Insurance Fraud / Arson Unit

Insurance FraudWhat is Insurance Fraud?

In Pennsylvania, an individual or corporation generally commits insurance fraud when they misrepresent a material fact to an insurance company concerning a claim.Insurance fraud is a felony crime, punishable by up to seven years in prison and a $15,000 fine, plus restitution and court costs.

What is the Insurance Fraud/Arson Unit (IFU)?

The Insurance Fraud / Arson Unit was created in 1996 to identify, investigate and aggressively prosecute those individuals and corporations committing insurance fraud in Montgomery County.The IFU works closely with local police departments, insurance companies and private citizens to help identify and investigate insurance fraud.Where appropriate, the IFU prosecutes those responsible for committing insurance fraud.The IFU provides training to law enforcement personnel, and educates the public as to insurance fraud.

The Insurance Fraud/Arson Unit is also responsible for investigating arson in Montgomery County.Insurance fraud and arson offenses are handled by one unit because arson is often used as a means to commit insurance fraud.

What Types of Insurance Fraud Does the IFU Prosecute?

The IFU is dedicated to prosecuting all forms of insurance fraud.Insurance fraud occurs with all types of insurance, including auto insurance, health insurance, homeowners’ insurance, and workers’ compensation insurance.

Auto Insurance Fraud Examples

  • Staged accidents, when one or more individuals cause intentional collisions to receive payments for vehicle damage.
  • Providing false information to an insurance company about a car’s mileage, condition or use.
  • Phony injury claims, e.g., when people lie about suffering injuries in an accident.
  • Inflated damage claims, e.g., when people falsify the true amount of damage incurred to their vehicle or the amount repairs needed.
  • Phony thefts, e.g., when the owner abandons a vehicle and then claims it was stolen.
  • Arson, e.g., when the owner intentionally burns his/her vehicle and then claims the fire was an accident.
  • False accident claims, e.g., when an individual claims a one-car accident was a “hit and run”.

Health Insurance Fraud Examples

  • Patients lying about services received.
  • Patients who ask their doctors to falsify a report to an insurer to cover a non-covered procedure.
  • Patients who ask their doctors to waive co-payments.
  • Patients forging receipts to get unwarranted reimbursement from an insurer.
  • Doctors billing insurers for a more costly service than the one performed.
  • Doctors providing services such as tests, surgeries or other procedures that are not medically necessary to get additional payment.
  • Doctors billing insurers for services not actually rendered.
  • Doctors billing each stage in a procedure as if each were a separate procedure.
  • Doctors accepting “kickbacks” (i.e., payments) from other doctors for referrals.

Homeowners’ Insurance Fraud Examples

  • Intentionally burning one’s home (arson) and claiming an accidental loss.
  • Staging a phony burglary or vehicle break-in and claiming a loss.
  • Overstating the value of stolen items after an actual home or vehicle burglary.
  • Lying about the extent, cause, date or location of legitimate property damage.
  • Making a second claim for a loss that was already paid by another insurer or through a prior claim.
  • Asking a repairman to “cover your deductible” within their estimate.
  • Fabricating supporting documentation – often in collusion with a contractor, plumber, repairman or insurance adjuster.

Workers’ Compensation Fraud Examples

A worker who:
  • Fakes an injury at work to get paid time off.
  • Exaggerates the severity of a legitimate injury to extend time away from work.
  • Claims an injury occurred on the job when it actually happened elsewhere.

An employer who:
  • Understates the amount of company payroll to reduce premium payments.
  • Claims employees are independent contractors.
  • Classifies employees with improper job codes that carry lower premiums.
  • Fails to carry workers’ compensation insurance.Under Pennsylvania law, all businesses employing one or more persons are required to furnish workers’ compensation insurance for their employees.

(Reprinted courtesy of Pennsylvania Insurance Fraud Prevention Authority)

How Do I Report Insurance Fraud or Arson?

You may report insurance fraud or arson to your local police department.You may also confidentially report insurance fraud or arson directly to the IFU at: Office of the District Attorney, Insurance Fraud Unit, P.O. Box 311, Norristown PA 19404-0311, 610-278-5272; fax 610-278-3095; email the Insurance Fraud Unit or our website referral form.

Why Should I Report Insurance Fraud?

Because insurance fraud is the crime that YOU pay for.Losses sustained from insurance fraud are passed on to you, the consumer, in the form of higher insurance premiums.Some types of fraud, such as arson and staged accidents, actually place others in physical danger.

Where can I get more information about insurance fraud?