Insurance Fraud By The Insured

Dallas insurance attorneys can tell lots of stories where the insurance company is ripping off and taking advantage of it’s insureds. The Insurance Journal recently published a couple of stories where an insured was involved in ripping off the insurance company. The punishment for getting caught can be grim.
An ex-worker at a Houston home decor store has pleaded guilty in a $2 million insurance scam in which customers intentionally fell and then filed claims.
The case involved more than two dozen false claims approved by Johnson and settlements topping $2 million. Prosecutors say the money was shared by Johnson, the fake victims and others in the scheme.
Johnson’s sister, Natalie Jeng of Katy, was an adjuster for a business hired by Garden Ridge to also review the claims and approve payments. Jeng and two other women earlier pleaded guilty in the scam.
Sandra Johnson of Katy faces up to 20 years in prison. Prosecutors announced the former claims manager at a Garden Ridge Pottery store pleaded guilty to receiving kickbacks in the money laundering conspiracy.
In a follow up the Insurance Journal reported this:
An ex-claims worker at a Houston decor store has been sentenced to more than seven years in prison and must repay $2 million in an insurance scam.
Sandra Johnson of Katy was sentenced on June 15 in Houston. The 48-year-old Johnson in February pleaded guilty to receiving kickbacks in money laundering conspiracy involving customers and fake injury claims.
Johnson formerly was the claims manager at a Garden Ridge Pottery store. The case involved more than two dozen false claims approved by Johnson, who received kickbacks from the $2 million settlements.
Her sister, Natalie Jeng of Katy, was an adjuster for a business hired by Garden Ridge to also review claims and approve payments. Jeng also pleaded guilty in the scheme and awaits sentencing.
Garden Ridge Pottery is now known as At Home.
Chapter 35 of the Texas Penal Code deals with Insurance Fraud. Section 35.02 is long but worth knowing:
(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.
(c) An offense under Subsection (a) or (b) is:
(1) a Class C misdemeanor if the value of the claim is less than $50;
(2) a Class B misdemeanor if the value of the claim is $50 or more but less than $500;
(3) a Class A misdemeanor if the value of the claim is $500 or more but less than $1,500;
(4) a state jail felony if the value of the claim is $1,500 or more but less than $20,000;
(5) a felony of the third degree if the value of the claim is $20,000 or more but less than $100,000;
(6) a felony of the second degree if the value of the claim is $100,000 or more but less than $200,000; or (7) a felony of the first degree if:
(A) the value of the claim is $200,000 or more; or (B) an act committed in connection with the commission of the offense places a person at risk of death or serious bodily injury.
(d) An offense under Subsection (a-1) is a state jail felony.
(e) The court shall order a defendant convicted of an offense under this section to pay restitution, including court costs and attorney’s fees, to an affected insurer.
(f) If conduct that constitutes an offense under this section also constitutes an offense under any other law, the actor may be prosecuted under this section, the other law, or both.
(g) For purposes of this section, if the actor proves by a preponderance of the evidence that a portion of the claim for payment under an insurance policy resulted from a valid loss, injury, expense, or service covered by the policy, the value of the claim is equal to the difference between the total claim amount and the amount of the valid portion of the claim.
(h) If it is shown on the trial of an offense under this section that the actor submitted a bill for goods or services in support of a claim for payment under an insurance policy to the insurer issuing the policy, a rebuttable presumption exists that the actor caused the claim for payment to be prepared or presented.