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What is the Punishment for Insurance Fraud?

Posted by Neil Shouse | Jul 08, 2019 | 0 Comments

insurance fraud

The punishment for insurance fraud in California can range from probation to five years in prison, as well as fines, community service, and restitution.

Insurance fraud charges are usually the result of either making a fraudulent insurance claim or from destruction of insured property.

A Fraudulent Insurance Claim under California Penal Code 550 occurs when:

  • a person makes a false insurance claim (or assists someone else in making a false claim),
  • the person knew the claim was false or fraudulent, and
  • the act was committed with the intent to defraud.

Fraudulent Destruction of Insured Property under California Penal Code 548occurs when:

  • an accused willfully injures, destroys, hides, abandons, or disposes of any insured property,
  • with the intent to defraud the insurer.

A fraudulent insurance claim can be charged as either a felony or a misdemeanor depending on the type and amount of the claim. As a felony, the punishment is:

  • two, three, or five years jail,
  • a $50,000 fine or double the amount of the fraud.

As a misdemeanor the punishment for a fraudulent insurance claim can be up to:

  • one-year jail,
  • a $10,000 fine.

If the fraudulent claim involves health care benefits in an amount less than $950, the offense is a misdemeanor punishable by:

  • six months jail,
  • a $1,000 fine.

Fraudulent Destruction of Insured Property is a felony punishable by:

  • two, three, or five years in jail, and
  • a $50,000 fine.

Restitution must be ordered in all insurance fraud cases.

Defenses to insurance fraud can include:

  • mistake,
  • no intent to defraud,
  • the statute of limitations has expired.

What is Insurance Fraud in California?

The California Department of Insurance investigates insurance fraud and has identified more than 60 types of insurance fraud. See http://www.insurance.ca.gov/0300-fraud/0100-fraud-division-overview/05-ins-fraud/

Most insurance fraud in California occurs in one of four areas:

  1. automobile property and personal injury fraud,
  2. healthcare benefits and payments fraud,
  3. workers' compensation fraud,
  4. property, life and casualty fraud.

A Fraudulent Insurance Claim under California Penal Code 550 occurs when:

  • a person makes a false insurance claim, or assists someone else in making a false claim,
  • the person knew the claim was false or fraudulent, and
  • the act was committed with the intent to defraud.

Destruction of Insured Property claims under California Penal Code 548 occur when:

  • an accused willfully injures, destroys, hides, abandons, or disposes of any insured property,
  • with the intent to defraud the insurer.

An insurance claim means that a person claims, makes, or presents a request for payment under a contract of insurance for a loss, injury, or health-care benefit.

Intent to defraud occurs when someone intends to deceive another person to cause:

  • a loss of money, goods, or services, or something of value, OR
  • causes damage to a legal, financial, or property right.

Please note that federal insurance fraud cases can also be filed. In federal court the crime of insurance fraud is usually prosecuted as mail fraud, criminal racketeering or other federal offenses.

Is Insurance Fraud a Felony or a Misdemeanor in California?

A fraudulent insurance claim in California can be either a felony or a misdemeanor depending on the type and amount of the claim. Actual loss is not needed so long as the suspect has committed an act and had the intent to commit the crime.

Insurance fraud is a specific intent crime. This means the prosecutor must prove that the person involved:

  • knowingly committed an act to defraud,
  • the act was completed.

For insurance fraud as a felony, the punishment is:

  • two, three, or five years jail,
  • a $50,000 fine or up to double the amount of the fraud.

If the claim involves health care benefits fraud over $950, the offense is a “wobbler,” punishable as either a felony or a misdemeanor. As a felony the punishment can be:

  • two, three, or five years jail,
  • a $50,000 fine or double the amount of the fraud.

As a misdemeanor the punishment could be up to:

  • one-year county jail,
  • a $10,000 fine.

If the claim involves health care benefits fraud less than $950, the offense is a misdemeanor punishable by:

  • six months county jail,
  • a $1,000 fine.

Destruction of Insured Property is a felony and punishable by:

  • two, three, or five years in jail, and
  • a $50,000 fine.

Sentence enhancements and additional punishment can be added if an accused has:

  • prior insurance fraud convictions, OR
  • if someone suffers serious bodily injury in vehicle fraud cases.

Please note that a person with one or more prior insurance fraud convictions is ineligible for probation.

Restitution must be ordered in every insurance fraud case.

What are Defenses to Insurance Fraud Charges in California?

Because insurance fraud is a specific intent crime, there are various defenses that can be raised by an experienced criminal defense attorney. These include:

  • mistake,
  • no specific intent to defraud,
  • the statute of limitations has expired.

About the Author

Neil Shouse

Southern California DUI Defense attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT).

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