What is Insurance Fraud
26 Dec 2020 Category: Business LawFraud is when someone lies to get a benefit or advantage they don't otherwise have or knowingly denies the entitlement to a due gift. For example, the law allows for insurance fraud to be charged when:
● The suspect intended to defraud. Insurance fraud is considered a crime with "specific intent." A prosecutor must prove that the victim was knowingly tricked.
● A complete act has been completed. It suffices to make a misrepresentation to an insurance company with untrue knowledge.
● Act and intention must be combined.
● As long as the suspect committed the act to do so, the actual loss is not necessary. A victim does not have to lose any money.
What types of insurance fraud or other crimes does the Fraud Division handle?
The Fraud Division is responsible for enforcing Chapter 12 of the California Insurance Code. Also known as the "Insurance Frauds Prevention Act," California Penal Code Sections 549-550, and California Labor Code Section 3700.5, the Fraud Division is also charged. The current law requires that the Fraud Division investigate various felony provisions in the Penal and Insurance Codes. In addition, the Fraud Division usually investigates a suspected fraudulent claim or related crime.
The Fraud Division investigates criminal acts involving automobile property, personal injury, workers' comp, and residential or commercial property claims. The following are examples of insurance fraud being examined:
● Medical
● Life
● Other
● Fire
● Property
Federal and California laws allow the Fraud Division federal jurisdiction.
Types of insurance fraud
Automobile Collision
● Support
● Hit& Run
Automobile Property
● Theft Damage
● Other Auto Property
Medical
● Pharmacy
● Dental
Life
● False/Suspicious Policy Application
Other
● Casualty
Fire
Property
Healthcare
● Unlawful Solicitations/Referral
● Pharmacy
Definitions
Automobile Collision
Swoop - Swoop causes "squat," a vehicle swerving in front of it, to brake and cause "squat," causing a rear-end collision between the victim's car and its brakes.
Sudden Stop – "Squat' vehicle slows down to close the gap between its or her truck and victim's, then suddenly brakes causing a rear-end collision with the victim.
Backing: The victim's car collides with the suspect's while backing out from a driveway or a parking spot in a lot.
Pedestrian versus Auto-Pedestrian versus Auto.
Right of Way – Suspect driver seems to have given right-of-way to victim driver, often in an intersection, causing cars to collide. The suspect later claimed that no right-of-passage was given.
Phantom Vehicle: A vehicle of unknown origin/description causes a single car to crash.
Hit and Run: A hit-and-run vehicle strikes the victim's vehicle and flees the scene.
Paper Collision: Parties conspire to create the appearance of a legitimate accident by using pre-damaged vehicles or intentionally and covertly inflicting damages on the suspect's vehicle(s).
Organized Ring: Collision orchestrated through an organized criminal activity that involves attorneys, doctors and other medical professionals, office managers, and cappers.
Medical Provider – Medical provider inflates the billing, knowingly submits incorrect medical codes, and misrepresents facts.
Automobile Property
Property Faked Damages: Vehicles damaged in exaggerated ways, not existent, preexisting, or later.
Inflated Damages: Damages exaggerated or exaggerated; non-existent or preexisting; excessive billing for vehicle body parts and repair work.
Vehicle Theft – Vehicle or motorhome theft.
Vehicle Arson - Motor home or vehicle arson.
Auto Property/Vandalism: Vehicle or motorhome vandalism includes car rims and stereo equipment.
Agent/Broker – Policy backdated before loss date and theft premium dollars meant for payment of coverage
Embezzlement: The embezzlement or stealing of funds.
Theft Damage/Trailer Watercraft - Watercraft are stolen or damaged when being transported on a trailer.
Trailed Watercraft Arson: Arson of a watercraft when it is being transported on a trailer.
Other Auto Property: Any other circumstances relating to autos that are not mentioned above involve the presentation of fake documents as proof of coverage.
Medical
Slip and Fall - Suspicious slip/fall claim.
Inflated Billing: Inflated billing by any medical institution, doctor, chiropractor, or laboratory.
Disability: A claim for disability against an insurance policy that covers permanent or temporary disability. The claimant is receiving ongoing benefits and vocational benefits. The claimant has reported that they work or perform activities beyond what is alleged to be their physical limitations.
Food Contamination – Foreign objects found in food/drink products
Pharmacy - A pharmacist or pharmacy that inflates or falsifies billing. Illegally obtains prescriptions for medical purposes and submits them to the doctor.
Dental: A dentist or dental office that inflates or falsifies bills.
Embezzlement: The embezzlement or stealing of funds.
Other Medical - Reports of non-auto injuries made by the insured or claimant.
Life
Questionable Death: Uncertain circumstances surrounding reported deaths; fake identity/staged death.
Suspicious/False Application - Questionable or suspicious actions taken by the applicant or policyholder (insured's health misrepresented on an application; suspicious timing of application relative to insured's death); potential for monetary gains from a life insurance policy. Suspected claims regarding murder for profit or claims about viatical agreements are included.
Workers' Compensation
Claimant Fraud: Suspected employee claim. Fraud by the employer
Employer-Employee commits an illegal act against the employee(s).
Legal Provider – Legal provider inflates billing or materially misrepresents facts.
Medical Provider – Medical provider inflates the billing, knowingly submits incorrect medical codes, and misrepresents facts.
Pharmacy: Pharmacy falsifies codes or inflates bills.
Misclassification - Underestimating the workers to get workers' compensation coverage with a lower premium. Example: Roofers are classified as clerical.
To obtain workers' compensation coverage at lower premiums, misreport payroll. Example: Reporting wages too high as if workers are skilled journeymen with less chance of injury, which allows for lower premiums and under-reporting payroll to maintain lower premiums.
X-Mod Evasion: To get workers' compensation coverage at lower premiums, you can misrepresent your claims history by either not reporting injury reports or creating shell companies to create the appearance of common or non-reported claim history.
Embezzlement: The embezzlement or stealing of funds.
Uninsured Employer – Uninsured Employees
Other
Casualty: A casualty, injury, or theft unrelated to any other fraud code definitions.
Agricultural/Livestock: Suspected loss or damage to agricultural products or livestock that is not due to acts of nature.
Fire
Commercial Fire - Suspicious damage to commercial/business property.
Arson for Hire – Suspected arson to be hired.
Residential Fire - Suspicious residential fire damage.
Inflated Fire Loss- Inflated claims arising from a fire loss
Property
Suspicious Residential Theft
Commercial Theft - Suspected commercial business theft.
Theft by Commercial Carrier – Insured reports baggage/cargo that have been lost by a commercial carrier (airline or bus, train, ship, etc.).
Watercraft/Aircraft Theft: Theft of or damage to watercraft/aircraft that isn't on a trailer.
Watercraft/Aircraft arson: Arson of watercraft/aircraft when it is not in a trailer.
Vandalism - Malicious mischief or destruction to the exterior or interior of a business or residence
Property Theft from Vehicle- Suspected theft of personal property stored in a vehicle (commonly covered under homeowner's insurance).
Agent/Broker – Policy backdated before loss date and theft premium dollars meant for payment of coverage
Mold Related - Mold related.
Other Property Damage: Property damage that is not covered by different definitions.
Healthcare
Embezzlement: The embezzlement or stealing of funds.
Identity theft - The use of another person's identity to obtain health care benefits.
Referral/Unlawful Solicitations - This refers to cases in which patients are recruited and offered incentives to undergo procedures.
Billing Fraud: A medical provider who knowingly submits false medical billing. It also bills for medical necessity procedures that may be elective or cosmetic and are not covered under health insurance.
Fraud in Immunization - False billing by medical providers for immunizations not provided.
Pharmacy: Pharmacy falsifies codes or inflates bills.
Surgery Center Fraud – Any alleged fraud (billing fraud, etc.) Outpatient surgery centers.
Disability: A claim for disability against an insurance policy that covers permanent or temporary disability. The claimant is receiving ongoing benefits and vocational benefits. The claimant has reported that they work or perform activities beyond what is alleged to be their physical limitations.
