losses of $755 million. Insurance fraud_sentence_133

Council compensation claims Insurance fraud_section_11

The fraud involving claims from the councils' insurers suppose staging damages blamable on the local authorities (mostly falls and trips on council owned land) or inflating the value of existing damages. Insurance fraud_sentence_134

Detecting insurance fraud Insurance fraud_section_12

The detection of insurance fraud generally occurs in two steps. Insurance fraud_sentence_135

The first step is to identify suspicious claims that have a higher possibility of being fraudulent. Insurance fraud_sentence_136

This can be done by computerized statistical analysis or by referrals from claims adjusters or insurance agents. Insurance fraud_sentence_137

Additionally, the public can provide tips to insurance companies, law enforcement and other organizations regarding suspected, observed, or admitted insurance fraud perpetrated by other individuals. Insurance fraud_sentence_138

Regardless of the source, the next step is to refer these claims to investigators for further analysis. Insurance fraud_sentence_139

Due to the sheer number of claims submitted each day, it would be far too expensive for insurance companies to have employees check each claim for symptoms of fraud. Insurance fraud_sentence_140

Instead, many companies use computers and statistical analysis to identify suspicious claims for further investigation. Insurance fraud_sentence_141

There are two main types of statistical analysis tools used: supervised and unsupervised. Insurance fraud_sentence_142

In both cases, suspicious claims are identified by comparing data about the claim to expected values. Insurance fraud_sentence_143

The main difference between the two methods is how the expected values are derived. Insurance fraud_sentence_144

In a supervised method, expected values are obtained by analyzing records of both fraudulent and non-fraudulent claims. Insurance fraud_sentence_145

According to Richard J. Bolton and David B. Insurance fraud_sentence_146

Hand, both of Imperial College in London, this method has some drawbacks as it requires absolute certainty that those claims analyzed are actually either fraudulent or non-fraudulent, and because it can only be used to detect types of fraud that have been committed and identified before. Insurance fraud_sentence_147

Unsupervised methods of statistical detection, on the other hand, involve detecting claims that are abnormal. Insurance fraud_sentence_148

Both claims adjusters and computers can also be trained to identify "red flags", or symptoms that in the past have often been associated with fraudulent claims. Insurance fraud_sentence_149

Statistical detection does not prove that claims are fraudulent; it merely identifies suspicious claims that must be investigated further. Insurance fraud_sentence_150

Fraudulent claims can be one of two types: Insurance fraud_sentence_151

Insurance fraud_unordered_list_1

  • they can be otherwise legitimate claims that are exaggerated or "built up", orInsurance fraud_item_1_4
  • they can be false claims in which the damages claimed never actually occurred.Insurance fraud_item_1_5

Once a built up claim is identified, insurance companies usually try to negotiate the claim down to the appropriate amount. Insurance fraud_sentence_152

Suspicious claims can also be submitted to "special investigative units", or SIUs, for further investigation. Insurance fraud_sentence_153

These units generally consist of experienced claims adjusters with special training in investigating fraudulent claims. Insurance fraud_sentence_154

These investigators look for certain symptoms associated with fraudulent claims, or otherwise look for evidence of falsification of some kind. Insurance fraud_sentence_155

This evidence can then be used to deny payment of the claims or to prosecute fraudsters if the violation is serious enough. Insurance fraud_sentence_156

When an insurance company's fraud department investigates a fraud claim, they frequently proceed in two stages: pre-contact and post-contact. Insurance fraud_sentence_157

In the pre-contact stage they analyze all available evidence before they contact the suspect. Insurance fraud_sentence_158

They may review submitted paperwork, reach out to third parties, and gather evidence from available sources. Insurance fraud_sentence_159

Then, in the "post-contact" stage, they interview the suspect to gather more information and, ideally, obtain an incriminating statement. Insurance fraud_sentence_160

Insurance fraud investigators are trained to question the suspect in a way that precludes the suspect raising a valid defense at a later time. Insurance fraud_sentence_161

For example, questions about access to claim forms preclude the defense that another individual filled out the fraudulent documents. Insurance fraud_sentence_162

Common defenses that the suspect interview may preclude include, for example, that the suspect lacked knowledge that their statement was false, lacked the intention to defraud, or made an ambiguous statement that was later misinterpreted. Insurance fraud_sentence_163

Full disclosure may add credibility to a suspect's account of events, but omissions from disclosure or false statements may detract from the suspect's credibility in later interviews or proceedings. Insurance fraud_sentence_164

In the context of health insurance, fraud by health insurance companies is sometimes found by comparing revenues from premiums paid against the expenditure by the health insurance companies on claims. Insurance fraud_sentence_165

For example, in 2006 the Harris County Medical Society, in Texas, had a health insurance rate increase of 22 percent for "consumer-driven" health plan from Blue Cross and Blue Shield of Texas. Insurance fraud_sentence_166

This was despite the fact that during the previous year Blue Cross had paid out only 9 percent of the collected premium dollars for claims. Insurance fraud_sentence_167

Legislation Insurance fraud_section_13

National and local governments, especially in the last half of the twentieth century, have recognized insurance fraud as a serious crime, and have made efforts to punish and prevent this practice. Insurance fraud_sentence_168

Some major developments are listed below: Insurance fraud_sentence_169

United States Insurance fraud_section_14

Insurance fraud_unordered_list_2

  • Insurance Fraud is specifically classified as a crime in all states, though a minority of states only criminalize certain types (e.g. Oregon only outlaws Worker Compensation and Property Claim fraud).Insurance fraud_item_2_6
  • The Coalition Against Insurance Fraud was founded in 1993 to help fight insurance fraud. This organization collects information on insurance fraud, and is the only anti-fraud alliance speaking for consumers, insurance companies, government agencies and others. Through its unique work, the Coalition empowers consumers to fight back, helps fraud fighters better detect this crime and deters more people from committing fraud. The Coalition supports this mission with a large and continually expanding armory of practical tools: Information, research & data, services and insight as a leading voice of the anti-fraud community.Insurance fraud_item_2_7
  • Approximately one third of these investigations result in criminal conviction, one third result in denial of the claim, and one third result in payment of the claim.Insurance fraud_item_2_8
  • 19 states require mandatory insurer fraud plans. This requires companies to form programs to combat fraud and in some cases to develop investigation units to detect fraud.Insurance fraud_item_2_9
  • 41 states have fraud bureaus. These are law enforcement agencies where "investigators review fraud reports and begin the prosecution process."Insurance fraud_item_2_10
  • Section 1347 of Title 18 of the United States Code states that whoever attempts or carries out a "scheme or artifice" to "defraud a health care benefit program" will be "fined under this title or imprisoned not more than 10 years, or both." If this scheme results in bodily injury, the violator may be imprisoned up to 20 years, and if the scheme results in death the violator may be imprisoned for life.Insurance fraud_item_2_11

Besides making laws more severe, Legislation has also come up with a list for management that should be implemented so that companies are better suited to combat the possibility of being scammed. Insurance fraud_sentence_170

That list includes: Insurance fraud_sentence_171

Insurance fraud_unordered_list_3

  • Understanding that fraud does exist and that there is a high possibility for it happening.Insurance fraud_item_3_12
  • Being fully aware of the dangers and severity of the problem.Insurance fraud_item_3_13
  • Understanding the importance of the hiring process and how important it is to hire honest individuals.Insurance fraud_item_3_14
  • Learn to deal with the economic side of business. That means putting procedures and policies in place to catch and deal with individuals trying to commit fraud.Insurance fraud_item_3_15

Canada Insurance fraud_section_15

Insurance fraud_unordered_list_4

  • The Insurance Crime Prevention Bureau was founded in 1973 to help fight insurance fraud. This organization collects information on insurance fraud, and also carries out investigations. Approximately one third of these investigations result in criminal conviction, one third result in denial of the claim, and one third result in payment of the claim.Insurance fraud_item_4_16
  • British Columbia's Traffic Safety Statutes Amendment Act of 1997 states that any person who submits a motor vehicle insurance claim that contains false or misleading information may on the first offence be fined C$25,000, imprisoned for two years, or both. On the second offense, that person may be fined C$50,000, imprisoned for two years, or both.Insurance fraud_item_4_17

United Kingdom Insurance fraud_section_16

Insurance fraud_unordered_list_5

  • A major portion of the Financial Services Act 1986 was intended to help prevent fraud.Insurance fraud_item_5_18
  • The Serious Fraud Office, set up under the Criminal Justice Act 1987, was established to "improve the investigation and prosecution of serious and complex fraud."Insurance fraud_item_5_19
  • The Fraud Act 2006 specifically defines fraud as a crime. This act defines fraud as being committed when a person "makes a false representation", "fails to disclose to another person information which he is under a legal duty to disclose", or abuses a position in which a person is "expected to safeguard, or not to act against, the financial interests of another person". This act also defines the penalties for fraud as imprisonment up to ten years, a fine, or both.Insurance fraud_item_5_20
  • A task force that specializes in tracking criminals who knowingly commit fraud.Insurance fraud_item_5_21

See also Insurance fraud_section_17

Insurance fraud_unordered_list_6


Credits to the contents of this page go to the authors of the corresponding Wikipedia page: en.wikipedia.org/wiki/Insurance fraud.