Chapter 15: Ethics and Social Responsibility | Article

History of Insurance—Fraud

One of the biggest cases of health insurance fraud occurred in 1991. Two brothers set up mobile medical labs in several states to conduct unnecessary tests on unsuspecting patients. In addition, they submitted claims for tests that were not performed. The brothers were arrested and convicted. They admitted to taking more than $1 billion in the fraud.

The trail of insurance fraud is littered with some truly ridiculous cases, most of which have resulted in convictions, prison sentences, and large monetary fines. (Insurance fraud that involves income tax fraud or mail fraud become federal cases). Here are some of the more jaw-dropping examples.

  • Three brothers came up with the idea of faking their fathers' life. Their beloved dad died in 1995, while receiving monthly income for life from an insurer due to a serious car accident. To keep those payments coming following their dad's death, the boys submitted fake documents and correspondence to the insurer. They collected his monthly benefits until 2006. Once caught, the brothers were convicted and jailed. They were also ordered to pay a healthy sum to the insurer as payback for their false claims.

  • A correctional officer in Connecticut was collecting workers compensation payments for an injury he claimed left him unable to work. He revealed his fraud when, dressed as a woman in high heels and wig, he entered a promotional race sponsored by a local radio station. The event was shown on TV. The game was up for this guy, who went on the show to try winning Hannah Montana tickets.

  • A medical supply company owner in Florida was running a medical fraud scheme that defrauded Medicare of more than $7 million. When police caught him breaking into a car, he took off on foot. In his haste to avoid the cops, he jumped into a lake with signs reading, "Danger Live Alligators." His alligator-bitten body was found the next day.

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