The term "insurance fraud" is not defined in the Indian Insurance Act. Insurance fraud is not specifically covered by either the Indian Contract Act or the Indian Penal Code (IPC). The parts of the IPC that address forgery or fraudulent activities are applied, but with little effectiveness, and as a result, they are unable to serve as deterrents.
How to Define Fraud?
The International Association of Insurance Supervisors (IAIS) defined insurance fraud as "an act or omission intended to gain dishonest or unlawful advantage for a party committing the fraud or for other related parties" as used by the Insurance Regulatory and Development Authority of India (IRDAI) to define the term.
Insurance fraud is described as "the act of making a statement known to be false and used to induce another party to issue a contract or pay a claim" by the Federation of Indian Chambers of Commerce & Industry. This behaviour must be willful and intentional, motivated by financial gain, performed under false pretences, and be against the law.
Healthcare fraud is defined as "the intentional submission of false claims to private health insurance plans and/or tax-funded public health insurance programmes" by the National Healthcare Anti-Fraud Association, USA. Knowing that their actions could result in an illegal profit for themselves, their organisation, or a third party, an individual or entity intentionally lies or makes a false statement.
Fraud Types
Insurance fraud can take the following forms, according to the IRDAI:
Policyholder Fraud and/or Claims Fraud
Fraud perpetrated against the health insurance company during the purchase and/or execution of a policy is known as policyholder fraud and/or claims fraud. Fraud committed at the time of filing a claim is also included.
Internal Fraud
When an insurance business employee commits fraud or misconduct against an insurer.
Intermediary Fraud
Fraud committed by an intermediary against an insurer or an insured is referred to as intermediary fraud.
Fraud Regarding Claims
The most frequent types of fraud committed by policyholders are:
Claim Fraud
In order to obtain additional benefits, policyholders conduct this fraud by providing false information on the application form regarding the illnesses they have, claims they have made, etc. As a sample, some policyholders provide misleading data about the diseases to receive extensive coverage.
Hiding a Pre-existing Condition
Since most individual health insurance policies have a two- to three-year waiting period for such conditions, the policyholder may choose to hide such information. The policyholder can achieve this by fiddling with the results of the pre-policy health examination.
Read more - Worried If a Pre-existing Disease Can Impact Your Health Insurance?
Presenting Fake Documents to Satisfy the Terms of the Insurance Policy
Fake documents are used to fulfill the terms of a policy because most insurance firms prefer to insure young, healthy individuals. An older applicant might not have their application rejected, but they could have to pay a larger premium. In this situation, people can submit fake documents to hide their age or a history of illnesses.
Fake Bills
The purpose of health insurance is to pay for any medical costs associated with a disease or procedure. The goal of buying an insurance policy is not to benefit from it. Therefore, it is fraudulent behaviour when someone sends forgeried bills, bills for which no expenses have been spent, or bills that have been exaggerated.
Buying Multiple Health Insurance Policies
Having multiple health insurance policies is not against the law. However, if a person has both a group policy and an individual health insurance policy, or both, then he or she must make sure that both the insurers are made aware of the other active policies. This is done to stop someone from filing several claims and ultimately profiting from them.
Read more - Is It Required To Buy Multiple Health Insurance Plans
Involving in a Fraud Ring
A fraud ring is formed when a consumer submits a false claim while working with agents, physicians, or other service providers. The insured may request that the doctor write fictitious prescriptions so that a claim can be made.
Fake Accident or False Disability Claims
A customer might fabricate an incident or disability in order to receive reimbursement for hospital and medical expenses.
The federal and state governments are prone to falling prey to false health insurance claims if social health insurance continues to increase. This could result in the development of a legal system to deal with such situations.
Fraud Prevention Measures
The government or the various insurance regulatory bodies have not yet properly documented or implemented any fraud management policies. Most insurance firms don't include an underwriting in their disclosures or paperwork that outlines what would happen to customers if they misdeclare or fail to declare important facts.
The following are the several insurance fraud-related legal actions that may be brought:
- Serious fraud allegations are always explicitly denied by the court if the perpetrator's culpability is shown.
- Fraud can also result in the termination of a policy, however this is less often in cases of abuse or misdeclaration.
- Because there isn't a full legal system in place to penalise the agents, there are just a few actions that may be taken against them.
Conclusion
Frauds performed by health insurance companies or their workers include the preparation of fraudulent claims by fake physicians, billing for products or services not delivered, inflated claims submission, billing provided for higher level of services, adjustments or revisions made in the submission of health insurance claims; changes in the patient's diagnosis, false documentation, and fraud committed by hospital or other healthcare product or service provider employees in omission.
Health insurance fraud and dishonesty are a serious moral hazard for the entire country's economy as well as the health insurance sector.
