Insurance is designed to protect individuals and businesses in Texas from losses arising from automobile theft, car accidents, work-related injuries, or property damage from fires, floods, and hurricanes. In addition, life insurance provides vital financial resources to families after a loved one’s death. Given that vast sums of money are often available for claims, insurance fraud has become increasingly common. Given the harsh penalties associated with this offense, it takes a skilled insurance fraud attorney to defend these charges. One issue that arises many times is a “parallel investigation.”
Benjamin Law Firm, conveniently located in El Paso, routinely defends clients against insurance fraud charges federally and throughout the state of Texas. If you have been accused of insurance fraud, our experienced criminal defense attorneys will aggressively fight for your rights. Founding attorney Brock Benjamin is a former prosecutor and Board Certified in Criminal Law by the Texas Board of Legal Specialization. When you consult us, you can rest assured that our experienced fraud attorneys will fight to protect your rights, your freedom, and your future.
What is insurance fraud?
Generally, insurance fraud is a type of white-collar crime that occurs when policyholders intentionally deceive insurance companies to obtain coverage for losses under false pretenses. While many may view insurance fraud as a “victimless crime,” fraud costs insurance companies billions of dollars each year, costs which are subsequently passed on to consumers in the form of higher premiums. It’s also a highly prosecuted offense.
In particular, insurance fraud involves a person or business knowingly:
- Presenting a false claim to an insurance company for payment
- Providing false, incomplete, or misleading information to an insurer concerning a claim
- Submitting a false application to an insurer to obtain an insurance policy
- Concealing information regarding an insurance application or claim
Insurance fraud is classified into two categories: soft fraud and hard fraud.
- Soft Fraud — Occurs when an individual submits a claim that overestimates the damages to maximize the value of a claim (e.g claiming a car was totaled in a minor fender bender)
- Hard Fraud — Involves fabricating a loss from an accident, injury, theft, or fire (arson) with the intent to defraud an insurance company
Common insurance fraud schemes in Texas include:
- Stolen Car — Car owners selling their vehicles to a body shop, or “chop shop” to be cut up for parts and then reporting the car stolen; others may sell a car overseas without any paperwork and then report it stolen
- Staged Car Accident — A driver and an accident “victim” staging an automobile collision to recover money for the auto damages
- Staged Home Fire — Homeowners hire individuals to set fire to a home or to break in and vandalize the home to create the impression that the homeowner has been victimized
- Storm Fraud — Homeowners seek to take advantage of insurers after hurricanes and floods by enhancing damage to their homes, or by submitting claims for damage that did not occur in order to obtain higher payouts
- Faked Death — An individual purchases a life insurance policy, names his or her spouse as a beneficiary, and then fakes his/her death so the spouse can obtain the death benefit
Depending on the circumstances, insurance fraud can result in both criminal and civil charges. This is where a parallel investigation comes in. There may be an insurance company investigation at the same, time as a criminal investigation. A criminal conviction can lead to imprisonment, significant fines, and a permanent criminal record while the potential consequences of a civil action include fines and other penalties, such as having to pay restitution. Further many insurance offenses trigger federal liabilities that may be prosecuted federally as well based on statutes in place.
Texas Penalties for Insurance Fraud
The penalties for an insurance fraud conviction are based on the amount or value of the claim. A fraudulent insurance claim of less than $50 is considered a “Class C” misdemeanor, which carries a $500 fine. On the other hand, a fraudulent insurance claim of $200,000 or more is considered a first-degree felony, punishable by 5-to-99 years in state prison and/or a fine of up to $10,000. Finally, providing false information on an insurance application is a state jail felony, punishable by 180 days to 2 years in state prison and/or a fine of up to $10,000.
Elements of Insurance Fraud
To prove insurance fraud, prosecutors must be able to demonstrate the following elements:
- The defendant knowingly made a false or misleading statement in an insurance claim
- The false statement was made or intended to be made, regarding a claim or a payment
- The statement was material to the case
At Benjamin Law Firm, we have the skills and resources necessary to mount an aggressive defense. As a former prosecutor, Brock has first-hand knowledge of the tactics prosecutors will use to gain a conviction, which gives you a distinct advantage.
While our objective is to win an acquittal, we will carefully weigh the strength of the state’s evidence against you. Depending on the circumstances, we may be able to arrange a plea bargain so that you receive a more lenient sentence. Above all, we will always put your best interests first and work tirelessly to protect your rights.
Types of Insurance Fraud in Texas
The most common types of insurance fraud include auto insurance fraud, homeowner’s insurance fraud, life insurance fraud, and Workers’ Compensation fraud, all of which are serious offenses.
Auto Insurance Fraud in Texas
Auto fraud costs insurance companies in the U.S millions of dollars each year. Common types of auto fraud in Texas include:
- Vehicle dumping — Insurers often refer to vehicle dumping as an “owner give-up” which can occur when a vehicle owner submerges a vehicle in a lake, drives it into the woods, or drives it to a remote place in the desert and reports the vehicle stolen.
- Reporting a sold vehicle stolen — Similar to vehicle dumping, this type of auto fraud occurs when a vehicle owner legitimately sells the vehicle and then reports it stolen. The vehicle owner gets paid by the buyer and then submits a claim for payment to the insurance company. As mentioned above, this might also involve the vehicle owner selling the vehicle to a chop shop and then reporting the vehicle stolen to obtain illegal payments from both the chop shop and the insurer.
- False registration — Vehicle owners who live in dangerous zip codes or park on streets in neighborhoods with high levels of auto theft typically pay higher insurance rates than those who live in safer neighborhoods. As such, some vehicle owners commit false registration auto insurance fraud in Texas by registering their vehicle to the address of a relative or friend who lives in a safer part of town to obtain cheaper insurance. While false registration may go undetected by the insurance company, a future claim may be denied due to fraud.
- False car insurance application — While vehicle owners can make bona fide mistakes on a car insurance application (e.g. reporting the vehicle as a 2018 model instead of a 2015 model), this type of auto fraud occurs when the individual submitting the car insurance application claims to be the primary driver when another member of the household, such as a spouse with a DUI, is the actual primary driver.
- Airbag installation fraud — A common type of insurance fraud, faulty airbag replacement is a form of car repair fraud. Because replacing an airbag is expensive, some low-quality repair shops will charge the vehicle owner or the insurance company for a full, legitimate airbag, only to stuff the device with packing material. This fraud can go undetected until the vehicle is involved in an accident. Under Texas law, airbag installation fraud is a Class A misdemeanor.
- Windshield replacement fraud — Another form of car repair fraud, windshield replacement fraud, occurs when a repair shop replaces a defective windshield with a new one but charges the vehicle owner for a high-quality windshield after installing a low-quality windshield. Windshield replacement fraud in Texas can occur in parking lots or at car washes when the scammer approaches the owner and offers to replace the windshield even though it’s fine.
Staged Car Accident Fraud in Texas
Staged car accidents are designed to recover compensation for vehicle damages and losses arising from personal injuries. Common types of staged car accidents include:
- Swoop and squat — In this scenario, 2 or 3 drivers work together to cause an accident. One driver pulls in front of another vehicle while a second driver pulls in front of the first vehicle and suddenly brakes, causing the driver behind to hit the middle vehicle. The last driver is typically at fault for hitting a vehicle from behind.
- Panic stop — Similar to the “swoop and squat,” a driver traveling with a spotter pulls in front of another vehicle. The spotter tells the driver when to brake so that the rear vehicle strikes the first vehicle from behind.
- Fake wave-in — This staged accident occurs when a driver is attempting to merge into a lane and another driver waves them in. As the driver moves into the lane, a rear driver accelerates and hits the vehicle. The rear driver tells police that the other driver was waved in, creating the impression of an improper lane change.
- Sideswipes — This version of car accident fraud typically occurs at an intersection with a double turn lane when one vehicle swerves into another, and it’s one driver’s word against the other when the police arrive on the accident scene.
- False witness scams — False witnesses are often involved in stage accidents working in cahoots with the scammer to back his or her version of the accident.
- Exaggerated damage/medical expense scams — One of the most common types of insurance fraud in Texas, this scam involves exaggerating damages or medical expenses to receive additional compensation from an insurer or claiming damage to a vehicle from a previous accident occurred in a more recent one. This scam also might involve exaggerating the amount of money paid to a medical center or a mechanic or misreporting wages to obtain more compensation for lost income.
Insurance Fraud Investigations
It is worth noting that insurance companies typically have special units that investigate auto accident fraud and also work with law enforcement to investigate claims if there is the slightest indication that an accident was staged. There are a variety of methods used to obtain evidence in an insurance fraud investigation to determine whether the claims are true or false, including:
- Surveillance of the supposed injury victim by private investigators to verify the claim
- Examination of medical reports and medical history
- Searching prior claims and/or accidents
- Insurance coverage analysis
- Identifying and interviewing witnesses
- Analysis of physician’s billing records
- Background check of the claimant
If the insurer believes you committed auto accident fraud, not only may your claim be denied, you may also face criminal charges. At the Benjamin Law Firm, we have the skills and experience to level the playing field when insurers, law enforcement, and prosecutors work together on auto accident fraud cases. We routinely collaborate with our own network of investigators and work strategically to refute any evidence that may be used against you.
Homeowners Insurance Fraud in Texas
Some homeowners overestimate values or make less-than-accurate estimates when submitting damage claims wrongly thinking that they are only seeking money that they’ve already paid to the insurer. Nonetheless, this form of fraud causes losses to insurers and affects other homeowners by way of higher insurance premiums. Common types of homeowners insurance fraud include:
- Overstating value — While determining the value of stolen possessions in a home invasion can be difficult, overstating the value of jewelry, artwork, family heirlooms or other personal property is considered insurance fraud under Texas law.
- Storm damage fraud — Because Texas is prone to hurricanes and floods, storm damage to homes is often overestimated by homeowners. They may also blame damage from non-covered events on storms or intentionally damage their own property to obtain a settlement.
- Staged fires — Homeowners may set fire to their own homes, or pay someone else to stage a fire when facing foreclosure, bankruptcy, or other financial distress. In addition to fraud, homeowners typically face arson charges as well, which can result in a significant prison sentence.
- Inflated claims to avoid deductibles — For homeowners experiencing financial difficulties covering the deductible to make repairs can be a challenge. At times, repairmen may suggest inflating the claim to avoid the expense, while homeowners are unaware of the legal ramifications. In this situation, both parties may face charges of homeowners insurance fraud.
- Orchestrated vandalism — Another common type of homeowners insurance fraud involves offering a portion of the proceeds from an inflated claim to someone who carries out an act of vandalism in exchange for a portion of the claim proceeds.
- Contractor kickbacks — This type of insurance fraud occurs when contractors offer homeowners a “kickback” from the insurance claim in return for using their repair services for repairs. Homeowners who agree to kickback schemes not only face insurance fraud charges but also run the risk of being taken advantage of by contractors who fail to make the needed repairs.
According to the Insurance Information Institute, fraudulent homeowner insurance claims cost insurers $30 billion per year, which forces insurance companies to raise premiums and rates. If you have been accused of homeowners insurance fraud in Texas, the best decision you can make to protect your rights and your future is to consult Benjamin Law Firm.
Life Insurance Fraud
Life insurance fraud in Texas is typically associated with a faked death, however, it can also involve application fraud, forgery, and phony policy fraud:
- Claims fraud — This type of fraud is often referred to as death fraud which occurs when a policyholder attempts to fake his or her death or the death of a loved one to collect a life insurance benefit. In an extreme (but rare) case, a beneficiary of a life insurance policy may murder the policyholder to obtain a payout.
- Application fraud — This involves an applicant knowingly providing false or inaccurate information to an insurer in the initial application and during a phone interview with a life insurance agent, including medical records and information from a medical exam. Insurance underwriters rely on this information to determine the applicant’s health rating. If the applicant lies, such as by lying about being a smoker when medical records indicate otherwise, the insurer may deny the application based on misrepresentation which could also result in criminal charges.
- Forgery — This form of insurance fraud does not involve the insured, but rather other parties unlawfully accessing the policy and changing the policyholder or beneficiaries. Forgery will not only result in claim denials but insurance fraud charges as well.
- Phony policy fraud — In this scenario, scammers impersonate insurance agents to sell fake policies to unsuspecting customers, requesting cash or direct payments.
Given the value of a typical policy, life insurance fraud will likely lead to felony charges, which makes having Benjamin Law Firm on your side crucial.
Workers’ Compensation Fraud
The Workers’ Compensation Insurance system in Texas is designed to protect employees and employers alike. Workers who sustain a work-related injury or illness receive benefits such as lost wages and medical expenses while employers are protected from personal injury lawsuits. Worker’s Compensation fraud occurs when employers, workers or medical providers attempt to take advantage of the system. The main types of Workers’ Compensation fraud include:
- Policy-related fraud — This occurs when a company that is purchasing Workers’ Compensation Insurance intentionally provides false information to an insurance company to obtain a lower premium. Examples of false information include inaccurately reporting the number of workers, and misclassifying employees as independent contractors.
- Claim-related fraud — This form of Workers’ Compensation fraud occurs when an employee files a false claim for a work-related injury or illness to unlawfully obtain benefits. This type of fraud may involve the worker claiming an offsite injury was work-related or exaggerating the severity of workplace injury to obtain a greater benefit.
- Medical provider fraud — This scheme may involve either a medical provider knowingly attempting to profit from the Workers’ Compensation system by performing unnecessary services on a claimant or medical specialists or pharmacies engaging in fraudulent billing or kickbacks.
Depending on the circumstances, Workers Compensation fraud in Texas may result in misdemeanor or felony charges.
Contact Our El Paso Insurance Fraud Defense Attorney
Brock Benjamin is highly regarded as a board-certified by the Texas Board of Legal Specialization in criminal law specialist. The Benjamin Law Firm has a white-collar crime defense practice. Although defendants are at a disadvantage when private companies and law enforcement collaborate on insurance fraud investigations and prosecution, we will leverage our skills and resources to refute the charges.
To gain a conviction, the prosecution must be able to prove beyond a reasonable doubt that you intentionally filed a false or inaccurate claim to deceive the insurer and obtain benefits for damages that were not incurred. A defense that arises many times is, was that intentional or did I make a mistake? Our legal team routinely collaborates with a network of private investigators and relies on the latest legal technology such as e-discovery to organize and examine the vast array of evidence — documents, data, bank records — typically involved in insurance fraud cases. In doing so, we will attempt to uncover errors in the prosecution’s case.
In addition, our insurance fraud attorneys will also work to determine whether law enforcement violated any of your civil rights, whether by conducting improper surveillance tactics or failing to obtain valid search warrants from the court. In such a situation, we may be able to have any evidence that was improperly seized suppressed.
Ultimately, the best line of defense against insurance fraud is to show that you did not intentionally submit a false claim or make a misrepresentation to the insurer to unlawfully obtain benefits. Similarly, it may be possible to show that you did not know, or were incapable of knowing, that you had engaged in insurance fraud.
Regardless of the type of insurance fraud charges you are facing, our experienced criminal defense attorneys will work tirelessly to protect your rights and preserve your freedom. We are well-versed in the applicable Texas fraud statutes and have a proven track record of achieving successful outcomes.
Nonetheless, insurance fraud is taken very seriously and the odds are stacked against you. When you become our client, we will explain all your rights, explore all options and mount an aggressive defense. The sooner you contact Benjamin Law Firm, the sooner we can begin protecting your freedom and your future. Contact our office today for an evaluation of your case. As always, please do not talk to anyone about the allegation except for an attorney. Doing so can have severe future consequences.