Insurance fraud law is often a part of a region’s penal code that defines insurance fraud and the penalties for individuals who commit it. Some types of insurance fraud are found in fraud laws and not the penal code. Insurance fraud is a crime, and it’s classified as a misdemeanor or felony. Most regions make a distinction between the two based on the amount that was taken as a result of the fraud. Many frauds are uncovered with the help of a whistleblower or an insurance fraud investigation that is sometimes funded by the insurance companies.
Some of the types of fraud outlined in penal codes codes are health care insurance fraud, fraudulent acts that affect interstate commerce, and mail fraud. Penal codes vary by jurisdiction, but some specify the elements required to prove these different types of insurance fraud. For example, a prosecutor often has to prove that a document or physical evidence contained false information about a material fact or concealed material information for the purpose of misleading in order to obtain coverage or reimbursement. The various degrees of fraud are also often outlined in the region's insurance fraud law. For example, the code may describe insurance fraud in the first degree to insurance fraud in the fifth degree.
Individuals can also be charged with aggravated insurance fraud under insurance fraud law if they’ve been convicted of insurance fraud previously. Aggravated insurance fraud is a felony in most jurisdictions, and the penalties often include serving time in prison. For example, some penal codes state that the defendant will be charged with aggravated insurance fraud if he has been convicted of insurance fraud within five years of the new charge or a different crime where insurance fraud was an essential element. The dollar amount involved in the fraud often does not impact whether the crime is aggravated, the way that the different degrees of fraud are determined. Aggravated fraud is based on the past crime that was committed.
In addition to regional laws, there are often national laws. A national insurance fraud law can make it a crime to commit a certain type of fraud, even if there are no regional laws that prohibit it. National laws may also outline elements for proving fraud not found in the regional penal codes or describe specific frauds that are generalized in the penal codes. There are federal mail fraud statutes in the United States, for example, that make it illegal to use the United States Postal Service to commit insurance fraud. It’s a federal crime, and a state resident can be charged and convicted, even though the state does not deem it a crime in the state penal codes.