White-Collar Crime - Fraud Against Insurance Companies
bureaus civil actions reported
Annually, thousands of cases are reported involving acts of fraud against insurance companies, such as faking a death to collect life insurance, setting fire to a house to collect property insurance, or claiming injuries not actually suffered. According to "A Statistical Study of State Insurance Fraud Bureaus: A Quantitative Analysis, 1995 to 2000" (Coalition Against Insurance Fraud, May 2001), insurance fraud bureaus in 41 states received nearly 89,000 referrals involving insurance fraud in 2000, up by 5 percent from 1999. There were 21,000 more cases of fraud reported to insurance fraud bureaus in 2000 than in 1995. Four states—New York, California, New Jersey, and Florida—accounted for 73 percent of all referrals. Referrals may come from insurance companies, consumers, and government and law enforcement agencies.
In 2000 insurance fraud bureaus referred some 3,998 cases of insurance fraud for prosecution, resulting in 2,123 criminal convictions nationwide. Florida reported 386 criminal convictions for insurance fraud in 2000, followed by New York (318), Pennsylvania (276), Arizona (137), and New Jersey (90). In 2000 there were some 1,100 civil actions initiated by insurance bureaus for insurance fraud. This was down somewhat from the 1,200 civil actions brought by insurance bureaus in 1999. Still, the number of civil actions brought by insurance bureaus in 2000 was more than triple the 344 civil actions brought in 1995.
In 2002 the United States Postal Inspection Service (USPIS) arrested three Kentucky men for defrauding insurance companies out of some $13 million. They fraudulently issued life insurance policies to people suffering from AIDS. To dupe the insurance companies into insuring the AIDS victims, they arranged for the blood of healthy people to be submitted for testing instead of the blood of the actual applicants.
In March 2004 one of the largest insurance frauds of recent times was unearthed in southern California. Following a 15-month investigation by the FBI, dozens of outpatient-surgery clinics were charged with performing unnecessary surgeries on patients and then overcharging their insurance companies. The patients themselves were part of the fraud, being recruited to have surgeries performed with the promise of a share of the insurance money. Some $300 million reportedly was stolen.