Private Insurance Investigations
Section 176 of the New York Penal Code; 18 U.S.C. §1347
- Private Insurance Investigations:
Insurance fraud is an increasingly common issue. Some sources find that fraud steals up to $80 billion a year across all lines of insurance (including health, property, and casualty insurance). In New York, the Financial Frauds and Consumer Protection Division (FFCPD) is the primary agency that is responsible for investigating insurance fraud. The Insurance Frauds Bureaus is part of the criminal investigations unit. It investigates fraud and will also refer certain cases for prosecution. Due to the variety of kinds of insurance fraud, the bureau is divided into specialized units addressing each kind of fraud – major case, arson, worker’s compensation, general, auto, no-fault, upstate, and mortgage and title. As you can see, the kind of insurance fraud one can be affected by vary widely. The division does not just concern itself with regular abusers of the system – that is, consumers; rather, the division also has a unit of examiners who monitor and enforce insurer compliance under the laws of New York. In New York, penalties depend on the severity of the fraud, dividing crimes into 4 degrees: the 4th degree concerns fraud more than $1000, and could command up to 4 years in prison. The 3rd degree is fraud for more than $3,000 and the possibility of up to 7 years in prison. The 2nd degree is fraud over $50,000 and violators could face punishment up to 15 years. Finally, 1st degree fraud is fraud over $1 million and comes with a punishment of up to 25 years in prison. Federal law focuses mostly on healthcare or Medicaid fraud, and has both civil and criminal penalties for violations of the law. The government treats healthcare fraud seriously – making a false claim regarding Medicaid or medicare can result in the violator spending up to 5 years in prison per offense. If convicted of federal health care fraud, it can result in a 10 year sentence per offense. Health care fraud that results in serious injury or death can span from 20 years to a life sentence. In addition to facing jail time, significant fines follow – individuals could pay up to $250,000 per offense while organizations could be on the hook for $500,000 per offense. If these parties engage in ongoing schemes, the fines could reach billions of dollars. The government can also order restitution or probation.
If you are accused of partaking in private insurance fraud, you must seek the advice of a licensed and experienced attorney immediately. If you suspect someone of committing fraud, contact the insurance fraud bureau in New York or with the federal government as soon as you have a reasonable suspicion.
Some defenses that can be made are to create a distinction between fraud and error. To commit fraud, someone must knowingly engage in a plan, scheme or activity to provide falsehoods, with the intent to achieve some financial gain. This is not the same as mistakenly billing for a treatment a patient did not receive. The best defense, however, is a good offense – that is, corporations and doctors need to be proactive, and create oversight to prevent the possibility of an insurance investigation. This includes a system in place for all employees and teaching its staff to recognize insurance fraud.
New York already requires insurers to create a fraud prevention plan, and is responsible for implementing said plan. The law requires these plans to include sections for in-service training programs for the investigative and claims staff to be able to identify and evaluate suspected fraud. They must also develop a Fraud Detection and Procedures Manual, and other steps in order to monitor attempted or suspected fraud by either their policyholders or medical professionals. Each insurer must submit an annual report to the bureau as well. All of these steps are efforts to monitor, catch and prosecute insurance fraud to reduce the costs and burden to the citizens of New York.
In 2015, the Department of Justice recovered over $2 billion in healthcare False Claims Cases. The majority of cases included business or individuals who provided unnecessary car, gave kickbacks to healthcare providers in exchanges for the use of goods or services, or overcharged for good and services. Hospitals were also involved in over $330 million, where a few whistlebowers reported hundreds of hospitals were implanting cardiac devices in patients using Medicare against the criteria from health experts. The pharmaceutical industry contributed to about $96 million as well.