CALIFORNIA PENAL CODE 550 PC – SUBMITTING FRAUDULENT INSURANCE CLAIMS

The crime of insurance claims fraud is established by California Penal Code § 550, which typically targets the intentional submission of false or fraudulent claims for insurance reimbursement. The specifics of this white-collar crime can vary significantly and include aspects such as:

• Filing a false or fraudulent claim for injury or property damage
• Presenting multiple claims for the same loss to different insurers
• Deliberately causing or participating in a vehicular accident to make a fraudulent insurance claim
• Submitting a false or fraudulent claim based on the purported theft, destruction, or damage to a vehicle

In general, cases of insurance claims fraud are brought against individuals who make a significant misrepresentation during the claims process. A misrepresentation is considered material if the falsely reported fact is crucial to the amount of loss or the determination of liability. It’s important to note that not all reported facts about an incident are considered material. For example, if an otherwise valid claim includes a detail such as the color of the defendant’s clothing at the time of an auto collision, and it turns out to be falsely reported, but this detail has no actual consequence to the claim, the defendant would not be expected to be charged based on this misrepresentation, even if it was made knowingly.

550. PC: (a) It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following: (1) Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury, including payment of a loss or injury under a contract of insurance. (2) Knowingly present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer, with an intent to defraud. (3) Knowingly cause or participate in a vehicular collision, or any other vehicular accident, for the purpose of presenting any false or fraudulent claim. (4) Knowingly present a false or fraudulent claim for the payments of a loss for theft, destruction, damage, or conversion of a motor vehicle, a motor vehicle part, or contents of a motor vehicle. (5) Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim. (6) Knowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit. (7) Knowingly submit a claim for a health care benefit that was not used by, or on behalf of, the claimant. (8) Knowingly present multiple claims for payment of the same health care benefit with an intent to defraud. (9) Knowingly present for payment any undercharges for health care benefits on behalf of a specific claimant unless any known overcharges for health care benefits for that claimant are presented for reconciliation at that same time. (10) For purposes of paragraphs (6) to (9), inclusive, a claim or a claim for payment of a health care benefit also means a claim or claim for payment submitted by or on the behalf of a provider of any workers’ compensation health benefits under the Labor Code. Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=550.&lawCode=PEN

TYPES OF INSURANCE CLAIM FRAUDS

Insurance fraud takes many forms, but it always involves a “Material Misrepresentation” – a false statement made in order to obtain a benefit under an insurance policy. Some examples of insurance fraud include:

• Workers’ Compensation Applicant Fraud: An employee makes false statements during a workers’ compensation claim to get benefits such as temporary total disability payments and/or medical benefits.

• Employer Fraud: An employer makes false statements to deny workers’ compensation benefits to an employee or prevent them from filing a claim.

• Claim Denial Fraud by Insurance Company: An insurance company makes false statements to deny workers’ compensation benefits to an employee or prevent them from filing a claim.

• Premium Fraud: An employer makes false statements to reduce workers’ compensation premiums such as misclassifying employees, underreporting payroll or number of employees, reporting actual employees as independent contractors, or doing business under another name to avoid higher rates. This type of fraud gives these employers an unfair advantage over competitors who are paying higher premiums.

• Insider Fraud: Insurance agents/brokers steal premiums and fail to obtain policies or issue sham policies.

• Medical/Health Care Provider Fraud: Medical professionals bill for services not rendered, “up code” bills for more expensive services not provided, or participate in organized rings by paying others to recruit patients. Medical provider fraud can occur under various types of insurance policies, including workers’ compensation, auto insurance, and health insurance.

• Auto Insurance Fraud: A person makes false statements to an insurance company to obtain benefits under an auto policy, such as falsely reporting that a car was stolen, submitting forged or fake receipts to support damages, or staging car accidents to claim injuries.

In all of these cases, a false statement is made with the intention to gain an insurance benefit through deception.

ELEMENTS OF FALSE INSURANCE CLAIMS

To secure a conviction under CPC §550(a), the prosecutor must demonstrate beyond any reasonable doubt that:

• You acted on your own or aided, solicited, or conspired with someone else to commit the offense; AND,
• You submitted a false or deceptive claim related to injury, vehicle theft or damage, or health care benefits (including unutilized benefits and incorrect charges); OR,
• You made multiple claims to several insurers; OR,
• You created, signed, or subscribed to a document, intending for it to be used or submitted to support a false claim; AND,
• You had knowledge that the claim was false or fraudulent; AND,
• You intended to deceive when committing the act.

EXAMPLE

John was involved in a minor car accident where his vehicle sustained minimal damage. However, he saw an opportunity to make some extra money by submitting false injury claims to his insurance company. He exaggerated the extent of his injuries from the accident and sought medical treatment for injuries that were not related to the car accident. John then submitted inflated medical bills and fabricated invoices to his insurance provider to support his fraudulent injury claims. Upon investigation, it was uncovered that the medical treatments and bills were falsified, and John’s intentions were to deceive the insurance company and benefit financially from the false claims. As a result, John could be charged under California Penal Code § 550 PC for Submitting Fraudulent Insurance Claims.

HOW DO AGENCIES DETECT FRAUD?

Insurance companies frequently utilize Special Investigations Units (SIUs) made up of professionals with advanced training in identifying and probing potential fraudulent claims. These SIUs collaborate with the California Department of Insurance to uncover suspicious claims. However, there are instances where they make errors and inadvertently lead to unwarranted criminal charges being brought forward.

PENALTIES, PUNISHMENT, AND SENTENCING

Submitting Fraudulent Insurance Claims in California is categorized as a “wobbler” offense, which means it can be charged as either a felony or a misdemeanor. The classification depends on the value of the fraudulent claim. If convicted of the felony form, the potential penalties include:

• A state prison sentence of up to five (5) years,
• A fine of up to $50,000,
• Both a fine and imprisonment.

If convicted of the misdemeanor form of Submitting Fraudulent Insurance Claims in California, the potential penalties include:

• A county jail sentence of up to one (1) year,
• A fine of up to $10,000,
• Both a fine and imprisonment.

HOW CAN I FIGHT FRAUDULENT INSURANCE CLAIMS CHARGES?

At Tabibnia Law Firm, we have extensive experience representing numerous individuals accused of fraud, including those charged with filing false insurance claims. Based on our experience, we have identified four defenses that have proven highly effective in persuading prosecutors, judges, and juries.

• Unintentional errors: Innocent mistakes, misinterpretation of claim forms, or confusion regarding the insurance claims process can result in inaccuracies. If we can demonstrate that these errors were not intentional, but rather the result of genuine confusion or misunderstandings, we can show that no fraud was committed.

• Good faith disagreements: Sometimes, policyholders and insurance providers have legitimate disagreements regarding coverage. If there is evidence that you acted in good faith and believed that your claim was valid based on the specifics of your policy, we can argue that no insurance fraud occurred.

• Being framed: You may be the victim of fraud or deceit, where someone else has used your identity or information without your knowledge. If we can gather evidence to prove that you were not responsible for the fraudulent claim, you can clear your name.

• No material misrepresentation: Only material misrepresentations – false information or omissions that impact the insurer’s decision-making process – can result in insurance fraud allegations. If any untruths on your insurance application were not material to your claim, we can argue that they cannot be the basis of a criminal charge.

In any of these situations, we would conduct a thorough investigation and present evidence to demonstrate your innocence. Our goal is to protect your rights and reputation and ensure that you are not unfairly accused of insurance fraud.

IMMIGRATION CONSEQUENCES

A conviction under PC § 550 can make an immigrant deportable. Fraud offenses involving a loss to the victim exceeding $10,000 are considered aggravated felonies under U.S. immigration law (8 U.S.C. § 1101(a)(43)(M)(i)). An aggravated felony conviction almost always leads to deportation and bars from re-entry. Even if the fraud does not reach the threshold for an aggravated felony, it can still render an immigrant inadmissible. This means they could be denied entry into the U.S. if they leave, or be unable to adjust their status to lawful permanent resident. Understanding the full impact of a charge under California Penal Code § 550 PC requires careful consideration of both criminal and immigration law. Professional legal advice is crucial for navigating these complex issues. If you or someone you know is charged with this crime, it is strongly advisable that you also consult with an immigration lawyer. If you do not have or know of an immigration lawyer, the Tabibnia Law Firm can refer you to one.

FEDERAL LAW USED TO PROSECUTE INSURANCE FRAUD

Federal law does not have a specific statute that explicitly prohibits insurance fraud. However, this does not imply that the federal government lacks authority to address instances of fraud. Instead, the federal government often utilizes broad statutes that encompass alleged fraud to prosecute cases of insurance fraud. Federal prosecutors frequently turn to 18 U.S.C. §1341 in cases of insurance fraud prosecution. This statute, focused on mail fraud, is commonly employed when an individual utilizes the U.S. postal services to submit a fraudulent claim or provide false information on an insurance application. Another frequently used statute in insurance fraud prosecutions is 18 U.S.C. §1343, which pertains to federal wire fraud. Similar to the utilization of mail fraud statutes, prosecutors rely on this provision to bring charges against individuals who engage in fraudulent activities by filing claims using telephones or other forms of wired communication. A conviction under either of these statutes can potentially result in a prison sentence of up to 20 years, accompanied by substantial fines. It is important to note that the applicability of these statutes is limited. In cases where these statutes do not apply, allegations of fraud are typically addressed under state law.

CAN A DEFENDANT GET A CONVICTION EXPUNGED?

Yes, a defendant can seek to have a conviction expunged under California Penal Code § 550 PC for submitting fraudulent insurance claims, but there are specific criteria and limitations to consider.

• The defendant must have successfully completed probation. This includes fulfilling all the terms and conditions of probation, such as paying fines, restitution, and completing community service or counseling.

• The defendant must not be facing any new criminal charges or serving a sentence for another offense.

• If the offense was initially charged as a felony but qualifies for reduction to a misdemeanor under Penal Code § 17(b), this reduction must occur before expungement.

Consulting with a knowledgeable attorney can significantly enhance the chances of a successful expungement.

RELATED CRIMES

• Destruction of Insured Property – California Penal Code §548(a) PC
• Referring or Soliciting Fraudulent Business – California Penal Code §549 PC
• Illegal Compensation for Referrals – California Penal Code §551(a) PC
• False Report of a Vehicle Theft – CVC [California Vehicle Code] §10501(a)
• Welfare Fraud – WIC [Welfare & Institutions Code] §10980,
• Making a False Statement to Alter a Benefit – Unemployment Insurance Code [UIC] §2101
• Workers Compensation Fraud – California Insurance Code [INS] §1871.4(a)
• Submitting Multiple Insurance Claims – California Penal Code 550(a)(4)
• Causing an Accident to Collect Insurance – California Penal Code 550(a)(3)
• Arson – Californoa Penal Code 451 PC

WHAT TO DO IF I AM CHARGED WITH FALSE INSURANCE CLAIMS?

If you or a family member is facing charges of insurance claims fraud under Penal Code § 550, the first step is to seek the assistance of experienced criminal defense attorney Cyrus Tabibnia at Tabibnia Law Firm. With a focus on defending against criminal charges during the investigative stage, Mr. Tabibnia aims to potentially reduce or dismiss charges through pre-filing intervention. Even if the case progresses to formal filing, there are still opportunities for a favorable outcome such as negotiating a settlement with the government or proceeding to litigation at a preliminary hearing or jury trial. Mr. Tabibnia is dedicated to reviewing the specific details of your case and exploring all legal options available to you. Based in Southern California, Mr. Tabibnia serves clients in the greater Los Angeles area and the San Fernando Valley. Do not discuss your case with anyone except your attorney. Anything you say can potentially be used against you in court. Schedule an initial consultation and discuss your case with Cyrus Tabibnia, you can reach him at 866-713-2159.