insurance fraud

Insurance Fraud Laws

Insurance fraud is a serious crime that can end up being expensive for the perpetrator.

There’s the potential for fines and restitution, and if the perpetrator is arrested, they’ll either need to wait until their court date or go through the bail bonds process to get out. Some cases of insurance fraud can also result in jail time.

How Insurance Fraud Works

Insurance fraud covers a wide variety of offenses, but what they all come down to is any action intended to defraud an insurance company into paying the perpetrator benefits. The insurance fraud could be committed by a consumer or by a company that receives payments from insurance companies.

For example, a consumer could commit insurance fraud by claiming an injury after a car accident when they’re actually uninjured. It would also be insurance fraud if they exaggerated the extent of their injuries to receive more compensation than necessary.

A service provider, such as a doctor, could commit insurance fraud by charging a higher price to a consumer’s insurance company than the service is supposed to cost.

Those are just two examples of insurance fraud, but considering all the types of insurance that are out there, many other methods exist.

Proving Insurance Fraud

In cases of insurance fraud, it’s the prosecution’s responsibility to demonstrate that the defendant intentionally defrauded the insurance company, whether they’re alleging that the defendant obtained benefits they weren’t supposed to get at all or that the defendant obtained a higher benefit amount than they should have.

The prosecution could prove this by showing that the defendant either made a false statement or omitted key facts in their insurance claim. One important point to remember regarding insurance fraud is that the prosecution needs to prove the defendant had intent. An honest mistake wouldn’t be considered fraud. In that case, the defendant would need to pay back what they obtained due to the mistake, but they wouldn’t be guilty of fraud. For this reason, lack of intent is one of the more common defenses to allegations of insurance fraud.

Legal Penalties for Insurance Fraud

The penalties for insurance fraud vary by state and by the amount that the defendant obtained fraudulently. In California, there are a few common penalties for insurance fraud.

If the insurance fraud is within the misdemeanor thresholds, then the maximum penalties are a fine of $10,000 and a one-year sentence in county jail. The court could choose one or both of these penalties.

If the insurance fraud falls under the felony range, then the defendant could be facing a prison sentence for two to five years.

State courts can also penalize the defendant with a fine, with the maximum amount being either double the amount that they fraudulently obtained or $50,000, whichever is greater. In cases of worker’s compensation insurance fraud, the maximum fine amount can go up to $150,000.

Prior offenses on the defendant’s record can lead to harsher punishments. For example, if the defendant has prior felony insurance fraud convictions, each of those convictions can add two years to their prison sentence.

Finally, there is the possibility that the defendant needs to pay the victim restitution.

Defense Against Allegations of Insurance Fraud

The best defense in an insurance fraud case will depend on the evidence that the prosecution has against the defendant. The defense will find this out during the discovery process. It’s smart for the defendant to hire an attorney to represent them in these situations, as this can make a significant difference in the outcome of their case.

An attorney can put together a solid defense strategy and represent the defendant in court, if the case goes to trial. They can also work on negotiating a plea bargain with the prosecution.

It’s unlikely for a defendant to get hit with the maximum penalties on a fraud case, especially if they’re a first-time offender. A skilled attorney can often negotiate a favorable plea deal with lower penalties. If the case is a misdemeanor, it’s possible the defendant could get off with a fine and no time in jail, although every case is different and there are never any guaranteed outcomes.

Read More: All About Insurance Fraud

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