Insurance Fraud is a Texas offense that is commonly prosecuted when an insurance company notifies local police that a claim filed with them appears to have been made with the intent to deceive them. You might also be charged with Insurance Fraud if you are involved in the process that leads up to a fraudulent claim being filed.

Sometimes we see Insurance Fraud charged under Section 71 of the Texas Penal Code as an Organized Criminal Activity when multiple people are involved. Learn more about the offense of Engaging in Organized Crime

A conviction for Insurance Fraud can carry severe punishments, and for this reason you should always hire a criminal defense attorney. It’s important to know what sorts of actions can constitute Insurance Fraud and to understand your defense options should you be charged. Being charged with Insurance Fraud can be a life-altering event, and we are serious about representing you and reaching the best possible outcome for you and your life. Learn more about the offense of Insurance Fraud below.

What is the current Texas law about Insurance Fraud?

The current Texas law defines the offense of Insurance Fraud in Penal Code Section §35.02 as follows:^[1]

(a) A person commits an offense if, with intent to defraud or deceive an insurer, the person, in support of a claim for payment under an insurance policy:

(1) prepares or causes to be prepared a statement that:

(A) the person knows contains false or misleading material information; and

(B) is presented to an insurer; or

(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.

(a-1) A person commits an offense if the person, with intent to defraud or deceive an insurer and in support of an application for an insurance policy:

(1) prepares or causes to be prepared a statement that:

(A) the person knows contains false or misleading material information; and

(B) is presented to an insurer; or

(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.

(b) A person commits an offense if, with intent to defraud or deceive an insurer, the person solicits, offers, pays, or receives a benefit in connection with the furnishing of goods or services for which a claim for payment is submitted under an insurance policy.

or, under subsection (2), a person:

(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.

or, under Section 35(b):

(b) A person commits an offense if, with intent to defraud or deceive an insurer, the person solicits, offers, pays, or receives a benefit in connection with the furnishing of goods or services for which a claim for payment is submitted under an insurance policy.

In general, this statute makes it a crime to provide a statement to an insurer that you know to be false or misleading and makes it a crime as well to be involved in a scheme by providing support for the fraudulent claim. An example of Insurance Fraud would be to deliberately damage one’s car by having a friend drive into another car and filing a claim with their insurance company stating that the other driver ran into their car. Both the person filing the claim, and the friend who drove the car could be charged with Insurance Fraud.

What is the range of punishment for Insurance Fraud?

The charge of Insurance Fraud is designed so that the punishment matches the monetary amount of the fraudulent claim that is submitted. For a claim under $2,500, the charge will be a Misdemeanor.^[2] For a claim between $2,500 and $30,000, the charge will be for a State Jail Felony.^[3] For a claim over $30,000, the charge can reach up to a First Degree Felony.^[4] The charge can automatically be escalated to a First Degree Felony if the act that led to the claim puts someone at the risk of death or serious bodily injury (such as the friend intentionally running into another car, which puts both drivers at risk of death or injury), even if the monetary amount of the claim doesn’t meet the required level for a felony.^[5]

Learn more about the range of punishments for Texas crimes

I didn’t know or intend the information I submitted to the insurer to be false or misleading. Can I still be charged?

Texas law requires that you intentionally submit information you know to be false to an insurer in order to be charged with the crime of Insurance Fraud. This means, first, that a prosecuting attorney must prove that you knew that the information was false or misleading. Then, secondly, the prosecutor must prove that you intentionally submitted that information for the purpose of deceiving the insurer. Proving what you intended can be a very high burden to prove, and if you have been charged with this crime and can show that it wasn’t your intent to deceive anyone, or that you didn’t know the information was false (for example, if your friend lied to you about what happened because they didn’t want to upset you and you had no reason to suspect they weren’t truthful) then we may be able to get your case dismissed.

What does material information mean?

Courts in Texas have to follow Texas Penal Code Section 35.015, defining a statement as “material”:

if the statement could have affected:

(1) the eligibility for coverage or amount of the payment on a claim for payment under an insurance policy; or

(2) the decision of an insurer whether to issue an insurance policy

This means that the statement must have been something that would have mattered to the insurance claim. For example, whether or not a person had been drinking when driving is material because the state of intoxication will affect whether or not the insurer will pay out for the incident. The color of the seats in the car is not material because that information would not affect how the insurance policy might be paid out.

I changed my mind after I prepared the information, but someone else submitted it. Can I still be charged?

Under the Insurance Fraud statute, the preparation of materials that end up being presented can still cause you to be charged. If the charge also includes a charge of organized criminal activity, it might be possible to present a defense of “renunciation“. Learn more about renunciation

What exactly is an Insurer?

An “Insurer” is defined in the Texas Insurance Code, Article 1.02 as:

an insurance company, reciprocal or interinsurance exchange, mutual insurance company, farm mutual insurance company, capital stock company, county mutual insurance company, Lloyd’s plan, a surplus lines insurer, or other legal entity engaged in the business of insurance in this state.

In short, any sort of business that offers monetary compensation for certain incidents where you pay a monthly fee (sometimes called a premium) will generally be considered an insurer. If you’re unsure if you’re dealing with an insurer, it’s important to consult an expert or attorney.

What sorts of communication fall under the term “statement”?

The state of Texas defines a statement to mean “an oral or written communication or a record or documented representation of fact made to an insurer. The term includes computer-generated information.”

In general, anything provide to an insurer, written, spoken or otherwise documented will probably be considered an information. It is likely that the law will generally allow most sorts of factual representations to be considered statements, so it’s important to make sure that all information that, if you have been charged with the offense, that you provide all the same information to your defense attorney.

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Legal References:

^1. Texas Penal Code §35.02^2. Texas Penal Code §35.02(c)(1),(2) and (3)^3. Texas Penal Code §35.02(c)(4)^4. Texas Penal Code §35.02(c)(5),(6) and (7)^5. Texas Penal Code §35.02(c)(7)