CALIFORNIA PENAL CODE 551 PC – UNLAWFUL REFERRAL TO AN AUTO REPAIR DEALER

Auto mechanics depend on a consistent flow of customers to sustain their livelihood. Due to the intense competition in the industry, there may be a temptation to offer incentives or kickbacks to insurance agents in exchange for customer referrals. Under California Penal Code Section 551 PC, it is illegal to make unlawful referrals, including for kickbacks, to an auto repair dealer. If convicted, this offense can be prosecuted as either a misdemeanor or a felony, and may result in a maximum sentence of up to 3 years in jail or prison.

California Penal Code Section 551 States: (a) It is unlawful for any automotive repair dealer, contractor, or employees or agents thereof to offer to any insurance agent, broker, or adjuster any fee, commission, profit sharing, or other form of direct or indirect consideration for referring an insured to an automotive repair dealer or its employees or agents for vehicle repairs covered under a policyholder’s automobile physical damage or automobile collision coverage, or to a contractor or its employees or agents for repairs to or replacement of a structure covered by a residential or commercial insurance policy. (b) Except in cases in which the amount of the repair or replacement claim has been determined by the insurer and the repair or replacement services are performed in accordance with that determination or in accordance with provided estimates that are accepted by the insurer, it is unlawful for any automotive repair dealer, contractor, or employees or agents thereof to knowingly offer or give any discount intended to offset a deductible required by a policy of insurance covering repairs to or replacement of a motor vehicle or residential or commercial structure. This subdivision does not prohibit an advertisement for repair or replacement services at a discount as long as the amount of the repair or replacement claim has been determined by the insurer and the repair or replacement services are performed in accordance with that determination or in accordance with provided estimates that are accepted by the insurer. (c) A violation of this section is a public offense. Where the amount at issue exceeds nine hundred fifty dollars ($950), the offense is punishable by imprisonment pursuant to subdivision (h) of Section 1170 for 16 months, or two or three years, by a fine of not more than ten thousand dollars ($10,000), or by both that imprisonment and fine; or by imprisonment in a county jail not to exceed one year, by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine. In all other cases, the offense is punishable by imprisonment in a county jail not to exceed six months, by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine. (d) Every person who, having been convicted of subdivision (a) or (b), or Section 7027.3 or former Section 9884.75 of the Business and Professions Code and having served a term therefor in any penal institution or having been imprisoned therein as a condition of probation for that offense, is subsequently convicted of subdivision (a) or (b), upon a subsequent conviction of one of those offenses, shall be punished by imprisonment pursuant to subdivision (h) of Section 1170 for 16 months, or two or three years, by a fine of not more than ten thousand dollars ($10,000), or by both that imprisonment and fine; or by imprisonment in a county jail not to exceed one year, by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine. (e) For purposes of this section: (1) “Automotive repair dealer” means a person who, for compensation, engages in the business of repairing or diagnosing malfunctions of motor vehicles. (2) “Contractor” has the same meaning as set forth in Section 7026 of the Business and Professions Code. Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PEN&sectionNum=551.

ELEMENTS

In order to prove someone guilty of violating this offense, a prosecutor must demonstrate the following:

• The person charged is either an automotive repair dealer, contractor, employee, or agent of one.

AND

• The accused offered a fee, commission, profit-sharing, or any other type of consideration to an insurance agent, broker, or adjuster in exchange for referring an insured individual to the automotive repair dealer or its employee for vehicle repairs covered by the policyholder’s insurance.

OR

• The individual knowingly provided a discount with the intention of offsetting a deductible required by an insurance policy that covers repairs or replacement of a motor vehicle.

EXAMPLE

Tom, a salesperson at a car dealership, refers all of his customers to a particular auto repair shop. Unbeknownst to his customers, Tom receives a kickback for every customer he refers to the shop. This practice is in violation of California laws governing auto repair transactions. Tom is charged for unlawful referral to an Auto Repair Dealer in California when the authorities become aware of his illegal activities and investigation is conducted.

PENALTIES, PUNISHMENT, AND SENTENCING

In cases where the amount involved exceeds $950, violating PC 551 is considered a “wobbler” offense, meaning it could be charged as either a misdemeanor or a felony. Potential penalties might include up to three years in county jail and/or a fine of up to $10,000. If the amount in question is less than $950, a PC 551 violation is treated as a misdemeanor with penalties of up to six months in county jail and/or a fine of up to $1,000.

DEFENSES TO UNLAWFUL REFERRAL TO AN AUTO REPAIR DEALER

If you are accused of violating PC 551, there are several legal defenses you can use to challenge the accusation. Here are three common defenses:

• The referral was a gift: The law only prohibits offering a fee or commission for a referral. If you can show that the referral was a one-time gift given for reasonable grounds, such as a holiday gift, it may not be considered a crime.
• Lack of knowledge about offering a discount as an offset: To be guilty under this statute, you must have knowingly offered a discount as an offset. If you can prove that you had no knowledge that you were offering a discount for this purpose, you may not be held responsible for a crime.
• Entrapment: In some cases, suspects are arrested and accused as a result of an undercover sting operation. If you were lured into committing the crime by an officer, it can be considered entrapment. Entrapment can serve as a legal defense if you can demonstrate that you only committed the crime due to the actions of law enforcement.

By presenting these defenses, you can challenge the accusation and potentially avoid criminal consequences.

IMMIGRATION CONSEQUENCES

Convictions involving fraud or misrepresentation can lead to deportability under 8 U.S.C. § 1227(a)(2)(A)(iii) and inadmissibility under 8 U.S.C. § 1182(a)(2)(A)(i)(I). This offense is generally considered a misdemeanor. The immigration consequences of a misdemeanor can vary significantly depending on the specific facts of the case, the individual’s immigration status, and their history. Certain misdemeanors may be classified as CIMTs, which can have serious immigration consequences, including inadmissibility or deportation. However, not all misdemeanors are CIMTs. CIMTs generally involve fraud, theft, or intent to cause significant harm. A charge for unlawful referral to an auto repair dealer might not typically be classified as a CIMT, but this can depend on the specific circumstances and the interpretation by immigration authorities. While misdemeanors are generally not classified as aggravated felonies, which have severe immigration consequences, certain offenses can be reclassified based on the sentence imposed or specific facts of the case. However, unlawful referral to an auto repair dealer is unlikely to be considered an aggravated felony. Even if a misdemeanor does not fall into a category that mandates deportation or inadmissibility, immigration authorities have discretion to deny benefits based on criminal activity, especially if it reflects poorly on the applicant’s moral character.

CAN A DEFENDANT GET A CONVICTION EXPUNGED?

Yes, a defendant can potentially get a conviction expunged under California Penal Code § 551, which pertains to insurance fraud involving automobile insurance claims. To be eligible for expungement under California Penal Code § 1203.4, the defendant must meet the following criteria:

• The defendant must have successfully completed all terms of probation, including paying all fines, restitution, and any other court-ordered requirements.
• If probation was not part of the sentence, at least one year must have passed since the date of conviction.
• The defendant must not have any pending criminal charges at the time of filing for expungement.
• The defendant must not have served time in state prison for the conviction. However, with the implementation of realignment (AB 109), certain felony convictions now served in county jail instead of state prison may still be eligible for expungement.
• The defendant must not be currently on probation for any other offense or serving a sentence for any other offense.

RELATED CRIMES

• Commercial bribery – California Penal Code 641.3 PC
• Auto insurance fraud – California Penal Code 548 PC, 549 PC, 550 PC
• False report of vehicle theft – California Penal Code 10501 PC
• Commercial Bribery – California Penal Code Section 641.3 PC

SPEAK WITH CRIMINAL DEFENSE LAWYER FROM TABIBNIA LAW FIRM

If you are being investigated for attempting to obtain an unlawful referral to an auto repair dealer in California, it’s important to seek legal guidance as soon as possible. This is a serious offense that could lead to a felony conviction, and the consequences could be life-altering. At the Tabibnia Law Firm, Cyrus Tabibnia can help you navigate this challenging situation. Cyrus Tabibnia is a well-respected attorney with extensive knowledge of criminal law and impressive litigation skills. You can call us at 866-713-2159 to schedule your free consultation with Cyrus and learn more about your legal options.