A particularly egregious form of bad faith by insurance companies involves threatening or filing baseless criminal charges against a policyholder to discourage a claim. If your home is damaged by a fire, insurance companies sometimes engage in the unethical practice of filing a claim for arson. Alternatively, an insurer may file criminal charges for insurance fraud by claiming that items that were destroyed or missing never existed in the first place. While these tactics can justify an insurance bad faith claim, there are many forms of fraud that can be legitimately associated with insurance coverage and claims. Many of these forms of fraud have nothing to do with the policyholder. In fact, fraud by an insurance agent or medical provider can result in the insured actually being the victim of insurance fraud. Below I discuss some egregious examples of insurance fraud during 2013 that provide lessons for policyholders.
Selling Fictitious Marine Insurance: Insurance agents purportedly sold marine insurance to the owner of Shoreline Cruises. A cruise ship owned and operated by the insured sank causing the death of twenty elderly tourists. When the insured attempted to file a liability claim for the business, the business owners discovered that they had no valid insurance coverage. The insurance agents pled guilty to insurance fraud and served lengthy state prison terms and were ordered to pay restitution in the amount of $2.45 million. The policyholder might have avoided this issue by requesting a complete copy of the policy and all ancillary documents after purchasing coverage. It is also a good idea to confirm coverage with the insurance company rather than simply relying on oral representations from an insurance agent.
Selling Fictitious Residential and Commercial Insurance: A former insurance agent, whose license to sell insurance had been revoked, collected premiums for non-existent residential and commercial insurance policies that he fabricated. The premiums were not sent to the insurer to bind coverage but were used by the former insurance agent for his own benefit. He used the fake policies to obtain premium financing agreement and kept the financed funds. The funds were invested into a commercial real estate scam that cost investors millions of dollars. He was convicted of the first degree felony misapplication of fiduciary property with a value exceeding $200,000 and received a sentence of 12 years in prison. He was also ordered to pay restitutions. This insurance fraud scheme had multiple levels, so multiple victims were affected, including the insured. Ironically, this entire scheme would never have been possible had the policyholder simply confirmed that he was dealing with a validly licensed insurance agent prior to retaining the policy.
Continuous Injury Claims Based on False Documents: The insured filed continuous injury claims with his health insurance carrier following his retirement. He forged documents from his physician and employer to justify the ongoing payments. The insured pleaded guilty to the 2nd degree felony of insurance fraud. He was sentenced to 6 months deferred adjudication and ordered to pay fines and restitution that amounted to almost $120,000. The lesson to take from this case is that you should never falsify any documents when making an insurance claim. The consequences for submitting falsified documents to you insurer can be incarceration and substantial financial repayment.
If you believe your insurer is treating you unfairly or your insurance agent has committed insurance fraud, you might have a claim for damages. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.