What is insurance fraud? What is an insurance scam? Well, from auto insurance fraud to health insurance fraud to life insurance fraud – you name it, someone has tried it. Check out this graphic detailing some of the biggest insurance scams in history so you can know who to thank for your higher insurance rates (of course, be sure to enter your zip above to see how much you could save by comparing rates from many different companies online!):
Biggest Insurance Scams in History
Insurance is there to protect people. Medical/health insurance allows people to bargain collectively to get lower rates on care. Deductibles limit how much an individual will have to pay each year for their care, preventing costly fees from driving people into bankruptcy. Life insurance provides for a person’s loved ones after they pass on. Auto insurance and home insurance replace important things when they become lost or damaged.
However, for all the good that insurance can do for people, there will always be people out there trying to take advantage of the system for their own selfish ends. Some of the perpetrators were in the insurance industries, others were trying to bilk companies out of money. Either way, many of them were stopped and insurance today is a more or less steady, secure way to protect yourself and your family.
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However, if you think you can get away with anything from car insurance fraud to an elaborate flood insurance scam you should be aware that insurance fraud punishment is severe and an insurance fraud investigator will be all over your case like white on rice if you attempt anything suspicious with your insurance policy. Do the smart thing and rather than trying to learn how to commit insurance fraud instead if you suspect an insurance scam is happening around you then report insurance fraud to the insurance fraud bureau in your state.
The Top 4 Insurance Scams in History:
1. Fake Health Insurance: In 2010 two scams resulted in millions of dollars lost. The first scam consisted of unlicensed companies selling fake policies. Customers forked over their hard earned money but got nothing in return. The other scam involved so-called “health care companies” nationwide proclaiming that they were selling “medical insurance,” but instead handing out worthless “medical discount cards.” The net result was that over $100 million was lost. Most of these scammers have been closed down, but some have yet to be caught. Yet…
2. California Workers Compensation Insurance Fraud: In this scam a single husband and wife team managed to scam a number of workers compensation insurance companies out of a combined $38 million. They ended up getting charged with 106 different felony crime counts, including conspiracy to commit a crime, grand theft, insurance fraud, filing a false tax return, and (classic) misrepresenting facts to a workers compensation insurance company (also know as lying).
3. Medicare Scam: Dozens of doctors, nurses, and other medical professionals made false claims to medicare for unnecessary equipment and allowed those false claims to go through. This cost tax payers $250 million in losses.
4. Colorado Car Insurance Scam: A ring of about a dozen insurance scammers in Colorado racked up a rapid succession of false care insurance claims from March to November 2010, that ended up costing almost half a million dollars. The ring manufactured claims including thefts that never happened, accidents they staged themselves, and self-inflicted vandalism. If they hadn’t been caught when they were, the total fraud could have easily been in the millions.
Scams of Note
Not all scams were explosive enough to make the big times on our list. Here’s a quick rundown of all the other bad people out there ruining insurance for the rest of us:
March 1990: Interstate insurance is declared insolvent. This is because their vice president had been charged with mail and bank fraud, bribery, and conspiracy.
July 1991: Mobile medical clinics start popping up, offering free tests for walk-in patients. Later the perpetrators submitted about a billion dollars in fake insurance claims.
March 1993: A Soviet immigrant plead guilty to setting up mobile clinics (like the ones above) and making off with $80 million dollars in fraudulent insurance claims.
May 1994: The Delaware insurance company is shut down by a combined $400 million in false claims.
February 1998: Martin Bramson earns himself more than a dozen years in prison for selling cut-rate medical malpractice insurance.
December 2003: The largest no-fault insurance fraud lawsuit in New York history is filed by Nationwide Mutual Insurance Company. It targeted an insurance fraud ring of 74 defendants and involved thousands of no-fault claims.
December 2004: A surgical center in California does a booming trade in fake procedures when “patients” from around the country come in with fake or exaggerated symptoms and have the doctors operate on them.
Arrests and Convictions
Many different types of fraudulent behavior will earn you the scrutiny of law enforcement officials. A few of the most notable ones for sheer volume of arrests and convictions made in 2010 are:
- Medicare/Medicaid Fraud: Almost 200
- Other Medical False Claims: Almost 150
- Drug Diversion: 125
- General Fraud: 120
- Insider – Insurer: 105
- Insider – Agent: 95
- Auto Giveup: 90
Medical Insurance Fraud
Medical insurance fraud is one of the most widespread and crippling types of insurance fraud there is. Sick and injured people rely on medical insurance to take care of them and help them get back on their feet. When unscrupulous people take advantage of medical insurance, Medicare, and Medicaid, it costs everyone – both private payers and tax payers – lots of money.
Medicare and Medicaid lose a combined $60 billion each year due to fraud.
From 2000 to 2007, Medicare paid claims from physicians who were suffering from a condition called “death.” These claims totaled $92 million. None of the doctors could be reached for comment.
Medical Identity Theft
Medical identity theft involves someone messing with your personal health and financial information, and using it to bilk you and/or your insurance company (or both) out of money. The effects of this kind of fraud can be truly disastrous. Nearly half of medical identity victims lose their medical coverage due to the fraud. Victims usually end up paying $20,000 to have their cases resolved, and less than 10% ever see their cases fully resolved. And this isn’t a rare occurrence, either. Over 1.4 million people have been victims of medical identity theft.
Prescription for Lost Money
One of the biggest medical insurance scams of a sort involve fake prescription scams. Fraudulent prescriptions cost private insurance companies $80 billion every year.
With all of this talk of losing money, why not see if you can save some money? Enter your zip in now to start comparing free insurance quotes online!