Many people think it's just harmless fudging. But soft fraud is a crime, and raises everyone's insurance costs. Fraud is Big Insurance fraud is hard to measure because so much goes undetected, and complete research has yet to be done. More than one third of people hurt in auto accidents exaggerate their injuries. Nearly one third of doctors exaggerate the severity of a patient's illness to help the patient avoid early discharge from a hospital, according to the Journal of the American Medical Association.
Insurers sometimes back off.
Most insurance companies take a tough stand against fraud, but some companies unwittingly encourage fraud by paying suspicious claims too easily. These companies believe it's cheaper to pay some smaller suspect claims than fight in court, and a quick payoff also may avoid multimillion-dollar lawsuits for bad faith. Health system is an easy target. America's health care system is huge and vulnerable. The sheer number of patients and treatments plus complexity of billing attract cons who are skilled at looting our overworked health care system.