June 11, 2025 • 20 mins
Ever wondered how Texas fights insurance fraud? In this eye-opening conversation, Rick Watson, Chief Prosecutor and Fraud Counsel for the Texas Department of Insurance's Fraud Unit, pulls back the curtain on a specialized law enforcement agency most Texans never knew existed.
Watson reveals the remarkable evolution of TDI's Fraud Unit since its 1991 founding, highlighting its unique embedded prosecutor program that places specialized attorneys in district attorney offices across Texas. This innovative approach—the only one of its kind in the nation—has yielded impressive results: over $96.7 million in court-ordered restitution over the past five years. The unit handles everything from consumers filing false vehicle theft claims to insurance professionals misappropriating premium payments, with cases ranging from $2,500 misrepresentations to multi-million dollar schemes.
Perhaps most surprising is Watson's revelation that many young people don't even consider insurance fraud wrong. "A lot of them said no," Watson explains when describing a study where millennials were asked if lying to an insurance company was criminal. "The majority didn't think it would even be a crime." This perception gap partially explains the growing caseload—from 14,180 referrals in 2020 to over 20,000 in 2024. Despite these numbers, only about 100 cases annually result in criminal charges, as prosecutors must prove actions were "knowingly and intentionally" fraudulent rather than honest mistakes.
For insurance professionals, the message couldn't be clearer: maintain honesty with consumers, stay current on continuing education, and report suspected fraud immediately. Under Texas law, anyone suspecting insurance fraud must report it—but they receive legal immunity from civil liability when doing so. Whether you're a licensed professional or concerned consumer, understanding how fraud impacts the industry benefits everyone.
Curious about reporting suspected fraud? Visit tditexas.gov or call 1-800-252-3439 to connect with TDI's Fraud Unit.
_______________________________________________
Rick Watson is the Chief Prosecutor and Fraud Counsel of the Texas Department of Insurance, Fraud Unit. Rick is responsible for supervising embedded TDI prosecutors across the state and acts as the Fraud Counsel for the Fraud Unit. Rick has over two decades of prosecutorial experience including being a prosecutor in the Harris County District Attorney’s Office, Bexar County District Attorney’s Office, San Diego County District Attorney’s Office, and the Dallas County Criminal District Attorney’s Office. Rick attended Southern Methodist University graduating with a Juris Doctorate and a master’s degree in economics in 1998.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
This podcast is for educational purposes only, does
not constitute legal advice anddoes not create an
attorney-client relationship.
If you need legal assistanceabout a legal problem, contact
an attorney.
Speaker 2 (00:13):
Welcome to another episode of Know your Regulator,
the podcast that inspires you toengage.
I am your host, Simone Murphy,and co-hosting with me today is
Senior Associate from theBertolino Law Firm, LaWanna
Acklin.
Hey, LaWanna.
Speaker 1 (00:28):
Hello there.
Speaker 2 (00:29):
How are you?
I am doing good.
I am really excited tointroduce this episode's topic.
Today's discussion is all aboutthe Texas Department of
Insurance's fraud unit, what itdoes, how it works and what
license holders need to know tostay compliant.
Speaker 1 (00:48):
Absolutely.
And today we have a veryspecial guest.
We have Rick Watson.
He is the Chief Prosecutor andFraud Counsel for the Texas
Department of Insurance's FraudIntake Unit.
And, rick, thank you forjoining us today.
How are you?
Speaker 3 (01:06):
Great.
Thank you, Simone and Luana,for having me on.
I'm really happy to be here.
Speaker 2 (01:12):
Absolutely.
We are excited to have you.
To start off, if you could justgive us a kind of brief
overview of TDI's Fraud Unit,how did this program get started
and how does it function today?
Speaker 3 (01:26):
Yeah well, the insurance fraud unit started
back in 1991.
At that point it was a lawenforcement agency that was
entered into the regulatorydepartment of insurance.
At that point they hadinvestigators that would
investigate fraud, referrals,and then, beginning in 2000,
they started a program where wewould have prosecutors embedded
(01:48):
into district attorney's offices, which started in Dallas.
That was the first one, andthen TDI.
Our purpose is to investigatereferrals and insurance fraud
having to do with any fraudhaving to do with the insurance
business.
Speaker 1 (02:05):
Wow and Rick, if you can just talk to us about your
role as chief prosecutor and howthe program has evolved over
the last three decades.
Speaker 3 (02:21):
Well as the chief prosecutor, I supervise the
embedded prosecutors and theembedded prosecutors are
prosecutors that are working inspecific counties.
We have a prosecutor in BexarCounty, one in Harris County
there's typically two, but wehave just one there right now.
I work the Travis County casesthat come into that office and
(02:42):
we have a prosecutor in TarrantCounty and one in Dallas County
and what that means is being anembedded prosecutor.
What we do is we're sworn inlike any other district attorney
, assisted district attorney,but we only work on specifically
for the Department of Insurancecases, but also as the
Department of Insurance.
We also help other counties aswell.
I mean over.
(03:03):
I think we've helped outmultiple counties.
The US Attorney's Office we'vehelped them out with.
You know subject matterexpertise and insurance fraud.
We've also worked in CollinCounty, kendall County, swisher
County and, like I said, the USAttorney's Office providing
expertise in Texas law forinsurance fraud.
Speaker 1 (03:32):
Oh wow, that is great .
Specifically, what are some ofthe milestones or achievements
that the Fraud Intake Unitthey've seen since its inception
?
Speaker 3 (03:38):
Well, you know, the Fraud Unit, like I said, has
been started since 1991.
And it is consistently grown asfar as the amount of referrals
that we get.
And since we've started addedprosecutors, we've went from one
prosecutor up to six.
It's fluctuated some At onepoint there was only went back
to one and that was only me, andthen we that was during COVID
(04:01):
We've had some leave but we'reback up to six now and we're
trying to hire another one ontop of that for Harris County.
But the biggest milestone isjust the amount of cases or
referrals that we can work andthat we can look at.
I mean, every year it just getsexponentially more of the
(04:22):
referrals that we get.
And so the way it's set up isunder 701 of the insurance code,
the commissioner is givencertain rights and as part of
that code is that anyone whosuspects insurance fraud has to
report that to our department.
It's reviewed by a couple ofanalysts, A law enforcement
(04:42):
person looks at it and then ifthey feel like we should go
further, it goes to a supervisorwho then looks at it and then
if they feel like we should gofurther, it goes to a supervisor
who then looks at it and thenif it warrants being
investigated by an investigator,that is done.
And then if it's appropriate tosend it on to a district
attorney's office, then we dothat as well.
And some of the numbers back inthe fiscal year 2020, we
(05:03):
received 14,180 referrals.
That one year, yeah.
And in this past fiscal year of2024, we received 20,356.
So, yeah, every single one ofthose is reviewed by an analyst
and then the appropriate onesare moved on.
(05:25):
And another milestone is overthe last five years, we've
collected $96.7 million has beencourt-ordered in restitution
based on the cases that havebeen prosecuted through our
investigator or our prosecutorsand through the US Attorney's
Office, with our help.
Speaker 1 (05:43):
Wow, that's huge $97 million.
Speaker 3 (05:46):
Yes, $96.7.
It's a lot of fraud going on.
Speaker 2 (05:50):
Yeah.
Speaker 3 (05:51):
Yes.
Speaker 2 (05:52):
I kind of want to ask , to piggyback off that answer,
this uptick in the referrals.
Do you think that that is?
Do you have an idea of why thatmight be?
Speaker 3 (06:16):
Do you think that people are just a little bit
more aware of what fraudulentactivity looks like and how to
report that?
Well, I think there's.
You know, there's always goingto be the growth of the
population of Texas.
That's, that's huge.
And then I mean, I've readstudies where they've talked to
young people, you know, likemillennials, and they asked them
it's like well, is insurancefraud wrong?
A lot of them said no.
The majority of them didn'tthink it would even be a crime
to lie to an insurance company.
You know about a materialmisrepresentation about an
(06:40):
insurance claim.
So I think it's more ofawareness and also the
population growth, I mean, andunder the law it's required, you
know, if you suspect insurancefraud you're required to report
it.
Speaker 2 (06:53):
That makes sense.
Yeah, yeah.
Well, I'm sure that within youknow, these last 30 years
there's been a lot to see, andmaybe more than just once or
twice.
Can you talk to us about themost common types of fraud that
your team investigates?
Speaker 3 (07:11):
Well, I've been a prosecutor now for a little over
25 years and most of that hasbeen white collar crime.
The very first felony trial Iever tried was in 2002.
And it was an insurance fraudcase.
And it was someone who claimedhis vehicle had been stolen when
he abandoned it at a shop andjust didn't go back and get it
(07:34):
Called.
The police said it was stolen,reported it stolen to the
insurance company.
Yeah, that is like the basickind of a case that we get.
I mean, a lot of times thefraud that we get are people
filing false claims about theirvehicles or about their home or
saying that they were injured inan accident when they weren't.
We get a lot of cases wherepeople are forging documents and
(07:55):
sending those in in support ofthe claim and when the insurance
companies do a bit of follow upfind out that these things are
completely forged.
And that's on the insured side.
On the insurer side, we getcases periodically, well fairly
regularly, of agents oradjusters who have done illegal
things, committed fraud, takingmoney for policies and never
(08:18):
remitting it to the insurancecompany, forging documents,
going in and getting checks onan active claim, writing checks
for their own personal use.
I mean it's a wide gamut, Imean it's anywhere from $2,500
is the level that makes it afelony here in Texas.
(08:38):
Up to we've had some that aremillions of dollars.
Speaker 2 (08:43):
Yeah.
Speaker 1 (08:46):
That is eye-opening, to say the least.
You said something that wasvery interesting to me.
You said that you've collectedyour unit collected almost $97
million, and you also mentionedthe US Attorney's Office.
So do you work, does your unionwork, with the federal
(09:07):
government and, if so, how oftenyou work?
Speaker 3 (09:10):
does your union work with the federal government and
if so, how often?
Well, the amount of money thatI was talking about is court
ordered restitution and some ofthat is paid up front.
If there's a way to get themoney up front, we generally do
that, but a lot of times they goon probation and it gets
ordered.
We've had prosecutors from ourunits work with US Attorney's
Office on specific cases.
We've had a lot of ourinvestigators work with the
federal agencies and with the USAttorney's Office on specific
(09:33):
cases.
I mean, we have 20investigators so we're kind of
limited as to resources that wehave to be able to investigate
these cases.
So sometimes when we get onethat is really big, then we'll
ask the US Attorney's Office orsome federal agency to work with
us or to take over theinvestigation with our expertise
.
Speaker 1 (09:54):
Excellent.
So you also mentioned thatanyone and just correct me if I
misunderstood you they'rerequired to report insurance
fraud.
So with that, how do thesecases come to your attention?
Where do the majority of thecases come from that?
(10:14):
You end up the analysts.
They analyze the case and thenit matriculates through the
court system.
Speaker 3 (10:22):
Well, the way that it gets to the Department of
Insurance is sometimes theenforcement attorneys will let
us know that something's goingon, but the majority, the
overwhelming majority of casesthat we get.
We have a reporting system onour website, which is
tditexasgov, and there's just abutton you click and then it
takes you right to where you canfile a fraud report.
(10:44):
Then we also have a 1-800number, which is 1-800-252-3439.
So, yes, anyone can make afraud report there, and we get a
lot of them from consumers andwe also get a lot of them from
the insurance industry as well.
Speaker 2 (11:01):
Wow, good to know.
Yeah, this is my favorite factabout this whole episode and
this whole topic, but I want ourviewers to know and I kind of
want to talk about this.
I think it's really goodinformation to know.
So, although the fraud unitworks very closely with the
Texas Department of Insurance,it's a separate law enforcement
(11:22):
agency.
Can you talk to us a little bitabout how the cases that y'all
prosecute are different from thecases that TDI prosecutes?
Speaker 3 (11:33):
Well, the cases that we get are all criminal
referrals.
So ours would be we investigatethe violations of criminal laws
.
So it would be the insurancefraud in the penal code or it
would be some other section ofthe penal code, and then
sometimes it's the.
There's other codes that youknow we will have offenses that
(11:54):
we prosecute out of it.
But on the enforcement sideit's purely civil enforcement.
So they do the regulation ofinsurance agents, of adjusters,
anyone who's licensed forinsurance.
They do that.
We only do the criminal portionof any interaction with the
agents or with the industry.
Speaker 2 (12:14):
Gotcha and I want to make sure our viewers know that
is not just limited to insuranceprofessionals.
We're talking aboutprofessionals across the board
who deal with insurance.
You know any type of insurancefraud would go to you guys.
Speaker 3 (12:33):
Yes, and that's the authority that we use, for that
is under the insurance code of701.
And since it is required forpeople to report incidents of,
or suspected insurance fraud,there's also a section in there
for immunity.
So anyone who does that,they're immune from civil
prosecution for slander or libelif they are just merely
(12:55):
reporting it to the Departmentof Insurance or to a police
agency.
So there is some protectionsfor people who come forward and
point out that there issuspected insurance fraud.
Speaker 2 (13:05):
That's great.
Speaker 1 (13:06):
It's great to know.
Oh, absolutely, that's great.
It's great to know.
I've always understood thatTexas's insurance laws are the
most stringent in the country.
What do you say in comparison,maybe, to other jurisdictions?
(13:31):
If you're working with thefederal government, how do our
laws stack up with other laws inthe country as far as
protecting the public from badactors in insurance?
Speaker 3 (13:43):
Well, I can't speak to the enforcement side.
My understanding is that fromthe enforcement side, texas is
very stringent compared to otherstates, but as far as criminal
prosecutions they're pretty muchall the same.
I was a prosecutor inCalifornia for three years.
I was in the San Diego DistrictAttorney's Office.
Insurance fraud it seems likeeverywhere I've ever been,
(14:04):
insurance fraud just keepspulling me in, even though I
wasn't working for theDepartment of Insurance.
It just seemed to.
You know, it chose me.
I didn't choose it and I justhappened to be there from
Florida, louisiana, a lot ofother places and they're very
similar.
None of them have, as far asI'm aware, none of them have the
(14:28):
embedded prosecutors like we do.
As far as I know, we're theonly state that has the
Department of Insurance pay forinsurance.
Well, for Department ofInsurance embedded prosecutors
to specifically work on theircases.
We're also there to help outwith other cases as well, but
primarily our duties are to makesure that the Department of
Insurance cases are giving theyou know the work that they need
(14:52):
and that they are handledcorrectly.
Speaker 1 (14:55):
Okay, wow.
So yet another question whatcan licensing professionals do
to avoid engaging in what ourlaws state are fraudulent
activities?
Speaker 3 (15:13):
Well, as far as the criminal laws, just don't do
anything that violates thecriminal law, because you don't
want to come, you don't want tobe in my section of the building
.
I mean.
As far as the enforcement side,like I said, I don't really do
that that much I mean, but Iwould suggest that you know
you're always honest withconsumers and with the
Department of Insurance, youknow and you keep up with your
(15:35):
continuing education and makesure that you do everything that
you're obligated to do withyour license.
As long as you don't violatethe law and do something that is
fraudulent, then it would onlybe an enforcement issue if
something were to come up.
Speaker 2 (15:53):
Awesome.
Yeah, definitely.
Being honest is so important.
Especially as a license holder,You're held to a higher
standard.
You've got to be responsibleand be honest and forthcoming.
We've talked about it inprevious episodes that it's so
much better to just tell thetruth, because later on down the
line you're really trying tocover up that lie and it just
(16:18):
gets ugly.
Yeah, absolutely.
Speaker 3 (16:20):
That does happen in our cases a lot, where agents
have done something fraudulently.
They'll accept money and, forwhatever reason, they don't bind
a policy, and then if theperson ends up filing a claim,
then they find out that theydon't have a policy and then
they're out there withoutcoverage, so they're stuck
handling themselves.
That is something that we seequite often.
(16:40):
That is something that we seequite often.
Speaker 2 (16:44):
I would say that's probably something that we see
here a lot too is, you know, the, the.
I didn't, I didn't think thatwas going to happen, or I, you
know, you're trying to make surethat doesn't happen.
And between that time whereyou're, you know, trying to
figure out what your next moveis that happens, and now your
(17:05):
whole, the whole plan you've had, has fallen apart.
And had you just been honest inthe beginning, or maybe just
not done the criminal activityin the first place, you wouldn't
have, you know, ended up there.
Speaker 3 (17:19):
So yeah, yeah, and there is a big distinction
between the two.
I mean for for me to beinvolved in it, for to be a
criminal act, it has to beknowingly and intentionally.
So if someone just makes amistake and it's something
that's inadvertent and theydidn't intend to do, yeah, that
would not be a violation of thecriminal law.
That would just be something onthe enforcement side.
Speaker 2 (17:38):
Yeah, and that would be really determined within that
kind of investigative periodright, where you guys first get
that referral and then you'rekind of taking a look at it and
determining, I guess, whether itwas or wasn't, you know,
intentional.
Speaker 3 (17:54):
Yeah, and out of the 20,000, I think that we got last
year, I think only around 100of those ended up with criminal
prosecutions out of the 20,000.
Speaker 1 (18:03):
Oh, wow yeah for various reasons.
Oh, that's super nice.
That's good to know.
Speaker 2 (18:07):
That's great.
Well, we've talked about it alittle bit so far in this
episode, but I really want todrive it home.
What can a license holder do ifthey suspect fraudulent
activity in their industry?
Speaker 3 (18:20):
Well, the main thing is, if you suspect that there's
any kind of fraud, report it.
I mean, contact the Departmentof Insurance by the website or
by the 1-800 number that I gaveand report that and document it
and make sure that you're makingus aware so that we can
investigate that and see ifthere's anything that can be
done.
I mean, that's the main thing,and always be honest with your
(18:43):
consumers.
That's the thing I would telleveryone.
Speaker 2 (18:48):
Yeah, great advice, Absolutely Well.
Thank you, Rick, for joining usthis afternoon and
congratulations.
I think the fraud unitcelebrated its 30th anniversary
20th of the embedded prosecutors.
Gotcha, ok, yeah, so well.
Congratulations to the fraudunit on its 20th anniversary of
the embedded prosecutors.
Gotcha, okay, yeah, so well.
Congratulations to the fraudunit on its 20th anniversary of
(19:08):
those embedded prosecutors.
It's very cool.
Speaker 3 (19:11):
Yeah, we have a very, very good team right now and
I'm I stepped in as the chiefand a fraud council at a good
time.
Good, and everyone is doing areally good job.
Speaker 2 (19:23):
Well, that's fantastic.
Thank you, guys for protectingus Texans and keeping our you
know, our industries clean andfree of fraud.
Before we let you go, I do wantto see if we can get, maybe,
some final advice.
What would be your key piece ofadvice for our listeners, your
key piece of advice for ourlisteners.
Speaker 3 (19:48):
Well, for anyone who's licensed is, like I
mentioned before, just make sureyou keep up with continuing
education to make sure, on topof what the latest laws are,
what the latest regulations areand if you see fraud reported.
Speaker 1 (20:00):
Yes, absolutely See something, say something.
Speaker 3 (20:03):
Yes, ma'am, yeah.
Speaker 1 (20:05):
Excellent.
Thank you so much, Rick.
This was an excellentconversation.
Speaker 3 (20:09):
Oh, you're welcome.
Thank you for inviting me.
I really enjoyed this.
Speaker 2 (20:13):
You are so very welcome and thank you to our
viewers and listeners for tuningin.
To learn more about TDI's fraudunit, you can visit tditexasgov
, or visit the link below in ourdescription, and for more
information on the ever-evolvinglandscape of professional
regulations, you can visit ourwebsite, also linked in the
(20:35):
description below.
Until next time, stay inspiredand continue engaging with your
regulatory agency.
Know your Regulator the podcastthat inspires you to engage.
This podcast is for educational purposes only, does
not constitute legal advice anddoes not create an
attorney-client relationship.
If you need legal assistanceabout a legal problem, contact
an attorney.
Speaker 2 (00:13):
Welcome to another episode of Know your Regulator,
the podcast that inspires you toengage.
I am your host, Simone Murphy,and co-hosting with me today is
Senior Associate from theBertolino Law Firm, LaWanna
Acklin.
Hey, LaWanna.
Speaker 1 (00:28):
Hello there.
Speaker 2 (00:29):
How are you?
I am doing good.
I am really excited tointroduce this episode's topic.
Today's discussion is all aboutthe Texas Department of
Insurance's fraud unit, what itdoes, how it works and what
license holders need to know tostay compliant.
Speaker 1 (00:48):
Absolutely.
And today we have a veryspecial guest.
We have Rick Watson.
He is the Chief Prosecutor andFraud Counsel for the Texas
Department of Insurance's FraudIntake Unit.
And, rick, thank you forjoining us today.
How are you?
Speaker 3 (01:06):
Great.
Thank you, Simone and Luana,for having me on.
I'm really happy to be here.
Speaker 2 (01:12):
Absolutely.
We are excited to have you.
To start off, if you could justgive us a kind of brief
overview of TDI's Fraud Unit,how did this program get started
and how does it function today?
Speaker 3 (01:26):
Yeah well, the insurance fraud unit started
back in 1991.
At that point it was a lawenforcement agency that was
entered into the regulatorydepartment of insurance.
At that point they hadinvestigators that would
investigate fraud, referrals,and then, beginning in 2000,
they started a program where wewould have prosecutors embedded
(01:48):
into district attorney's offices, which started in Dallas.
That was the first one, andthen TDI.
Our purpose is to investigatereferrals and insurance fraud
having to do with any fraudhaving to do with the insurance
business.
Speaker 1 (02:05):
Wow and Rick, if you can just talk to us about your
role as chief prosecutor and howthe program has evolved over
the last three decades.
Speaker 3 (02:21):
Well as the chief prosecutor, I supervise the
embedded prosecutors and theembedded prosecutors are
prosecutors that are working inspecific counties.
We have a prosecutor in BexarCounty, one in Harris County
there's typically two, but wehave just one there right now.
I work the Travis County casesthat come into that office and
(02:42):
we have a prosecutor in TarrantCounty and one in Dallas County
and what that means is being anembedded prosecutor.
What we do is we're sworn inlike any other district attorney
, assisted district attorney,but we only work on specifically
for the Department of Insurancecases, but also as the
Department of Insurance.
We also help other counties aswell.
I mean over.
(03:03):
I think we've helped outmultiple counties.
The US Attorney's Office we'vehelped them out with.
You know subject matterexpertise and insurance fraud.
We've also worked in CollinCounty, kendall County, swisher
County and, like I said, the USAttorney's Office providing
expertise in Texas law forinsurance fraud.
Speaker 1 (03:32):
Oh wow, that is great .
Specifically, what are some ofthe milestones or achievements
that the Fraud Intake Unitthey've seen since its inception
?
Speaker 3 (03:38):
Well, you know, the Fraud Unit, like I said, has
been started since 1991.
And it is consistently grown asfar as the amount of referrals
that we get.
And since we've started addedprosecutors, we've went from one
prosecutor up to six.
It's fluctuated some At onepoint there was only went back
to one and that was only me, andthen we that was during COVID
(04:01):
We've had some leave but we'reback up to six now and we're
trying to hire another one ontop of that for Harris County.
But the biggest milestone isjust the amount of cases or
referrals that we can work andthat we can look at.
I mean, every year it just getsexponentially more of the
(04:22):
referrals that we get.
And so the way it's set up isunder 701 of the insurance code,
the commissioner is givencertain rights and as part of
that code is that anyone whosuspects insurance fraud has to
report that to our department.
It's reviewed by a couple ofanalysts, A law enforcement
(04:42):
person looks at it and then ifthey feel like we should go
further, it goes to a supervisorwho then looks at it and then
if they feel like we should gofurther, it goes to a supervisor
who then looks at it and thenif it warrants being
investigated by an investigator,that is done.
And then if it's appropriate tosend it on to a district
attorney's office, then we dothat as well.
And some of the numbers back inthe fiscal year 2020, we
(05:03):
received 14,180 referrals.
That one year, yeah.
And in this past fiscal year of2024, we received 20,356.
So, yeah, every single one ofthose is reviewed by an analyst
and then the appropriate onesare moved on.
(05:25):
And another milestone is overthe last five years, we've
collected $96.7 million has beencourt-ordered in restitution
based on the cases that havebeen prosecuted through our
investigator or our prosecutorsand through the US Attorney's
Office, with our help.
Speaker 1 (05:43):
Wow, that's huge $97 million.
Speaker 3 (05:46):
Yes, $96.7.
It's a lot of fraud going on.
Speaker 2 (05:50):
Yeah.
Speaker 3 (05:51):
Yes.
Speaker 2 (05:52):
I kind of want to ask , to piggyback off that answer,
this uptick in the referrals.
Do you think that that is?
Do you have an idea of why thatmight be?
Speaker 3 (06:16):
Do you think that people are just a little bit
more aware of what fraudulentactivity looks like and how to
report that?
Well, I think there's.
You know, there's always goingto be the growth of the
population of Texas.
That's, that's huge.
And then I mean, I've readstudies where they've talked to
young people, you know, likemillennials, and they asked them
it's like well, is insurancefraud wrong?
A lot of them said no.
The majority of them didn'tthink it would even be a crime
to lie to an insurance company.
You know about a materialmisrepresentation about an
(06:40):
insurance claim.
So I think it's more ofawareness and also the
population growth, I mean, andunder the law it's required, you
know, if you suspect insurancefraud you're required to report
it.
Speaker 2 (06:53):
That makes sense.
Yeah, yeah.
Well, I'm sure that within youknow, these last 30 years
there's been a lot to see, andmaybe more than just once or
twice.
Can you talk to us about themost common types of fraud that
your team investigates?
Speaker 3 (07:11):
Well, I've been a prosecutor now for a little over
25 years and most of that hasbeen white collar crime.
The very first felony trial Iever tried was in 2002.
And it was an insurance fraudcase.
And it was someone who claimedhis vehicle had been stolen when
he abandoned it at a shop andjust didn't go back and get it
(07:34):
Called.
The police said it was stolen,reported it stolen to the
insurance company.
Yeah, that is like the basickind of a case that we get.
I mean, a lot of times thefraud that we get are people
filing false claims about theirvehicles or about their home or
saying that they were injured inan accident when they weren't.
We get a lot of cases wherepeople are forging documents and
(07:55):
sending those in in support ofthe claim and when the insurance
companies do a bit of follow upfind out that these things are
completely forged.
And that's on the insured side.
On the insurer side, we getcases periodically, well fairly
regularly, of agents oradjusters who have done illegal
things, committed fraud, takingmoney for policies and never
(08:18):
remitting it to the insurancecompany, forging documents,
going in and getting checks onan active claim, writing checks
for their own personal use.
I mean it's a wide gamut, Imean it's anywhere from $2,500
is the level that makes it afelony here in Texas.
(08:38):
Up to we've had some that aremillions of dollars.
Speaker 2 (08:43):
Yeah.
Speaker 1 (08:46):
That is eye-opening, to say the least.
You said something that wasvery interesting to me.
You said that you've collectedyour unit collected almost $97
million, and you also mentionedthe US Attorney's Office.
So do you work, does your unionwork, with the federal
(09:07):
government and, if so, how oftenyou work?
Speaker 3 (09:10):
does your union work with the federal government and
if so, how often?
Well, the amount of money thatI was talking about is court
ordered restitution and some ofthat is paid up front.
If there's a way to get themoney up front, we generally do
that, but a lot of times they goon probation and it gets
ordered.
We've had prosecutors from ourunits work with US Attorney's
Office on specific cases.
We've had a lot of ourinvestigators work with the
federal agencies and with the USAttorney's Office on specific
(09:33):
cases.
I mean, we have 20investigators so we're kind of
limited as to resources that wehave to be able to investigate
these cases.
So sometimes when we get onethat is really big, then we'll
ask the US Attorney's Office orsome federal agency to work with
us or to take over theinvestigation with our expertise
.
Speaker 1 (09:54):
Excellent.
So you also mentioned thatanyone and just correct me if I
misunderstood you they'rerequired to report insurance
fraud.
So with that, how do thesecases come to your attention?
Where do the majority of thecases come from that?
(10:14):
You end up the analysts.
They analyze the case and thenit matriculates through the
court system.
Speaker 3 (10:22):
Well, the way that it gets to the Department of
Insurance is sometimes theenforcement attorneys will let
us know that something's goingon, but the majority, the
overwhelming majority of casesthat we get.
We have a reporting system onour website, which is
tditexasgov, and there's just abutton you click and then it
takes you right to where you canfile a fraud report.
(10:44):
Then we also have a 1-800number, which is 1-800-252-3439.
So, yes, anyone can make afraud report there, and we get a
lot of them from consumers andwe also get a lot of them from
the insurance industry as well.
Speaker 2 (11:01):
Wow, good to know.
Yeah, this is my favorite factabout this whole episode and
this whole topic, but I want ourviewers to know and I kind of
want to talk about this.
I think it's really goodinformation to know.
So, although the fraud unitworks very closely with the
Texas Department of Insurance,it's a separate law enforcement
(11:22):
agency.
Can you talk to us a little bitabout how the cases that y'all
prosecute are different from thecases that TDI prosecutes?
Speaker 3 (11:33):
Well, the cases that we get are all criminal
referrals.
So ours would be we investigatethe violations of criminal laws
.
So it would be the insurancefraud in the penal code or it
would be some other section ofthe penal code, and then
sometimes it's the.
There's other codes that youknow we will have offenses that
(11:54):
we prosecute out of it.
But on the enforcement sideit's purely civil enforcement.
So they do the regulation ofinsurance agents, of adjusters,
anyone who's licensed forinsurance.
They do that.
We only do the criminal portionof any interaction with the
agents or with the industry.
Speaker 2 (12:14):
Gotcha and I want to make sure our viewers know that
is not just limited to insuranceprofessionals.
We're talking aboutprofessionals across the board
who deal with insurance.
You know any type of insurancefraud would go to you guys.
Speaker 3 (12:33):
Yes, and that's the authority that we use, for that
is under the insurance code of701.
And since it is required forpeople to report incidents of,
or suspected insurance fraud,there's also a section in there
for immunity.
So anyone who does that,they're immune from civil
prosecution for slander or libelif they are just merely
(12:55):
reporting it to the Departmentof Insurance or to a police
agency.
So there is some protectionsfor people who come forward and
point out that there issuspected insurance fraud.
Speaker 2 (13:05):
That's great.
Speaker 1 (13:06):
It's great to know.
Oh, absolutely, that's great.
It's great to know.
I've always understood thatTexas's insurance laws are the
most stringent in the country.
What do you say in comparison,maybe, to other jurisdictions?
(13:31):
If you're working with thefederal government, how do our
laws stack up with other laws inthe country as far as
protecting the public from badactors in insurance?
Speaker 3 (13:43):
Well, I can't speak to the enforcement side.
My understanding is that fromthe enforcement side, texas is
very stringent compared to otherstates, but as far as criminal
prosecutions they're pretty muchall the same.
I was a prosecutor inCalifornia for three years.
I was in the San Diego DistrictAttorney's Office.
Insurance fraud it seems likeeverywhere I've ever been,
(14:04):
insurance fraud just keepspulling me in, even though I
wasn't working for theDepartment of Insurance.
It just seemed to.
You know, it chose me.
I didn't choose it and I justhappened to be there from
Florida, louisiana, a lot ofother places and they're very
similar.
None of them have, as far asI'm aware, none of them have the
(14:28):
embedded prosecutors like we do.
As far as I know, we're theonly state that has the
Department of Insurance pay forinsurance.
Well, for Department ofInsurance embedded prosecutors
to specifically work on theircases.
We're also there to help outwith other cases as well, but
primarily our duties are to makesure that the Department of
Insurance cases are giving theyou know the work that they need
(14:52):
and that they are handledcorrectly.
Speaker 1 (14:55):
Okay, wow.
So yet another question whatcan licensing professionals do
to avoid engaging in what ourlaws state are fraudulent
activities?
Speaker 3 (15:13):
Well, as far as the criminal laws, just don't do
anything that violates thecriminal law, because you don't
want to come, you don't want tobe in my section of the building
.
I mean.
As far as the enforcement side,like I said, I don't really do
that that much I mean, but Iwould suggest that you know
you're always honest withconsumers and with the
Department of Insurance, youknow and you keep up with your
(15:35):
continuing education and makesure that you do everything that
you're obligated to do withyour license.
As long as you don't violatethe law and do something that is
fraudulent, then it would onlybe an enforcement issue if
something were to come up.
Speaker 2 (15:53):
Awesome.
Yeah, definitely.
Being honest is so important.
Especially as a license holder,You're held to a higher
standard.
You've got to be responsibleand be honest and forthcoming.
We've talked about it inprevious episodes that it's so
much better to just tell thetruth, because later on down the
line you're really trying tocover up that lie and it just
(16:18):
gets ugly.
Yeah, absolutely.
Speaker 3 (16:20):
That does happen in our cases a lot, where agents
have done something fraudulently.
They'll accept money and, forwhatever reason, they don't bind
a policy, and then if theperson ends up filing a claim,
then they find out that theydon't have a policy and then
they're out there withoutcoverage, so they're stuck
handling themselves.
That is something that we seequite often.
(16:40):
That is something that we seequite often.
Speaker 2 (16:44):
I would say that's probably something that we see
here a lot too is, you know, the, the.
I didn't, I didn't think thatwas going to happen, or I, you
know, you're trying to make surethat doesn't happen.
And between that time whereyou're, you know, trying to
figure out what your next moveis that happens, and now your
(17:05):
whole, the whole plan you've had, has fallen apart.
And had you just been honest inthe beginning, or maybe just
not done the criminal activityin the first place, you wouldn't
have, you know, ended up there.
Speaker 3 (17:19):
So yeah, yeah, and there is a big distinction
between the two.
I mean for for me to beinvolved in it, for to be a
criminal act, it has to beknowingly and intentionally.
So if someone just makes amistake and it's something
that's inadvertent and theydidn't intend to do, yeah, that
would not be a violation of thecriminal law.
That would just be something onthe enforcement side.
Speaker 2 (17:38):
Yeah, and that would be really determined within that
kind of investigative periodright, where you guys first get
that referral and then you'rekind of taking a look at it and
determining, I guess, whether itwas or wasn't, you know,
intentional.
Speaker 3 (17:54):
Yeah, and out of the 20,000, I think that we got last
year, I think only around 100of those ended up with criminal
prosecutions out of the 20,000.
Speaker 1 (18:03):
Oh, wow yeah for various reasons.
Oh, that's super nice.
That's good to know.
Speaker 2 (18:07):
That's great.
Well, we've talked about it alittle bit so far in this
episode, but I really want todrive it home.
What can a license holder do ifthey suspect fraudulent
activity in their industry?
Speaker 3 (18:20):
Well, the main thing is, if you suspect that there's
any kind of fraud, report it.
I mean, contact the Departmentof Insurance by the website or
by the 1-800 number that I gaveand report that and document it
and make sure that you're makingus aware so that we can
investigate that and see ifthere's anything that can be
done.
I mean, that's the main thing,and always be honest with your
(18:43):
consumers.
That's the thing I would telleveryone.
Speaker 2 (18:48):
Yeah, great advice, Absolutely Well.
Thank you, Rick, for joining usthis afternoon and
congratulations.
I think the fraud unitcelebrated its 30th anniversary
20th of the embedded prosecutors.
Gotcha, ok, yeah, so well.
Congratulations to the fraudunit on its 20th anniversary of
the embedded prosecutors.
Gotcha, okay, yeah, so well.
Congratulations to the fraudunit on its 20th anniversary of
(19:08):
those embedded prosecutors.
It's very cool.
Speaker 3 (19:11):
Yeah, we have a very, very good team right now and
I'm I stepped in as the chiefand a fraud council at a good
time.
Good, and everyone is doing areally good job.
Speaker 2 (19:23):
Well, that's fantastic.
Thank you, guys for protectingus Texans and keeping our you
know, our industries clean andfree of fraud.
Before we let you go, I do wantto see if we can get, maybe,
some final advice.
What would be your key piece ofadvice for our listeners, your
key piece of advice for ourlisteners.
Speaker 3 (19:48):
Well, for anyone who's licensed is, like I
mentioned before, just make sureyou keep up with continuing
education to make sure, on topof what the latest laws are,
what the latest regulations areand if you see fraud reported.
Speaker 1 (20:00):
Yes, absolutely See something, say something.
Speaker 3 (20:03):
Yes, ma'am, yeah.
Speaker 1 (20:05):
Excellent.
Thank you so much, Rick.
This was an excellentconversation.
Speaker 3 (20:09):
Oh, you're welcome.
Thank you for inviting me.
I really enjoyed this.
Speaker 2 (20:13):
You are so very welcome and thank you to our
viewers and listeners for tuningin.
To learn more about TDI's fraudunit, you can visit tditexasgov
, or visit the link below in ourdescription, and for more
information on the ever-evolvinglandscape of professional
regulations, you can visit ourwebsite, also linked in the
(20:35):
description below.
Until next time, stay inspiredand continue engaging with your
regulatory agency.
Know your Regulator the podcastthat inspires you to engage.
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