Insurance companies are generally regulated by the Department of Insurance in each state. As such, insurance lawyers represent people who have had a legitimate insurance claim denied, or who were subjected to a company’s act of bad faith. Insurance law largely addresses insurance fraud, which will be further discussed later on.
Companies specialize in many different types of insurance. While some insurance is required by law, such as car insurance, others are optional. Below are examples of the different types of insurance:
Another type of insurance would be professional liability insurance, which may also be known as professional indemnity insurance (“PII”) or errors & omissions (“E&O”). This protects professionals whose service involves giving advice from negligence or malpractice actions that are brought by clients.
The most common professionals protected by this insurance include:
- Contractors;
- Lawyers;
- Accountants;
- Real estate brokers; and
- Medical professionals.
What Is Health Care Fraud?
Healthcare fraud involves filing false health care claims in order to obtain a profit, or to reduce expenditures on health care costs. This type of fraud is generally carried out by individuals, but also by entire entities, who are attempting to avoid costs associated with healthcare coverage. Health care fraud is illegal and can result in serious legal penalties.
Some examples of the many different types of fraud associated with health care fraud include:
Most health care fraud violations involve filing false statements associated with a health care application. Additionally, healthcare fraud lawsuits may involve illegal conduct such as:
- Filing Duplicate Claims: an applicant may file a duplicate claim, or a claim that is just slightly different, in order to reap dual benefits. They would then sell the additional medicine and equipment that they receive in order to make money off of it;
- “Kickback” Schemes: The applicant is illegally rewarded for using or endorsing a specific type of medical treatment, drug, equipment, or service. They may also be illegally rewarded for providing illegal referrals;
- Fraudulent Medical Billing Scams: An example of this would be overcharging, or filing for excess services, as filing for unnecessary services is also considered to be illegal;
- Providing False Information: Making false statements on a health care application or claim is generally considered to be a violation. Doing so can result in both private and criminal consequences; and
- Illegal Resale: Selling medicines or equipment through an illegal medical market is considered to be especially risky, and can result in legal consequences as well as injuries to innocent people.
Because of health care fraud, the healthcare industry is highly regulated and as such is subject to considerably strict laws. Whenever healthcare fraud is committed, the healthcare provider passes the costs to its customers. In turn, this influences insurance rates by causing premiums to rise in order to cover the losses of the insurance company. When the fraud is committed by a healthcare provider, they can lose their professional license; additionally, the healthcare of their patients may be affected.
Because of legislation enacted by Congress, healthcare insurance must pay a legitimate claim within 30 days. The Federal Bureau of Investigation, the U.S. Postal Service, and the Office of Inspector General are all charged with investigating this type of fraud.
However, because of the 30 day rule, these agencies generally do not have enough time to perform an adequate investigation before the insurer must pay.
What Are Some Examples Of Health Care Fraud?
As was previously mentioned, the two primary motives behind health care fraud is to obtain medical care without valid insurance, or to profit financially. Examples of fraud committed by individuals include:
- Providing false information in order to obtain medical coverage;
- Visiting several different doctors in order to get multiple prescriptions;
- Using insurance that belongs to a different person;
- Adding someone who is not eligible to an insurance policy by providing false information; and
- Exaggerating a specific claim.
Examples of fraud committed by medical providers include:
- Falsifying a patient’s diagnosis in order to justify surgeries or procedures which are medically unnecessary, or which are not covered;
- Billing the patient for services and procedures which were not actually provided;
- Billing for a different, more expensive service than the one which was actually rendered;
- Engaging in duplicate submission of a claim for the same service, when it was performed only once; and
- Billing each step of a procedure as if it was a separate procedure.
Examples of fraud committed by insurance companies include:
- Denying payment on services, procedures, or prescriptions which are supposed to be covered; and
- Collecting premiums for policies on which the company does not intend to pay.
Both insurance companies and law enforcement agencies employ investigators to investigate reports of suspected healthcare fraud. They will review the evidence and meet with the insurance company, medical providers, and patients in order to collect information.
The investigators may also utilize asset searches and surveillance, among other methods, in order to conduct a thorough investigation into the suspected fraud. If the investigator determines that fraud has been committed, the evidence is then provided to the appropriate law enforcement agency. It may also be provided to the local prosecutor to bring criminal charges against the perpetrator.
How Is Insurance Fraud Prosecuted?
In a legal context, there are generally two kinds of insurance fraud:
- Soft Fraud: When a person makes a false or misleading statement (also known as a material omission) in order to improperly obtain a financial benefit, it is considered to be soft fraud. Generally charged as a misdemeanor, penalties for soft fraud include fines, jail time, community service, and/or probation; or
- Hard Fraud: Hard fraud is intentionally fabricating a loss in order to obtain insurance payments. Common examples of hard fraud include staging a car accident or committing arson to collect from an insurance policy. Hard fraud is a felony that is punishable by substantial fines, as well as time in a federal prison facility of one year or more.
The prosecution must prove certain elements beyond a reasonable doubt in order to win a conviction for insurance fraud. The exact elements in each state may vary, but generally include:
- Knowingly making a false or misleading statement;
- Making the statement in connection with a claim or payment; and
- The statement is material, meaning that it could have an impact on the outcome of the claim.
Are There Any Defenses To Health Care Fraud?
There are certain defenses available to a person or organization charged with healthcare fraud, the most common of which would be mistake. In order for an act to be considered fraud, it must be intentional; meaning, with the intent to defraud. An act which appears fraudulent may actually be a mistake, without any intention to defraud. An example of this would be how an individual, healthcare provider, or insurance company may accidentally:
- Omit information;
- Bill improperly; and/or
- Make an error in payment.
Lack of evidence is another common defense in cases associated with allegations of fraud. Other defenses which may apply will depend on the facts of each individual case as well as state and local fraud laws.
Do I Need A Lawyer For Help With Health Care Fraud Defenses?
Healthcare fraud is a criminal offense and there are many different types of healthcare fraud. You should consult with an insurance lawyer if you need help understanding any healthcare fraud laws, or if you have a claim against a person or entity for healthcare fraud.
Your attorney can help you understand your legal rights and options according to your state’s specific laws, and will also be able to represent you in court, as needed.
