Earlier this month, insurance giant GEICO announced that it filed a lawsuit against five companies and six individuals in Florida that are suspected of committing insurance fraud. The company stated that the defendants created fraudulent invoices and bills regarding glass repairs. GEICO claims that the payments it made to the defendants were unnecessary, as the repairs were not needed or even carried out.
GEICO wants to use this lawsuit to prove how serious the company is about its zero-tolerance policy. The company has also mentioned hopes for legislative reform regarding insurance fraud, using the lawsuit to send a message to lawmakers in Florida and around the country.
How Does Insurance Fraud Work?
Insurance fraud is a type of fraud that involves an insurance holder or health professional obtaining improper payment from an insurance company through fraudulent acts or claims.
Insurance fraud is a broad term. It covers everything from little white lies to faking an entire accident in order to collect payment. Some examples of insurance fraud include:
- Disaster Fraud Schemes – false or exaggerated claims by insurance holders who live near or around an area hit by a disaster
- Asset Diversion – theft of insurance company assets
- Billing Fraud – health care professionals bill an insurance company for unnecessary prescriptions or nonexistent surgeries
- Staged Accidents – home fires, floods, or injuries are faked in order to receive insurance claim money
Insurance fraud is not just committed by insurance holders. According to the FBI, the most common type of insurance fraud is premium diversion. Insurance agents commit premium diversion by selling insurance without a license, collecting premiums for personal use and failing to pay claims.
Effects of Insurance Fraud
It seems easy to think insurance fraud is no big deal. After all, insurance companies have tons of money, right? They can afford to give you some extra compensation.
That’s not the logic of insurance companies, though, and not the reality for American taxpayers.
When an insurance holder commits insurance fraud, the company will have to increase premiums and, ultimately, taxpayers are hit hardest by fraudulent activity. Insurance fraud racks up a bill of almost $40 billion per year, and costs the average American family up to $700 in year as their premiums increase.
Penalties for Insurance Fraud
Because insurance fraud affects so many insurance holders and taxpayers, penalties are serious and typically involve heavy fines and even incarceration. If you are charged with insurance fraud as a lawyer or medical professional, you may lose your license to practice.
Fines and prison sentences for insurance fraud are dealt with in a fashion similar to other fraud or white collar crimes. The amount of money involved typically determines the sentence given, as well as aggravating factors and prior convictions.
One example of insurance fraud in Miami involved 22 people and a public adjuster that racked up $7.6 million in insurance fraud bills by intentionally setting up fires or floods in order to collect payment. The adjuster could face a sentence of up to 30 years in federal prison.
Future Insurance Fraud Lawsuits
GEICO’s competitors may take note of the recent lawsuit and enforce their own zero-tolerance policies. You should not be surprised to see insurance companies taking a harsh stance on insurance fraud for the benefit of their company and their customers.
If you have been charged with insurance fraud, you are going up against a big company with the proper resources to hire an aggressive and experienced attorney. Contact a Florida white collar crime attorney today to begin crafting your defense.
About the Author:
Attorney David W. Olson is the founder of the Law Offices of David W. Olson in West Palm Beach. He has been practicing criminal law and successfully representing clients throughout the State of Florida for over 30 years. Throughout his legal career, Mr. Olson has been honored numerous times for both his dedication and excellence in criminal law. He proudly holds the Martindale-Hubbell AV Rating, as well as being recognized as a Top 100 Trial Lawyer (2013), in the Nation’s Top One Percent of attorneys (2015), and as a 10 Best Member of the American Institute of Criminal Law Attorneys (2015). He has even received commendations from members of congress and other public officials for the fantastic work that he’s done. Mr. Olson graduated from the University of Florida’s Fredric G. Levin College of Law in 1981 and has been a member of the Florida Bar since 1983.