Auto Insurance Fraud

Various circumstances may lead to an auto insurance fraud charge. These events revolve around the manipulation involving your car with the aim of collecting an insurance payout. Such activities include but are not limited to staging an accident, reporting that your car is stolen while it is not, and inflating the value of the claim. These acts are usually meant to manipulate insurance firms into paying out claims.

In insurance, the guiding principle is having the utmost good faith. The information received by the insurance company about your car and what transpired should be factual. The accident should have actually occurred, and its occurrence did cause the loss or damage to your vehicle. However, the principle of utmost good faith is often violated through deliberate efforts to misrepresent facts in favor of the victim.

However, the determination that a person may have committed car insurance fraud may also be falsified in itself, you can rectify the issue by involving a criminal defense attorney. The team at LA Criminal Defense Attorney based in Los Angeles, CA is committed to mounting a proper defense against the auto insurance fraud charges you are facing.

Understanding Auto Insurance Fraud

The guiding principle to auto insurance fraud is encompassed in Penal Codes 548 to 551. Any of the following acts are deemed to be a violation of this law, and as such, you are considered liable for the offenses stated herein.

  1. Damaging, Hiding, or Abandoning a Car

    Penal Code 548 states that any person proven to have willfully destroyed, abandoned, or hid a car that has insurance coverage against loss or damage with the intention of collecting insurance proceeds is guilty of committing car insurance fraud.

    The law, therefore, opens a possibility of charges being levied against you if you took part in either damaging, abandoning, or hiding the insured vehicle. This is regardless of whether the insurance provider is at a loss as a result of the action, or whether the car in question belongs to you. Therefore, the loss experienced by the insurance firm or the ownership status of the vehicle is not in question when prosecuting the offense under this section.

  2. Filing Fraudulent Claims

    Penal Code 550 considers several scenarios as fraud instances. According to subsection (a), auto insurance fraud is deemed to have occurred in the following instances.

    • Filing two or more claims with the same or other auto insurance providers for the same loss;

    • You are aware of your actions in using the same loss to generate two or more claims;

    • Your intention when making a claim was to defraud the insurance provider(s);

    • You fraudulently or by pretense claimed a loss that resulted from a damaged, stolen, or a destroyed car, a conversion of the motor vehicle, part of the vehicle, or any contents of the car;

    • You were aware that the claim made was fraudulent; and

    • The claim’s intention when you made it was to commit fraud.

    The matter interrogated under Penal Code 550 relates to your knowledge of your actions and the intention of your actions. If the prosecution determines that you were aware of your efforts to defraud the insurance provider(s), then they have a case against you under this section.

  3. Participating or Causing an Accident

    Penal Code 550 also presents other aspects that do fall as actions in violation of the California law. Subsection (a) (3) states that you are culpable of auto insurance fraud if your actions show that you;

    • Participated or caused an accident to which you raised an insurance claim;

    • Knowingly filed for a claim payout in the accident you participated in or was caused with the intention of presenting a false account of what transpired;

    • You did all the above mentioned with the intention of committing fraud.

    In evaluating the merits of the case, the court will seek to understand who or what caused the accident. Therefore, the prosecution will produce evidence to show that the crash was a natural consequence of your actions; that is, the accident would not have occurred had it not been for your efforts.

    The charge against you still holds even in the likely scenario that you engaged another to cause the car accident. This will be considered as an accident by participation.

  4. Making False Statements

    Section (b) of Penal Code 550 all through from subsection (1) to (4) describes how you may be liable of auto insurance violations. Culpability is best expressed in the following instances;

    • Giving your account as part of or in contradiction to a claim, written or orally presented, to which it is your understanding that it is false and misleading in its presentation of the facts;

    • To the best of your knowledge, you fully understand that the written or oral statement you present as part of or in contradiction to a claim you seek an insurance payout to, contains information that is a distortion of the facts;

    • The written or oral statement you prepared or presented was with the intention of obtaining a car insurance payout in the pretense that you reside in California, whereas you reside in another place other than California.

    Your intention and the consciousness of your actions to defraud an insurance provider through your statements will be put on focus. They are examined in totality if your liability in the matter is to be proved.

  5. Fraud through the Actions of Business Owners or Employees

    Penal Code 551 stipulates the following as avenues that are deemed as violations to the law in view of auto insurance fraud.

    • Through solicitation or referrals, you conduct business with an individual who you are aware, or by way of reckless disregard, with the intention to commit an auto insurance fraud;

    • Through solicitation or referrals, you conduct business with an individual who you are aware, or by way of reckless disregard, with the intention to commit an auto insurance fraud;

    This section of the law protects the interests of the policyholders and that of the shareholders of the insurance company. It is the general assumption that policyholders get fair market value for their claims or that their vehicles are repaired and restored to their original state at market friendly rates. This principle may be compromised if the employees of the insurance firm are allowed to send policyholders to repair shops they have a stake in or receive some form of compensation.

    Shareholder interests are also taken care of by this law. Any engagement an employee has with the repair shops should not hinder the ability of the insurance company to operate profitably through paying out claims and repairing vehicles involved in accidents at fair market value. Profitability may be compromised if the repair costs are inflated all with a view of compensating agents of the insurance firm with whom the repair companies have an engagement.

Penalties for Individuals in Violation of the California Auto Insurance Fraud Laws

The court’s determination of the penalties imposed on the defendant is pegged on the material facts of the case if there is a successful conviction. That means that all fraud instances have different charges levied on the defendants. Take a look at some of them;

  1. Damaging, Hiding, or Abandoning a Car

    Any conviction under Penal Code 548 that relates to the damaging, hiding, or abandoning of a car is a felony charge. It warrants a jail sentence of two, three, or five years, a possible fine of no more than $50,000, or both. Any prior felony convictions under Penal Codes 548 or 550 leads to a further two-year sentence added to the conviction terms issued by the judge.

  2. Filing Fraudulent Claims

    All convictions pursuant to Penal Code 550 (a) (4) that describes the submission of fraudulent claims and Penal Code 550 (a) (2), which details the matter of filing multiple claims, are felonies. The offenses attract a jail term of either two, three, or five years as directed by the courts. Further, the convicted party may be liable to a fine of no more than $50,000 or double the amount in the fraud case, whichever is greater. The fine can be administered together with the jail sentence.

    Any prior convictions under Penal Code 548 or 550 are punishable by an additional two-year sentence for each prior felony conviction. Any prior conviction forfeits the possibility of receiving a suspended or probation sentence.

  3. Participating or Causing an Accident

    All convictions made under Penal Code 550 (a) (3) that relate to causing an accident are considered to be felony charges in which the punishment is a two, three, or five year jail term, and/or a fine not exceeding $50,000 or an amount double the sum in the case, whichever is greater.

    Any prior felony convictions attract an additional two-year sentence for any felony charge under the Penal Code 548 or 550. You would risk an additional three or more years to your sentence if your actions in causing the accident led to great bodily injury to another.

    You further risk having five years added to your conviction if you have two or more prior felony charges related to car insurance fraud by way of causing an accident. Additionally, the law provides for a two year sentencing for an accomplice to the crash if it resulted in injuries to another other than the accomplice.

  4. When Presenting and Making False Statements

    The prosecutor has latitude when prosecuting offenses of false statement under Code 550 (b) (1) through to (4). You may face misdemeanor or felony charges for making and presenting false statements depending on the material facts to the case as well as your criminal history if any. Penalties levied for false statements charged as felonies attract a two, three, or five-year sentencing, and/or a fine not exceeding $50,000 or double the sums involved in the fraud case, whichever is greater.

    If the false statement charges are prosecuted as misdemeanors, you risk being under probation, serving a county jail time of no more than a year, and/or a fine of no more than $10,000.

  5. Committing Car Insurance Fraud through Solicitation, Referral, or any other form of Business Engagement

    If the prosecution proves that you had a business engagement with an employee of an insurance firm with whom you were aware of their plans to commit auto insurance fraud, you can be prosecuted in either of two accounts; a misdemeanor or a felony.

    Felony penalties are that you are under probation, can be sentenced to a jail term of either sixteen months, two, or three years. The judge may issue a fine not exceeding $50,000, or double the sum involved in the case, whichever is greater. The fine may be a separate sentence or may be part of the jail terms.

    Potential misdemeanors attract probationary sentencing, a county jail term not exceeding one year, and/or a fine of no more than $1,000. Any subsequent conviction for any violation of the auto insurance law is treated as a felony with penalties as presented above.

  6. The Matter of Compensation and other Forms of Profit-Sharing with Auto Repair Shops

    Penalties levied against those in violation of the law when they engage in some form of compensation and revenue sharing plan with an employee of the insurance firm in exchange of business, depends on the amounts involved in the case. Such an engagement is referred to as a kickback.

    Any sums as a kickback to the tune of $950 or less attract a misdemeanor violation punishable by a county jail term of not more than six months or a fine not exceeding $1,000, or both. Any amounts that are in excess of $950 are misdemeanors punishable by a one-year county jail imprisonment, and/or a fine not exceeding $1,000.

    Prior felony convictions have different sentencing. The law provides for either a sixteen month-long, two, or three-year-long sentencing. You will be required to pay a fine to the tune of $10,000 as part of the jail term punishment or as a separate charge for your violation of the law.

Offenses Related to Auto Insurance Fraud

All matters that relate to the insurance industry are put under a single database. All the information about an insured is shared within the database and is accessible to all the insurance companies. In case your actions raise red flags, insurance investigators act on the concern raised and access your records of past claims made and whether any of them are suspicious or not. Activities such as multiple claims made by a policyholder with losses being incurred within a short time after the insurance coverage takes effect, or similar accidents, theft, or damage claims filed by the same policyholder are all causes for concern, and it is the information authorities act on. All the information gathered is then forwarded to the prosecution as evidence to be used in the auto insurance case.

Auto insurance fraud may be prosecuted on its own. However, specific charges may be introduced as part of the case against you. They include;

Falsified Vehicle Theft Report

These charges are evident when making a false report to a law enforcement agency with regards to a stolen vehicle. If the intent was to deceive the agency, you stand accused of a misdemeanor under the Vehicle Code 10501. You risk a jail sentence of not more than six months if you are a first time offender.

Arson

Penal Code 451 describes arson as any willful and malicious act of setting fire to a property. This offense is prosecutable in instances that the vehicle was torched with the aim of seeking insurance claim proceeds. The violation is prosecuted as a felony crime of arson punishable with a jail term in California’s state prison of either sixteen months, two years, or three years. There is a possibility of a fine as punishment on its own or as one attached to the jail sentence. You could part with an amount no greater than $50,000 or double the sum earned from the fraudulent claim as fines payable in line with the directions of the judge.

Health Care Fraud

Claims to the insurance firm for medical expenses after an accident that was determined to have been caused by the intention to defraud the insurance provider are considered as an instance of Health Care Fraud. It is prosecutable under Penal Code 550 with the penalties dependent on the direction of the judge pursuant of the Penal Code.

Penal Code 550 (c) (2) stipulates that any party found to have committed a health care offense is guilty of a felony. If convicted, you are liable to an imprisonment of two, three, or five years, or a fine of no more than $1,000 or both if the amount in question is $950 or below.

If the sums in the fraud case exceed $950, you are liable to an imprisonment charge of two, three, or five years, and/or a fine not more than $50,000, or double the sums involved in the fraud matter. The judge has the option of issuing a fine of no more than $10,000 or a jail sentence of not more than one year, or both.

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Legal Defenses for Auto Insurance Fraud

The growing number of fraud cases in the auto insurance industry coupled with the political clout the insurance companies have in California as well as America as a whole has a bearing as to the nature of investigations carried out by the prosecution. There is growing aggression for investigations to be carried out. The pressure trickles down with the prosecution expected to press the investigated cases of fraud. However, the aggression comes at a cost. Cases of overreach by the prosecution, shoddy investigations and rushed judgment on their part are on the rise.

The district attorneys may overlook merits to the auto insurance fraud cases because of their pursuit for increased prosecutions and therein lies the trouble of failed justice. You too, in facing such charges, may be a victim of a system skewed in the prosecution’s favor. That is why you need to get in touch with a criminal defense attorney. It is their task, among other things, to mount a defense strategy that will include using any of the following defenses based on the facts of your case.

Fraud was not the Intent that Describes Your Actions

Intent shapes the very nature of the charges. More often than not, careless mistakes are taken by insurance firms as fraudulent actions. Any investigations carried out by the authorities after the case is reported are often geared to prove your culpability. You do not need to fall victim of an honest mistake.

The burden of proof lies with the prosecution, and they need to prove that you acted fraudulently. A skilled attorney can cast doubt in the prosecution’s submissions enough to render a not-guilty outcome.

Lack of Sufficient Evidence

Most of these cases end up with circumstantial evidence. The sheer complexity of proving fraud and the work required to produce evidence against the growing pressure to prosecute the cases creates a loophole exploited by the investigating team that results in less than ideal investigations.

The compromise of the investigations will only lead to evidence being produced in court that is circumstantial at best. However, this may not be apparent if you do not have a criminal defense attorney. Their experience comes in handy in pointing out the ambiguities in the evidence produced against you in the fraud case.

If you are being charged with a crime feel free to contact our Los Angeles Criminal Lawyer for a free consultation.