Insurance fraud is any deliberate deception committed against or by an insurance company, insurance agent, or consumer for the purpose of unjustified financial gain. This occurs during the process of buying, using, selling, and underwriting insurance.
The Insurance Fraud Prevention Division is a certified law enforcement division whose duties and responsibilities are to conduct investigations independent of, or in conjunction with, law enforcement agencies when the Division has cause to believe that an act of insurance fraud has been or is currently being, committed.
Mandatory Reporting of Suspected Fraud (Insurance Companies and Producers) - Neb. Rev. Stat. § 44-393
Insurance Fraud Act
- 44-6601 - Act
- 44-6602 - Purpose
- 44-6603 - Terms, defined
- 44-6604 - Fraudulent Insurance Acts; enumerated
- 44-6605 - Immunity from Civil Liability
- 44-6606 - Insurance Fraud Prevention Division; Powers and Duties; Public Inspection; Limitations; Fee
- 44-6607 - Civil Penalty; Costs; Section, How Construed
- 44-6608 - Act, How Construed.
Crimes and Punishments, Article 6, Offenses Involving Fraud
- 28-631 - Fraudulent Insurance Act; Penalties
Mission
The mission of the Insurance Fraud Prevention Division is to confront the problem of insurance fraud in Nebraska by prevention, investigation, and prosecution of fraudulent insurance acts in an effort to reduce the amount of premium dollars used to pay fraudulent claims.
Division Creation
The purpose of the Insurance Fraud Act is to confront the problem of insurance fraud in Nebraska by:
- Detecting insurance fraud
- Developing fraud prevention programs
- Investigating complaints of suspicious insurance activity
- Seeking prosecution of individuals committing insurance fraud
- Obtaining restitution of fraudulently obtained benefits
The ultimate goal is to reduce the amount of premium dollars used to pay fraudulent claims.
While the Nebraska Department of Insurance does not require the filing of a fraud plan, it recognizes the importance of reducing operational risk through fraud awareness. As such, the Department would like to provide some guidance to carriers who wish to strengthen their fraud controls by creating and implementing an internal fraud policy.
During a market conduct and/or a financial examination, the Nebraska Department of Insurance may request a carrier to provide a summary of its anti-fraud activities and the corresponding results. Pursuant to Neb. Rev. Stat. § 44-5906 (8)(a), an anti-fraud summary provided to the Department in the course of an examination conducted under the Insurers Examination Act shall be given confidential treatment by the Department shall not be subject to subpoena, shall not be made public by any person except to the extent provided in Neb. Rev. Stat. § 44-5906(7), and shall not be public records subject to disclosure under public records request outlined in Neb. Rev. Stat. § 84-712 to 84-712.09.
Anti-fraud policies outline specific procedures appropriate to the lines of insurance the carrier writes in Nebraska, with the following suggestions, at a minimum:
- Preventing, detecting, and investigating all forms of insurance fraud covering insurance that the carrier is authorized to write in Nebraska, including, but not limited to:
- Fraud involving the carrier's employees or agents;
- Claims fraud; and
- Security of the carrier's data processing systems
- Fraud involving the carrier's employees or agents;
- Educating appropriate employees on fraud prevention and detection, the Nebraska Mandatory Fraud Reporting Statute, Neb. Rev. Stat. § 44-393, and the carrier's anti-fraud policy.
- Informing policyholders about insurance fraud and how to prevent it
- Encouraging the reporting of suspected incidents of insurance fraud to the Insurance Fraud Prevention Division of the Nebraska Department of Insurance.
- Encouraging legal pursuit of restitution for financial loss caused by insurance fraud where appropriate.
- Designating or identifying the person responsible for oversight and implementation of the carrier's anti-fraud policy.
Nebraska Department of Insurance
Insurance Fraud Prevention Division
1526 K Street, Suite 200
Lincoln, NE 68509-5087
Telephone: 402-471-2201
Facsimile: 402-742-8313
Email: DOI.FraudPrevention@Nebraska.gov
Kimberly P. Church, SCLA, CIFI, AHFI
Fraud Division Chief
Telephone: 402-471-4999 & 402-471-8334
Email: Kimberly.Church@Nebraska.gov
John McGahan
Fraud Investigator
Telephone: 402-471-1842
Email: John.McGahan@Nebraska.gov
Charles P. Starr, SCLA, CIFI, AHFI
Fraud Investigator
Telephone: 402-471-8334
Email: Charles.Starr@Nebraska.gov
Robert Branch Jr.
Fraud Investigator
Telephone: 402-471-8333
Email: Robert.Branch@Nebraska.gov
Connie C. Drake
Administrative Assistant
Telephone: 402-471-8336
Email: Connie.Drake@Nebraska.gov
Videos
Fraud Court Action
In 2024, the Insurance Fraud Prevention Division received Suspected Fraud Referrals involving suspected violations of the Fraudulent Insurance Act 28-631 in 60 of the 93 Nebraska counties. Throughout the year, thirty-two arrest affidavits were submitted to the various county attorneys with a 100% felony filing rate. Below are samples of a few of those cases.
Lancaster County District Court,
Case D-CR24-997
State v. Jeffrey Smith
Fraud Type: Falsified/Forged Documents
Jeffrey Smith was employed as a claims examiner with authority to pay claim benefits to policy holders. During an internal review of claims, the insurer identified several claims in which Mr. Smith, was creating claim payments for his own policy. Upon further review it was discovered Mr. Smith had created $935,830 in unsupported claims against his policy and issued himself $885,230 in payments in the previous seven months. An additional $50,600 in payments were scheduled to be paid but were stopped upon discovery. Mr. Smith was subsequently terminated, and a suspected fraud referral was submitted to the Insurance Fraud Prevention Division.
During an interview Jeffrey Smith admitted to the theft but denied having access to the funds. A warrant was issued for Jeffery Smith in Lancaster County for Theft by Deception over $5,000; a Class 2A felony. Upon arrest, a 10% bond was set at $1,000,000.00.
The Lancaster County Attorney offered a plea deal for an amended count of Attempted Theft By Deception; a Class 3A Felony. Mr. Smith accepted the plea deal and pled No Contest. Mr. Smith was sentenced to 3 Years incarceration, with 308 days credit for time served; and an additional 18-Months Post Release Supervision.
Douglas County District Court,
Case D-CR22-3797
State v. Jordan Thompson
Fraud Type: Falsified/Forged Documents
Claimant Jordan Thompson was involved in an auto accident with the insured being at fault. During the claim, Mr. Thompson submitted medical records and lost wage documents and was paid $19,160.00 for his bodily injury claim. During the grace period, Mr. Thompson submitted additional documentation for wage loss, and out of pocket expenses, totaling $40,818.09. Further investigation revealed issues with the documentation and additional verification was requested, However Mr. Thompson stopped all communication and the claim was closed. A suspected fraud referral was submitted to the Insurance Fraud Prevention Division.
During the investigation, investigators confirmed all supporting documents submitted by Mr. Thompson, including documents submitted prior to the settlement were fabricated. As a result of Mr. Thompson’s misrepresentation, the insurer suffered an actual loss of $19,160 and a potential loss of $40,818.09. A warrant was issued for Jordan Thompson in Douglas County for one count of Fraudulent Insurance Act; a Class 3 Felony and one count Theft by Deception; a Class 2A Felony.
The Douglas County Attorney offered a plea deal to a reduced charge of one count of fraudulent insurance act. Mr. Thompson accepted the plea deal and pled no contest to a Class 3 Felony. Mr. Thompson was sentenced to five-years probation, fees, court costs and $19,160 in restitution.
Phelps County Court,
Case 24-31
State v. Tyler Peterson
Fraud Type: Past Posting
Tyler Peterson incepted an auto policy with liability only coverage. Two months later the policy lapsed for non-payment of premium. The policy was out of force for twelve days then reinstated by phone. During the recorded call, the insurance representative read Mr. Peterson a “statement of no loss, to which he affirmed the vehicle had not been in an accident during the lapse in coverage. Within minutes of reinstatement a claim was filed by Mr. Peterson. In a recorded statement Mr. Peterson stated the accident occurred after the policy was reinstated. The same day, the owner of the claimant vehicle filed a liability claim providing a time of occurrence that would have been prior to the policy being reinstated.
The claim investigation concluded through a police report the loss occurred while the policy was not in force and the liability claim was denied. As a result of Mr. Peterson’s misrepresentations, the insurer suffered a potential loss of $2,660.93 for the claimant’s medical costs incurred by Medicare and the claimant suffered an actual loss of approximately $3,167 for the total loss value of her vehicle. A suspected fraud referral was submitted to the Insurance Fraud Prevention Division.
During an interview with the investigator Mr. Peterson acknowledged he had in fact reinstated the policy after the accident. A warrant was issued for Tyler Peterson in Phelps County for one count of Fraudulent Insurance Act; a Class 4 Felony.
The Phelps County Attorney offered a plea deal to a reduced charge of Fraudulent Insurance Act. Mr. Peterson accepted the plea deal and pled No Contest to one count of Fraudulent Insurance Act; a Class 1 Misdemeanor. Mr. Peterson was sentenced to nine months of probation, Fees; Fine and Court Costs.
