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Insurance fraud or false insurance claims are insurance
Insurance

Insurance, in law and economics, is a form of risk management primarily used to Hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating los...
 claims filed with the intent to defraud
Fraud

In the broadest sense, a fraud is a deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction....
 an insurance provider.

In the United States insurance fraud is estimated to cost US$875 per person per year with The Coalition Against Insurance Fraud estimating the loss to be $80 billion per year and Medicare estimating fraud in its system costs the government $179 billion per year.

Health insurance fraud 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.

Fraud can be committed by both a member and a provider.






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Encyclopedia


Insurance fraud or false insurance claims are insurance
Insurance

Insurance, in law and economics, is a form of risk management primarily used to Hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating los...
 claims filed with the intent to defraud
Fraud

In the broadest sense, a fraud is a deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction....
 an insurance provider.

In the United States insurance fraud is estimated to cost US$875 per person per year with The Coalition Against Insurance Fraud estimating the loss to be $80 billion per year and Medicare estimating fraud in its system costs the government $179 billion per year.

Types


Health insurance fraud

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.

Fraud can be committed by both a member and a provider. Member fraud consists of ineligible members and/or dependents, alterations on enrollment forms, concealing pre-existing conditions, failure to report other coverage, prescription drug
Prescription drug

A prescription drug is a medication that is regulated by legislation to require a medical prescription before it can be obtained. The term is used to distinguish it from over-the-counter drugs which can be obtained without a prescription....
 fraud, and failure to disclose claims that were a result of a work related injury. Provider fraud consists of claims submitted by bogus physicians, billing for services not rendered, billing for higher level of services, diagnosis
Diagnosis

Diagnosis is the identification of the nature of anything, either by process of elimination or other analytical methods. Diagnosis is used in many different disciplines, with slightly different implementations on the application of logic and experience to determine the cause and effect relationships....
 or treatments that are outside the scope of practice, alterations on claims submissions, and providing services while under suspension or when license have been revoked. Independent medical examinations are used to debunk false insurance claims and allow the insurance company or claimant to seek a non-partial medical view for injury related cases.

In response to the increased amount of health care fraud in the United States, Congress
United States Congress

The United States Congress is the Bicameralism legislature of the Federal government of the United States of the United States of America, consisting of two houses, the United States Senate and the United States House of Representatives....
, through the Health Insurance Portability and Accountability Act
Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services website, Title I of HIPAA protects health insurance in the United States coverage for workers and their families when they change or lose their jobs....
 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.

Auto (or Motor) insurance fraud

Globally, one of the largest categories of insurance claims fraud revolves around the insurance of vehicles. There are a number of modus operandi
Modus operandi

Modus operandi is a Latin phrase, approximately translated as "mode of operation". The plural is modi operandi . It is used in law enforcement to describe a criminal's characteristic patterns and style of committing crimes....
:

Staged collisions
This rapidly growing category involves staging a collision where the fraudsters will use a vehicle to stage an accident with the innocent party. Typically, there would be 4 or 5 fraudsters in the vehicle which makes an unexpected manoeuvre causing the innocent party to collide with the fraudsters vehicle. Each of the fraudsters then claim for injuries sustained in the vehicle. Working with a “recruited” doctor, the injuries are typically whiplash or other soft tissue injuries which are hard to dispute later.

Exaggerated claims
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.

Examples

Some memorable examples of insurance fraud include the following:
  • Former British Government minister John Stonehouse
    John Stonehouse

    John Thomson Stonehouse was a British politician and minister under Harold Wilson. Stonehouse is perhaps most famous for his unsuccessful attempt at faking his own death in 1974....
     went missing in 1974 from a beach in Miami. He was discovered living under an assumed name in Australia
    Australia

    Australia, officially the Commonwealth of Australia, is a country in the southern hemisphere comprising the Australia of the world's smallest continent, the major island of Tasmania, and numerous list of islands of Australia in the Indian Ocean and Pacific Oceans....
    , extradited to Britain and jailed for seven years for fraud, theft and forgery.
  • Derek Nicholson and Jottie Nagle were accused of attempting to defraud a life insurance
    Life insurance

    Life insurance or life assurance is a contract between the policy owner and the insurance, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness....
     company for $1 million after Mr Nicholson apparently went missing in New Jersey
    New Jersey

    New Jersey is a state in the Mid-Atlantic States and Northeastern United States regions of the United States. It is bordered on the north by New York, on the east by the Hudson River and the Atlantic Ocean, on the southwest by Delaware, and on the west by Pennsylvania....
     in July 2003 and Ms Nagle reported him missing and made a claim on the policy.
  • Gaylan Sweet of San Diego, California
    California

    California is a U.S. state on the West Coast of the United States of the United States, along the Pacific Ocean. It is bordered by Oregon to the north, Nevada to the east, Arizona to the southeast, and to the south the Mexico state of Baja California....
    , who was a claims adjuster for Allstate
    Allstate

    The Allstate Corporation is the largest publicly held personal lines insurance in the United States and the second-largest of all personal lines insurers in the U.S....
     Insurance set up a scheme in 2002 that included non-existent children who were killed in hit-and-run auto accidents at non-existent intersections by phantom drunk drivers. Sweet and two others (who posed as the parents of the non-existent children) pocketed $710,000 before being caught by Allstate and later jailed for five years.
  • John Magno
    John Magno

    John Magno is a Toronto businessman who is currently awaiting trial for arson, allegedly for insurance fraud.Magno was the president of Woodbine Building Supply at Danforth Avenue and Woodbine Avenue, a business he co-owned with his two brothers Frank and Carlo and founded by their father....
    , a Toronto
    Toronto

    Toronto is the List of the 100 largest municipalities in Canada by population in Canada and the Provinces and territories of Canada Provincial and territorial capitals of Canada of Ontario....
     businessman, allegedly hired accomplices to set fire
    Arson

    Arson is the crime of deliberately and maliciously setting fire to structures or wildland areas. It may be distinguished from other causes such as spontaneous combustion and natural wildfires caused by lightning for example....
     to his Woodbine building supply hardware store so he could collect insurance money. This was one of the biggest fires in the city's history as more than 170 firefighters were required to bring the six-alarm blaze under control. One accomplice was burned to death, and another was in a coma for several months. Not only did investigators immediately suspect arson, Magno and his accomplices were later charged with second-degree murder.


External links

  • (UK)
  • by CarSnaps (2006)