Tennessee Insurance Fraud

Code Sections

Tennessee Code Title 56 Insurance, Chapter 53: Insurance Fraud

Tennessee Code Section 39-14-133: False or Fraudulent Insurance Claims

What Is Prohibited?

For Consumers: It's a criminal violation to knowingly, with intent to defraud for money or other value, submit insurance transactions containing false representations of any facts in an application, renewal, or payment of any insurance policy. Doing so knowingly or recklessly could be a civil violation. Also, intentionally submitting a false insurance claim for benefits or false documents to support the false claim is prohibited.

For insurers: It's criminally prohibited to present false representations on material facts in selling insurance, applying for a certificate, providing financial condition of any insurer, for the merger, formation, or dissolution of an insolvent insurer. It’s also a crime to embezzle insurer funds or to remove or destroy records or assets from the insurer. It's a civil violation to solicit or accept new or renewal insurance risks by or for an insolvent insurer. Insurers also shouldn’t break state insurance regulations, such as failing to have an anti-fraud plan.

Penalties

Insurance fraud can be punished criminally and administratively, as well as by sued in civil court.

Criminal Penalties

Insurance fraud, including false insurance claims, are punished the same as theft. The penalty changes based on the value of the property or services obtained through the fraud:

• Class A Misdemeanor - For $500 or less in services or property gained, punished by less than 11 months and 29 days in jail and a fine not more than $2,500
• Class E Felony - For $500 to $1,000 gained, 1-6 years in prison and a fine not more than $3,000
• Class D Felony - For $1,000 to $10,000 gained, 2-12 years in prison and a fine not more than $5,000
• Class C Felony - For $10,000 to $60,000 gained, 3-15 years in prison and a fine not more than $10,000
• Class B Felony - For $60,000 or more gained, 8-30 years in prison and a fine not more than $25,000

Persons convicted of insurance fraud can also owe restitution to those they harmed. Also, knowingly burning or exploding a structure to collect insurance, AKA arson, is generally a Class C felony.

Administrative Penalties

The appropriate licensing authority will handle administrative disciplinary actions for insurance fraud or breach of trust felonies, including possible administrative hearings with sentences including temporary or permanent revocation of professional licenses for insurance fraud by practitioners, including possible disbarment of attorneys.

Since 2002, insurers with ten million or more in premiums must maintain an anti-fraud plan to prevent insurance fraud and provide fraud warnings with all insurance applications and claim forms. Insurance companies that fail to do this are subject to a $500 per day penalty, not to exceed $25,000.

Civil Court

Anyone victimized by civil insurance violations can sue the person who harmed them for the return of any profit, compensation, or payment received for the violation and reasonable attorney fees and court costs. Anyone victimized by criminal insurance fraud can recover the profit or compensation, attorney’s fees, and court costs, as well as any other economic damages they experienced, the cost of investigation, and a penalty of $100 to $10,000. Triple the economic damages may be possible. The attorney general or a prosecuting attorney can maintain civil actions for the Department of Commerce and Insurance. If done, a $5,000 fine for each criminal violation will be levied.

The time in which any civil action must be brought, or statute of limitations, is five years of the date of the violation or the time the violation should've been discovered. For triple economic damages, it must be within three years of violation.

Types of Insurance Fraud

Some examples of insurance fraud are:

• Vehicle Insurance and Accidents - Anything from stolen car scams to staged car accidents
• Health Insurance, Medicare, or Medicaid Claims - Often providing unnecessary medical procedures or billing for services or supplies never provided
• Small Business Insurance - Notoriously, arson to profit from a failing business
• Insurance for your Home or Rental - Submitting misleading property loss claims, including small lies about the value of stolen items
• Insurance Applications - Lying about your medical history to qualify for life insurance
• Disability Insurance Benefits - Claiming a more serious injury or inability to work to receive disability benefits
• Unemployment Insurance - Falsely obtaining UI benefits when you're really working

Insurance Fraud Enforcement Agencies

If you've been victimized by insurance fraud, you can file a complaint with the Tennessee Consumer Insurance Services online or at 1-800-342-4029.

If you've been billed for services or supplies you never received or suspect other fraud and use Medicare or TennCare (Medicaid), you can call your Medicare plan provider to ask them about the possible fraud. You can also report the suspected fraud for Medicare at 1-800-Medicare or for TennCare to the fraud hotline at 1-800-433-3982.

If you believe a licensed professional (your doctor, counselor, chiropractor, etc.) has committed insurance fraud, you may also wish to file a complaint with their professional licensing board.