New York Insurance Fraud – All You Need To Know

by ECL Writer
New York Insurance Fraud Frequently Asked Questions

Insurance fraud is a widespread problem in many parts of the world, and New York is no exception. With its bustling financial and insurance industries, New York is a hotbed for fraudulent activities ranging from auto insurance scams to workers’ compensation fraud. These fraudulent activities not only result in financial losses for insurance companies but also impact honest policyholders who end up paying higher premiums to cover the losses. In recent years, the state of New York has taken several steps to combat insurance fraud, including the establishment of specialized law enforcement units and the enactment of stricter penalties for offenders. In this article, will explore the issue of New York insurance fraud, including its impact on the insurance industry, common types of fraud, and the state’s efforts to combat this criminal activity.

New York insurance fraud is defined and categorized under New York Criminal Code 176.00 et seq. Depending on the amount that is allegedly in dispute, penalties for insurance fraud can be severe. Insurance fraud carries maximum sentences of 1 to 25 years in prison and is classified as anything from a class A misdemeanor to a class B felony. A case of aggravated insurance fraud may also be brought against a person if they conduct insurance fraud more than once during a five-year period, regardless of the sum at issue. The maximum sentence for aggravated insurance fraud, a class D felony, is seven years in jail.

Broadly speaking, insurance fraud occurs when a person enters materially incorrect information into an application or claim for commercial insurance with the knowledge and purpose to defraud. When someone submits a health insurance or personal insurance application or claims with materially incorrect information, they are also committing insurance fraud.

The New York legislature’s attempt to defend insurance companies from false arson, auto theft, and staged accident no-fault claims served as the foundation for passing specific legislation to deal with insurance fraud, apart from other types of fraud. In the late 1970s and early 1980s, Bronx County experienced particularly bad cases of this issue.

  • Insurance Fraud in the Fourth Degree –New York Penal Law 176.15
  • Insurance Fraud in the Third Degree –New York Penal Law 176.20
  • Insurance Fraud in the Second Degree –New York Penal Law 176.25
  • Insurance Fraud in the First Degree –New York Penal Law 176.30

Almost every prosecutor’s office in the state has looked into this behavior. Insurance fraud schemes have allegedly developed into a lucrative criminal plan, raising the price of insurance of all kinds, according to insurance companies. Insurance companies would have the public believe that there is a massive anti-insurance conspiracy against insurers, and the tendrils of that conspiracy reach everyone from lawyers, physicians, corrupt police, professional plaintiffs, fictitious property management companies, dishonest nurses, phony accident victims, paid witnesses, and many other illegal professions intent on profiting from insurance companies.

The “Special Investigative Units” (SIU) of insurance companies, which are typically composed of ex-military personnel, private investigators, and off-duty or retired police, aggressively pursue many honest and hardworking health care providers, business owners, and drivers who file entirely legitimate claims on a daily basis. Since the claim would be expensive for the insurance company to pay or because the insurance company previously paid out a sizable claim to that party, these SIU units sometimes coerce and intimidate persons and corporations into withdrawing genuine claims.

Moreover, these SIU units may lead claimants to unintentionally admit to information that could be proof of insurance fraud. District attorney’s offices that are specifically dedicated to one issue, pursuing insurance fraud, may start looking into this more.

As the end result of both crimes is essentially theft, one could wonder what the difference is between insurance fraud and larceny. The main distinction between the two crimes is that while larceny actually requires the victim to be deprived of their goods, insurance fraud is accomplished upon attempt, the execution of the documents, rather than the actual theft taking place. The amount that the prosecution believes the offender tried to fraudulently obtain from the insurance company is what is utilized to assess the severity of the charges; the fraudulent applications or claims need not actually be paid.

Insurance fraud is a very serious offense in New York state, just like any other kind of healthcare fraud. Insurance fraud, in contrast to health care fraud, concentrates on the recipient of the insurance and their decision to supply false information. Although there are five possible degrees for this conduct, only the lowest is a misdemeanor and not a felony. Call a skilled New York criminal attorney right now if you are being investigated for any type of insurance fraud.

While the actual law is straightforward, just saying that someone is guilty of insurance fraud in the fifth degree if they commit a fraudulent insurance act, it is crucial to understand what the legislature meant by that. The phrase “fraudulent insurance act” comprises two parts. First, any written statement that is submitted in support of, or as a component of, an application, rating, claim, or other benefit and is done so with the intent to mislead the insurer contains inaccurate information that deals with a material fact or conceals a major fact. Second, any written statement or tangible proof presented in support of or as a component of an application for health insurance, approval of coverage for services under a private or public health plan, or benefit claim that hides or provides incorrect information relating to a material fact.

If someone does a false insurance act and withholds or gets property worth more than $1,000, they are charged with a class E felony, which is one degree higher than this misdemeanor. It is crucial that these charges be handled by a team that will work hard to get the most favorable conclusion because, like any felony conviction, this might result in the loss of a person’s right to vote as well as their eligibility for various kinds of state benefits in the future. If the amount of property unjustly withheld or gained exceeds $3,000 in value under the same circumstances as before, insurance fraud in the third degree and a class D felony are now the charges. Money can also be considered property in this context, which means that if someone commits a fraudulent insurance act and receives a cash payment, the amount of that cash payment would be regarded as the property wrongfully obtained. Property in this context does not only refer to land or tangible objects.

The second-highest charge, insurance fraud in the second degree, is applicable under identical circumstances as those for the fourth and third degrees, but it becomes a C felony when the amount exceeds $50,000. A B felony is charged at its highest level when the amount of the property surpasses $1,000,000. A person can also be charged with aggravated insurance fraud if they had previously been found guilty of any level of insurance fraud within the previous five years of their present violation. Regardless of the severity of the prior and current offenses, this charge is automatically a class D felony. It is crucial that you contact a knowledgeable New York criminal attorney as the bulk of these violations might lead to a felony conviction.

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