ISSUE: Insurance fraud

OUR VIEW: Reporting fraud stands to save everyone money

Amid the reality of higher insurance premiums, understanding the market factors and worldly conditions that drive prices is necessary. Knowing about your policies is as important for ensuring adequate coverage as it is monetary value.

So, too, is it necessary that South Carolinians understand something else about insurance: People will try to cheat insurance companies by filing false claims. They cost us all.

Insurance fraud is a felony in South Carolina and can result in jail time.

Gov. Mark Sanford has proclaimed  July 15-21 as Insurance Fraud Awareness Week in the state.

Insurance fraud costs nearly $120 billion a year, with health care fraud at $85 billion a year and property and casualty insurance fraud at $30 billion a year, according to the Insurance Information Institute. Each year consumers spend about $300 per household just in additional insurance premiums, according to the National Insurance Crime Bureau. While there are organized fraud rings throughout South Carolina, other people you wouldn't suspect, such as a next-door neighbor, co-worker or close acquaintance, are also the causes of insurance fraud and increased insurance premiums.

The South Carolina Insurance Fraud Investigators, Attorney General Henry McMaster, and the South Carolina Insurance News Service are continuing their ongoing initiative to fight insurance fraud and increase public awareness of insurance fraud and public participation in fraud prevention efforts.   

As of June 30, there have been 41 criminal convictions and 38 civil remedies in South Carolina as a result of insurance fraud charges, according to the Insurance Fraud Division of the Office of the Attorney General.

The conventional wisdom has been that about one in four people believe it is OK to "pad" an insurance claim. And cases from this past year in South Carolina show to what lengths people will go. As detailed by the attorney general, "South Carolina's Top Most Outrageous Cases of Insurance Fraud in 2007" include:

• Obsession over repossession - On 07/24/06, Edward Pinckney claimed that his truck, valued at $15,000, was stolen from his home driveway. Investigation revealed the truck was not stolen but repossessed by the State Credit Union. Before the repossession Pinckney was notified of the repossession by certified mail. On the day of the alleged theft, Pinckney had a three-way telephone conversation with Deputy Ballenger from the Greenville County Sheriff's office and Eric McIwain from the South Carolina Credit Union at which time he was made aware that the truck was not stolen, but was repossessed. On July 31, 2006, Pinckney completed and submitted a theft affidavit to State Farm Insurance Co., which indicated his truck was stolen and not recovered and he was unaware of its whereabouts. On 03/14/07, Pinckney pleaded guilty to Presenting a False Claim for Payment over $5,000. He was sentenced to five years, suspended to 20 months of probation.

• 3 Stooges and a home computer -- On May 21, 2003, Linda Thompson was in a motor vehicle accident with her husband Matthew Barnes and her 17-year-old daughter. Thompson did present to Cambridge Integrated Insurance Co. forged medical billings for herself and her daughter totaling $4,452.00. The medical bills had the appearance of being typed on a home computer. Investigation found that one of the alleged medical facilities was actually a residential trailer park. Thompson also submitted billings from actual medical facilities; however, these medical facilities informed investigators that they never treated Thompson. The insurance company denied the claim. There was no restitution. On 01/30/07, she pleaded guilty to presenting false claims for payment. She was sentenced to five years in prison.

• Grooms and bride -- On Aug. 24, 2002, in Richland County, a rental car driven by Phyllis Harden allegedly rear-ended another vehicle containing the passenger Joseph Grooms. Grooms submitted to bodily injury claim to Cambridge Integrated Services, the insurance carrier for the rental car company. Grooms and Harden denied knowing each other when questioned by police and the insurance company. However, it was revealed that Grooms and Harden were in fact married. An expert in accident reconstruction examined the vehicles and determined that the damage to the vehicles was completely inconsistent with the accident scenario related to law enforcement and the insurance company. On 03/19/07, Harden pleaded guilty to presenting false claim for payment over $1,000. She was sentenced to one year in prison suspended to time served. There was $1,225.31 due in restitution to the victim in the case. The restitution was converted into a civil fine.

Stopping these insurance crimes stands to benefit all. Reporting fraud when you see it or suspect it is necessary.

The South Carolina Insurance Fraud Hotline, 1-888-95-FRAUD, is available 24 hours a day, 7 days a week for confidentially reporting insurance fraud. Use it if you have information.

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