What is insurance fraud in North Carolina?

The term “insurance fraud” generally refers to a person or company making false or fraudulent statements to an insurer with the intent to obtain some financial benefit.  Common examples of insurance fraud include exaggerating the value of claims submitted to insurers or billing for services that were never performed.  Insurance fraud usually occurs in one of two instances: first, when initially applying for an insurance policy.  Second, when filing a claim for a reimbursement.  False statements made in either setting can trigger an insurance fraud investigation.

In North Carolina, there are two main crimes relating to insurance fraud.  The first is Presenting a False Statement to Procure Benefit of an Insurance Policy, under N.C.G.S. § 58-2-161, which is a felony.  This statute makes it a crime to knowingly submit false or misleading information to an insurer with the intent to defraud.

The second crime relating to insurance fraud is Obtaining Property by False Pretenses, under N.C.G.S. § 14-100, also a felony.  This statute makes it a crime to make false or fraudulent statements to an insurer with the intent to obtain money, property, services, or any other thing of value.

The North Carolina Department of Insurance can also charge you with aiding and abetting insurance fraud if they believe you have assisted someone else—like a spouse, friend, or business partner—in submitting false statements to an insurer.

Who investigates insurance fraud in North Carolina?

The North Carolina Department of Insurance (NCDOI) investigates suspected insurance fraud in North Carolina.  The investigators at the Department of Insurance are law enforcement officers with statewide jurisdiction to investigate insurance fraud, execute search warrants, make arrests, and file criminal charges. 

In some cases, the N.C. Department of Insurance may work alongside federal law enforcement agencies to investigate insurance fraud.  These federal agencies may include the U.S. Department of Justice, the FBI, the IRS, and the U.S. Small Business Administration.

Is insurance fraud common in North Carolina?

Yes, insurance fraud is common in North Carolina.  In 2023 alone, the Department of Insurance made over 500 arrests for insurance fraud.  The Department of Insurance made several hundred more arrests in 2024.

The following are a few real case examples of insurance fraud in North Carolina.

State v. Shepard, (2021): Carteret County man convicted of insurance fraud based on false claims made to GEICO.  He was sentenced to several years in prison.

State v. Ray, (2020): Harnett County man sentenced to a maximum of 21 months in prison for insurance fraud based on false bills (and claims for reimbursements) submitted to homeowner’s insurance company.

State v. Koke, (2019): New Hanover County man convicted of insurance fraud based on lying about his criminal record when applying for a commercial auto insurance policy.  He was sentenced to a maximum of about 2 years in prison.

State v. Hinton, (2024): Woman from Edgecomb County convicted of insurance fraud and sentenced to a maximum of 1 year and 9 months in state prison.

Punishment and Penalties for Insurance Fraud in North Carolina

North Carolina has serious penalties for insurance fraud.  The punishment mainly depends on the value of the money or services involved in the offense.  If the value of the money or services involved were under $100,000, then the maximum possible punishment is 3.5 years in state prison.  If the value of the money or services involved were above $100,000, then the maximum possible punishment is 19 years in state prison.

Regardless of how much money was involved, someone convicted of insurance fraud in North Carolina will likely be required to pay restitution to the victim of the offense.  The victim will be the insurer.

In addition to the criminal penalties imposed by the court system, there are several additional consequences associated with having a felony conviction on your record.  This is especially bad for people who are professionally licensed, such as nurses and other medical professionals, real estate agents, accountants/CPAs, and lawyers.  These licensed professionals may risk losing their licenses to practice in the event of a felony conviction for insurance fraud.

For more information on hiring a criminal defense attorney for licensed professionals, see this page.

Federal Charges for Insurance Fraud in North Carolina

Insurance fraud at the state level can also give rise to potential federal charges for wire fraud.  (For more information on wire fraud, see this page).

Federal prosecutors at the U.S. Department of Justice or the U.S. Attorney’s Office often work alongside investigators at the N.C. Department of Insurance and collaborate on investigations.  Sometimes, cases may even begin as state-level investigations and then graduate to federal cases.

The federal mail fraud and wire fraud statutes broadly criminalize any “scheme or artifice to defraud” another person or business out of money or property. The mail and wire fraud statutes represent some of the federal government’s primary tools used to prosecute a broad range and wide category of suspected frauds, including insurance fraud. 

Generally speaking, for the government to prove someone guilty of mail or wire fraud, the government has to prove that the defendant knowingly made a false statement to another person or business with the intent to obtain money or property and that mail system was involved or the interstate “wires” were used. “Wires” includes almost any electronic means of communication, including email, text message, a bank transfer, and more. 

Mail and wire fraud crimes are punishable by up to 20 years in federal prison and hefty fines.

What are common defenses to insurance fraud in North Carolina?

There are many defenses to insurance fraud in North Carolina.  Whether these defenses apply will depend heavily on the particular facts of your case.  Below are some common defenses.

Lack of intent.  Criminal defense attorneys can argue that, even if you made a false statement to an insurance company, you did not actually intend to mislead or deceive anybody.  People make incorrect statements in business transactions every day around the world.  But just because someone made an error does not mean they harbored an actual intent to defraud the other party.

Truth of the statements.  Another common defense to insurance fraud is that the statements that are allegedly false are in fact true.  

Lack of knowledge.  Another common defense to insurance fraud is that you were unaware that the person who made the false statements was acting fraudulently.  For example, if you own a business that has property damage from a natural disaster, your colleague or business partner might be the one who fills out the paperwork and submits the claim to the insurer.  If you were unaware of the false statements on the forms, and you did not assist the partner, you are not guilty of insurance fraud.

There are many other defenses to insurance fraud that your North Carolina insurance fraud attorney can discuss with you depending on the facts of your case.

What is the statute of limitations for insurance fraud in North Carolina?

Insurance fraud in North Carolina is a felony.  There is no statute of limitations on felonies in North Carolina, meaning that the Department of Insurance can bring charges several years after the illegal conduct took place.

Final thoughts.

As with any felony crime, insurance fraud is a serious matter.  If you believe you are under investigation for insurance fraud, it is critical that you seek the advice of a North Carolina insurance fraud attorney to protect your rights and your freedom.  It is especially important to hire an attorney as early as possible in order to benefit from the best possible outcome.  

About the Author

John J. Dowling III is a white collar criminal defense attorney based in Charlotte, North Carolina who handles white collar cases nationwide.  He routinely represents people charged with crimes in state and federal court.