Insurance Fraud in Texas: Types, Penalties, and Common Cases

Insurance fraud is aggressively prosecuted in Texas, and it can arise in many forms—from staged car accidents and inflated medical claims to false property loss reports and fake beneficiary information. Under Texas Penal Code § 35.02, knowingly presenting false or misleading information to obtain insurance benefits is a criminal offense that can result in misdemeanor or felony charges, depending on the amount involved. In this post, we break down the different types of insurance fraud, the penalties you could face, and real-world examples of how these cases are charged. If you're under investigation or need legal guidance from a trusted attorney near you, acting quickly can be the key to protecting your freedom and your future.

Insurance Fraud in Texas: Types, Penalties, and Common Cases

Insurance fraud in Texas encompasses a wide range of deceptive practices aimed at unlawfully obtaining benefits from insurance policies. Understanding the various forms of insurance fraud, their legal implications, and potential defenses is crucial for anyone facing such charges.

Types of Insurance Fraud

1. False or Inflated Claims

Submitting claims for damages or losses that never occurred, or exaggerating the extent of legitimate claims, constitutes insurance fraud. Examples include:

Claiming pre-existing damages as new.
Overstating the value of stolen or damaged property.
Fabricating medical expenses.LegalClarity+1Varghese Summersett+1

2. Staged Accidents

Deliberately causing accidents to file fraudulent claims is a serious offense. Common schemes involve:Texas Statutes+13The Texas State Senate – HOME+13Texas Department of Insurance+13 Dallas Justice

The “Swoop and Squat”: A vehicle suddenly cuts in front of the victim's car and brakes, causing a rear-end collision.
The “Wave-In”: A driver waves another vehicle into traffic and then collides with it, denying the wave occurred.Wikipedia

3. Application Fraud

Providing false information on insurance applications to obtain coverage or lower premiums is illegal. This includes misrepresenting:Varghese Summersett

Driving history.
Health conditions.
Property details.Varghese Summersett

4. Unlicensed Insurance Sales

Selling insurance policies without proper licensing is a criminal act. Victims often discover the fraud only when attempting to file a claim and finding no coverage exists.

5. Agent and Provider Fraud

Insurance agents and healthcare providers can commit fraud by:

Embezzling premiums.
Billing for services not rendered.
Submitting duplicate claims.

Penalties for Insurance Fraud in Texas

Under Texas Penal Code § 35.02, penalties for insurance fraud vary based on the value of the fraudulent claim:

Class C Misdemeanor: Claims less than $100.
Class B Misdemeanor: $100 or more but less than $750.
Class A Misdemeanor: $750 or more but less than $2,500.
State Jail Felony: $2,500 or more but less than $30,000.
Third-Degree Felony: $30,000 or more but less than $150,000.
Second-Degree Felony: $150,000 or more but less than $300,000.
First-Degree Felony: $300,000 or more, or if the fraud places someone at risk of death or serious bodily injury.

Penalties can include imprisonment, fines, restitution, and probation.

Common Insurance Fraud Cases in Texas

Case 1: Rhonda Keisha Powell

In 2025, Powell was convicted of defrauding USAA Insurance by submitting a fake renters' insurance claim, obtaining over $58,000. She attempted to claim an additional $124,000 using falsified documents and internet-sourced photos. She was sentenced to five years in prison, with 45 days to be served behind bars and the remainder on probation. She was also ordered to repay the stolen funds. MySA

Case 2: William Neil “Doc” Gallagher

Gallagher, a radio host, was convicted in Dallas County for securities fraud, theft, and money laundering. He defrauded investors of over $10 million, targeting elderly listeners with promises of high returns. He was sentenced to 25 years in prison and ordered to pay restitution. Texas Department of Insurance

Legal Defenses Against Insurance Fraud Charges

Lack of Intent: Demonstrating that there was no intention to defraud.
Mistaken Identity: Arguing that the accused was not the person who committed the offense.
Valid Claim: Proving that the claim was legitimate and supported by accurate information.
Insufficient Evidence: Challenging the prosecution's evidence as inadequate to support a conviction.

Conclusion

Insurance fraud charges in Texas carry severe consequences, including potential imprisonment, fines, and a permanent criminal record. Understanding the nature of these offenses and the legal avenues available is essential for anyone facing such allegations.

If you or someone you know is facing insurance fraud charges, contact Walker Law Office at (713) 228-2611 or visit https://www.walkerlawhouston.com/contact/ to schedule a consultation and protect your rights.

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