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Matthew A. Radefeld and Daniel A. Juengel

Key things to know about insurance fraud

On Behalf of | Jul 15, 2021 | Uncategorized |

During hard times, people may see an opportunity to make extra money through insurance fraud. Here’s what you need to know about this type of fraud and what the penalties for committing it may be. 

What is insurance fraud?

Whenever a person uses deceptive means to receive payment from an insurer, they commit insurance fraud. The unofficial terms “soft fraud” and “hard fraud” describe the two methods people use to deceive their insurers.

The two types of insurance fraud

In instances of “soft fraud,” an individual provides inaccurate statements to file for a claim. In a “hard fraud” case, an individual deliberately creates a verifiable condition to get an insurance payment. For example, a person who purposefully burns down their own home to file a fire loss claim through their home insurance is committing hard fraud.

All forms of insurance can be subject to insurance fraud. Sometimes, people commit insurance fraud with good intentions. For example, medical doctors have falsified claims to insurers to help patients get coverage for ailments their policies did not cover.

Most people who commit insurance fraud believe they’ll be able to get away with it. However, this is not the case; many insurers investigate suspicious claims after they’ve issued payment.  

19 Missouri residents indicted for insurance fraud

In December 2020, 19 Missouri residents were indicted by a federal grand jury for a conspiracy involving false insurance claims. They defrauded six insurance companies, filing claims of approximately $1.2 million for falsified car accident injuries.

Their troubles were only beginning. Because people usually commit insurance fraud by phone or mail, additional criminal charges typically accompany the fraud charges. In this case, the accused were also indicted on 38 counts of felony wire fraud, six counts of attempted wire fraud, and 20 counts of mail fraud. Pending convictions, these multiple counts could add up to lengthy prison sentences.

Penalties

Insurance fraud is a Class E felony in Missouri. If the individual has a previous history of the same crime, the charge becomes a Class D felony. Wire fraud, a more serious crime, is a Class C felony. 

A Class E felony charge can result in up to four years in prison. Class D felony charges top off at seven years in prison. However, a conviction for wire fraud (a class E felony) could lead to up to 20 years in prison. And it can balloon to 30 years if the scheme took advantage of an officially declared major disaster or a financial institution.