In June 2026, the U.S. Department of Justice charged 455 defendants in connection with more than $6.5 billion in alleged Medicaid Fraud, underscoring the scale of healthcare fraud throughout the industry.1 While most individual claims will not rise to this level, carriers have options to pursue those responsible for fraudulent activity.
In my last blog, Combatting Medical Fraud in Liability Claims, we discussed how to identify potential medical fraud and the importance of reporting suspicious activity to your Special Investigations Unit (SIU) or the appropriate authorities. Once suspected fraud has been identified and reported, the question becomes, what happens next?
One of the most effective tools available to carriers is pursuing civil action against the individuals or entities suspected of fraud. Unlike criminal proceedings, civil cases generally carry a lower burden of proof and may provide a longer window to pursue recovery, with statutes of limitation in some jurisdictions extending up to six years.
So, how does an insurance carrier move from identifying fraud to pursuing a successful civil action?
To help answer that and other questions, I spoke with Frank Goldstein, managing partner of The Goldstein Law Group. What follows is a synopsis of that conversation.
Rebecca: Frank, once suspected fraud is identified, how does a carrier determine the appropriate authority to contact?
Frank: Depending upon your state’s requirements, the carrier could/would contact:
- The state agency in charge of investigating and prosecuting insurance fraud
- A designated state attorney (if any), responsible for investigating and prosecuting insurance fraud
- The National Insurance Crime Bureau (NICB)
- The FBI, if there are possible federal implications
- The U.S. Attorney, if there are possible federal implications
How you determine who to contact depends upon:
- The amount of potential damages the insurer has sustained
- Whether the crimes implicate state and/or federal laws
- The type of insurance fraud committed
- The level of success the state / federal agency has had in investigating and prosecuting insurance fraud
- The historical willingness of the state / federal agency to take the specific type of insurance fraud case you are presenting
Rebecca: What information and evidence does a law firm need from the carrier to evaluate a potential fraud case?
Frank:
- The insurer’s goals (i.e. to stop the bleeding, to effectuate arrests / criminal prosecution, and/or to recover money
- The total damages incurred
- The precise evidence (evidence; not speculation) the insurer has and whether that evidence is direct evidence, circumstantial evidence, and most importantly, admissible evidence
- The history of the investigation and what the insurer knew or should have known at points in time so that the insurer can anticipate possible defenses to their affirmative litigation or the presented criminal case
- What investigation remains yet to be completed
Rebecca: Should the carrier continue to defend the underlying claim/lawsuit while the fraud claim is pending?
Frank:
- If it’s a tort suit / claim, depending upon the state laws, the duty to defend / indemnify is typically broader than the duty to provide coverage. So, in a tort suit, until coverage has been disclaimed the insurer should continue to defend their insured.
- If it’s a PIP suit or suit filed by the clinic / insured over medical bills, whether the insurer should pay those bills during the pendency of a fraud investigation or after they have sued the fraudsters depends on the type of fraud discovered and whether the fraud permeates every claim and bill.
Rebecca: What tools and strategies are used to fight the cases in civil court?
Frank:
- Experts who will explain the fraud committed in a way a jury easily understands, such as medical experts, billing experts, biomechanical engineers, accident reconstructionists, forensic phone inspection experts, etc.
- Demonstrative aides that present all claims submitted and results of those claims
- Charts setting forth the total damages paid out by the insurer as a result of the fraud
- Key deposition excerpts that support your fraud allegations and causes of action
- Key exemplars of any documents you allege were systematically fraudulent or that show evidence of the fraud committed
Rebecca: What is considered a “win”? What constitutes a successful outcome in a civil fraud case?
Frank:
- Prosecuting a cost-effective case (doing your best to make sure the expense of prosecuting a case civilly does not cost more than the amount the insurer is seeking back)
- Recovering money stolen by the fraudsters
- Obtaining a “no bill” agreement whereby the fraudsters agree never to bill the insurer again
- In a Bodily Injury / Uninsured Motorist setting, getting the tort suit dismissed with prejudice and getting a full release
- Impacting the crime ring in a way that you see no further claims / suits or same is mitigated
Always know who to contact if you suspect fraud. Gather the evidence, continue to defend the case until the appropriate time and continue the fight against the fraudsters.
We hope you find these tips helpful. If you have any questions, please feel free to reach out to your Gen Re claims executive for additional information.
