Penal Code 550 PC – Submitting Fraudulent Insurance Claims

Penal Code 550 is the California statute that makes it a crime for a person knowingly to submit fraudulent insurance claims. It is also a crime under this statute if a person knowingly:

  • presents multiple claims for the same loss,
  • stages an accident while engaging in a scheme to defraud an auto insurer,
  • presents false information to an auto insurer in support of a claim, and
  • makes false statements in the submission of a claim.

PC 550 is one of several of California's auto insurance fraud laws.

According to this statute:

“It is unlawful to do any of the following…

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.

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.

Knowingly cause or participate in a vehicular collision, or any other vehicular accident, for the purpose of presenting any false or fraudulent claim.

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….”

Examples of illegal acts under this code section include:

  • Chuck was in a car accident and submits three claims to his insurer for the exact same damages.
  • Juanita and her boyfriend fake damage to their car and then submit a claim to their insurer for coverage.
  • Montel wants to get cheaper rates on his insurance policy, so he tells his insurer that he lives in a different city.

Defenses

Luckily, there are several legal defenses that a person can raise if accused of a crime under Penal Code 550. These include showing that the defendant:

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:

insurance fraud

1. What is prohibited under California Penal Code 550 PC?

Penal Code 550 is the California statute that makes it a crime for a person to knowingly submit fraudulent auto insurance claims. It is also a crime under this statute if a person knowingly:

  • presents multiple claims for the same loss,
  • stages an accident while engaging in a scheme to defraud an auto insurer,
  • presents false information to an auto insurer in support of a claim, and
  • makes 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, a person that:

  1. presents false information in support of a claim, and then
  2. submits the fraudulent claim.

Here, the two fraudulent acts can lead to two separate charges.2

2. Are there legal defenses to PC 550 accusations?

If a party is accused of a crime under this statute, then it can challenge the accusation by raising a legal defense. A good defense can often get a charge reduced or even dismissed.

Three common defenses to accusations under PC 550 are:

  1. no knowledge,
  2. falsely accused, and/or
  3. duress.

2.1. No knowledge

The language within Penal Code 550 states that an accused is only guilty if he acts knowing that he is committing a fraud or doing some unlawful act. Therefore, it is always a legal defense for a defendant to show that he did not act with this requisite knowledge.

2.2. Falsely accused

Unfortunately, it is not at all uncommon for people to get prosecuted based on false allegations. People get falsely accused out of

  • jealousy,
  • revenge, and
  • anger.

Thus, it is a valid defense for a defendant to say that a party falsely accused him of violating Penal Code 549.

2.3. Coerced confession

Duress is a legal defense in which an accused basically says: “He made me do it.” The defense applies to the very limited situation in which a person commits a crime (here, unlawfully submitting a fraudulent insurance claim), because somebody threatened to kill him if the crime was not committed.

man behind bars
A violation of this crime can lead to a fine and/or jail time

3. 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:

  1. auto insurance fraud by damaging or abandoning a vehicle – PC 548,
  2. referring or soliciting auto insurance fraud business – PC 549, and
  3. 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 for a person to purposefully damage or abandon a vehicle in order to submit a claim with an auto insurance company.6

An accused can be guilty of this crime even if the insurance company never loses money because of his actions—and even if the car was not his.

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 for a person 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:

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

Were you accused of submitting a fraudulent insurance claim in California? Call us for help…

fraud criminal defense attorneys
Call us for help at (855) LAW-FIRM

If you or someone you know has been accused of a crime under Penal Code 550 PC, we invite you to contact us for a free consultation. We can be reached 24/7 at 855-LawFirm.


Legal References:

  1. California Penal Code 550 PC. This code section states: “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…”.

  2. People v. Zanoletti (2009) 170 Cal. App. 4th 1516.

  3. California Penal Code 550 PC.

  4. See same.

  5. See same.

  6. California Penal Code 548 PC.

  7. California Penal Code 548a PC.

  8. California Penal Code 549 PC.

  9. See same.

  10. See same.

  11. California Penal Code 551 PC.

  12. See same.

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