Insurance fraud consists of fraudulent activities committed by applicants for insurance, policyholders, third-party claimants, or professionals who provide insurance services. Insurance fraud can be “hard” or “soft.”

Hard Fraud. This is when someone deliberately fakes an accident, injury, theft, arson or other loss (or worse, such as a life insurance beneficiary killing an insured) to collect money illegally from insurance companies. Many act alone, but increasingly, organized crime rings stage large schemes that steal millions of dollars.

Soft Fraud. People often tell “little white lies” to their insurance company. A car owner inflates a fender bender claim to cover her deductible. A homeowner inflates the value of his stereo equipment stolen during a robbery. These are crimes.

Even though the federal government is more actively involved in the pursuit and prosecution of some insurance fraud cases than it used to be, it is the state insurance departments, state attorneys general and county district attorneys offices that do most of the investigation, enforcement and prosecution of insurance fraud because most of the anti-fraud laws are state statutes.

Frequently, however, insurance fraud cases result in federal prosecution because the fraudulent activity (doctor illegally using prescription drugs, doctor diluting medication resulting in injury or death of patients, unnecessary surgeries, murder) also violates federal law. Also, Title 18 of the U.S. Code, Section 1033 is used to prosecute anyone engaged in the business of insurance (executives, employees, sales agents) who is involved in the perpetration of insurance fraud. And, of course, federal laws are violated whenever there is a case of Medicare, Medicaid (federal and state laws) or Tri-Care (military insurance) fraud.

As the pursuit of fraudulent activity by state and federal authorities intensifies, the penalties have increased. Mandatory restitution of lost income, loss of professional license and substantial prison sentences can result from a conviction for insurance fraud.

If you are under investigation for, or have been charged with, insurance fraud, contact a qualified insurance fraud attorney right away. An experienced insurance fraud lawyer can help preserve your rights and defend you in the face of federal prosecution.