CRS § 18-5-211 – Insurance Fraud Laws in Colorado

CRS § 18-5-211 is the Colorado law prohibiting insurance fraud. This is defined as deliberately making false claims or giving false information. The crime can be prosecuted as a misdemeanor or a felony and carries penalties of up to 3 years in prison and fines of up to $100,000.00.

Example: Harold submits a life insurance application with Farmers. Harold lies about being a non-smoker to get a lower insurance premium. Farmers does grant him a policy with a lower, non-smoking premium. Therefore, Harold could be prosecuted for defrauding an insurer.

CRS 18-5-211 also comprises filing untrue car accident claims. The statute states it is illegal when a person:

“[w]ith an intent to defraud causes or participates … in a vehicular collision … for the purpose of presenting any false or fraudulent insurance claim[.]”

Penalties

It is a class 2 misdemeanor to apply for coverage by lying. If the defendant receives a policy, the sentence is:

• Up to 120 days jail, and/or
• Up to $750

All other types of insurance-related fraud are class 5 felonies. This carries:

• 1 to 3 years in Colorado State Prison, and/or
• Up to $100,000

Defenses

An effective defense to CRS 18-5-211 charges is the defendant had no intent to defraud. Defendants may have to return any money they wrongly received. But defendants who unknowingly provided false information broke no law.

In this article, our Denver Colorado criminal defense attorneys will address:

• 1. What is insurance fraud under CRS 18-5-211?
  • 1.1. By individuals
  • 1.2. By agents
• 2. What are the penalties?
• 3. Who prosecutes insurance fraud?
• 4. What are common defenses?
• 5. Can the record be sealed?
• 6. What are the immigration consequences?
• 7. How do I report insurance fraud in Colorado?
• 8. Related Offenses
  • 8.1. Health care fraud
  • 8.2. Identity theft
  • 8.3. Forgery
  • 8.4. Unemployment Fraud
  • 8.5. Workers’ Compensation Fraud

An insurance crime can be a felony or a misdemeanor under CRS 18-5-211.

1. What is insurance fraud under CRS 18-5-211?

Insurance fraud is trying to get undeserved benefits from an insurer, such as financial profit. This becomes a Colorado crime when the defendant has the intent to defraud. Mistakenly filing a false claim is no crime.

Insurance fraud can be committed by individuals or by insurance agents or adjusters. Insurance fraud is also committed by people involved in organized crime. It can be perpetrated on all types of insurance, including

• health insurance,
• automobile insurance,
• life insurance,
• unemployment insurance,
• property insurance, etc.

1.1. By individuals

There are five main ways consumers defraud insurance companies:

1. Applying for a policy. The application has material lies or omissions, such as those that would lower premiums. And the insurer grants the policy based on this application. “Material” means important or relevant to the policy.
2. Making a claim for a loss or injury. A fraudulent claim contains false material information, or it withholds material information.
3. Staging a car accident to file a fake claim.
4. Filing a claim for the payment of a loss. But the loss or damage predates the policy. (An exception is if the policy covers preexisting conditions.)
5. Making an oral or written statement in support of an insurance claim. And the person knows it is false or missing material information.

1.2. By agents

There are two main ways agents defraud insurers:

1. Presenting a certificate of being insured with false information to any person or entity.
2. Misappropriating premium funds without authorization or lawful justification¹

2. What are the penalties?

Receiving an insurance policy after submitting a fraudulent application is a class 2 misdemeanor. Penalties include:

• Up to 120 days jail, and/or
• A fine of up to $750

All other ways of defrauding an insurer are a class 5 felony. (Examples include filing a false claim or staging an accident.) The penalties include:

• 1 to 3 years in prison (with a mandatory 2-year parole period), and/or
• A fine of up to $100,000

Agents face disciplinary actions like losing their professional licenses as well.²

3. Who prosecutes insurance fraud?

Colorado insurance fraud cases are typically prosecuted by the state’s Attorney General’s office – Insurance Fraud Unit (“Unit”). Though some county district attorneys do have robust economic crime units, such as those in

• Denver,
• Douglas,
• Jefferson, and
• Arapahoe Counties.

The Unit collaborates with other agencies such as the

• FBI,
• National Insurance Crime Bureau (NICB),
• Colorado Division of Insurance, and
• local police detectives.

They investigate reports of both “hard fraud” – which is planning false claims such as staging an accident or falsely reporting a vehicle stolen – as well as “soft fraud” – which is inflating the losses of an otherwise legitimate claim, like double-billing or over-billing.

Four high-profile insurance fraud cases the Colorado Attorney General prosecuted in recent years are:

1. Former Silt police Col. Michael Taylor. He was indicted by a grand jury in 2017. In 2018, he pleaded guilty to insurance fraud for falsely reporting that his home and car had been burglarized. He was sentenced to 45 days in jail, five years probation, 100 hours of public service, and more than $70,000 in restitution plus interest to the insurer.⁴
2.  Former Havana Pharmacy and Alamada Pharmacy owner George Sackey. In 2017, he was charged for allegedly fraudulently billing Medicaid and Medicare for more than $7.8 million. He created a cream with bulk powder, but he billed Medicaid for brand-name ointment and tablets – which were far more expensive. This practice is called up-coding or upgrading. He cut off his ankle monitor and has been a fugitive since.⁵
3.  Chiniece Carter. In 2014, she pled guilty to insurance fraud and violating the Colorado Organized Crime Control Act (COCCA) for submitting forged medical bills to insurance companies. She received close to $200,000 in benefits from seven different insurers. She was sentenced to nine years in prison.⁶
4. Briana Nguyen. In 2013, she was charged with insurance fraud for making more than two dozen false claims over two decades. As part of her “crash for cash” scheme, she would slam her car breaks, causing herself to be rear-ended. Then she would exaggerate her injuries. After being convicted of 21 felonies, she served three months in jail and was ordered to pay restitution. (Other types of car insurance fraud include rate evasion, which is registering a car in a less expensive location, and fronting, which is listing a non-primary driver as the primary driver on a policy.) ⁷

4. What are common defenses?

A common way defense lawyers fight fraud charges is to argue the defendant had no intent to defraud.³ Mistakes and oversights are not criminal:

Example: Kelsey is applying for homeowners coverage from Progressive. On the application, he makes a typo and states that his house is worth $800,000. In fact it is worth only $300,000. But Progressive provides him with the policy worth $800,000. Here, Kelsey committed no crime because he had no intent to defraud. Unless the D.A. can prove intent to defraud beyond a reasonable doubt, criminal charges should not stand.

Sometimes, companies suspect policyholders staged an accident to get money. In these alleged fraud cases, the defense attorney would search for all available evidence to show the claimant’s innocence:

Example: Sheila is the victim of a hit-and-run. She calls her auto coverage company Liberty Mutual to make a claim. But her agent believes she is lying because her facts keep changing. After a fraud investigator and various law enforcement agencies look into the matter, Sheila gets charged with defrauding an insurer for staging an accident.

Sheila’s attorney then hires an accident reconstruction expert. This expert testifies in a deposition that her vehicle’s damage is consistent with a hit-and-run. Sheila’s attorney also hires a medical expert. This expert testifies that it is typical for accident victims to be fuzzy on the facts. In the course of the investigation, Sheila’s attorney also finds surveillance video which shows the car that hit Sheila fleeing the scene. The D.A. eventually realizes that Sheila’s claim is genuine. The charges get dropped.

If the defendant in a CRS 18-5-211 case is an agent, three potential defenses are:

1. The agent did realize the insurance certificate was false;
2. The agent had lawful authority to move the funds; or
3. The agent did not knowingly misappropriate funds

No intent to defraud is a defense to allegations of trying to defraud an insurer.

5. Can the record be sealed?

Yes, insurance fraud convictions may be sealed from the defendant’s criminal record. The waiting period is

• three years after the case ends for felonies and class 1 misdemeanors, and
• two years after the case ends for class 2 misdemeanors.
• If the charge gets dismissed, defendants may petition for a seal right away.⁸

Learn how to seal Colorado criminal records.

6. What are the immigration consequences?

Colorado insurance fraud is arguably a crime involving moral turpitude. And in some cases, it may be an aggravated felony. Therefore, non-citizens convicted of it might be deported.⁹

Aliens facing fraud charges should consult with an attorney immediately. The lawyer can determine whether the charges are deportable. And the prosecutor may be willing to reduce or dismiss the charges.

Learn more about the criminal defense of immigrants in Colorado.

7. How do I report insurance fraud in Colorado?

To report insurance fraud in Colorado, go to the Colorado Attorney General “Report Insurance Fraud” website and submit a tip. Or else call the Colorado Attorney General’s Office at (720) 508-6000.

8. Related Offenses

8.1. Health care fraud

Health care fraud generally involves filing false claims with health insurers. It may also involve fraud against a government agency providing health care benefits. Examples of health care fraud schemes include

• phantom billing (charging for services not delivered) and
• ganging (charging services to people accompanying the patient who received no treatment).

Health insurance fraud may be a misdemeanor or felony.

8.2. Identity theft

Identity theft (CRS 18-5-902) is common in the digital age. It is using another person’s identifying information to obtain anything of value. This includes using another’s identity to file an insurance claim. ID theft can be a misdemeanor or felony.

Victims of identity theft should contact the Colorado Department of Labor and Employment.

8.3. Forgery

Forgery is making or possessing fake documents. A classic example is drawing up a fake will. Another is falsifying a tax return. Forgery can be a misdemeanor or felony.

8.4. Unemployment fraud

Unemployment insurance fraud is knowingly making a false statement or withholding information in order to receive benefits they are not entitled to. False unemployment claims have been prevalent during the pandemic. Unemployment fraud is a type of criminal theft, and penalties depend on the extent of the unemployment benefits the defendant received.

8.5. Workers’ Compensation fraud

Workers’ comp fraud is making false statements on a workers’ compensation claim for the purpose of obtaining benefits that the person is not lawfully entitled to. It is always a felony, and the defendant forfeits all rights to compensation.

Call us for help…

Call our criminal law firm.

Arrested? Contact our Denver criminal defense lawyers to discuss how we can get your charge reduced or dismissed. We have law offices throughout the state of Colorado, including Denver, Greeley, and Colorado Springs.

Accused of insurance fraud in California? Learn about California insurance fraud crimes.

Accused of insurance fraud in Nevada? Learn about Nevada insurance fraud crimes.

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Legal References

1. CRS 18-5-211; also see the Colorado Division of Insurance (doi.colorado.gov).
2. Same. Prior to March 1, 2022, lying when applying for insurance was a class 1 misdemeanor, carrying 6 to 18 months in jail, and/or a fine of up to $5,000. SB21-271.
3. See Hollinger v. Mutual Ben. Life Ins. Co., 192 Colo. 377, 560 P.2d 824 (1977).
4.  AP, Former Colorado police officer sentenced for insurance fraud, Denver Post (February 15, 2018).
5. Kirk Mitchell, Fugitive Colorado pharmacist illegally billed Medicaid and Medicare $7.8 million in fraud scheme, prosecutors say, Denver Post (February 27, 2019).
6. Corrie Sahling, Woman pleads guilty to fraud costing hundreds of thousands of dollars, Denver Post (May 22, 2014).
7. Prosecutor of the Year Award Goes to Colorado Duo who Cracked Fraud Scam, Claims Journal (January 8, 2015).
8. CRS 24-72-705 – 706.
9. See 8 U.S.C. § 1101(a)(43)(M)(i).