North Carolina Insurance Fraud Laws

Definition of Insurance Fraud

In North Carolina, insurance fraud is a big business with millions of dollars lost each year to fraudsters. Fraud can occur in numerous different ways from health insurance, to property and casualty insurance, to life and disability insurance. North Carolina is particularly susceptible to property-related insurance fraud due to hurricanes, floods, and other natural disasters.

This crime 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, failing to pay valid claims, or claims adjusting.

Common types of insurance fraud in North Carolina include:

  • Arson for profit,
  • Life and disability fraud,
  • Embezzlement,
  • False pretense, False statements,
  • Willful failure to pay group insurance premiums
  • Automobile Repairs;
  • Automobile Accidents;
  • Medical Insurance Fraud

Who Enforces Insurance Fraud Laws?

State and local prosecutors handle insurance fraud cases under the state's penal laws. North Carolina 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 North Carolina's insurance fraud laws.

See also Association of Certified Fraud Examiners, Fraud, Fraud and Financial Crimes, and Arson.

Code Section

North Carolina General Statutes ยง 58-1-1 et seq

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: prison time, fines, and possible restitution to the victim(s).

Possible civil penalties including fines, revocation of business license, etc.

Who Can Be Prosecuted Consumers, providers (such a doctor and auto repair shop), and insurance companies, adjusters and others
Types of Insurance Fraud Automobile repair and accidents, medical/healthcare, life, workers' compensation, fire, property (repairs and property claims adjustments)

Whistleblower Laws

The North Carolina False Claims Act (PDF) imposes liability on persons who knowingly present false or fraudulent claims for payment to the state, misappropriate state property, or deceptively avoid binding obligations to pay the state, among other violations.

A defendant can be ordered to pay up to three times the actual harm to the state, plus a fine equal to between $5,500 and $11,000 for each violation of the Act.

Incentive: A private person who files a successful claim may receive between 15 and 25 percent of any recovery if the North Carolina Attorney General intervenes in the matter.

If the whistleblower successfully prosecutes the case on his own, he may receive between 25 and 30 percent of the amount recovered.

The court may reduce the amount of the award if the plaintiff planned or initiated the fraud, or if the action is largely based on information disclosed in the media or public hearings.

The Act also protects whistleblowers from retaliation by their employers for filing a claim or assisting the state with its own claim.

Enforcement Agencies

If you feel you have been victimized by insurance fraud, here is some contact information that can help you:

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

Next Steps: Search for a Local Attorney

Contact a qualified attorney.