Automobile Insurance Fraud

The Legal Definition of Auto Insurance Fraud

California defines what constitutes automobile insurance fraud under Penal Code 550. These activities consist of the following but are not limited to:

• Knowingly submitting fraudulent or false claims to receive money for a loss or injury under an insurance policy
• Submitting numerous fraudulent claims for the same damage or loss
• Taking part in or causing a car accident, intending to make a fraudulent claim
• Submitting fraudulent or fictitious claims for the damage, theft, destruction, or conversion of a car, a component, or its contents
• Fabricating information or creating documentation to prove something is not valid
• Submitting fraudulent claims to receive health care benefits
• Filing claims for medical benefits that you, the claimant, did not utilize

Making a Fraudulent Claim

You make fraudulent claims when you intentionally provide an insurance company with incorrect or misleading information to obtain benefits to which you are not legally entitled. This includes fabricating paperwork, accidents, damages, or injuries or giving false information about occurrences.

Submitting Numerous Fraudulent Claims For The Same Damage or Loss

You commit a crime when you provide an insurance company with inaccurate or misleading information several times in an attempt to obtain benefits to which you are not legally entitled. Some of the more common ways people engage in this behavior include the following:

• Exaggerating damages or injuries — To inflate the amount of a claim, people provide incorrect information regarding the level of damages or injuries incurred in an accident.
• Staging accidents — When someone deliberately causes or takes part in a collision, they may file multiple claims for the same incident. For the same occurrence, these activities typically include multiple cars or participants.
• Falsifying documents: In other cases, persons make up or alter records, like invoices for repairs, medical bills, or witness statements, to support false accusations.
• Giving inaccurate information — Individuals could also fabricate information about the people engaged in an accident. They could also distort facts about its conditions to support their claim.
• Filing claims from different insurance companies — Different claims make it possible to obtain duplicate payments. Most people file claims for the same incident with several insurance providers, which is a crime.
• Filed claims for pre-existing damage — Policyholders in other situations submit claims for injuries or damages that predate the incident. These actions attempt to recover money for losses that never happened.

Causing an Accident

Occasionally, policyholders willfully create accidents to fraudulently obtain auto insurance. This entails planning or fabricating an incident to file a false insurance claim. People willfully cause accidents or alter the circumstances surrounding them to make injuries or damage appear legitimate.

Submitting Fraudulent Claims to Obtain Health Care Benefits

Property holders also file fraudulent claims to receive health care benefits, which constitutes auto insurance fraud. They knowingly offer inaccurate or misleading information to their healthcare provider or insurance company.

Their objective? They do not have the right to obtain medical care or services.

Examples of this form of fraud include:

• Falsifying medical information — People fabricate information regarding their health history, symptoms, or injuries to obtain needless medical care or services.
• Billing for non-rendered services — Medical professionals submit claims to insurance companies for treatments they did not administer to patients.
• Upcoding or unbundling — Medical professionals could also be involved. They could use billing code manipulation to exaggerate the cost of treatments or services. Thus, they will secure more money from insurance companies.
• Identity theft — Identity theft occurs when someone uses another person’s identity or insurance information to unlawfully secure medical care or services. It is also part of automobile insurance fraud.

A component of auto insurance fraud includes people knowingly filing claims for medical benefits they did not use. When someone makes false claims for compensation for medical services or treatments they did not receive or require, it is considered fraud. Through these activities, people try to secure money from their insurance provider for medical bills they never had.

Whether the insurance company or anybody else suffered financial, property, or legal losses, you could be found guilty of any of these crimes. Furthermore, you can be liable even if the car belongs to another party.

What Prosecutors Must Prove for You to be Convicted

Prosecutors must establish multiple factors beyond a reasonable doubt to convince the court to convict you of automobile insurance fraud. These components might change based on the particular accusations and case circumstances, but they include:

• Your intent to commit fraud — This entails demonstrating that you purposefully engaged in dishonest or fraudulent behavior to receive money from an insurance provider.
• You gave the insurance company incorrect information, misrepresented yourself, or both — This can entail presenting fraudulent paperwork, inflating damages or injuries, or fabricating accident information.
• The false representation significantly impacted the insurance claim — The misrepresentation had to influence the insurance company’s choice to accept or reject the claim or the amount of money awarded.
• You were aware that the material you submitted was inaccurate or deceptive at the time of submission — Evidence of intentional deception or a pattern of fraudulent activity is required.

Possible Defendants in an Auto Insurance Fraud

The list of possible defendants extends beyond policyholders. These are the primary wrongdoers in most cases, but per what PC 550 considers a crime, the following could also face charges:

1. Companies or individuals Engaging in Business With Individuals or Entities Intending to Commit Automobile Insurance Fraud

You may be subject to insurance fraud-related charges if you are involved in requesting, accepting, or referring any business to or from any individual or organization that you know intends to commit automobile insurance fraud. However, prosecutors will be required to demonstrate that:

• You aware of the possibility of auto insurance fraud or
• You acted with reckless disregard in dealing with the person or organization in question.

The above actions indicate that you actively participated in or encouraged the fraud. These actions violate PC 549.

2. Auto Repair Shops

For repairs covered by motor insurance, an auto repair shop may be named as a defendant in an automobile insurance fraud action if it pays an insurance agent, adjuster, or broker a fee in exchange for recommending policyholders to the shop. This might be interpreted as a component of a fraudulent operation designed to inflate the cost of repairs or cause needless repairs to raise insurance claims.

If these actions involve dishonest behavior to obtain money through fraud, they may qualify as insurance fraud. Prosecutors would have to demonstrate that car repair shop owners were aware of the false nature of the recommendations. They must also show that the shop owner took advantage of the insurance company or offered compensation to participate in the scheme.

Automobile insurance fraud involving auto repair shops is a violation of PC 551. Per this law, discounts cannot be given to offset insurance deductibles for vehicle or structural repairs by automotive repair dealers, contractors, employees, or agents. This is only possible if the insurer has verified that the repair or replacement claims and services are done accordingly.

Legal Defenses in an Automobile Insurance Fraud

Developing a successful defense strategy for vehicle insurance fraud cases depends on the defense lawyer’s skill. Their abundance of knowledge, in-depth comprehension of the law, and vast experience with similar cases enable them to thoroughly examine your case’s specifics. They will settle on a defense specific to the set of facts in your case by identifying any holes in the prosecution’s case. Some of the common defenses your attorney could settle include the following?

1. Your Actions Lacked an Intent to Defraud

Since intent is a critical factor in fraud prosecutions, demonstrating that there was no intention to mislead or defraud the insurance company is a viable defense strategy. Your lawyer could strengthen this argument by proving that the acts were unintentional. For example, they could draw attention to misinterpretations of policy terms or a need for more awareness of the legal implications.

Pre-existing auto damage is sometimes mistaken for fresh damage by people. This is especially the case when several people use the car. This happens for several reasons. Users could be blind to damage that occurs while the vehicle is in the possession of another person. When multiple individuals frequently use the car, keeping an eye on everything is challenging. Routine inspections could miss some pre-existing damage. Minor damages could also appear as typical wear and tear.

Arguing the lack of intent attempts to show that discrepancies in the documented damages were due to error or negligence rather than deliberate dishonesty.

2. The Case Lacks Sufficient Evidence of Wrong-Doing

The lack of sufficient defense is a viable defense strategy. The prosecution bears the burden of proof in criminal cases. The jury cannot find you guilty if they cannot prove it beyond a reasonable doubt.

The prosecution must show that you knowingly participated in fraudulent behavior in insurance fraud proceedings, like fabricating information or fabricating an accident. If your attorney feels that there is insufficient evidence to show these aspects of the crime, they can argue for acquittal or dismissal.

Further undermining the prosecution’s case is the lack of witness testimony that refutes your reports or testimony, GPS data, or video footage showing any criminal activity. Without this proof, the prosecution might have trouble proving their case and supporting their allegations of fraudulent behavior.

3. An Expired Statute of Limitations

One defense in a vehicle insurance fraud case is that the statute of limitations has run its course. This Act, PEN 802, establishes a deadline for prosecuting criminal offenses, like fraud with auto insurance. You can assert the defense that the statute of limitations has run out if the prosecution tries to file charges after this deadline has passed. This could lead to the case being dismissed.

In California, car insurance fraud cases usually have a three-year statute of limitations.

Consequences If You Are Convicted of Auto Insurance Fraud

You can be convicted of a misdemeanor or felony violation, depending on the facts of your case. You could be subjected to misdemeanor or felony penalties during your sentencing. Let us look at the following scenario:

1. Submitting a Fraudulent Claim or Multiple Claims

Submitting fraudulent or multiple claims is a felony. A conviction will result in the following penalties:

• Formal probation
• Imprisonment of 2, 3, or 5 years, and/or
• Up to $50,000 or double the value of the fraud, whichever is greater

2. Causing an Accident

Causing an accident to commit automobile insurance fraud is a felony. A guilty verdict will result in the following penalties:

• Formal probation
• Imprisonment of 2, 3, or 5 years, and/or
• Up to $50,000 or double the value of the fraud, whichever is greater

Sentence enhancements for this kind of auto insurance fraud include:

• Prior Penal Code 548 or 550 motor insurance fraud convictions will result in two more years.
• If you have two or more prior felony convictions for vehicle insurance fraud by causing an accident, PC 550(a)(3) imposes a five-year increase.
• A two-year enhancement for each individual you cause grievous bodily harm to, except accomplices.
• An additional three or more years if you cause someone else serious physical harm in the course of the accident

3. Making False Statements

Making false statements is either a misdemeanor or a felony violation. Misdemeanor convictions are punishable by the following penalties:

• Informal probation
• A jail sentence of up to one year and/or
• Up to $10,000 or double the value of the fraud, whichever is greater

Felony violations are punishable by:

• Formal probation
• Imprisonment of 2, 3, or 5 years, and/or
• Up to $50,000 or double the value of the fraud, whichever is greater

4. Soliciting, Accepting, or Referring Automobile Insurance Fraud Business

Soliciting, accepting, or referring to an automobile insurance fraud business can be charged as a misdemeanor or felony.

If convicted of a misdemeanor, you will likely face the following penalties:

• Summary or informal probation
• A jail sentence of up to one year and/or
• Up to $10,000

If convicted of a felony, you will likely face the following penalties:

• Formal probation
• Imprisonment of 16 months, 2, or 3 years, and/or
• Up to $50,000 or double the value of the fraud, whichever is greater

5. Accepting Kickbacks as Auto Repair Shops

Per PC 551, authorities could impose:

• Prison terms of sixteen months, two or three years, and/or
• Fines up to $10,000 if the value of the fraud exceeds $950.

For smaller sums, the government may penalize you up to $1,000 and/or send you to a county jail for up to six months.

Upon a future conviction under (a) or (b), individuals who have previously been convicted under specific sections may be subject to increased penalties.

Offenses Related to Automobile Insurance Fraud

The following are crimes related to insurance fraud:

1. Damaging or Abandoning a Car

If you purposely damage or destroy a car, aiming to file a false insurance claim for benefits, you could face charges under Penal Code Section 548. This offense is often linked with insurance fraud.

This offense is a felony. Therefore, it is punishable by:

• Formal probation
• Imprisonment of 2, 3, or 5 years, and/or
• Up to $50,000 or double the value of the fraud, whichever is greater

In addition to the penalty for the felony violation, you will also face an additional two-year enhancement if you have any prior conviction of intentionally damaging or destroying a car with the intent to file a false insurance claim for benefits.

2. Submitting a False Report of an Auto Theft

Vehicle Code 10501 prohibits you from reporting a car theft to any law enforcement agency to deceive them by filing a false or fraudulent complaint. Prosecutors must establish each of the following components in a VEH 10501 case beyond a reasonable doubt:

• You completed or submitted a report
• The story was either bogus or untrue
• The vehicle theft was the subject of the report
• You intended to mislead the authorities and insurance company

Submitting a false report of auto theft is a misdemeanor violation. If convicted, you could face the following penalties:

• Up to 6 months in jail and/or
• A fine not exceeding $1,000

Subsequent violations are wobbler offenses. You could be charged and convicted of a misdemeanor or felony violation. If you are convicted of a misdemeanor violation, you could face:

• Up to one year in jail and/or
• A fine not exceeding $1,000

If you are convicted of a felony violation, you could face:

• 16 months, 2 or 3 years in jail and/or
• A fine not exceeding $10,000

3. Healthcare Fraud

Taking part in actions that qualify as healthcare fraud entails the following while facing charges of auto insurance fraud:

• Billing the insurance company for services or treatments that you never received
• Submitting fictitious or exaggerated medical bills for injuries sustained in car crashes
• Conspiring with healthcare practitioners to inflate or fabricate injuries to receive more considerable insurance benefits
• Taking part in deliberate or planned crashes to submit false insurance claims for medical care
• Fabricating diagnostic test results or medical records to bolster false insurance claims
• Taking bribes from healthcare professionals in exchange for sending accident victims for needless care
• Falsifying pre-existing medical issues to claim medical costs reimbursed by insurance about the accident

When fraudulent methods concerning medical care and insurance claims are combined with accusations of vehicle insurance fraud, these actions are classified as healthcare fraud. If found guilty of healthcare and vehicle insurance fraud, you may be subject to misdemeanor or felony charges. Convictions result in lengthy jail terms and hefty penalties. These could include:

• Imprisonment of 5 to 10 years
• Fines that could go as high as $50,000 or more

4. Arson

Prosecutors could pursue arson charges if you purposefully set a car on fire to obtain compensation. As per Penal Code 451, arson is defined as the deliberate and malicious setting of property on fire and any assistance, advice, or arrangements to burn the property.

PC 451 outlines the following as the penalties if you are convicted:

• Arson causing grave physical injury is punishable by a five-, seven-, or nine-year sentence in state prison.
• Property arson is a crime that carries an imprisonment term of 16 months, 2 or 3 years. That being said, burning your possessions is not an act of arson unless there is a fraudulent motive or damage to another person’s property.