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What Is the Penalty for Filing a False Insurance Claim?

Insurance fraud accounts for millions in losses of taxpayers' money and higher insurance rates for legitimate claimers. Filing fraudulent claims is a crime under the state and federal laws, and penalties may vary according to state mandates and the circumstances of the each case. Laws such as the Health Insurance Portability and Accountability Act, or HIPPA, however, place insurance fraud under federal jurisdiction.


Penalties for filing fraudulent claims are not uniform and vary depending on the state and severity. All lines of insurance fall victim to fraud and the fraudulent behaviour may occur at any point of the insurance process. Generally, there are soft-fraud and hard-fraud cases, each with fewer terms of penalties and harsher penalties respectively. Soft fraud normally refers to exaggeration of facts to obtain a higher claim payout, and hard fraud refers to deliberately destroying property so that you can file a claim.


The Federal False Claims Act imposes fines on any individual or group that files false claims for payment from federal health insurance programs, such as Medicare and Medicaid. Through this act, perpetrators can receive fines between £3,250 and £6,500. The recoverable damages may be two to three times the falsely recovered amount. Similarly, the Administrative Remedies for False Claims is a statute that serves administrative recoveries by federal agencies for claims submitted but not yet paid. If a person knowingly files a false claim, including submitting false information or doctoring or omitting information, she can be fined up to £3,250 in penalties, and she may be further assessed up to twice the amount claimed.


Consequences for filing a false insurance claim can also include jail time. Among other objectives, the Health Insurance Portability and Accountability Act of 1996 combats fraudulent and abusive behaviours in health insurance delivery. If a person violates HIPAA regulations, including falsifying information to defraud benefit plans and insurance providers, he receive jail time for up to 10 years. If the fraudulent behaviour results in the death of a patient, the perpetrator can receive up to 20 years of jail time.

Other Penalties

Fines are the most detailed forms of punishment for any form of insurance fraud, and together with jail time, the severity will vary depending on the magnitude of the offence. Fines and jail time might also be accompanied by other lighter sentences including community service, restitution and parole. Similar to jail time, these penalties are less severe for first-time offenders as compared to repeated offenders.