What is Insurance Fraud?
Insurance fraud is the crime of knowingly and intentionally deceiving an insurer or person claiming insurance with false information to obtain or deny the benefits of an insurance policy.
Essentially, insurance fraud can occur when a person deceives an insurance company to obtain benefits, or an insurance company deceives policy holders to deny benefits.
Fraudulent insurance claims from both sides hurt everybody in the system, which is why the state of North Carolina investigates and punishes these crimes harshly.
The state of North Carolina punishes this form of fraud whether it is committed by a person trying to obtain an insurance benefit or by a person in a position to approve or deny benefits. While the state has a high burden of proof to convict somebody of this crime, the penalties upon conviction are quite steep. If you are facing charges for insurance fraud, you should contact an experienced North Carolina attorney as soon as possible.
Elements of Insurance Fraud
Like with most other fraud crimes, prosecution has to reach a high bar of proof to obtain a conviction. This is because fraud is not simply giving information that turns out to be false. There are two key elements that need to be proven beyond a reasonable doubt, otherwise the defendant will not be deemed guilty.
False Statements Made Knowingly and Intentionally
As mentioned above, for a statement to be fraudulent, it must not only be false, but the person making the statement must have known it was false, and intended to make the statement to obtain or deny a benefit unlawfully.
For example, unknowingly and mistakenly under-reporting automobile mileage by a small amount for an automobile insurance claim is not fraud. If you are facing an investigation for fraud like this, prosecution may use a combination of testimony and circumstantial evidence. For example, if the statement made was so outrageously wrong that, given no unusual circumstances, the defendant should have reasonably known to be false when providing it, that may point to fraud.
The Statement was "Material"
The term “material” here means important and relevant to the insurance payment or claim. Essentially, even if a person knowingly gives a false statement, they would not be guilty of fraud unless the statement was in connection to the insurance claim and could impact related decisions.
For example, a person may claim to their automobile insurer that they try to ride their bike to work, when they do not. Even though the person lied to the insurer, they did not commit fraud as long as they otherwise reported relevant information like mileage correctly, as interest in biking is not a material claim.
Does The Law Cover All Types of Insurance?
In short — yes, North Carolina insurance fraud laws protect all kinds of insurance. Whether you are attempting to defraud an insurer or an insurer is defrauding a claimant, law enforcement may investigate and press charges.
While most common insurance fraud crimes happen against the bigger insurance industries like health, automobile, life and property insurance, there are plenty of other lesser known “Insurers”.
North Carolina defines “insurer” rather broadly, as:
Any corporation, association, partnership, society, order, individual or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships and corporations. "Company" or "insurance company" or "insurer" does not mean the State of North Carolina or any county, city, or other political subdivision of the State of North Carolina.
In essence, if an organization that is not the state government provides a form of insurance, they are an insurer.
Insurance Fraud Crimes and Penalties
Insurance fraud is an umbrella term for any kind of fraudulent material statement made in connection with insurance, but the penalties for such statements differ depending on the circumstances. North Carolina insurance fraud crimes can be split into two categories, knowing by the industry as “soft fraud” and “hard fraud”.
False Statements to Obtain or Deny Benefit
This crime, under N.C.G.S § 58-2-161, covers general insurance fraud crimes. To be guilty, one must present a written, oral or digital statement in relation to insurance benefits that they know to be false or misleading, with the intent to defraud or deceive.
Generally, this crime applies to cases where a person submits a false claim to obtain insurance money, such as faking an accident or heavily exaggerating stolen goods value in a break-in.
A conviction of this crime is punished as a Class H felony.
Auto-Insurance Rate Evasion
North Carolina law has a specific statute addressing fraud in automobile insurance applications. A person is guilty of this crime when they knowingly present or any false statement in support of an automobile insurance application or amendment to a policy that would make them eligible for the policy when they otherwise would not be.
A conviction of this crime is punished a a class 3 misdemeanor under most circumstances. If the crime is committed to obtain an insurance policy for a commercial motor vehicle (e.g. heavy cargo trucks or buses), it is punished as a class H felony.
False Application Statements
If any insurance application, insurance agent, examining physician or other person knowingly or willfully makes a false or fraudulent statement in reference to an insurance application, they will be guilty of a class 1 misdemeanor.
Defending Against Insurance Fraud Charges
Defending against insurance fraud charges requires a thorough review of the case and all related charges you may be facing, which is why it is imperative that you hire an experienced white-collar federal defense attorney. There are several defenses that can be used in an insurance fraud case to either completely avoid liability, or significantly reduce charges. These defenses target the aspects that prosecution must prove to convict you of insurance fraud, which are that you:
- Defrauded, conspired to defraud, or attempted to defraud an insurer or insurance claimant,
- To obtain or deny benefits, and
- Did so knowingly and intentionally.
Our lawyers have successfully represented clients in fraud cases at state and federal levels and know how to carefully structure a defense based on the facts of the case. Most importantly, we are exceptionally skilled at taking these cases to trial, as we know the tactics used white collar criminal prosecution that often push the defendant into a plea-bargaining position before a trial begins. If you would like to learn more about how we an help, or request a consultation with us, then leave us a message or call us today.
[…] based on a false account of who was driving, both the passenger and driver could be charged with insurance fraud. This could easily take a state criminal case to a felony-level federal […]