Workers Compensation Fraud in New York
What circumstances place someone at risk?
Insurance policies protect citizens for worst case scenarios. By providing financial compensation and assistance with expenses related to losses, these policies allow for individuals to receive aid during difficult times.
If the event is not a covered incident, individuals have been known to submit false information to obtain payments. There are fake agencies that collect payments and sell policies that are not real, resulting in a financial loss to the consumer and affected individuals. This can also be done by an insurance company that uses false information to receive or prevent payments.
These are all types of insurance fraud, including: healthcare, disability, auto, home, and personal property. Auto and disability have the highest false claim rates, however, which cause premiums for other consumers.
Below, we will discuss the statutes related to workers compensation fraud.
When does Insurance Fraud occur?
Insurance fraud occurs when any documentation is sent to the insurance agency with false information. If payment is received from the company, the charges are escalated based on the amount. These crimes can punish the individual, barring them from future policies, and forcing them to face felony convictions.
Charges for insurance fraud can result in fines, restitution, repayment of the funds, and even prison sentences. The following information can help to determine if you are at risk or have possibly committed insurance fraud.
This article is meant to inform but not replace any legal representation. The following information can be used for clarification of Insurance Fraud and associated charges. Legal representation should be contacted as soon as possible if you suspect you have committed or are facing these charges.
Legal Definition
Insurance fraud can occur in one of three forms. Most commonly, these are done through consumers who file false complaints. These are classified as soft and hard frauds.
Soft Fraud
Soft fraud is often “a white lie” in which a customer exaggerates or changes details of the claim in order to make the event qualify and receive payment. Claims such as these are often committed by average citizens who did not intend to commit criminal acts.
Hard Fraud
Hard fraud occurs when an incident is intentionally committed and reported as an accident to collect the insurance payment.
- The second type of fraud is committed when an individual or false entity collect money for insurance but do not issue payments for claims. This money is kept by the individuals and is a common fraud scheme as well.
- The final type of fraud is committed by insurance companies to prevent payment. These types of fraud are not often committed as reputable companies are not known to alter records and payments. These do occur though to prevent some agencies from submitting payment.
In the state of New York, insurance fraud is defined by the following elements in Article 176:
Element #1
- Knowingly and intentionally submitting false documentation or evidence
- This includes ANY type of report or document that is submitted to an insurer to gain payment or hide an event
- Example: Submitting an accident report for a “mysterious vehicle” damaging your car. These are commonly submitted, so consumers do not have to admit fault and are considered a hard fraud.
- Exaggerating the amount of damage that occurred to receive more funds from the insurance company constitutes a soft fraud.
- Example Case: Murder for Insurance Money. A Chicago man burned down his house with his mother inside to solve overwhelming business debts. After leading his mother into the basement of the home and trapping her, he ignited the house using gasoline.
He claimed that she started the fire as a suicide attempt to collect the insurance premiums (home and life) of over $700,000. Instead of receiving money, he received a jail sentence for 150 years in prison for murder and insurance fraud.
Element #2
- The documentation that was submitted is crucial and helps determine the claim
- This would include claims for payment from health insurance,
- Example: Turning in a theft report for a property that you do not own. This resulted in an insurance payout when there was no thief would be a hard fraud.
- Stating the costs, you think the item was worth that is more than actual market cause could be considered a soft fraud.
- Example Case: A resident of Walton, NY, claimed that his stove caught on fire in his kitchen with two pans in flames. After a failed attempt to put out the fire with rags and water, he threw the pan outside. It conveniently landed in his vehicle. He then states he attempted to throw a second engulfed pan outside but tripped.
The pan landed on his couch, which ignited and caused a house fire. He attempted to commit both auto and homeowners fraud. Law enforcement took down his statements and filed a report. Knowing the story was highly unlikely; after an investigation, he was found guilty of insurance fraud. He received 5 years of probation and did not get to collect his insurance payout.
Related Statues
Along with insurance fraud, Article 170 also details the crime of Life Settlement Fraud in cases where life insurance payouts. Other possible charges can include but are not limited to: wire fraud, bank fraud, larceny, enterprise corruption.
These are commonly charged with life settlement fraud. Submission of false paperwork is a misdemeanor, and if any funds are received, it becomes a felony.
Each of these crimes carries large fines and restitution to the victims. It is important for legal representation to review your case to determine all the charges that you are facing and anticipate possible issues.
Federal Statutes
The United States Code 18 section 1033 details the federal standards of fraud for which states base their laws on. This law sets out that any individual or business that is conducting business with or for insurance agencies or an insurer is subject to this law. This covers the individuals making claims, fake agencies, and agencies that do not pay.
It sets out the conditions of the terms for conducting business to cover transactions that can occur. The purpose is to define the parameters for the law and protect as many possible.
- This code also outlines the penalties and maximum sentencing. If insurance fraud occurs, the prison sentence cannot exceed 10 years. However, if the safety of anyone is in involved, the sentence can be increased to 15 years.
There are also fines that can be assigned. It is at the discretion of the judge to fine, imprison or both to the perpetrator. The higher sentence can also be assigned if there is evidence of embezzlement or misappropriated.
- This code is directed towards any type of individual or business that handles any sort of insurance coverage. It is focused on protecting anyone that submits claims and the companies from being victims of fraud. The state legislation details fines and prison sentences as well, but all must fall within the guidelines set by the federal statutes.
Who prosecutes?
There are several agencies that can investigate insurance fraud. The National Insurance Crime Bureau (NICB), Coalition Against Insurance Fraud (CAIF), and the National Association of Insurance Commission (NAIC) are some of the agencies that investigate claims of fraud. These agencies have a plethora of information about the various types of fraud, how to report, the investigation process and resources.
- In addition, these agencies encourage reporters to call the insurance agencies, Medicare, Medicaid, and Obamacare if they suspect any type of fraud. The state of New York also has an agency specifically devoted to researching fraud.
- In addition to prosecution on the criminal aspect, there can also be civil suits that arise. Individuals and agencies can file suit to recover lost funds and help to offset the loss they have faced. These cases have become increasingly common due to various reasons.
Cases of fraud take a backseat to violent offenses that are awaiting prosecution at times. Payments have been sent for fraudulent claims and not pursed. Often times, agencies believe it is in their best interest to pay the costs as it would be less expensive than court fees, so they take a large loss. Finally, the healthcare industry has been targeted for fraud for claims of false treatments. Due to all of these, the cases of fraud have been on the rise.
- The perpetrators of these crimes open themselves up for criminal and civil charges in court and investigations into their lives. If you or anyone you know of has been accused of fraud, contacting legal representation is critical. There are laws to protect whistleblowers, or those that report from within a company and speak up, and lawyers are able to negotiate on your behalf.
Degrees of Insurance Fraud
Insurance Fraud in the fifth degree
- Section 176.10
- Submission
of false documentation qualifies for the fifth degree
- This occurs if you were to file a false report or submit incorrect information
- This is considered a Class A misdemeanor
- Punishments
can include:
- 15 days up to 1 year in prison
- Fines and restitution to the victim
Insurance Fraud in the fourth degree
- Section 176.15
- Submission of false documentation
- Receiving funds or compensation equal to $1,000 or more
- This is considered a Class E felony
- Punishments
can include:
- Up to 4 years in prison
- Fines and restitution
Insurance Fraud in the third degree
- Section 176.20
- Submission of false documentation
- Receiving funds or compensation greater than $3,000
- This is considered a Class D felony
- Punishments
can include:
- Up to 7 years in prison
- Fines and restitution
Insurance Fraud in the second degree
- Section 176.25
- Submission of false documentation
- Receiving funds or compensation greater than $50,000
- This is considered a Class C felony
- Punishments
can include:
- Up to 15 years in prison
- Fines and restitution
Insurance Fraud in the first degree
- Section 176.30
- Submission of false documentation
- Receiving funds or compensation greater than $1 million
- This is considered a Class B felony
- Punishments
can include:
- Up to 25 years in prison
- Fines and restitution
Aggravated Insurance Fraud
- Section 176.35
- Fraudulent insurance activity is done
- Conviction of insurance fraud within the past 5 years
- This is considered a Class D felony
- Possible
punishments can include:
- Up to 7 years in prison
- Fines and restitution
Sentence Enhancements
As with all cases, the sentencing is determined by the judge. They will look at the entirety of your current situation, your criminal background, and the evidence provided to announce the sentence. They are able to assign jail time and fines dependant on the number of funds and the situation. It is also important to note situations in which sentences can be enhanced.
If you are a repeat offender or have previous convictions, it is imperative to consult with legal representation. The sentences can be enhanced to the maximums along with fines and restitution. A lawyer will be able to discuss your situation and history to determine the best course of action. In addition to the penalties that are listed above, you also face the punishments that come with a felony title.
As a felon, you can possibly lose certain rights, such as voting or purchase a firearm. This will stay on your record and can prevent employment in certain fields and establishments. This conviction can have life-altering events and cause trouble for many years to come. With this possibility on the horizon, an attorney should be contacted as soon as possible.
Possible Defenses
The details provided are merely examples and should not replace legal counsel.
Defense #1: Lack of Intention
There must be an intentional submission of the false documentation
Defense #2: Lack of Knowledge
This crime cannot be committed without conscious thought of the fraud
Defense #3: Partially Correct
If part of the claim is accurate and covered by the policy, this defense could be effective
Defense #4: Mistake
Submitting information on the accident that was false does not qualify as fraud. It is not only a mistake but a lack of knowledge and intent.
Discussing the details of your case, whether you are the accused or accused is imperative. The situation needs to be assessed to determine defense strategies.
CALL A LAWYER
Cases of insurance fraud have the potential of a felony charge that can result in major life changes. These cases carry the risk of fines, prison, and other associated charges to arise. It is critical to contact an attorney if you believe that you or someone you know that is involved in fraud.
There are laws in place to protect reporters. To avoid these serious consequences, contact us as soon as possible to begin working on your defense.
Press Releases
Barrington Mayne was charged with:
- 1 count of Scheme to defraud in the first degree
- 2 counts of Grand larceny in the fourth degree
- Mayne was employed with several car dealerships in New York. He allegedly used his contacts and resources through these agencies to sell fake insurance plans to customers. Calling the victims and using the credibility of the dealership, he was able to collect thousands as payments for fake premiums. He faces trial at the end of May 2019 for his crimes. He faces the possibility of 1-4 years in prison and restitution to his victims.
- In a large insurance fraud operation, six citizens were arrested for their roles in the operation. Their operation involved filing false insurance claims on expensive luxury vehicles. Payments from insurance companies were ranged from $5,000-$20,000.
The claims varied from previous existing damage, intentional damage, and false identities on the claims. The following individuals were charged and face a total of 42 counts of Insurance fraud in the second degree, insurance fraud in the first degree, falsifying business records in the first degree, grand larceny in the third degree, scheme to defraud in the first degree and conspiracy in the fifth degree.
The following individuals pleaded guilty to these charges and were sentenced:
- Carlington Haye
○ Insurance fraud in the second degree
○ He was sentenced to 90 days in prison, $120,000 in restitution, and 5 years of probation
- Keon Cole
○ Insurance fraud in the third degree
○ He was sentenced to 30 days in jail, $50,000 in restitution, and 5 years of probation
- Theresa King
○ Insurance fraud in the fourth degree
○ She was sentenced to a year in prison
- Mkada Beach
○ Insurance fraud in the fourth degree
○ He received 5 years of probation
- Dexter Carl
○ Insurance fraud in the fourth degree
○ He is forced to pay $6,000 in restitution to the victims
- Omari Brown
○ Attempted petit larceny
○ He was sentenced to pay $9,000 in fines
Their operation has been shut down, and these individuals have been held accountable for their actions. Insurance fraud can occur on the individual or organized group, as seen in this example.
Brad Jacobs was charged with:
- Grand larceny in the third degree
- Unauthorized practice of a profession
- Scheme to defraud in the first degree
- Welfare fraud in the third degree
- Insurance fraud in the second degree
- Jacobs was a plastic surgeon in New York who practiced from 1998-2007. His license was suspended after 29 counts of complaints, including medical malpractice, gross negligence, and even moral unfitness. He was forced to surrender his license and not to practice further.
He filed a claim with a disability policy he had purchased and filed for SNAP, food stamps, stating that he was receiving help from his parents. After investigation, it was found that he and his associate had performed over 60 illegal cosmetic plastic surgeries and received payments from $5,000-$20,000 as payments.
He concealed the income to qualify for his government assistance and from the insurance company in which he was receiving payments for disability. He was sentenced in March 2019 to 3-4 years imprisonment and to repay over $425,000 to his patients. His associate is still under investigation and had a pending case.
Jean Devilmar was charged with the following crimes:
- 17 counts of insurance fraud in the third degree
- 1 count of filing with a false instrument in the first degree
- 5 counts of possession of a false instrument in the second degree
- 1 count of scheme to defraud in the first degree
The Attorney General of New York released a statement of his prison sentence in which he will serve 4-14 years in a state penitentiary. Devilmar was the head of a criminal ring of individuals who committed insurance fraud. After purchasing 100 vehicles and registering them to fictitious characters at 20 different companies, he had each vehicle insured for $50,000.
The policies in total were for over a million dollars in coverage. The vehicles were registered at the DMV with fake names, signatures, and addresses. After obtaining coverage, damages were reported to the vehicles, and the individuals would receive payments.https://ag.ny.gov/press-release/operation-decoy-delivery-ag-schneiderman-announces-prison-sentence-insurance-fraud
David Safir along with his co-conspirators Dr. Alexander Haslekorn and Roberta Haslekorn, Therion Gringe, Nadezdha Ursolova were tried for 61 counts of the following crimes:
- Grand larceny in the third degree
- Money laundering in the second degree
- Insurance fraud in the third degree
- Grand larceny in the fourth degree
- Unauthorized practice of a profession
- Falsifying business records in the first degree
- Practicing or appearing as an attorney without being registered
- Scheme to defraud in the first degree
These individuals owned and operated a clinic to attract victims of motor vehicle collisions to come to their clinic. There they received minimal medical treatment but were asked to exaggerate their injuries. The patients were then billed to the state of New York as a no-fault compensation to pay for the uninsured patients medical treatment that they did not receive.
Each individual had a unique role in the clinic as two attorneys, a doctor, a medical supply purchaser, and the owner. Safir, the ringleader, faces 5-15 years in prison and his associates can be sentenced for 2-7 years in prison each.
Sources
18 US Code Section 1033. (n.d.) Retrieved from https://www.law.cornell.edu/uscode/text/18/1033
Defending against Insurance Fraud. (2/27/17). Retrieved from https://www.hilderlaw.com/blog/2017/02/defending-against-insurance-fraud-charges.shtml
Fraud: Why Should You Worry? (n.d.) Retrieved from http://www.insurancefraud.org/fraud-why-worry.htm
Insurance Fraud (4/15/15) Retrieved from https://legaldictionary.net/insurance-fraud/.
Insurance Fraud. (5/14/19) Retrieved from https://www.naic.org/cipr_topics/topic_insurance_fraud.htm
Insurance Fraud. (n.d.) Retrieved from https://www.fbi.gov/stats-services/publications/insurance-fraud
Insurance Fraud (n.d.) Retrieved from https://www.naic.org/cipr_topics/topic_insurance_fraud.htm
Insurance Fraud (n.d.) Retrieved from https://www.law.cornell.edu/wex/insurance_fraud
LaMance, Ken. Defenses for Criminal Fraud. (5/7/18). Retrieved from https://www.legalmatch.com/law-library/article/defenses-for-criminal-fraud.html
MacDonald, Jay. 6/9/11. 8 Extreme Cases of Insurance Fraud. Retrieved from https://www.bankrate.com/finance/insurance/8-extreme-cases-of-insurance-fraud-1.aspx