Insurance Fraud is specifically classified as a crime in 48 out of 50 states (all except Oregon and Virginia).  19 states require mandatory insurer fraud plans. This requires companies to form programs to combat fraud and in some cases to develop investigation units to detect fraud.  41 states have fraud bureaus. These are law enforcement agencies where "investigators review fraud reports and begin the prosecution process." 

Section 1347 of Title 18 of the United States Code states that whoever attempts or carries out a "scheme or artifice" to "defraud a health care benefit program" will be "fined under this title or imprisoned not more than 10 years, or both." If this scheme results in bodily injury, the violator may be imprisoned up to 20 years, and if the scheme results in death the violator may by imprisoned for life

Following are some examples of real instances of insurance fraud that occurred in recent years:

• According to a report by a United States district court in Illinois, a psychiatrist who practiced as the Assistant Medical Director and Medical Director at a psychiatric facility in Illinois from 1998 through 2002 submitted claims to Medicare for psychiatric and psychotherapy services that he in fact never actually provided. He also "up-coded," or billed for more expensive services than those that were actually provided, many claims that he submitted to Medicare. In addition, he admitted patients that did not qualify for treatment so that he could submit bills for hospital care even though it was not medically necessary for those patients. Through these schemes, this psychiatrist was able to fraudulently obtain $875,881 in Medicare Reimbursements before his conviction in February of 2005.

• The Insurance Information Institute conducted a study on organized crime rings in New York City that have fraudulently exploited the personal injury protection policies of no-fault automobile insurance plans throughout the beginning of the 21st century. This has often been achieved when a "runner" is paid to organize an intentional collision, often including multiple passengers. These passengers then are taken to "medical mills," which are either real or nonexistent facilities that file claims for reimbursement for treatments that are unnecessary and often not received. This practice has caused the cost of claims in New York City to rise by 32.1% in 2006, as opposed to only a 4.5% increase in 1998.

• According to the Coalition Against Insurance Fraud, a former business executive from Chicago resorted to insurance fraud to pay off his debt of over $672,000. He set fire to his own home in order to collect insurance money on it. In order to disguise this act of arson, he trapped his ninety year old mother in the basement while the house was burning so that the fire would appear to be a suicide. He received about $600,000 in insurance money, but was eventually convicted on several charges and sentenced to 190 years in federal prison.