Insurance Fraud | Federal Criminal Defense

insurance fraud

Any attempt to deceive an insurance carrier, whether private or public, by making a false claim is actionable under federal law as insurance fraud. Many types of insurance policies can be the basis for these prosecutions.

Examples of insurance fraud

  • Claims made after arson to a home or vehicle;
  • Claims made after homicides;
  • Claims made where insurance brokers have tried to manipulate fraudulent policy or annuity transfers or even steal the proceeds of insurance policy liquidations.
  • Claims made alleging missing or stolen insured jewelry

Federal Charges for Insurinterance Fraud

While the term “insurance fraud” is a term of art that connotes a specific victim (insurance carriers) and type of deception (filing a false claim), most often these crimes are prosecuted under generic fraud statutes such as 18 USC 1341 (mail fraud), 18 USC 1343 (wire fraud) and 18 USC 371 (conspiracy to defraud the United States).

Unlike wire and mail fraud, a “371 conspiracy” carries up to 5 years imprisonment. In these prosecutions, the Government does not need to establish use of a telephonic, online, or postal carrier. Rather, it is only necessary to establish that the victim was a United States entity (or some other federal nexus regarding the victim) at the time of the offense.

Insurance fraud prosecutions may target individuals, groups of people, or even companies. This means that persons who cause damage to insured property could be held equally liable to persons who actually file falsified claims related to the intentional harm to insured persons or property. The fact that fraud schemes can include multiple people is significant because an increase in prosecution targets offers prosecutors an increase in potential cooperators and sources of evidence.

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Individuals accused of insurance fraud need help at the beginning stages of an investigation. It is common for federal or state agents (such as a state’s department of insurance or the FBI) to attempt to interview targets by surprise. This is often accomplished via visits to a target’s place of employment or home. People contacted by law enforcement officials need to be careful when interacting with law enforcement officials.

Also, as these cases require the review of sometimes confusing, technical insurance policies and documents as well as financial records, it is important to have competent legal representation. It is also important for defense attorneys to arrange for experts to evaluate claim data and bank records to determine the proper monetary scope of the claim. This can have a substantial impact if a person receives a sentence for insurance fraud.

Sentencing in Insurance Fraud Cases

Federal sentences regarding mail and wire fraud are typically addressed under section 2B1.1. Just as in healthcare fraud, wire fraud and mail fraud sentences are driven primarily by the amount of loss. This means that the policy claim drives a federal sentence. Further, it is important to understand that insurance fraud cases include the concept of intended losses. This means that if an insurance scheme is thwarted, the fact that a client didn’t actually get away with any monetary gain will not decrease criminal culpability of mitigate a sentence.

Challenging loss amounts is an often overlooked aspect of defending an insurance fraud case. Organizing and preparing the presentation of expert accounting evidence to challenge the Government’s loss estimate can make a tremendous impact upon a federal sentence. If a defendant simply allows a loss amount to stand without review or challenge, it could cost them months or years of freedom.

If you or a loved one is facing federal charges, be sure to read: Federal Criminal Defense Basics

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Benson Varghese

Managing Partner at Varghese Summersett PLLC
Benson Varghese is the founder and Managing Partner of Varghese Summersett PLLC. He is a prolific writer and has authored hundreds of articles about criminal law in Texas and at the Federal level. His articles have been featured in the Wall Street Journal, Above the Law, and have been selected as Top Blogs by the State Bar of Texas. He was named the Young Lawyer of the Year in 2019 by the Tarrant County Bar Association. Benson led the firm to become one of the 500 fastest growing businesses in the United States by Inc 500 Magazine in 2018. In the same year, the firm was named the Best Law Firm in Fort Worth by the Fort Worth Star-Telegram. The lawyers at Varghese Summersett PLLC exclusively handle criminal defense matters.
Benson Varghese