The Difference Between Civil and Criminal Insurance Fraud Cases

When the New Jersey Department of Banking and Insurance (DOBI) contacts you about possible insurance fraud, it is important to consult an attorney immediately before talking to or providing any information to the government. While you might assume you are only facing an administrative issue and a fine that can be resolved quickly, your exposure is so much more.

In New Jersey, a single act of fraud can be both a civil violation and a criminal offense. The civil case is handled by DOBI, which enforces the Insurance Fraud Prevention Act (IFPA) and can impose administrative penalties. Separately, the criminal case is handled by the Office of Insurance Fraud Prosecutor (OIFP), a division of the Office of the Attorney General, which can pursue criminal penalties, including prison time. 

Crucially, these two processes can be completely independent; a civil investigation can run concurrently with a criminal investigation, often without the person under investigation realizing that both are underway.

Why insurance fraud can be both a civil and criminal matter

Insurance fraud in New Jersey is handled on two independent legal tracks because state law created separate statutes and agencies to address it. A single action—such as filing a false claim or misrepresenting facts—can violate both laws simultaneously, which leads to dual-track exposure:

• Civil enforcement is overseen by DOBI. This agency enforces the IFPA (N.J.S.A. 17:33A) and imposes administrative penalties.
  
• Criminal prosecution is managed by OIFP. This office pursues charges under the Criminal Code (specifically N.J.S.A. 2C:21-4.6) that can result in prison time.

Importantly, resolving a civil case with DOBI does not protect you from criminal charges. The IFPA explicitly states that civil penalties do not preclude OIFP from pursuing criminal prosecution for the same conduct. This independence is the central reality that makes these cases uniquely serious.

What is civil insurance fraud?

The IFPA (N.J.S.A. 17:33A) governs civil insurance fraud enforcement in New Jersey. DOBI’s Bureau of Fraud Deterrence investigates alleged violations and can impose penalties administratively, without filing a criminal case.

The burden of proof in civil proceedings is preponderance of the evidence, meaning the agency must show only that a violation more likely than not occurred. That is a significantly lower bar than the criminal standard.

Civil penalties under N.J.S.A. 17:33A are tiered by the number of violations:

• First violation: Up to $5,000
• Second violation: Up to $10,000
• Each subsequent violation: Up to $15,000

In addition to fines, DOBI can order restitution and refer the matter to professional licensing authorities for suspension or revocation. For anyone working in insurance, finance, healthcare, or any licensed field, disciplinary action taken on your professional license can be more damaging than the financial penalties.

Civil enforcement reaches policyholders, insurance producers, adjusters, healthcare providers, and anyone else whose conduct touches an insurance transaction.

What is criminal insurance fraud?

Criminal insurance fraud is charged under N.J.S.A. 2C:21-4.6 and prosecuted by OIFP. Unlike civil enforcement, criminal prosecution requires proof beyond a reasonable doubt, the highest standard in the legal system, and requires the state to establish that the defendant acted knowingly.

Criminal penalties are degree-based:

• Fourth degree (misrepresenting a vehicle’s principal location or garaging address to obtain out-of-state insurance): Up to 18 months in prison and fines up to $10,000
• Third degree (a single act of insurance fraud under the general provision): Up to 5 years in prison and fines up to $15,000
• Second degree (five or more separate acts totaling at least $1,000): Up to 10 years in prison and fines up to $150,000

Each act constitutes a separate offense. Beyond incarceration and fines, a criminal conviction carries collateral consequences that civil penalties do not: a permanent criminal record, loss of professional licenses, and lasting damage to employment prospects.

Differences between civil and criminal insurance fraud cases at a glance

	Civil (DOBI / N.J.S.A. 17:33A)	Criminal (OIFP / N.J.S.A. 2C:21-4.6)
Agency	Dep’t of Banking & Insurance	Office of Insurance Fraud Prosecutor
Burden of proof	Preponderance of evidence	Beyond a reasonable doubt
Intent required	Yes (preponderance of evidence)	Yes (beyond a reasonable doubt)
Consequences	Fines, restitution, license action	Imprisonment, criminal record, fines, loss of professional licenses
Can run simultaneously	Yes	Yes

Because fraud is a crime of intent, both civil and criminal statutes require proof that the person knew their statement or action was false. The main difference is the standard of proof required to win the case.

In civil cases, DOBI only needs to show that a violation was “more likely than not” (preponderance of the evidence). In criminal cases, OIFP must prove knowledge “beyond a reasonable doubt.” This higher standard is usually the primary focus of a criminal defense strategy.

How civil investigations turn into criminal prosecutions

The New Jersey IFPA legally requires the Department of Banking & Insurance to refer any insurance matter involving potential criminal activity to the Office of the Attorney General, OIFP. This means a DOBI investigation is never truly separate from the criminal side. Instead, it acts as a direct route to criminal charges.

This often unfolds when an insurance company’s internal fraud team flags a claim and reports it to DOBI. DOBI begins an administrative investigation, and if the facts suggest intentional wrongdoing, the case is sent to OIFP. 

Once OIFP gets involved, they launch their own independent criminal investigation, which includes issuing legal demands for documents and conducting surveillance.

Several factors make it more likely for a civil case to escalate into a criminal prosecution:

• A pattern of similar actions across multiple claims or transactions
• High dollar amounts suggesting deliberate and repeated fraud
• Clear proof of intent, such as communications or records showing the person knew the information was false
• Multiple people are involved in a coordinated scheme

Warning signs that your case may escalate to criminal charges

Certain developments indicate that a matter has moved, or is moving, beyond administrative enforcement:

• A subpoena rather than a voluntary records request. DOBI’s administrative subpoena power under N.J.S.A. 17:33A-10 is used when the agency is building a formal case, not conducting routine follow-up.
• OIFP contact following an open DOBI investigation. If you hear from OIFP after DOBI has already been in contact, the referral has likely already occurred.
• Target identification. A target letter or investigator statement indicating you are a subject of the investigation, not a witness.
• Coordinated agency contact. Simultaneous or sequential contact from DOBI, OIFP, and law enforcement signals a multi-agency investigation.

Any of these developments warrants immediate legal representation.

Defending against criminal insurance fraud allegations

Because criminal insurance fraud under N.J.S.A. 2C:21-4.6 requires proof of knowing conduct, the defense often focuses on components like:

• Lack of intent: Demonstrating that the false statement resulted from an error, misunderstanding, or reliance on another party, not a deliberate decision to deceive. This is the most common and often most effective defense, because the knowing standard is what separates a civil violation from a criminal charge.
• Challenging the civil-to-criminal referral: Examining whether the referral from DOBI to OIFP followed the proper statutory basis and whether the evidence supporting escalation was sufficient.
• Contesting materiality: N.J.S.A. 2C:21-4.6 requires that the false statement involve a material fact. A statement that was immaterial to the insurer’s decision may not satisfy the statute.
• Good faith reliance: Showing that the person acted on guidance from an insurance agent, adjuster, or other professional and had reasonable grounds to believe the information was accurate.

The strength of any defense depends on the specific facts and, critically, when legal representation was secured.

What to do if you are contacted by DOBI or OIFP

The most important thing to understand is that responding to a civil investigation without legal counsel can expose you to criminal liability. Statements made in DOBI proceedings can be used in subsequent criminal proceedings. Cooperation with one agency does not protect you from the other. It is important that you:

• Do not respond to any inquiry (civil or criminal) without an attorney present. This applies to voluntary interviews, records requests, requests for verbal or written statements, and formal subpoenas.
• Do not destroy or alter any documents. Once you are aware of an investigation, the destruction of documents can result in obstruction charges, separate from and in addition to the underlying fraud allegation.
• Contact a criminal defense attorney before engaging with either agency. An attorney retained early can assess which track the investigation is on, respond to civil inquiries in a way that protects criminal rights, and engage with investigators before charging decisions are made.
• Treat a DOBI notice as a potential criminal matter until you know otherwise. The civil and criminal tracks are connected by statute. A matter that appears administrative may already have a parallel criminal component.

Consult with an insurance fraud attorney

Civil and criminal insurance fraud proceedings move on separate timelines, but they share a common starting point: the conduct DOBI is already reviewing. At Dughi, Hewit & Domalewski, P.C., our criminal defense attorneys represent clients across both tracks, from the first DOBI contact through OIFP criminal investigation and, when necessary, trial.

Schedule your consultation with our team today.