CRS 18-5-211 – Insurance Fraud – Colorado Law & Penalties

CRS § 18-5-211 is the Colorado law prohibiting insurance fraud, which is deliberately making false claims or giving false information to get an unearned benefit. Insurance fraud can be prosecuted as a misdemeanor or a felony and carries penalties of up to three years in prison and fines of up to $100,000.

Examples:

• Staging a fake vehicle theft and filing a false claim with the auto insurance company
• Deliberately causing an accident and then exaggerating injuries to obtain a bigger insurance payout
• Lying about prior health conditions on a life insurance application in order to obtain a lower premium

Defenses:

Three effective defenses to CRS 18-5-211 charges are:

1. You had no intent to defraud,
2. You were falsely accused, or
3. The police committed misconduct.

Penalties

The following table spells out the punishments for insurance fraud in Colorado.

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

• 1. Elements
• 2. Penalties
• 3. Prosecutors
• 4. Defenses
• 5. Record Seals
• 6. Immigration Consequences
• 7. Reporting Insurance Fraud
• 8. Recent Cases
• 9. Related Offenses
• Additional Resources

1. Elements

Insurance fraud is trying to get undeserved benefits from an insurer, such as financial profit. This becomes a Colorado crime when you have 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, or
• Property insurance, etc.

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. 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. You then file a fake claim.
4. Filing a claim for the payment of a loss. However, 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. Meanwhile, you know it is false or missing material information.

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; and/or
2. Misappropriating premium funds without authorization or lawful justification.¹

2. 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.

Knowingly diverting or misappropriating premium funds without the authorization of the owner of the funds or other lawful justification is a class 5 felony. The penalties include:

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

Finally, all other ways of defrauding an insurer are a class 6 felony, carrying:

• 12 to 18 months in prison (with a mandatory 1-year parole period), and/or
• A fine of $1,000 to $100,000.

Agents also face disciplinary actions, such as losing their professional licenses.²

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

3. Prosecutors

Colorado insurance fraud cases are typically prosecuted by the state’s Attorney General’s office – Insurance Fraud Unit (“Unit”). However, 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; and
• Soft fraud – which is inflating the losses of an otherwise legitimate claim, like double-billing or over-billing.

4. Defenses

Here at Colorado Legal Defense Group, we have represented literally thousands of people charged with fraud, including insurance fraud. In our experience, the following three defenses have proven very effective with prosecutors, judges, and juries.

You Had No Intent to Defraud

Claiming you had no criminal intent is our strongest defense because prosecutors have no way to prove what was going on inside your head. All they have to rely on is circumstantial evidence, which is subjective.³

In these cases, we would argue that you made a mistake or were being careless. Accidents and oversights on an insurance application are not criminal. As long as there is reasonable doubt, you may have to return any money you wrongfully received, but criminal charges cannot stand.

You Were Falsely Accused

We see cases all the time where someone with a grudge levies false allegations against someone else. Sometimes, they even commit crimes themselves by forging paperwork in order to back up their false accusations.

In these cases, we heavily investigate your accuser’s recorded communications (such as text messages) in search of their motivations to lie. Once we show the prosecutors we have enough evidence to impeach your accuser’s credibility, they may agree to drop your case.

The Police Committed an Unlawful Search

The Fourth Amendment requires police officers to get a search warrant or else have a valid reason to search without a warrant. However, we frequently see police violating Constitutional protocols when gathering evidence.

If the officers in your case may have conducted an unlawful search and seizure, then we would ask the judge to suppress any unlawfully obtained evidence. If the judge agrees, the D.A. may be left with too little proof to convict you.

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

5. Record Seals

Insurance fraud convictions may be sealed from your 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 your charge gets dismissed, you may immediately petition for a seal.⁴ Learn how to seal Colorado criminal records.

6. Immigration Consequences

Colorado insurance fraud is arguably a crime involving moral turpitude. In some cases, it may be an aggravated felony. Therefore, non-citizens convicted of it might be deported.⁵

Aliens facing fraud charges should consult with an attorney immediately. Learn more about the criminal defense of immigrants in Colorado.

7. Reporting Insurance Fraud

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

8. Recent Cases

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.⁶
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.⁷
3.  Chiniece Carter. In 2014, she pleaded 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.⁸
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.) ⁹