Tips to Avoid Insurance Fraud with Tony Royall

“Insurance fraud is the second most costly white collar crime in the United States, behind tax evasion.” - Tony Royall Share on X

Predators look to take advantage of people during the roughest situations of life. A perpetrator of insurance fraud makes a career out of milking the system thinking it's a victimless crime. Today’s guest is Officer Tony Royall. Officer Royall started in the Virginia Department of State Police in 1986. He worked in Accident Reproduction and then became an agent in Narcotics. Officer Royall has now been working in Insurance Fraud for the past 22 years.

“Read and understand your policy. I know that’s as exciting as watching paint dry, but it’s necessary to know what’s in it - what’s covered and not covered.” - Tony Royall Share on X

Show Notes:

• [0:47] – Officer Royall shares his background in law enforcement.
• [2:24] – Over the years, there have been a lot of wild insurance fraud cases for Officer Royall. He describes a recent one that had an unexpected twist.
• [4:47] – How was this insurance fraud discovered?
• [7:18] – One of the most prevalent insurance fraud situations is staged auto accidents.
• [9:01] – Officer Royall describes another case and what the result was for the perpetrator staging accidents and fabricating medical bills.
• [11:15] – Investigations are geared toward the people who intentionally commit crime.
• [12:55] – Staged accidents that are insurance fraud are usually committed by multiple people working in tandem.
• [13:59] – Officer Royall explains another type of insurance fraud case involving a staged slip and fall accident.
• [15:59] – Sometimes people take the opportunity to purposefully stage an accident in a public place.
• [17:54] – With every case of insurance fraud, premiums for everyone else could go up.
• [19:53] – There are times when the police are contacted by insurance agencies, but are mostly contacted about insurance fraud by possible victims.
• [21:18] – Always make sure your policy is up to date and periodically check on things to be sure it’s active.
• [22:13] – Read the policy and what is covered. 
• [23:14] – Keep an inventory of high ticket items in your home and business including serial numbers. Documentation is extremely helpful in the event of fraud.
• [25:20] – Catastrophic events create opportunities for perpetrators trying to solicit.
• [26:15] – If you find yourself in an automobile accident, take photos of the damage of both cars and document details.
• [28:02] – How can you document details of an accident?
• [29:21] – Be diligent and make as much information known as possible.

“The sad thing is, in many cases, people are not going to get their money back.” - Tony Royall Share on X

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Transcript:

William, thank you so much for coming on the Easy Prey Podcast today.

Thank you. It's my pleasure.

Can you give myself and the audience a little bit about your background and how you got to where you're at now?

I've been employed by the Virginia Department of State Police since 1986. That was a long time ago. I started out, I went through the academy and worked on the road as a uniformed trooper. I did that for 13 years.

During that time, I was certified as an accident reconstruction expert and also had an explosive K-9. I was in that for five years. I got promoted as an agent. I worked narcotics for a little over a year and a half and then a position came available in the insurance fraud unit. I took that, and I have worked in insurance fraud cases since 2000.

Was there something in particular about insurance fraud that caught your attention?

It started because we started the program back at the end of 1988. It became effective in January of 1999. It was something brand new. We typically worked normal murder, rapes, robberies, drugs, and white collar crimes, but this is a little bit different type of investigation.

It kind of piqued my interest. But truth be told, when I was working at narcotics, I was away from where I lived. A position came available back where I was living at the time, so I applied for that and took that position. I've enjoyed it ever since. I've been in it for 22 years.

Being around friends and family is definitely a good motivator for a job.

Oh, yeah.

Is there any particular case that kind of stands out to you as the most interesting or unusual insurance fraud case that you've come across?

Let's see, I got a list. I got a bunch of them. I just finished one up. It was kind of a twist because it's nothing that I had worked in the previous 20 years. I just finished up with it last year.

A guy that owned a funeral home local to where I live now was offering prepaid insurance for funeral expenses. He got into some financial difficulties. What we discovered is he was taking people's premiums and basically putting it in his pocket and not binding the coverage. People thought they had a valid policy to pay for their funeral, and all of my victims were pretty elderly.

In fact, three of them died during the time I was working on the investigation and getting all the documents and everything. That was to the tune of a little over $50,000 in premiums that he took and didn't bind any coverage. People had no insurance whatsoever for their funerals. He just got sentenced at the end of last year to 10 years. He's got to pull two years in the penitentiary.

The sad thing is the people are not going to get your money back on that. I actually found some other victims that he had done the same thing to, but they didn't want to proceed because they knew they weren't going to get their money back and just kind of didn't want to go through the rigors of that.

I guess the two questions I have is, how did he find out that he was committing the fraud? Is there something that the people could have done in the beginning or during the process to realize that maybe he was doing this?

Actually, it came about by the death of one of my victim's sons. That was another story that he had taken the body to the funeral home and just kind of shoved it in the back corner, and that was a whole other. He got charged criminally for that as well.

Then he got to check in through their insurance policy to see if there was anything on the son. That's when they found out that his mother, who was in her 90s, had paid, I think, $10,000 or $11,000, but she had no coverage at all. I would suggest—and it’s one of my things that I tell people when talking about insurance on a regular basis—just call and check the insurance guy if they can do it online or whatever. Always check and make sure your policy is still in effect.

Always check and make sure your policy is still in effect. -Tony Royall Share on X

Were the victims making payments to him and then he was supposed to make it to the insurance company, or was he kind of intercepting payments made out to the insurance company?

No, he was taking the money. In Virginia, you could do that insurance. Like I said, I didn't know this because I had never dealt with funeral home insurance. Funeral directors can be appointed as kind of quasi-agents for this specific purpose.

What he was doing was actually filling out applications with people and going over everything. He's filling out applications and giving them a copy of that. But then he was kind of stonewalled on the actual policy paperwork coming to him. All of my victims, except for one, paid all the money in a lump sum.

Got you.

Yeah. One of them had put a down payment and then were going to go to make him payments. This came to light, so they only lost $700. But my other victims, it was right around $10,000 apiece and they paid it all at one time. They're just out of that money.

That's tough.

Yeah.

It's unfortunate when people take advantage of people at a particular time of pain and grief when the last thing you want to be dealing with is you're trying to bury a loved one and finding out the insurance is a scam, the burial guy is quasi legit himself.

That's the whole purpose of getting this coverage. To lessen the burden of your family at that time. It was particularly heinous, I think, that he took advantage of these elderly people the way he did.

Yeah, that's really unfortunate. I think probably, in my mind, the most common insurance scam that I can think of for most people that they have the chance to be exposed to is the staged auto accidents.

Yeah, that's kind of the prevalent fraud scheme that we find—anything involving staged accidents, staged auto thefts, and burning of vehicles. Typically, we've investigated a few where there were organized rings, not really organized crime that we've seen in Virginia yet, but organized rings doing multiple staged accidents.

One case that I prosecuted a few years ago was one lady and she had a horrific claims history. It was like page upon page upon pages of claims. What she was doing was she had a core group of her older son and a friend of his, and she had smaller children—nephews, and nieces. What she was doing was staging accidents and actually running cars together staging an accident, staying off to the side. Then after the accident, put the kids in and claim that everybody was injured.

Who's going to question a three, four, five-year-old whether they're injured? If the mom says they're hurt, they're hurt. She just did that continually. I had just reams and reams of paperwork and documents to go through. I charged her federally. It went through the federal system. I charged her with actual health care fraud when it deals with injuries arising out of an auto accident.

I convicted her of seven counts. The funny thing about this one, she got convicted of seven counts of health care fraud and she got sentenced to 84 months in federal prison. Not only was it bad enough that she was staging accidents, but she was actually altering and fabricating medical bills that she submitted to the insurance companies on top of that.

What's bad enough is she was claiming a false accident. She was trying to inflate it even more with the fraudulent documents. In one of the accidents—one of the bigger ones—she got paid $41,000 out of the one accident. She actually filed suit and filed a homeowner's claim saying that a bunch of items were stolen out of her car when it was towed to the tow yard. She submitted a 42-page proof of loss of all the items. There were like over 400 items.

That's a lot of stuff to put in a car.

It was a midsize car. It was a small Isuzu or something, but she had five people in the car with her with all those items. When it came time to the federal trial, I wanted to take that proof of loss and go to Walmart, take all the stuff she had listed on there, and see if it was physically possible to put all that stuff in there, let alone five people in there with it. The US attorney looked at me like I was an idiot.

That was $11,000 on top of the $41,000 that she had already gotten that she attempted to get. We were able to use that as a mitigating factor when she was sentenced, and then that knocked it up to the next threshold level. She was just a career criminal. That's the kind of people I look to prosecute.

We get some claims. There are good people that do good things, bad people do bad things, and then there are good people that do stupid things. I kind of gear my investigations toward the bad people that do intentional things when they're perpetrating this crime.

There are good people that do good things, bad people do bad things, and then there are good people that do stupid things. -Tony Royall Share on X

It's one thing when someone says they had a better radio in the car than they really had versus someone who's causing accidents.

Right. I had one guy, in particular, he had a race car that he had wrecked. He was doing time trials. He […] driving. You go to the track and you compete against the clock. On the way home, he wrecked it. He wrecked it at the racetrack, but he said he was on his way home when he wrecked it. Of course, it wasn't covered because of the racing event.

His thing was, “I paid all these premiums and I thought of trying to get my money back a little bit.” He kind of sees that in a way. Insurance is not a savings account. It provides a service, but I kind of understood where he was coming from. I didn't agree with it, but I understood.

His big thing is he said, “I'll take whatever punishment you'll give me. I just don't want to be convicted of a felony because I still want to vote.” That's kind of how that is.

With the staged accidents, if I'm driving down the road and someone stages an accident, what are the sorts of things that they're doing to stage the accident to make it look like it's my fault, or is that what's happening?

Yeah. Most of the time, if we have staged accidents that are insurance fraud, that's usually people that are complicit that are working together, at least here in Virginia. I know years ago, there was this big thing. I think it was in California where they call it the swooping squad, where again, two people working in tandem, but they would pick a car, pull in front of them, just slam on the brakes, and then have the co-conspirator next to you so the person behind them wouldn't be able to avoid and ran into him.

Of course, they claim the neck and back injury and all that and pumped up the medical bills. We haven't seen that here in Virginia. Most of the time, it's people that are colluding together. They're working together and staging wrecks.

Is it the same sort of thing you see with insurance fraud against businesses, kind of the slip-and-fall, or is it the business owners conducting the scam?

No, we haven't seen too much with business owners. We've had a few slip-and-falls and they're hard to prove. Soft-tissue injury is kind of hard to prove or disprove, if you will.

We did have a guy a few years ago. His name came across our desk and he had 13 previous slip-and-falls. We had looked at it and just didn't have any way to convict him. Actually, in this last case, we finally did convict him. We didn't disprove the injury or the slip-and-fall itself, but he, again, got a little greedy and had filed for what he's lost.

Actually, he went and was posed as an insurance adjuster for the insurance company that covered the building, not the business, but the building itself, to see if there was exposure there. I got him to talk a little bit and then we determined that the business that he claimed he's lost wages from never existed. We were able to convict him on that aspect of it.

Oddly enough, right after that, he moved to Tampa and then we got contacted by them down there. He had done a slip-and-fall within six months of moving to Florida.

It sounds like his real job is slipping around a lot.

Yeah, not a very agile person. Those are the kind of people we want to prosecute, you know what I'm saying? That's kind of what we're looking for.

They've made a career out of it, as opposed to a single incident.

Exactly, yeah.

Are these people targeting specific types of businesses? I know out here in California, there was a rash of people targeting kind of immigrant businesses, people who may not be familiar with the law. They're basically saying, “Hey. This happened at your restaurant or your business. We're going to sue you, but we'll settle for a couple of thousand dollars and we'll go away.” Is this sort of thing where they're targeting immigrant communities?

Not that we've seen anything in particular. It's kind of a crime of opportunity. Mostly with the slip-and-fall, there are convenience stores where they have these little tanks of soft drinks where they'll have ice, drinks, and whatever. Those tips, they always leak, so they'll look for something like that.

I had a case not too long ago, a video of a lady, and she was walking down the aisle of Target and poured some liquid into the floor and then got down. I saw a video. She just sat down on the floor and just started screaming that she was in pain. It's an opportunistic type thing.

It sounds like if you're a business owner, lots of cameras is the sort of thing that can help you.

Yeah, cameras are always a good thing and just cleaning up the place. Especially in small convenience stores like that, some people, when an opportunity presents itself, they just take advantage of it. I realize it's difficult for a business owner, but I would suggest trying to be as diligent as you can.

With a small business, is it negatively affecting the business that they're having to pay out of pocket for these incidents, or is it really the insurance company that's really the victim, so to speak?

It's funny because a lot of people think of insurance fraud as a victimless crime. Insurance companies, they got more money than the guy that bought Tesla, Elon Musk. The victims are you and me because insurance companies, they're a business. Their responsibility is to do the service, but they have to show a profit or else they wouldn't be in business. Where do they make their money at? From the premiums from us.

For all these fraudulent claims, our premiums go up. Insurance fraud is the second most costly white collar crime in the United States behind tax evasion. It was ironic because years and years we've been saying it's approximately $80 billion a year of fraudulent claims in America. The Coalition Against Insurance Fraud just updated that, I found out last week. They're saying it's over $300 billion a year.

Insurance fraud is the second most costly white collar crime in the United States behind tax evasion. -Tony Royall Share on X

Wow.

Yeah, it's unbelievable. This probably needs to be updated too, but it's always been estimated at $200-$1000 per month and increased premiums for us. It's not a victimless crime at all. It's us. We're the victims in insurance fraud cases.

It's not a victimless crime at all. It's us. We're the victims in insurance fraud cases. -Tony Royall Share on X

The victims are just spread out and each paying a small amount as opposed to one victim paying a large amount.

Absolutely. If you think about insurance, it's a pool of money. That's what insurance is. If you have a loss, we can use this pool of money to mitigate your damages as opposed to you bearing responsibility all by yourself. It's kind of the same thing with premiums.

Are you mostly contacted by the insurance companies then when they think something has happened?

That's where we get the majority of our cases. We work closely with them. A lot of the investigators with the insurance industry or […] law enforcement as well, so we always keep a good working relationship.

We do get contacted by the citizens. Disgruntled girlfriends, boyfriends, and ex-spouses have been known to call us a time or two. By the same token, we're not a hired gun for the insurance industry. We work with them in conjunction, but we keep parallel investigations.

We've prosecuted a number of insurance professionals as well. It's kind of similar with the guy with a funeral home. Especially in rural areas, the local agent who you go to church with, you go to see at dinner, and all that stuff, that's who you deal with.

We've had some agents in the past that will take people's insurance premiums, and what they should be doing is keeping the premium stuff, the insurance, in a separate account from the working account to pay the overhead and all that. Sometimes they will commingle the two, and that's why they get in trouble. Again, they'll take money and not bind the policy. Somebody thinks they have insurance on the car, house, or whatever. If something happens, they're out of luck because they don't have a policy to put down.

Yeah, it sounds like it's the trust, but verify.

There you go.

Always make sure you're getting billing statements that you're confirming that your policy is up to date.

The one thing I tell people is read and understand your policy and what it says. I know that's exciting as watching paint dry. -Tony Royall Share on X

People ask me, “How can I combat against insurance fraud?” The one thing I tell people is read and understand your policy and what it says. I know that's exciting as watching paint dry, but it's necessary. To know what's in it, what's covered, what's not covered. Policy is a policy.

Basically, the generic is kind of all the same. Different states have different rules, different regulations, and a lot of exclusions, but list what is covered what is not covered, so that you don't find yourself in a situation where if you have a loss and you try to make a claim and it's not covered.

For example, most generic insurance policies kind of have a limit and is pretty low for jewelry or personal items like that. Most of them, $2500, $3000, $5000, or something like that. If you have a lot of high-end expensive jewelry, you lose it or it's stolen, and if it's $15,000, $20,000, they're only going to pay the limit to what the policy says, so that's quite a big loss.

By reading your policy and understanding that, and you can get a personal rider writer like an addendum to the policy where he covers just those specific items. You'll be covered in an instance. It's always a good idea to understand and make an inventory of things around your house. Especially if you have expensive high-end items, computers, phones, laptops, and stuff like that. Keep an inventory, have the serial numbers, date purchased, keep the receipts or take a picture of the receipts if you can so you have all that documentation in the worst-case scenario. It'll help you out in the long run.

The insurance companies are famous for lacking documentation.

Oh, yes. I've got a cubicle here full of documentation.

When dealing with insurance companies, we have to change our mindset and think like an insurance company as opposed to thinking like a consumer.

Exactly, and that helps us. As far as, again, with the prosecution, the more documents we have, the easier it is for us to prove our cases.

Do you have many cases of fraud conducted by an insurance company?

Not fraud per se, but again, just like the agents taking money and not binding the policies, that’s kind of the extent of who we see. If people have called me and said, “You need to investigate XYZ insurance company because they're charging me outlandish premiums,” that's not in my bailiwick.

That's a contract dispute, not a criminal matter.

Exactly. Insurance fraud, it is a contract, so it's a contract law that we're kind of enforcing.

Before we finish up here, any other parting advice you'd have for individuals or businesses with respect to dealing with insurance fraud?

Just a couple of things. As I mentioned, as far as the homeowner stuff, it's always a good idea to, like I said, make inventory and keep a good documentation of all that stuff. 

One thing we do see, and it's everywhere all across the country, unscrupulous contractors or public adjusters, they call themselves sometimes storm chasers. When you have a catastrophic event, tornado, hurricane, or something like that, always look out for—they go around and knock on your door and say, “I can represent you. I know she had damage. I could do this and that.” They go around from catastrophe to catastrophe, and that's what they do. That's how they make their money.

Be very leery about people knocking on your door and soliciting you as opposed to you reaching out looking for somebody to take care of your damage. Always follow up and try to verify everything. Do a little research and dig into any contract or make sure that they're up and up, not unscrupulous.

For auto insurance, if you find yourself in an accident, just make notes, take pictures. Take pictures of your damages, take pictures of the other vehicle’s damage. Take notes or take pictures of the driver because a lot of times, we'll have a little mix-up in who was actually driving the car. How many people were in the car?

A lot of times, we'll have jump-ins too where you have an accident and it's one person, and all of a sudden, the insurance claim pops up and there are five or six people that claim that they were in the car and injured. Take pictures of the surrounding area if there are any witnesses, people standing around. That can always help you out if you find yourself in an accident like that. Who else was there and inside the vehicle?

Was it also helpful for having a dashcam?

It would certainly help, but that would help if it's right in front of you, not if you're hit from the side or the back. I had one case when I was working down in Virginia Beach—there’s a trooper that I've worked with for years. It was a good thing just how many passengers went to the vehicle when he got to the scene.

I convicted two people who did the same—they were jump-ins. They said that they were injured in an accident. When I talked to the trooper, he said, “No, no, no. There’s but one driver and that was it. Nobody else was in that scene.” So documentation as far as that is always helpful.

If I'm in a car accident, what can I do to help make sure that the police officer documents it on his report?

Just ask him nicely to put a notation in his field notes and document that yourself. As I go around, I talk to insurance groups, I talk to civic groups, and I talk to other police departments. I'm always harping on that. When you work in an accident, it's an investigation just like any other.

Take a little few minutes just to document that kind of stuff. You don't have to write a whole book and a big litany of information, just basic stuff. It may end up helping us in the long run well after he's worked the accident.

I'm trying to remember, I was a witness to a pretty bad accident once. I'd wait around for the police to be there, and they had me write a witness statement. I suppose it's good as if they're having you read a witness statement. Regardless of what the police officer does, you make sure that you in your statement say, “The other car had this many people in it. I had this many people in my car.” So they at least can't say that you're changing your story after the fact.

Right, and keep a copy of that, because if you can write as soon as possible after the event, that's when you're going to have the freshest memory. Just write all those little things down. Just be diligent and make as much information known as possible.

Take a breath. Let the emotions cool down.

Yeah, that too. Yeah, sometimes. Sometimes when we get called to an accident, there can be a fight in progress by the time we get there. That has happened a few times before too.

Are there situations where people are staging an accident, where there's an actual accident that's happened, where they're trying to get the person, “Well, just give me cash right now and I'll go away.” And then they turn around and file an insurance claim later?

That has happened not too often, but yeah, absolutely. Don't do that at all, because you're just asking for trouble there and opening yourself up to even more liability. If you pay a few dollars or whatever, you'll end up paying again because claims could be made against you. If there are injuries involved, we're talking thousands and thousands of dollars. Always stay away from doing that.

I assume insurance investigators are like, “Well, if you didn't do anything wrong, why did you give the person money?”

Good point. Very good point.

I totally understand that. “I didn't want to have to deal with my insurance company, so I thought $200 for a bumper was a good deal.”

Sometimes, dealing with insurance companies can be a hassle. I can understand that, but you're better off in the long run and let the process work itself out.

William, or Tony, if you prefer, I super appreciate your time this afternoon. Thank you so much for coming on the Easy Prey Podcast.

Sure thing. I would encourage your viewers—our website here in Virginia is stampoutfraud.com. We have a lot of information there and some extra tips that I've probably forgotten to mention. There's also a national website, Coalition Against Insurance Fraud. I'm not sure if it's dot-org or dot-com.

If you google Coalition Against Insurance Fraud, that's kind of a national entity that deals with insurance fraud. You can actually report on both websites in Virginia. On the national one too, you can actually report or it gives you the fraud bureaus of each state, so you can report for all of that as well.

Awesome. We'll make sure to link to both of those in the show notes, so people can just click on it and not have to figure out how to type it all in.

All right, yeah, that'd be great.

All right. Thank you very much.