An insurance company might be guilty of fraud if it fails to pass on the fee breaks it negotiates with its providers to its consumers.

• A. True
• B. False
• C. Sometimes
• D. Never

Answer: (A)

Concealing negotiated discounts from consumers is a form of price deception. When an insurer negotiates fee breaks with providers, those savings reduce the actual cost of services for the insured. If the insurer bills the consumer at the higher, undisclosed rate or otherwise hides the savings, it misleads the consumer about what they’re paying and benefits the insurer at the consumer’s expense. Fraud involves intentional deception or misrepresentation for gain, so intentionally not passing along these discounts can be considered fraudulent. In short, the scenario could be fraudulent, making the statement true.