December 4th, 2017 by Attorney Dan Carman
Insurance companies have a lot of resources. A person may feel it’s OK to engage in insurance fraud since whatever the company pays for a bogus insurance claim isn’t much compared to the amount of money at their disposal. Kentucky law doesn’t look at it that way, and those engaging in insurance fraud risk possible jail time and fines if convicted.
Kentucky’s Division of Insurance Fraud Investigation conducts criminal investigations into insurance fraud claims and other related acts. Insurance fraud schemes harm the public because insurance companies don’t just suffer financial losses due to fraud — they pass on costs to policy holders to make up for it.
Most commonly, insurance fraud involves filing claims for losses that didn’t actually happen, or their cost is exaggerated. But it can happen in many ways:
- A policy holder could claim a vehicle was stolen when, in fact, it was intentionally destroyed or sold.
- An auto repair or body shop could inflate costs, claim payment for work that was not done or intentionally cause additional damage to a vehicle to justify a higher claim.
- An accident could be staged where someone intentionally rams his or her vehicle into another and claims the other person is at fault.
- A policy holder could commit arson (or pay someone else to do it), burn down a home or building and claim it was an accident.
- Someone can claim to be an insurance agent and sell bogus insurance policies or collect premiums and embezzle them.
- A health care professional could fabricate a diagnosis and seek payment for treatments that weren’t performed or were performed but weren’t necessary.
According to a report by Eastern Kentucky University,
- About 10% of losses paid by the insurance industry are related to fraudulent claims.
- Fraud steals about $80 billion annually for all types of insurance, and half of it is from medical insurance fraud.
- Property and casualty insurance fraud comes to about $32 billion a year, which could fund Kentucky’s state government for about eight years.
- Insurance fraud increases costs to the average U.S. family by between $400 and $700 each year through increased premiums plus higher deductibles.
- Taxpayers pay for law enforcement’s efforts to prevent, investigate and prosecute those involved in insurance fraud and pay for supervision of those on probation and the costs of incarceration for those imprisoned after a conviction on insurance fraud claims.
Under Kentucky law someone convicted of a “fraudulent insurance act” where the value of the fraud is $500 or less is guilty of a misdemeanor which can result in a prison sentence of up to one year or a fine of up to $1,000, or both, plus be ordered to pay restitution. If the value of the fraud is more than $500, the crime is a felony which can result in a prison sentence of from one to five years, a fine of up to $10,000 ,or both, plus restitution.If one is found guilty of engaging in a criminal syndicate (a group of five or more people working together to promote or engage in a fraudulent insurance act) or acts to facilitate insurance fraud by such a syndicate, he or she could be sentenced to prison for ten to twenty years, pay a fine of $10,000, or both, plus be ordered to pay restitution.
Given the possible penalties for insurance fraud, such a criminal charge is not to be taken lightly. Depending on the facts of the situation, federal criminal charges might also be filed. If you or loved one is being investigated for or facing insurance fraud charges in Kentucky discuss the situation with criminal defense attorney Dan Carman, founder of the Lexington, KY-based Carman Law Firm. From arrest to appeal, he has the necessary expertise to effectively maneuver your case through the criminal process. Call today at 859-685-1055 or fill out this convenient online form for a free initial consultation.