South Carolinians are seeing a larger portion of their paychecks go to rising insurance costs, according to Trey Walker, a spokesman for the Attorney General’s Office, where the budget has been boosted to chase offenders.
Walker said fraud could involve a false claim, an overstatement of damages and injuries from an accident or not reporting accurate medical history when applying for health insurance.
The state Attorney General’s Office has been prosecuting insurance fraud by statute since the mid-’90s, and the office has a division devoted solely to insurance fraud prosecution, Walker told the Greenville News.
Initially in the mid-’90s the office had two prosecutors and two State Law Enforcement Division agents were dedicated to prosecuting insurance fraud across the state. But with budget cuts, the office shrank to only one prosecutor and two SLED agents, which according to Walker, led to a tremendous backlog that the offices are still working through today.
Walker said the Legislature acted to provide an additional $400,000 a year to the Attorney General’s Office to hire insurance fraud prosecutors, starting in fiscal year 2005-2006. In July 2005, the office hired four more prosecutors and now has five prosecutors devoted to insurance fraud cases.
Walker said in the first quarter of the 2005 fiscal year, the office had a 250 percent increase in the number of insurance fraud cases it handled and closed compared to the first quarter of the 2004 fiscal year.
He told the News that as insurance companies lose money because of fraud, the cost is passed on to the consumer. He said the average American household pays about $1,000 a year in out-of-pocket costs as a result of insurance fraud.
The State Attorney’s office sees cases every day, like a Travelers Rest man who pleaded guilty to insurance fraud recently and received a five-year suspended sentence and three years’ probation in a case in which prosecutors said he claimed the same damage to his pickup truck twice. He was ordered to pay restitution of $3,899.72 to State Farm Insurance Co.
“There is $80 billion in insurance fraud each year nationally,” James Quiggle, a Coalition Against Insurance Fraud spokesman told the News. He said insurance fraud can range from people underreporting the number of miles they drive on their auto policy to staging an accident and having passengers pretend to be injured to collect insurance. And he said there’s always an influx of fraud after disasters as well, whether it is a flood, ice storm or hurricane.
“People will always swoop in and try to profit from a natural disaster,” Quiggle said.
“Fraud doesn’t just hit insurance companies; people can lose their life savings because of insurance investment schemes, some swindlers who sell nonexistent health policies or other insurance plans.”
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