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State Agency Enforces Laws Against Insurance Fraud
BALTIMORE – When Forestville resident Sheronda A. Harris totaled her car after hitting a Metro transit bus, she thought she could add insurance coverage before reporting the accident, tricking her insurance company into paying for her vehicle’s damage. She did not expect to be ordered to pay nearly $20,000 as a result. Last month, Harris was ordered to reimburse her insurance company $15,060.48 and to pay a $4,500 penalty to the MIA for committing fraud.
When an uninsured driver crashes, buys insurance, then claims the accident happened after the policy took effect, that is fraud. It is a felony that could result in fines or jail time. Such “crash and buy” schemes are a growing trend in Maryland. They constitute a quarter of the fraud investigations conducted by the Maryland Insurance Administration (MIA), the independent State agency charged with enforcing insurance laws.
“It’s this kind of illegal action that hurts all consumers,” said Insurance Commissioner Al Redmer, Jr. “Everyone ends up paying higher premiums when someone cheats an insurance company.” The FBI estimates that families pay as much as an extra $1,000 a year as a result of fraudulent claims. Overall, the Coalition Against Insurance Fraud estimates, up to $80 billion is paid out for false claims annually. Insurance fraud is the second most costly financial crime in the United States. Only income tax evasion is costlier.
Harris’s case is one of 36 civil fraud cases that the MIA has taken action on since the agency recently gained authority to pursue civil cases. To date, the agency has assessed $141,500 in penalties and ordered $56,845.83 in restitution for these cases.
In addition, MIA investigations have resulted in 1,270 criminal convictions since its Fraud Division formed two decades ago. The division is staffed with retired police officers and prosecutors. Their cases run the gamut from falsifying receipts to support a homeowners insurance claim to filing false claims for lost income. For instance, a Baltimore County couple claimed to have been injured when their car was hit in a parking lot. When a surveillance camera showed neither was in the car at the time, they pleaded guilty. He served 18 months in jail and she received a suspended sentenced. In another case, a Prince George’s County resident couldn’t afford repairs to his motorcycle, so he left it at the repair shop before claiming it had been stolen. He received an 18-month suspended sentence and was ordered to perform 30 hours of community service. A person does not even need to collect money to commit insurance fraud. Simply filing a false claim, even if it is later withdrawn, is enough to constitute fraud.
Thanks to a law passed in 2014, the MIA now has broader authority to investigate fraud claims based on where the defendant lives, where the insured property is located, or where the loss is said to have occurred. Until this law took effect, charges could only be brought in cases when it could be proved that the false claim was made within the state.
If you suspect someone has committed insurance fraud, call the MIA’s Fraud Division hotline at 1-800-846-4069, or email a referral form to fraud-referrals.mia@maryland.gov. To learn more, please visit www.insurance.maryland.gov.
About the Maryland Insurance Administration
The Maryland Insurance Administration (MIA) is an independent State agency charged with regulating Maryland’s $28.5 billion insurance industry. For more information about the MIA, please visit www.insurance.maryland.gov or follow us on Facebook at www.facebook.com/MDInsuranceAdmin or Twitter at @MD_Insurance.
State Agency Enforces Laws Against Insurance Fraud
BALTIMORE – When Forestville resident Sheronda A. Harris totaled her car after hitting a Metro transit bus, she thought she could add insurance coverage before reporting the accident, tricking her insurance company into paying for her vehicle’s damage. She did not expect to be ordered to pay nearly $20,000 as a result. Last month, Harris was ordered to reimburse her insurance company $15,060.48 and to pay a $4,500 penalty to the MIA for committing fraud.
When an uninsured driver crashes, buys insurance, then claims the accident happened after the policy took effect, that is fraud. It is a felony that could result in fines or jail time. Such “crash and buy” schemes are a growing trend in Maryland. They constitute a quarter of the fraud investigations conducted by the Maryland Insurance Administration (MIA), the independent State agency charged with enforcing insurance laws.
“It’s this kind of illegal action that hurts all consumers,” said Insurance Commissioner Al Redmer, Jr. “Everyone ends up paying higher premiums when someone cheats an insurance company.” The FBI estimates that families pay as much as an extra $1,000 a year as a result of fraudulent claims. Overall, the Coalition Against Insurance Fraud estimates, up to $80 billion is paid out for false claims annually. Insurance fraud is the second most costly financial crime in the United States. Only income tax evasion is costlier.
Harris’s case is one of 36 civil fraud cases that the MIA has taken action on since the agency recently gained authority to pursue civil cases. To date, the agency has assessed $141,500 in penalties and ordered $56,845.83 in restitution for these cases.
In addition, MIA investigations have resulted in 1,270 criminal convictions since its Fraud Division formed two decades ago. The division is staffed with retired police officers and prosecutors. Their cases run the gamut from falsifying receipts to support a homeowners insurance claim to filing false claims for lost income. For instance, a Baltimore County couple claimed to have been injured when their car was hit in a parking lot. When a surveillance camera showed neither was in the car at the time, they pleaded guilty. He served 18 months in jail and she received a suspended sentenced. In another case, a Prince George’s County resident couldn’t afford repairs to his motorcycle, so he left it at the repair shop before claiming it had been stolen. He received an 18-month suspended sentence and was ordered to perform 30 hours of community service. A person does not even need to collect money to commit insurance fraud. Simply filing a false claim, even if it is later withdrawn, is enough to constitute fraud.
Thanks to a law passed in 2014, the MIA now has broader authority to investigate fraud claims based on where the defendant lives, where the insured property is located, or where the loss is said to have occurred. Until this law took effect, charges could only be brought in cases when it could be proved that the false claim was made within the state.
If you suspect someone has committed insurance fraud, call the MIA’s Fraud Division hotline at 1-800-846-4069, or email a referral form to fraud-referrals.mia@maryland.gov. To learn more, please visit www.insurance.maryland.gov.
About the Maryland Insurance Administration
The Maryland Insurance Administration (MIA) is an independent State agency charged with regulating Maryland’s $28.5 billion insurance industry. For more information about the MIA, please visit www.insurance.maryland.gov or follow us on Facebook at www.facebook.com/MDInsuranceAdmin or Twitter at @MD_Insurance.
