What are the penalties for insurance fraud in New Jersey?

Penalties for Insurance Fraud in New Jersey

Insurance fraud is a big problem in New Jersey and across the United States. Insurance fraud costs everyone money in the form of higher premiums. New Jersey has some of the toughest laws against insurance fraud in the country. Let’s take a look at what exactly insurance fraud is, the different types, penalties, and defenses in New Jersey.

What is Insurance Fraud?

Insurance fraud simply means intentionally lying to or misleading an insurance company. This is done to collect money or benefits that the person is not entitled to. Some common examples include:

• Filing claims for injuries or damage that did not actually happen
• Exaggerating the amount of loss from an accident
• Staging accidents to file injury claims
• Filing claims for medical treatments or procedures that did not happen

Insurance fraud can occur with health insurance, auto insurance, homeowners insurance, life insurance, and other types of coverage.

New Jersey Insurance Fraud Laws

New Jersey has strict laws against insurance fraud. Most cases fall under New Jersey Code 2C:21-4.6. This law makes it a third-degree felony to intentionally lie or mislead an insurance company.

Some other applicable laws include:

• Health Care Claims Fraud Act – Covers fraud related to health insurance. This can include billing for services not performed or exaggerating costs of treatment. Penalties can include fines up to $150,000 or five times the amount of fraudulent claims[1].
• Fraudulent Vehicle Insurance Identification – It is a fourth-degree crime to produce or sell fake auto insurance cards. This can lead to fines up to $10,000 and up to 18 months in jail[2].
• Insurance Fraud Detection Reward Program – This provides rewards up to $25,000 for reporting insurance fraud that leads to convictions[3].

Penalties for Insurance Fraud

For most third-degree insurance fraud crimes in New Jersey, the penalties can include[4]:

• 3-5 years in state prison
• Fines up to $15,000

In cases of repeated or excessive insurance fraud, it can rise to a second-degree offense. This can lead to stiffer penalties of 5-10 years in prison and fines up to $150,000[4].

Under the Health Care Claims Fraud Act, penalties can include fines of $150,000 or five times the amount of fraudulent claims. There can also be license revocation for health care professionals[1].

Types of Insurance Fraud

Insurance fraud is often divided into two categories – hard fraud and soft fraud[5].

Hard Fraud

Hard fraud is intentionally fabricating information or staging accidents and injuries. Examples include[5]:

• Staging car accidents to file injury claims
• Filing claims for medical treatments that never occurred
• Submitting claims for damage not caused by an insured event
• Arson – Damaging property to collect insurance money

Hard fraud is often carefully planned and executed. It can involve elaborate schemes with multiple participants. This type of fraud is taken very seriously by prosecutors.

Soft Fraud

Soft fraud is exaggerating otherwise valid claims. This accounts for the majority of insurance fraud. Examples include[4][5]:

• Claiming more damage from an accident than actually occurred
• Reporting higher value items as stolen than actually were
• Billing for unnecessary medical tests or procedures
• Padding car rental or other costs after an accident

While the individual instances of soft fraud may be small, collectively they add up to significant costs. Soft fraud can often lead to criminal charges as well.

Defenses Against Insurance Fraud Charges

Some potential defenses against insurance fraud charges include[5]:

• Lack of intent – If there is no evidence showing intentional deception, fraud charges may be defeated. Errors or mistakes are not criminal offenses.
• No material misrepresentation – If the alleged false statements would not have reasonably impacted the insurer’s decision, it may not meet the standard for fraud.
• No loss to insurer – If the insurer did not incur damages due to the claims, there may have been no crime.

An experienced criminal defense attorney can evaluate the evidence and determine if any viable defenses exist. The state has the burden of proving intent to defraud beyond a reasonable doubt.

Reporting Insurance Fraud

If you suspect insurance fraud, you can report it anonymously to the New Jersey Office of the Insurance Fraud Prosecutor. Tips can be submitted online or by phone. Rewards up to $25,000 may be paid for information leading to convictions.

Conclusion

Insurance fraud is a serious crime that raises costs for everyone. New Jersey has strict laws allowing prosecutors to pursue felony criminal charges for both hard and soft fraud. Penalties can include years in prison as well as steep fines. However, viable legal defenses may exist in some cases. Anyone facing charges should retain an experienced criminal defense attorney to protect their rights.