California Penal Code § 550 PC makes it a criminal offense to “knowingly present, or cause to be presented, any false claim for the payment of a loss or injury, including payment of a loss or injury under a contract of insurance.” A conviction is a felony punishable by up to 5 years in jail.
Common examples of insurance fraud include:
- presenting multiple claims for the same loss,
- staging an accident while engaging in a scheme to defraud an auto insurer,
- altering the receipts or inflating the costs of repairs,
- exaggerating the extent of your injuries,
- presenting false information to an auto insurer in support of a claim, or
- making false statements in the submission of a claim.
PC 550 is one of several of California’s auto insurance fraud laws.
Common Defenses
Luckily, there are several legal defenses you can raise if accused of a crime under Penal Code 550. These include showing that:
- you did not knowingly lie,
- there is a good faith disagreement as to what the insurance policy covers,
- someone else filed the false claim, and you were framed, and/or
- you made no material misrepresentations.
Penalties
In general, a violation of this statute is charged as a felony (as opposed to a misdemeanor or an infraction). The punishment may include:
- imprisonment for up to five years in county jail, and/or,
- a maximum fine of up to $50,000, or double the amount of the fraud, whichever is greater.
Our California criminal defense attorneys will highlight the following in this article:
- 1. What is prohibited under California Penal Code 550 PC?
- 2. Are there legal defenses to accusations of violating PC 550?
- 3. What are the penalties, punishment, and sentencing?
- 4. Related offenses
Violating Penal Code 550 is a felony.
1. What is prohibited under California Penal Code 550 PC?
Penal Code 550 is the California statute that makes it a crime for you to submit fraudulent auto insurance claims knowingly. It is also a crime under this statute if you knowingly:
- present multiple claims for the same loss,
- stage an accident while engaging in a scheme to defraud an auto insurer,
- present false information to an auto insurer in support of a claim, and
- make false statements in the submission of a claim.1
Please note that different acts of fraud will count as different and separate charges under this statute. Consider, for example:
- presenting false information in support of a claim, and then
- submitting the fraudulent claim.
Here, the two fraudulent acts can lead to two separate charges.2
1.1. How companies agencies detect fraud
Insurance companies often employ Special Investigations Units (SIUs) comprised of professionals trained in detecting and investigating potential fraudulent claims. SIUs work with the California Department of Insurance to sniff out suspicious claims, though sometimes they get it wrong and cause unfounded criminal charges to be filed.
2. Are there legal defenses to PC 550 accusations?
Here at Shouse Law Group, we have represented literally thousands of people accused of fraud, including filing a false insurance claim. In our experience, the following four defenses have proven very effective with prosecutors, judges, and juries.
2.1. You did not knowingly lie
It is not uncommon for innocent mistakes or misunderstandings to occur. There is no intent to defraud when you accidentally make a clerical error, misinterpret the claim form, or are genuinely confused regarding the insurance claims process.
In these types of cases, we would meticulously review all communications, instructions, and forms to demonstrate that any inaccuracies were unintentional and did not arise from a desire to deceive.
2.2. There is a good faith disagreement as to what the insurance policy covers
Insurance policies can be complex and laden with legal jargon. From what we see, it is routine for policyholders and insurance providers to have disagreements regarding coverage specifics.
If you believed in good faith that your claim was valid and within the parameters of your policy, then no fraud occurred. We often engage insurance experts or delve into the intricacies of the policy to illustrate that the disagreement is a legitimate one, and not an attempt at deception.
2.3. Someone else filed the false claim, and you were framed
You may be the victim of deceit or fraud perpetrated by someone else. Perhaps someone used your identity or information without your knowledge, or there may have been internal fraud within the insurance company.
In cases like these, we would launch a thorough investigation, seeking evidence such as surveillance footage, digital trails, or witness testimonies, to prove that you were not the actual culprit behind the fraudulent claim.
2.4. You made no material misrepresentations
A material misrepresentation occurs when you provide false information or omit certain details, and this information plays a crucial role in the insurer’s decision-making process, especially in determining claim eligibility or policy premiums. Only material misrepresentations can trigger an insurance fraud allegation.
Therefore, we would try to show that any untruths you may have included on your insurance application were not material to your claim and cannot be grounds for a criminal charge.
A violation of this crime can lead to a fine and/or jail time
3. What are the penalties, punishment, and sentencing?
In general, a violation of this statute is charged as a felony. The punishment may include:
- imprisonment for up to five years in county jail, and/or,
- a maximum fine of up to $50,000, or double the amount of the fraud, whichever is greater.3
Note, though, that making false statements under Penal Code 550 is a wobbler offense, meaning that it can be charged as either a misdemeanor or a felony.
The felony penalties for false statements are the same as the penalties given above.4
Misdemeanor penalties can include:
- imprisonment in the county jail for up to one year, and/or
- a fine of up to $10,000.5
4. Related Offenses
There are three crimes related to submitting fraudulent insurance claims. These are:
- auto insurance fraud by damaging or abandoning a vehicle – PC 548,
- referring or soliciting auto insurance fraud business – PC 549, and
- kickbacks from auto repair shops – PC 551.
4.1. Auto insurance fraud by damaging or abandoning a vehicle – PC 548
Penal Code 548 PC is the California statute that makes it a crime to purposefully damage or abandon a vehicle in order to submit a claim with an auto insurance company.6
You can be guilty of this crime even if the insurance company never loses money because of your actions—and even if the car was not yours.
A violation of Penal Code 548 is charged as a felony.
The crime is punishable by:
- imprisonment in the county jail for up to five years, and/or
- a maximum fine of $50,000.7
4.2. Referring or soliciting auto insurance fraud business – PC 549
Penal Code 549 PC is the California statute that makes it a crime to refer someone to an auto repair shop with the knowledge that the professional will submit a fraudulent insurance claim.8
PC 549 is a wobbler offense, meaning that it can be charged as either a felony or a misdemeanor.
The potential felony penalties are:
- felony (or formal) probation,
- imprisonment in jail for up to three years, and/or
- a maximum fine of up to $50,000, or double the amount of the fraud, whichever is greater.9
The potential misdemeanor penalties are:
- misdemeanor (summary) probation,
- up to one year in county jail, and/or
- a fine of up to $1,000.10
4.3. Kickbacks from auto repair shops – PC 551
Penal Code 551 PC is the California statute that prohibits the unlawful referral to an auto repair dealer.11
Depending on the facts of the case, a violation of PC 551 can be charged as either a misdemeanor or a felony. Penalties can be as harsh as:
- imprisonment in the county jail for up to three years, and
- a fine of up to $1,000.12
Legal References:
- See CALCRIM No. 2000. California Penal Code 550 PC. The language of the statute reads:550. (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.
(b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:
(1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.
(2) Prepare or make any written or oral statement that is intended to be presented to any insurer or any insurance claimant in connection with, or in support of or opposition to, any claim or payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.
(3) Conceal, or knowingly fail to disclose the occurrence of, an event that affects any person’s initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled.
(4) Prepare or make any written or oral statement, intended to be presented to any insurer or producer for the purpose of obtaining a motor vehicle insurance policy, that the person to be the insured resides or is domiciled in this state when, in fact, that person resides or is domiciled in a state other than this state.
(c) (1) Every person who violates paragraph (1), (2), (3), (4), or (5) of subdivision (a) is guilty of a felony punishable by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or five years, and by a fine not exceeding fifty thousand dollars ($50,000), or double the amount of the fraud, whichever is greater.
(2) Every person who violates paragraph (6), (7), (8), or (9) of subdivision (a) is guilty of a public offense.
(A) When the claim or amount at issue exceeds nine hundred fifty dollars ($950), the offense is punishable by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, 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 ten thousand dollars ($10,000), or by both that imprisonment and fine.
(B) When the claim or amount at issue is nine hundred fifty dollars ($950) or less, the offense is punishable by imprisonment in a county jail not to exceed six months, or by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine, unless the aggregate amount of the claims or amount at issue exceeds nine hundred fifty dollars ($950) in any 12-consecutive-month period, in which case the claims or amounts may be charged as in subparagraph (A).
(3) Every person who violates paragraph (1), (2), (3), or (4) of subdivision (b) shall be punished by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, or by both that imprisonment and fine, or by imprisonment in a county jail not to exceed one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that imprisonment and fine.
(4) Restitution shall be ordered for a person convicted of violating this section, including restitution for any medical evaluation or treatment services obtained or provided. The court shall determine the amount of restitution and the person or persons to whom the restitution shall be paid.
(d) Notwithstanding any other provision of law, probation shall not be granted to, nor shall the execution or imposition of a sentence be suspended for, any adult person convicted of felony violations of this section who previously has been convicted of felony violations of this section or Section 548, or of Section 1871.4 of the Insurance Code, or former Section 556 of the Insurance Code, or former Section 1871.1 of the Insurance Code as an adult under charges separately brought and tried two or more times. The existence of any fact that would make a person ineligible for probation under this subdivision shall be alleged in the information or indictment, and either admitted by the defendant in an open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury.
Except when the existence of the fact was not admitted or found to be true or the court finds that a prior felony conviction was invalid, the court shall not strike or dismiss any prior felony convictions alleged in the information or indictment.
This subdivision does not prohibit the adjournment of criminal proceedings pursuant to Division 3 (commencing with Section 3000) or Division 6 (commencing with Section 6000) of the Welfare and Institutions Code.
(e) Except as otherwise provided in subdivision (f), any person who violates subdivision (a) or (b) and who has a prior felony conviction of an offense set forth in either subdivision (a) or (b), in Section 548, in Section 1871.4 of the Insurance Code, in former Section 556 of the Insurance Code, or in former Section 1871.1 of the Insurance Code shall receive a two-year enhancement for each prior felony conviction in addition to the sentence provided in subdivision (c). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. Any person who violates this section shall be subject to appropriate orders of restitution pursuant to Section 13967 of the Government Code.
(f) Any person who violates paragraph (3) of subdivision (a) and who has two prior felony convictions for a violation of paragraph (3) of subdivision (a) shall receive a five-year enhancement in addition to the sentence provided in subdivision (c). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury.
(g) Except as otherwise provided in Section 12022.7, any person who violates paragraph (3) of subdivision (a) shall receive a two-year enhancement for each person other than an accomplice who suffers serious bodily injury resulting from the vehicular collision or accident in a violation of paragraph (3) of subdivision (a).
(h) This section shall not be construed to preclude the applicability of any other provision of criminal law or equitable remedy that applies or may apply to any act committed or alleged to have been committed by a person.
(i) Any fine imposed pursuant to this section shall be doubled if the offense was committed in connection with any claim pursuant to any automobile insurance policy in an auto insurance fraud crisis area designated by the Insurance Commissioner pursuant to Article 4.6 (commencing with Section 1874.90) of Chapter 12 of Part 2 of Division 1 of the Insurance Code.
(Amended by Stats. 2011, Ch. 15, Sec. 392. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
See also: People v. Singh (1995) 37 Cal.App.4th 1343; People v. Zelver (1955) 135 Cal.App.2d 226; People v. Pugh (2002) 104 Cal.App.4th 66; People v. Gaul-Alexander (1995) 32 Cal.App.4th 735; People v. Scofield (1971) 17 Cal.App.3d 1018; People v. Benson (1962) 206 Cal.App.2d 519.
- People v. Zanoletti (2009) 170 Cal. App. 4th 1516.
- California Penal Code 550 PC. See also People v. Dieguez (2001) 89 Cal.App.4th 266.
- See same.
- See same.
- California Penal Code 548 PC.
- California Penal Code 548a PC.
- California Penal Code 549 PC.
- See same.
- See same.
- California Penal Code 551 PC.
- See same.