Maryland Insurance Fraud Laws

Insurance fraud happens many different ways. Typically, insurance fraud occurs when someone tries to profit from an insurance transaction through lies or misrepresentations. Insurance providers can also violate insurance laws, for example by misrepresenting insurance during sales, inappropriately cancelling policies, or denying coverage.

Who Enforces and Prosecutes Insurance Fraud Laws?

State and local prosecutors in Maryland can handle insurance fraud cases under the criminal code. When insurance companies or agents act in bad faith and violate the insurance code regulations or consumers violate the insurance code, the matter can be handled by the Maryland Insurance Administration, for example by fining the insurer or consumer. If the insurance fraud involves federal criminal laws or crosses state lines, the federal government can also prosecute it. For example, if it involves mail fraud or racketeering, it's likely a federal crime.

Maryland Insurance Fraud Statute

The following table details some of the main insurance fraud laws in Maryland.

Code Sections Maryland Code, Criminal Law, Title 6, Subtitle 1, Sections 6-106: Burning with Intent to Defraud, 8-509: Defrauding State Health Plan, and 8-514: Obtaining Benefit by Fraud

Maryland Code, Insurance, Title 27, Subtitle 4, Sections 27-403: False or Misleading Claims, 27-406: False Applications and Statements, and 27-407.1: Intentional Auto Accidents
What’s Prohibited?

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.
Penalties

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.

Insurance Fraud Enforcement Agencies

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.

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

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Get a Free Initial Case Review

If you find yourself on the wrong side of insurance fraud laws you may be facing a very complicated criminal case. Defending yourself will involve careful consideration of the laws and the facts of your individual circumstances. Contact a local attorney for a free initial case review to learn how they can help.

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