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What is Health Insurance Fraud?

In this type of fraud, false or misleading information is provided to a health insurance company in an attempt to have them pay unauthorized benefits to the policyholder, another party, or the entity providing services. The offense can be committed by the insured individual or the provider of health services.

An individual subscriber can commit health insurance fraud by:

  • allowing someone else to use his or her identity and insurance information to obtain health care services
  • using benefits to pay for prescriptions that were not prescribed by his or 
    her doctor

Health care providers can commit fraudulent acts by:

  • billing for services, procedures and/or supplies that were never rendered
  • charging for more expensive services than those actually provided
  • performing unnecessary services for the purpose of financial gain
  • misrepresenting non–covered treatments as a medical necessity
  • falsifying a patient's diagnosis to justify tests, surgeries, or other procedures
  • billing each step of a single procedure as if it were a separate procedure
  • charging a patient more than the co–pay agreed to under the insurer's terms
  • paying "kickbacks" for referral of motor vehicle accident victims for treatment


Here are a few typical scenarios to illustrate some of the different ways health insurance fraud can be committed:

Connor was the only one in his family with health insurance, but he let his brother and cousin use his card to receive health care benefits.

A nurse in Dr. Smith's office became addicted to painkillers and with access to patient records she called in forged prescriptions to a local pharmacist and posed as a family member of the patient when she picked up the drugs.

Brandon was addicted to painkillers, stole and forged prescription forms from his doctor's office, passed them at a local pharmacy, and used his health care insurance to pay for the drugs.

Dr. Miller billed his patients' health insurance for both the services he actually provided and for services that were not provided. He falsified his patients' medical records to reflect office visits and treatments that never occurred.

Dr. Johns received the results of medical testing performed by a diagnostic firm for her interpretation of the results. She billed the patients' health insurance as though she performed both the testing and interpretation of the tests.

Dr. Kramer was employed by a medical center where low-income and indigent patients were recruited to undergo unnecessary exams. While Dr. Kramer saw few patients, medical records were falsified by a physician's assistant to support the billing of insurance programs for procedures that were never performed.


Most health insurance includes specific benefits, and health insurance fraud practices such as overbilling for the type of services received robs consumers of these benefits.

This is why health insurance fraud is such a serious crime. As with all other types of insurance fraud, Michigan considers it a felony. Violators can spend up to four years in jail and spend up to $50,000 in fines. There are also many other associated expenses such as court costs and legal fees. Plus, those found guilty of insurance fraud have the stigmas and limitations of being a convicted felon to carry with them for life.