Insurance fraud incidents in California have increased substantially in recent years. Because of this, federal and state authorities have taken stringent steps and thus pursue any attempts to defraud insurance providers aggressively. However, while being aggressive, these authorities have also caused substantial problems for innocent people who are victims of misunderstandings. When this occurs to you, a skilled criminal defense lawyer can assist you in solving the legal matter.
There are many different types of insurance fraud. Some forms involve accusations of fraudulent automobile insurance claims, while others result from acts law enforcement believes were suspicious, like a house fire. Fraudsters target even healthcare insurance. If you have been accused of any form of insurance fraud, our lawyer at Los Angeles Criminal Attorney may be able to help. Irrespective of the facts surrounding your case, contacting us could increase the chances of obtaining a favorable outcome for your case.
Insurance Fraud Elements
Insurance fraud is a term that describes the broad category of unlawful acts. Prosecutors must rely on different state or federal criminal laws to prosecute insurance fraud. However, every case of insurance fraud has similar vital elements. The elements include:
- Fraudulent intent— fraudulent intent means planning to deceive the insurer, to cause them a monetary loss or damage to their financial, property, or legal rights. There is nothing like accidental fraud or committing fraud by accident. For a conviction to occur, the prosecution must prove that you consciously did an act intending to defraud an insurer.
- A completed action— for an insurance fraud conviction to occur, the prosecution must prove that you completed an act in furtherance of the fraud. Completing an act entails more than just planning to do something or making false statements.
Either the intent or the act alone does not suffice. Fraud only happens when someone first aims to commit the fraudulent act and then proceeds to act on the intention. It does not matter whether the action was successful or not. It qualifies as insurance fraud even if the supposed victim or fraud target does not incur any loss or harm.
Classifying California Insurance Fraud Charges
The facts surrounding a specific insurance fraud case are based on whether federal or state prosecutors file the charge. While large fraud cases are prosecuted under federal law, California prosecutors can file charges.
Federal Insurance Fraud Law
The federal statute does not address the insurance fraud matter directly since no law explicitly criminalizes it. This does not imply that the federal authorities have no power when insurance fraud occurs. Mostly, these federal authorities will depend on broad laws applying to any supposed fraud to prosecute incidents of insurance fraud.
The one statute that federal prosecutors usually depend on when prosecuting insurance fraud incidents is 18 U.S.C 1341. This law describes mail fraud and is prevalently used when an individual uses United States postal services to lie on an insurance application or file a false claim.
Also prevalent is the application of 18 U.S.C 1343, the statute on wire fraud. Like mail fraud, federal prosecutors depend on this law to try anybody who files a fraudulent claim using the phone or other kind of wired communication.
Per either law, a conviction may result in twenty years in prison and substantial fines. However, these laws only apply in a few situations. In cases where they are inapplicable, state laws likely cover any other insurance fraud allegations.
State Insurance Fraud Laws
Whereas federal laws may not directly address insurance fraud cases, that is not true for California statutes. There are laws for a broad range of insurance fraud. They include:
- Auto insurance fraud laws
- Healthcare insurance fraud laws
- Unemployment insurance fraud laws
- Workers’ compensation fraud laws
- Medi-Cal fraud laws
- Welfare fraud laws
Auto Insurance Fraud Laws
The most commonly charged incidents are those of vehicle insurance fraud. Several laws cover vehicle insurance fraud. They are PC 548, PC 549, PC 550, and PC 551.
PC 548, Damaging/Abandoning a Vehicle
PC 548 makes it illegal to hide, destroy, damage, abandon, dispose of, or injure an insured vehicle intending to defraud the insurer. This is the most commonly charged form of auto insurance fraud. It is considered a felony, and a conviction is punishable by felony probation, a court fine of not more than 50,000 dollars, and two, three, or five years of incarceration served in jail.
PC 549, Referring/Soliciting Vehicle Insurance Fraud Business
PC 549 makes it an offense for an individual to refer another to a vehicle shop or doctor or for a vehicle repair shop to solicit business from somebody else, aware that the professional would file a fraudulent vehicle insurance claim. This law applies to any corporation, firm, association, partnership, someone acting in their capacity, or someone acting in their capacity as a private or public employee.
Violating Penal Code 549 is deemed a wobbler crime. A wobbler is a crime that the prosecutor can charge either as a felony or misdemeanor based on the facts of the case and the defendant’s criminal history. The possible misdemeanor conviction consequences are summary probation, a jail sentence of one year, and up to a thousand dollars in fines. The penalties for a felony conviction are felony probation, three years of incarceration served in jail, and 50,000 dollars in fines or twice the fraud amount, whichever is more. A second/subsequent conviction is always a felony carrying similar felony consequences.
PC 550(a)(2), Filing Multiple Claims
PC 550 covers different forms of auto insurance fraud, one of which is filing multiple claims. According to PC 550(2), it is against the law to knowingly present two or more insurance claims for the same loss to the same or more insurance providers intending to defraud the insurer. This crime is a felony punishable by felony probation, two, three, or five years of jail sentence, and a maximum of 50,000 dollars in fines or twice the fraud amount, whichever is higher. You may also face a two-year sentence increment for every prior felony conviction for vehicle insurance fraud under PC 550 or 548. Note that the judge may deny you a suspended sentence or probation if you have a past felony conviction for vehicle insurance fraud.
PC 550(a)(3), Causing a Vehicle Accident
You violate PC 550(a)(3) if you participate in or cause an accident, aware that its purpose is to file a fraudulent/false insurance claim intending to defraud. It counts as a PC 550(a)(3) if the crash was the direct, probable, and natural repercussion of your actions, and the collision would not have occurred if you did not act the way you did.
Violating PC 550(a)(3) is a felony. A conviction carries felony probation, two, three, ot five years of incarceration served in jail, and up to 50,000 in fines or twice the fraud amount, whichever is more. You may also face various sentence enhancements if you have particular prior convictions.
PC 550(a)(4), Fraudulent Claims
PC 550(a)(4) criminalizes submitting a fraudulent/false claim for a vehicle's destruction, theft, conversion, or damage. For the court to convict you of this crime, the prosecution must prove that:
- You fraudulently or falsely claimed compensation for loss because of destruction, theft, conversion, or damage of a vehicle, vehicle part, or contents of an automobile
- Knowing the claim was fraudulent or false
- You filed the insurance claim with the intent to defraud
Submitting a fraudulent or false claim is a felony. A conviction carries felony probation, two, three, or five years of jail sentence, and 50,000 in fines or twice the fraud amount, whichever is higher. You will also face a sentence enhancement of two years for every past felony conviction for vehicle insurance fraud per PC 550 or 548. And if you have any past felony conviction for vehicle insurance fraud, the judge may deny you a suspended sentence or probation.
PC 550(b)(1-4) False Claims
It is also considered vehicle insurance fraud if you:
- Present a written/oral statement to oppose or support an auto insurance claim knowing the statement contains misleading or false info regarding the material fact
- Make or prepare an oral or written statement to support or oppose a vehicle insurance claim, aware the statement has misleading or false info regarding the material fact.
- Make or prepare a written or oral statement that you live in California when you live elsewhere, meant to be submitted to a vehicle insurance company to obtain auto insurance benefits.
Violating PC 550(b) (1-4) is deemed a wobbler. A felony conviction is punished similarly to filing fraudulent or multiple claims. But if convicted of a misdemeanor, you will face misdemeanor probation, a year of jail term, and 10,000 dollars in fines.
PC 551, Unlawful Referral to a Vehicle Repair Dealer
PC 551 makes it illegal for a vehicle repair dealer (or its workers) to:
- Pay an insurance agent to refer policyholders to the dealer for auto repairs covered by insurance
- Knowingly offer a customer a discount to offset a deductible on their insurance policy
This crime is a wobbler if the amount in question is more than 950 dollars. Potential penalties for a felony include three years in jail and up to 10,000 in fines. And if the amount in question is less than 950 dollars, you will face misdemeanor charges punishable by not more than 1,000 dollars in fines and a jail time of six months.
Health Care Insurance Fraud Laws
Healthcare insurance fraud is usually called medical billing fraud, Medi-Cal fraud, or Medicare fraud. PC 550(a) is the law that prohibits health care insurance fraud. Most patients pay their health care bills through government or private insurance. Because making health care payments is intricate, it is easier to commit fraud. The most prevalent schemes that violate PC 550(a) include:
- Doctor or patient submitting false/fraudulent health care insurance claims
- Preparing a false document to support healthcare insurance fraud
- Healthcare professionals submitting multiple healthcare insurance claims for the same procedure
- Healthcare clinics billing for more costly services than a patient received
- A doctor billing for services that a patient never received
For a case involving less than 950 dollars, healthcare insurance fraud is a misdemeanor punishable by a fine of $1,000 and six months in jail. It becomes a wobbler offense if the amount is more than 950 dollars. A felony carries probation with a year in jail, five, three, or two years of incarceration, and a court fine of 50,000 dollars or twice the fraud amount, whichever is more. Additionally, your professional license may be revoked or suspended if you are a healthcare professional.
Unemployment Insurance Fraud Laws
Unemployment insurance fraud is not as common as other types of insurance fraud, but it is still frequently prosecuted in California.
You commit this crime when you make a false identification, knowing concealment or willful false representation to increase, obtain, defeat, or reduce unemployment benefits under federal or state programs. This form of insurance fraud is governed mainly by the state's Unemployment Insurance Code and generally by the Penal Code.
Both employers and employees can be prosecuted under unemployment insurance fraud laws. Common ways in which you can violate unemployment insurance fraud laws as an employee include:
- Falsifying the reason you are no longer working
- Fabricating work-search efforts (stating you are diligently looking for employment when you are not)
- Cashing another person’s unemployment check without permission to do so
- Creating a fake employer and listing yourself as a worker who qualifies to obtain unemployment insurance benefits
- Living in California and attempting to receive fraudulent benefits in a different state
- Using a false social security number, name, or employment info while you continue working and simultaneously receiving unemployment benefits
- Collecting other forms of compensation like workers’ comp benefits, pension, et cetera, without reporting the compensation to the Employment Development Department (EDD), the body that is in charge of the state’s unemployment insurance program
- Working while receiving unemployment benefits and failing to report the work you do to the EDD
Employers, on the other hand, can violate unemployment insurance fraud laws by:
- Knowingly withholding deductions from workers and willfully failing to pay them to the EDD
- Intentionally providing false info regarding why a worker was terminated
Under the Unemployment insurance Code (UIC 2101), unemployment insurance fraud is considered a wobbler. A misdemeanor is punishable by a year in jail and 20,000 in fines, while a felony carries up to three years of prison term and 20,000 dollars in fines.
Under the Penal Code (PC 550), the fraud amount controls the sentence. If the fraud amount is 950 dollars or less, you will face misdemeanor charges punishable by $1,000 in fines and six months in jail. If the amount is over 950 dollars, the crime is a wobbler. A conviction for a misdemeanor carries 12 months in jail and $10,000 in fines. A conviction for a felony carries not more than five years of incarceration, a fine worth 50,000 dollars, or twice the fraud amount, whichever is higher.
Other consequences may include professional license suspension/revocation, repayment of benefits plus a 30 percent penalty, and ineligibility to retain or receive paid benefits.
Workers’ Compensation Fraud Laws
California workers’ comp fraud involves providing misleading or false info to obtain benefits for which you do not legally qualify. Several laws address workers’ comp fraud. They are Insurance Code 1871.4, PC 550, and PC 549. Acts considered workers’ comp fraud include:
- Referring, accepting, or soliciting a business from an individual, aware they intend to commit workers’ compensation fraud
- Submitting an insurance claim for health care benefits covered by workers’ compensation that was not used
- Submitting or preparing multiple insurance claims to receive health care benefits covered by workers’ comp insurance for the same injury
- Knowingly participating in or aiding and abetting a conspiracy to commit workers’ comp fraud.
- Making a fraudulent/false statement about qualifying for benefits to deter an injured employee from claiming comp benefits
- Knowingly presenting or making a fraudulent/false statement to obtain or deny workers’ comp benefits.
Most workers’ comp fraud cases are wobblers. The possible felony prison sentence for most workers’ comp fraud is two, three, or five years. The fine for a felony conviction may be as high as 150,000 or twice the fraud amount, whichever is higher. In many cases, workers’ compensation fraud is a misdemeanor carrying a jail term of one year.
Welfare Fraud Laws
Welfare and Institutions Code (WIC) 10980 describes two primary forms of welfare fraud— internal and recipient fraud. Recipient fraud is the most common. It occurs when a person provides incomplete or false information to obtain Medi-Cal benefits, food stamps, or benefits for which they do not legally qualify. Even though there are several ways of committing recipient fraud, some are more prevalent than others. Common examples of recipient welfare fraud include:
- Receiving benefits from a different state plus those you receive in California
- Filing an insurance claim for ineligible or fictitious children
- Filing an insurance claim for a minor who does not reside in the home
- Not reporting additional income and other benefits
- Claiming that you are a single parent when the minor’s other parent resides in the home (that is, absent parent living in the home)
Internal fraud occurs when a government worker plays a role in distributing or assigning benefits to recipients they know do not qualify. In most cases, this is an inside job when an eligible employee falsifies applications for ineligible family members or friends and splits the proceeds. Employees may make false claims about income, create fictitious children, or neglect reporting facts that would disqualify family members or friends from obtaining legitimate benefits.
The consequences of welfare fraud are based on what activity you have committed. Some are straight felonies, others are straight misdemeanors, and others are wobblers.
Common Defenses to Insurance Fraud Charges
The defenses in insurance fraud cases can vary. Although, the elements of the specific offense make some of the vigorous legal defenses available. Note that insurance fraud only takes place when there is fraudulent action combined with intent. If the prosecution cannot prove you had fraudulent intent, it cannot prove that you committed insurance fraud. Similarly, even the intention to defraud another is not an offense if you never acted upon it.
A mistake of fact is another prevalent defense. At times insurance companies just make mistakes, while in other situations, the police may need to understand the insurance claim grounds. When these mistakes occur, proving the charges were filed out of a misunderstanding can result in the case being dismissed.
Another legal defense that can apply to most insurance fraud crimes is lack of knowledge. Most of these violations require that the prosecutor proves you knew you were committing fraud for you to be convicted. For example, the prosecutor must prove you were aware that you were making false statements or filing fraudulent or multiple claims to be convicted. The judge cannot sentence you if the prosecution cannot prove you had the requisite knowledge.
In some insurance fraud cases, the most solid defense is arguing that the prosecutor has not met the required standard of proof. Not that the burden to prove the charges lies on the prosecutor. It is not upon you to demonstrate your innocence; instead, it is up to the state to prove you are guilty. The judge should not convict you if the prosecuting attorney cannot show beyond any reasonable doubt that insurance fraud occurred.
Find an Experienced Fraud Crimes Lawyer Near Me
The financial strain and stress that accompanies fraud charges can be considerable. Amidst all the concerns are the likelihood of being convicted and the consequences that come with it. Regardless of the insurance fraud law, you have been accused of violating, the possible punishment is significant. However, working with an experienced insurance fraud lawyer goes a long way in avoiding these penalties. A skilled and knowledgeable lawyer can assist you in building the most solid defense possible that could result in a charge reduction or dismissal.
At Los Angeles Criminal Attorney, our lawyers have decades of experience and in-depth knowledge of California insurance fraud laws. We will be by your side throughout the criminal process, seizing every opportunity to ensure you obtain the most favorable outcome for your case. To know your chances of winning your case and avoiding a conviction, call us at 424-333-0943 for a cost-free consultation and case evaluation