The 4 Biggest Insurance Scams in History
Every once in a while, we’ll hear about that one big insurance scam that resulted in thousands of people conned and millions of dollars lost, but there are more that have occurred than we think. To give you an idea, let’s take a look at some of the biggest insurance scams that have occurred in the United States:
#1: Fake Health Insurance
Two scams were uncovered in 2010 that involved fake health insurance and resulted in thousands of everyday people losing millions of dollars on worthless policies.
The first scam involved unlicensed companies selling fake policies. The other scam involved companies like Health Care One in Arizona, United Benefits in Tennessee and Consumer Health Benefits in Florida promising to provide major medical insurance but only issuing worthless medical discount cards.
All in all, well over $100 million in hard-earned money was lost. While the Federal Trade Commission was able to shut down the insurance fraud operations, policyholders still had to scramble to find new coverage and pay bills for doctor’s visits that were essentially not covered.
Even worse? Some of the scammers have yet to be arrested.
#2: California Workers’ Compensation Insurance Fraud
In 2009, a California husband and wife racked up more than $38 million with premium insurance fraud, according to the California Department of Insurance. Taking part in the largest known workers’ compensation insurance fraud case in California history, the two were discovered with the help of their lavish lifestyle of high-end cars, vacations and shopping sprees.
After being investigated by the Orange County District Attorney’s Office (OCDA) and the Orange County Premium Fraud Task Force, the couple–Michael Vincent Petronella (50) and Devon Lynn Kile (44)–was arrested.
They were charged with 106 felony counts that included conspiracy to commit a crime, grand theft, insurance fraud, filing a false tax return and misrepresenting facts to a workers’ compensation insurance company. Now their lives will have to continue behind bars.
#3: Medicare Scam
In another one of the biggest insurance fraud cases in history, dozens of doctors, nurses and medical professionals were caught participating in a massive Medicare insurance scam.
The scam spread across the country, affecting Miami, New York City, Detroit, Houston and Baton Rouge, Louisiana and ranged from billing Medicare fraudulently for unnecessary equipment to allowing false claims to go through. In Detroit, the fraudsters even set up fake HIV clinics to fool patients into accepting care that didn’t truly benefit them.
While the major scam was eventually shut down, it resulted in a loss of over $250 million.
#4: Colorado Fake Car Insurance Claims
Around a dozen individuals in Colorado were caught filing 35 fraudulent auto insurance claims with 12 different car insurance companies. The car insurance fraud claims involved staging accidents, committing fraudulent vandalism and faking thefts in and around Denver.
The indictment revealed that false claims totaled $460,762 between March 17, 2007 and Nov. 10, 2009. Colorado Attorney General John Suthers said the losses could have easily reached into the millions if the scammers were not caught.
How to Avoid Insurance Fraud
There are a number of major issues that arise from insurance scams. Of course, the biggest issue is that the victims lose thousands of dollars and have to work to acquire legitimate insurance afterward.
If you want to avoid being the victim of insurance fraud, here are some tips to consider:
- Conduct research on insurance companies: Before you purchase a policy from a company you’re not familiar with, conduct research with your state’s Department of Insurance, as well as the Better Business Bureau to make sure it’s legitimate. Also, it’s good to read over the specifics of the policy to make sure you’re covered in the exact ways you think you are.
- Avoid ambulance chasers: In some states, ambulance chasing is considered a form of insurance fraud and could get you in a lot of trouble. If you are contacted by a lawyer or medical professional after an accident and they say they want to help you seek claims, it’s best to avoid working with them altogether.
- Make sure websites are legit: There are a lot of “dummy” websites out there that do a great job of duplicating legitimate sites in order to steal your money or personal information. Before you attempt to purchase insurance of any type from a website, do your research to ensure the website is the company’s legitimate site.
Insurance scams of all types could not only have a detrimental effect on the parties involved, but anyone who purchases insurance since costs soar when scams are successful. So do your best to avoid losing money while contributing to increased insurance costs by following the above tips.