What happens to a company when they commit insurance fraud?

Question

I know for sure that a local company is commiting insurance fraud.

How do I turn them in and what happens next?

They are providing services to people and telling them that their insurance will cover everything (no money out of the customers pocket.)

This is not legal is it?!

Answer 1

There are services that can be covered entirely through insurance.  That in itself is completely legal.  Many Mental Health facilities work this way, as do quite a few independent hospitals, doctor's offices, dentists, and opticians.  So long as the service is provided and the paperwork is filed correctly, they operate completely legally with no (or little) out of pocket expense for the client (depending on the insurance type).  Worst case scenario is that the customer receives a bill for the amount unpaid by insurance.

The question is what service they are provided and who they send the insurance claim to.  If they are over claiming, or fraudulently claiming, there there is an issue.  From what little you have said, that doesn't sound like the case.  Even so, they would be reported to your State's Insurance Commission.  I believe some States also call it the Insurance Commissioner or the Fair Trade Board.  You'd have to look that up on your own.  Realize, though, that claims of insurance fraud can be devastating to a small company, even if they're not true.  Make sure you have real evidence of illegal activity before reporting them.