What the law covers
Insurance fraud generally means knowingly presenting false information to an insurer with intent to defraud, most often in a claim, though some kinds of applications are covered as well. In New York it is a crime graded by degree, largely according to the amount involved, and related charges such as falsifying business records or larceny are common. Federal law can apply when health insurance, the mail, or interstate wires are involved. Claim forms and many kinds of New York insurance applications carry a fraud warning statement for this reason. Innocent mistakes and honest disagreements about value are not fraud, but a statement that turns out to be false can still give an insurer grounds to deny a claim or rescind a policy even where no crime occurred.
Who is watching
Many New York insurers are required to maintain fraud prevention plans with special investigation units, and insurers must report suspected fraud to the Department of Financial Services. The department's frauds bureau investigates those reports and can refer cases to district attorneys and other prosecutors. Insurers also share claim information through industry databases, which is how a past claim can surface during a new one. Separately, insurers can bring civil suits to recover money they paid, and in no-fault matters they often contest payment through arbitration. A single matter can therefore move along civil, regulatory, and criminal lines at once.
Questions to ask early
If you have been asked for a recorded statement or an examination under oath, or a claim has been denied for fraud, read the policy's cooperation conditions and talk to counsel before answering. Refusing can jeopardize the claim, but what you say will be on the record. In a first meeting we review the policy, the claim file, and what was submitted, and assess whether the matter is a coverage dispute, a fraud allegation, or both. If you believe the insurer is the one acting improperly, a complaint to the Department of Financial Services is a separate route we can discuss.
