Understanding the Federal Crime of Insurance Fraud

July 11, 2023

Insurance fraud has existed since the inception of insurance itself. Consequently, it is one of the better-known white-collar crimes within the American legal system. Although insurance fraud does not carry the most severe penalties, being convicted of this crime can still significantly impact your daily life. It can lead to fines, imprisonment, and other sanctions.


At McCoy Law Group, we understand the gravity of insurance fraud allegations and the impact they can have on individuals and businesses. If you are facing federal charges related to insurance fraud, take immediate action and seek the guidance of our experienced federal criminal defense attorney.


Understanding Federal Insurance Fraud

Insurance fraud involves engaging in deceptive practices to obtain fraudulent insurance benefits. This can include making false statements or claims to insurance companies, other insured parties, or state and federal agencies to gain a financial advantage.


Different Types of Federal Insurance Fraud

Insurance fraud can be “soft” or “hard”:


  • "Soft" fraud is where a defendant is accused of inflating the value of a legitimate claim. For instance, someone might claim that their five-year-old 24-inch television, which was stolen from their apartment, was actually a brand new 48-inch plasma screen.


  • "Hard" fraud involves deliberate and elaborate deceptions. These crimes can include staging accidents or even causing physical injuries to fraudulently collect from an insurance policy.



Insurance fraud cases can take many forms, ranging from individual acts to complex criminal enterprises involving multiple participants. Under 18 U.S.C. § 1033, federal law addresses various forms of insurance fraud, including:


  • Life Insurance Fraud: Life insurance fraud involves deceptive practices aimed at obtaining fraudulent benefits from life insurance policies. This can include falsifying information on applications, staging deaths, or submitting fraudulent death claims.


  • Auto Insurance Fraud: Auto insurance fraud refers to fraudulent activities related to automobile insurance policies. This can involve staging accidents, inflating damages, submitting false claims, or engaging in other deceptive practices to receive undeserved benefits from the insurance company.


  • Workers' Compensation Fraud: Workers' compensation fraud occurs when individuals deceive the workers' compensation system to unlawfully obtain benefits. This can involve exaggerating injuries, misrepresenting work-related incidents, or continuing to receive benefits while engaging in activities that contradict claimed disabilities.


  • Property Insurance Fraud: Property insurance fraud entails fraudulent activities targeting property insurance policies. This can include intentionally causing property damage, inflating claims, providing false information about the value or condition of insured property, or filing false claims for property losses.


  • Unemployment Insurance Fraud: Unemployment insurance fraud involves dishonest actions aimed at wrongfully obtaining unemployment insurance benefits. This can include providing false information about employment status, underreporting income, or continuing to receive benefits while working.


  • Health Care Insurance Fraud: Health care insurance fraud encompasses various deceptive acts committed in the context of health insurance. This can involve submitting false claims, billing for services not rendered, forging medical records, or engaging in schemes to unlawfully obtain reimbursements from health insurance providers.


Federal Penalties for Insurance Fraud

Violating 18 U.S.C. § 1033 can lead to severe penalties. In South Carolina, insurance fraud is classified based on the amount of benefits received. If the benefits obtained are less than $10,000, it is considered a misdemeanor offense. However, if the fraud involves benefits exceeding $10,000, it is considered a felony. A felony conviction for insurance fraud can lead to a minimum of 10 years of imprisonment. In cases where the false statement caused significant harm to an insurance company or jeopardized its viability, the maximum sentence can be increased to 15 years.


For misdemeanor fraud, individuals convicted may face a maximum fine of $1,000 and up to three years in jail.


Defending Against Insurance Fraud Charges

Insurance fraud cases can be complex and involve multiple federal agencies, state laws, and intricate legal issues. At McCoy Law Group, we have extensive experience defending clients in federal courts and handling insurance fraud cases. Our skilled attorney will develop a comprehensive defense strategy tailored to your specific circumstances, striving to achieve the best possible outcome for your case.


Protect Your Future with McCoy Law Group

Insurance fraud allegations are serious, and they carry the potential for significant prison sentences and substantial fines. If you or a family member in the insurance industry are concerned about potential federal criminal liability, it is crucial to seek immediate legal assistance.


Contact our experienced team at McCoy Law Group for an initial consultation. We have a strong track record of federal pre-filing intervention and federal jury trial work. Trust our experience and expertise to guide you through the legal process and seek the most favorable resolution for your case.

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