What is insurance fraud?
Insurance fraud is defined as an illegal act committed by either the buyer or seller of an insurance contract. Insurance fraud by the issuer includes selling policies from non-existent companies, failing to submit premiums, and churning policies in order to increase commissions.
The submission of fraudulent claims is one of the many costs of insurance to society. Like, auto accidents are staged or fabricated in order to collect benefits, Dishonest claimants fabricate slip-and-fall injuries, Insurance companies are notified of bogus burglaries, thefts, and vandalism, False health insurance claims are filed in order to collect benefits, and dishonest policyholders purchase life insurance policies on unsuspecting insureds and then arrange for their deaths.
Payment of such fraudulent claims raises premiums for all insureds. The existence of insurance also motivates some insureds to purposefully cause a loss in order to profit from insurance. These are the social costs that are borne directly by the society. Some types of insurance fraud are particularly heinous.
The Coalition Against Insurance Fraud compiles an annual list of particularly shocking, brazen, and outrageous insurance fraud cases. The following is a rundown of some shocking cases:
Two elderly women in Los Angeles befriended two homeless men and took out $3 million in life insurance on the men, naming themselves as beneficiaries. Helen Golay and Olga Rutterschmidt then had cars run over the two men, killing them. Both women were sentenced to life in prison without the possibility of parole.
Killing homeless people for insurance
Richard James is a Guyanese-American life insurance agent who allegedly conspired to sell fraudulent life insurance policies to Guyanese street people in the New York City area. He had them murdered for the money. Four homeless people were killed in a scheme worth more than $1 million. James and a friend are facing life in prison.
A corrupt cop shoots himself
A passing motorist discovered Los Angeles District police officer Jeff Stenroos on the ground near his open door. He claimed he was shot by a car burglary suspect wearing a ponytail and a black leather jacket. However, the shooting was a hoax. Stenroos shot himself in his bulletproof vest before filing a false workers’ compensation claim.
His home is set on fire, and his children perish
Timothy Nicholls set fire to his house in order to collect insurance money to repay a motorcycle gang that supplied him with methamphetamines. Three children died as a result of smoke inhalation. Nichols was sentenced to life in prison.
Experimenting with fire backfires
For insurance, Victor and Olga Barriere planned to burn down their shaky house. The couple was saddled with a $315,000 mortgage and a falling-apart house that no one wanted to buy. They hired handyman Thomas Trucious to torch the place as part of an insurance settlement. The strategy backfired. The handyman was a novice who blew up the house in a raging fireball, fatally engulfing himself in flames and endangering nearby homes.
The nursing home hellhole
Robert Wachter was the administrator of three nursing homes in Missouri. Water, food, and sanitation were denied to the residents. Many of the same services were billed to Medicare and Medicaid. Some residents died as a result of neglect. Wachter was sentenced to 18 months in federal prison and fined $750,000.
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