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 may unethically allege arson as a basis for non-payment. An insurer may also file baseless criminal charges. 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. Some egregious examples of insurance fraud 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Selling Fictitious Residential and Commercial Insurance: A former insurance agent, whose license to sell insurance had been revoked, collected premiums for non-existent residential and commercial insurance policies that he fabricated.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 agreements 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 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 restitution. 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.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].