Maryland Insurance Fraud Laws

Under the Maryland Criminal Code, several different aspects of insurance fraud are illegal, including:

• Setting on fire or burning any property of any kind with the intent to defraud anyone (insurance companies included).
• Attempting to defraud the state health plan for health services by making false representations of money or property for delivery of health care services or knowingly defrauding the health plan.
• Getting drugs or medical care made from federal or state funds under a state health plan (Medicaid) by fraud, deceit, counterfeiting a prescription, concealing an important fact, or using a false name or address is illegal.

Under the Insurance Code, several insurance consumer activities are prohibited, including:

• Presenting any documentation or statement for a claim knowing that it’s false or misleading
• Misappropriate benefits of an insurance policy
• Presenting documentation for an application, financing, transfer, or settlement of the sale of a life insurance policy to a third party (a “viatical settlement”) knowing that it contains false or misleading information about any important aspect.
• Knowingly making a false statement in an insurance application or to make false sworn statements to the insurance commission in an investigation or hearing.
• Knowingly participating in an intentional motor vehicle accident or a scheme to pretend an accident occurred that didn’t in order to submit an auto insurance claim is insurance fraud.

Insurance fraud can be punished criminally, administratively, and civilly in Maryland.

Criminal Penalties

A person who is convicted of burning with the intent to defraud can be imprisoned for up to 5 years and fined up to $5,000. You can also be convicted of a different crime (like arson) and have to serve your sentences either consecutively (back-to-back) or concurrently (at the same time).

For insurance code fraudulent acts where the value of the fraud is over $300, the act is a felony; if less than $300, it’s a misdemeanor. If convicted, for each violation, the person must restore any property or the value of the property taken from a victim.

Additionally, for presenting false insurance claims, the fine can be up to 3x the value of the claim or $10,000 (whichever is more), the minimum fine is $500 and imprisonment can be sentenced for up to 15 years for a felony or 18 months for a misdemeanor.

For making false statements to the insurance commissioner or intentional car accidents, the penalty can be not more than 15 years for a felony or 18 months for a misdemeanor imprisonment and a $10,000 fine.

Administrative Penalties

For Insurance Code violations, an administrative penalty up to $25,000 for each act of insurance fraud is possible. The exact penalty will vary based on the circumstances, number of violations, degree of guilt, and prior offenses. Restitution can be ordered to pay back the insurer or self-insured employer any insurance benefits paid for the fraudulent claim.

Civil Penalties

An insurance company can also independently seek to recover any wrongfully paid out benefits in civil court. If administrative penalties aren’t paid, the Maryland Insurance Commissioner can bring a civil action to collect the judgment, and collect interest, court costs, and reasonable attorney’s fees.

Note: Felonies and misdemeanors with prison sentences can typically be prosecuted at any time, therefore a crime you committed many years ago can come back to haunt you.

The agency to contact about insurance fraud depends on the type of fraud you believe you've witnessed or experienced

• If you feel you’ve witnessed insurance fraud, you can report it to the Maryland Insurance Administration by calling 1-800-846-4069 or printing this form and mailing, faxing it to 410-347-5350, or emailing it to fraud_referrals.mia@maryland.gov.
  • Car, home, health, and life insurance, worker’s compensation, and other forms of insurance fraud are reported here.
• If you’ve been billed for health services or supplies you never received, you can call your Medicare provider at 1-800-Medicare or other health insurance provider to tell them about the possible fraud.
• If you suspect a licensed professional, including a doctor, therapist, or other professional, has committed insurance fraud, you can also file a complaint with their professional licensing board.