Insurance Fraud: Charges, Penalties & Defense

Gavel on book - Insurance fraud attorney David J. Kramer

Are you or is a loved one being investigated for insurance fraud in Michigan?

In Michigan, if you have made a substantial insurance claim related to an automobile accident, you may be subject to private investigation by your insurance company.

As a result, you might be followed around and photographed by a private investigator.

According to the Detroit Free Press, insurance companies are resorting to this tactic to combat what they say are too many fraudulent claims related to Michigan’s no-fault accident laws.

A number of insurance companies have uncovered fraudulent claims made by individuals.

For example, one woman claimed to need help getting dressed and toileting as a result of her accident. She was secretly photographed at an amusement park.

Michigan’s auto insurance law requires motorists to purchase unlimited medical benefits in case of an accident. Because of that law, Michigan is an excellent place for people who wish to try to benefit by fraud. It is the only state in the nation that has a law like this.

What Is Insurance Fraud?

Insurance fraud can be perpetrated in several ways:

  • Filing a false claim.
  • Destroying or having someone else destroy your home, car or business in order to collect the insurance payment.
  • Making an inflated report of a real claim to get out of paying a deductible or as a way to pay off past insurance premiums.
  • Exaggerating an injury to obtain worker’s compensation benefits.
  • Billing for services that you never received.

Additionally, insurance companies can be guilty of insurance fraud if they sell bad insurance policies or fail to pay valid claims.

Insurance fraud cases can cover any type of insurance. For example,

  • Automobile
  • Medical
  • Life
  • Worker’s compensation
  • Fire
  • Property insurance

Charges & Penalties

While insurance companies who want to avoid paying huge settlements may hire private investigators to catch you lying, the criminal penalties for insurance fraud are severe. According to the Michigan Insurance Code, Section 500.4503 and 500.4511:

You can be charged with fraud for lying about or concealing an essential fact on your insurance claim. An insurance company can be guilty of this for issuing fake insurance policies or rate-fixing.

Insurance fraud is considered a felony. In addition to restitution to the victims, it is punishable by:

  • Up to four years in prison and
  • A fine of up to $50,000

Additionally, you could face civil penalties and have your business license revoked if you are a business found guilty.

Who Prosecutes Fraud?

In Michigan, there are state laws governing fraud cases. However, there are also federal laws that cover the same crimes.

You could end up facing both types state and federal charges. Consumers, providers like doctors or auto repair shops, insurance companies, and adjusters can all be prosecuted for fraud.

In 2018, Governor Snyder created an anti-fraud authority in the state of Michigan to help crack down on fraud in the auto, health, and banking insurance sectors. And for a good reason: Michigan’s auto insurance rates are highest in the country.

Michigan Insurance Fraud Attorney

In conclusion, insurance deception is a big problem in the state of Michigan. The penalties are severe if you are caught. Even if you aren’t sentenced to prison time, you could be left with financially crippling penalties and restitution to pay and stripped of your business license.

If you are facing insurance fraud charges, you will need an experienced criminal attorney right away. Contact my office today.

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