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Michigan Insurance Fraud Laws

What is Insurance Fraud?

In Michigan, insurance fraud is a serious crime. It happens when a person receives insurance money for filing a false claim, inflating a legitimate claim, or billing for services that were never received.

An insurance company itself might commit insurance fraud by selling bad insurance policies or failing to pay valid claims.

Common types of insurance fraud in Michigan include

  • Inflating a claim to get out of paying a deductible or to cover past insurance premiums;
  • Orchestrating the destruction of an owned automobile, home, or business to collect insurance;
  • Exaggerating the extent of a minor injury to collect workers' compensation benefits; or
  • Billing insurance companies for medical services that were not rendered.

The Law

State and local prosecutors handle insurance fraud cases under the state's penal laws. Michigan and federal laws also permit law enforcement to pursue cases federally. In those instances, the crime of "insurance fraud" is usually pursued as "mail fraud," "criminal racketeering," or other federal offenses.

The following table highlights the main provisions of Michigan's insurance fraud laws.

See also Association of Certified Fraud Examiners and Fraud.

Code Section

Michigan Insurance Code Section 500.4503, and Section 500.4511

What is Prohibited Knowingly lying about, or concealing an important fact in connection with a insurance claim or payment made under an insurance policy. Applies to issuing fake insurance policies and rate-fixing. Also includes conspiring to do any of the above.
Penalties Felony, up to 4 yrs. in prison and a fine of not more than $50,000. Possible restitution to the victim(s). Also possible civil penalties including revocation of business license.
Who Can Be Prosecuted Consumers, providers (such a doctor and auto repair shop), and insurance companies, adjusters and others
Types of Insurance Fraud Automobile, medical/health care, life, worker's compensation, fire, property

Whistleblower Laws

The Michigan Medicaid False Claims Act allows whistleblowers to bring a lawsuit in the name of the State of Michigan where a wrongdoer engages in conduct that defrauds the state or local government of its healthcare dollars. This statute is designed to address Medicaid fraud.

A person or company found liable under the act must generally pay damages, civil penalties, plus costs and attorneys fees.

Consumer Reporting

Consumers wishing to report suspected insurance fraud may do so by calling 1 (800) 835-6422.

Enforcement Agencies

If you feel you have been victimized by insurance fraud, here is some resources that may be able to help you:

Because insurance laws can sometimes get complicated, it may also be a good idea to consult an experienced Michgan insurance attorney if you have questions about your specific situation.

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