I’m often mistaken for an attorney. I’m not (much to my mother’s lament) but the law still is something I understand, or at least the kind that seeks to tamp down insurance fraud.
All states have laws setting timeframes for when prosecutions must be launched. Most statutes of limitation start the clock ticking when the crime is committed. That’s fine for crimes such as murder, which entail a very specific act.
Complex financial crimes such as insurance fraud are different. Insurers may discover a suspected scam well after the money was stolen. Staged-crash and medical rings might get away with bogus injury claims for years before insurers can discover them, and piece together enough evidence to earn a prosecution. Some life insurance scams can also take years to unravel.
Obvious insurance crooks who’d normally be convicted can go free on what amounts to a technicality.
Colorado and Arkansas recently gave fraud fighters more time to build cases against larger-scale scammers.
Colorado’s three-year statute of limitations starts running when the insurance crime is discovered. The clock used to start ticking when the scheme happened.
Arkansas allows five years for staged crashes (though still three years for other insurance crimes). The statute begins when the last scam occurred.
There’s also a wrinkle — fraud fighters have six-10 years if they couldn’t reasonably have discovered the scam in time.
These states grasp that complex insurance scams take time to discover and dismantle. It makes little sense to treat insurance fraud like a home burglary, bank robbery or murder. These are single acts that occur in specific moments.
Fraud fighters and victimized policyholders alike get a fair shake from the wise new laws in Colorado and Arkansas. Other states should review their statutes of limitation and follow this smart lead.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.