In a 2018 press release, the New Jersey Department of Banking and Insurance (DOBI) outlined their program for investigating and prosecuting insurance-related fraud. Across the U.S., an estimated $80 billion in losses annually are attributed to insurance fraud. The Department addresses over 5,000 cases each year in criminal and civil actions. These forms of fraud are currently among the most costly forms of white-collar crime, as the ramifications ultimately are felt by the majority of consumers through higher premiums.
Insurance fraud has been identified as a priority. The DOBI implemented a Bureau of Fraud Deterrence, which assumes the role that was handled by the state's Attorney General's Office in the past. This Bureau is composed of a staff of more than 90 people that are tasked with handling civil investigations in conjunction with the Department of Law and Public Safety who prosecutes criminal fraudulent activity.
Understanding Insurance
Insurance is purchased to protect an entity from potential “loss, damage, risk, or liability” that may occur. Policies are issued in writing by an insurance company in the form of a contract. Acts of fraud occur in transactions that involve the insured party, known as a claimant. The crimes may be committed by an individually insured party or may be executed as part of a more complex conspiracy that seeks to unlawfully obtain a benefit.
The Crime of Insurance Fraud (2C:21-4.6)
A party may commit insurance fraud by acting with intent to make a claim that is fabricated, false, or misleading. A claim may seek a benefit or reimbursement for an alleged loss. The crime may also be conducted as part of the application or renew process. It is generally charged as a second-degree offense, assuming the value involved is at least $1,000. If the value involved is a lesser amount the charge is a third-degree offense. Each act of fraud is deemed as an independent (separate) offense; however, they may be merged together when there are five or more acts.
An Incentive for Reporting Suspected Fraud
The legislature acknowledges in (2C:21-4.4) the harm that these acts of fraud create for consumers and organizations. The criminal penalties that may be imposed are now substantial. In addition to bringing criminal actions, those who work within the insurance industry are subject to civil actions that are a part of the terms of professional licensing and certification. The state offers those that may have “reasonable suspicions or knowledge of a person or persons” that fraud has occurred an incentive through the Fraud Detection Reward Program. Those who report unlawful acts that ultimately result in a conviction are potentially eligible for financial benefits.
The Office of the Insurance Fraud Prosecutor offers several ways for reporting possible fraudulent acts. They maintain a 24-hour insurance fraud hotline that allows people to report. The Insurance Fraud Prosecutor has allocated $25,000 in funds to be used as a reward. Only a single $25,000 reward may be paid for each occurrence. The reward may be split among multiple parties when applicable. Those who act in “good faith” when reporting acts of fraud are also eligible for immunity that shields them from any potential criminal or civil liability. The reward program is managed according to the discretion of the Attorney General.
Health Care Claims Fraud
One of the most common forms of insurance fraud is committed by submitting fraudulent claims relating to medical services. The New Jersey Health Care Claims Fraud Act was enacted that contains the provisions for managing violations. It allows for sizable monetary penalties of up to $150,000 and offenders may be responsible for paying up to five times the amount involved in the offense. This type of fraud may stem from unlawful claims made to private insurance companies, in addition to government programs such as Medicare and Medicaid.
Fraudulent claims may be made by a provider seeking reimbursement for medical services that were not performed. A supplier of durable medical equipment could submit a claim for products that were not actually provided. Another example may involve “overbilling” an insurer by submitting a claim for a more costly service than what was actually provided. Another major concern involves those who engage in schemes that offer “kickbacks” for referrals or other arrangements that end up defrauding the system.
Automobile Insurance Fraud
Acts of fraud are often committed involving automobile insurance, particularly associated with collision or comprehensive coverage. A vehicle owner may intentionally dispose of a vehicle in some way and file a theft claim. Those who live in areas where car insurance is more costly may register their vehicle using someone else's address in another location to avoid paying higher rates. A vehicle owner may collaborate with an automotive repairer to exaggerate the costs or receive reimbursement for parts or services that were not provided or performed.
Fraudulent Vehicle Insurance Identification (2C:21-2.3)
Another form of fraud occurs when someone “knowingly produces, sells, offers or exposes for sale a document, printed form or other writing” that falsely indicates that a motorist has automobile insurance. This crime is charged as a third-degree offense. If a motorist presents a forged or counterfeit insurance card or document to law enforcement they may be charged with a fourth-degree offense. Those who are found to simply be in possession of such documentation may be charged with a disorderly person offense.
Penalties in New Jersey
- Second-Degree Offense: A sentence of up to 10 years of incarceration and a maximum fine of $150,000
- Third-Degree Offense: A sentence of up to five years of incarceration and a maximum fine of $15,000
- Fourth-Degree Offense: A sentence of up to 18 months of incarceration and a maximum fine of $10,000
- Disorderly Person Offense: A sentence of up to six months of incarceration and a maximum fine of $1,000
Importance of Experienced Defense Counsel
Allegations such as those related to insurance fraud are generally viewed as being white collar crimes. Charges of fraud can lead to significant penalties including a lengthy period of imprisonment. It is imperative that those who are facing these charges seek assistance from a seasoned defense attorney that is familiar with handling these often complex cases.
Criminal Defense Lawyer for Cases of Insurance Fraud
Attorney Joseph D. Lento has spent many years providing effective defense for clients who are alleged to have committed acts of insurance fraud and many other types of white-collar crime. Make the call to (888) 535-3686 today for a complimentary case evaluation.
