Insurance fraud is a serious crime in California, and it involves an individual or entity intentionally deceiving another to obtain an undeserved economic benefit or to cause another to lose money.
Understanding Insurance Fraud
Insurance fraud occurs when an individual or entity intentionally provides false information, makes misleading statements, or engages in deceptive practices to obtain benefits or payments from an insurance company to which they are not entitled.
Insurance fraud can take many different forms, including but not limited to:
- Burning of property to collect insurance money: This is a form of arson where an individual intentionally sets their property on fire to collect insurance proceeds.
- Claiming that property was damaged in an accident when it was not: This type of fraud involves an individual lying about the extent of damage to their property to receive a larger payout from their insurance company.
- Faking an accident to receive money: In this scenario, an individual fabricates an accident or injury to claim insurance benefits.
- Falsely stating that a vehicle was stolen to collect money: This involves reporting a vehicle as stolen when it was not to receive insurance money.
- Falsifying a personal physical injury to collect money: This includes staging accidents or exaggerating injuries to obtain insurance benefits.
- Overstating the property damage: Similar to claiming the property was damaged when it was not, this type of fraud involves inflating the cost of repairs or replacing damaged items.
Insurance Fraud Laws CA
California has stringent laws and regulations in place to combat insurance fraud. The primary statutes governing insurance fraud in the state include:
- California Insurance Code Section 1871.4 defines insurance fraud and makes it illegal to knowingly present a false or fraudulent insurance claim.
- California Penal Code Section 550: This statute covers various forms of insurance fraud, including false claims, premium diversion, and staged accidents. It imposes severe penalties for those convicted of insurance fraud.
- California Insurance Code Section 1872.8: This section focuses on application fraud and makes it unlawful to provide false information on an insurance application knowingly.
- California Penal Code Section 549: This law explicitly addresses healthcare fraud and penalizes individuals and entities that submit fraudulent healthcare claims.
- California Penal Code Section 551: This statute targets insurance agents and brokers who embezzle premiums or engage in other fraudulent activities.
Penalties for Insurance Fraud
The penalties for insurance fraud in California vary depending on the specific type of fraud and the defendant's activities. If the fraud is classified as a misdemeanor, it could result in a sentence of up to one year in county jail, a fine of up to $10,000, or both. If the fraud is considered a felony, it could lead to a term of imprisonment for 2-5 years and a fine of up to $50,000.
Other penalties may include:
- Civil Penalties: In addition to criminal penalties, those found liable for insurance fraud may be subject to civil penalties, including fines, treble damages (three times the amount of the fraudulent claim), and attorney's fees.
- Loss of Insurance Coverage: Individuals found guilty of insurance fraud may lose their insurance coverage, making it challenging to obtain coverage in the future.
- Professional Consequences: Insurance agents or healthcare providers convicted of fraud may face professional consequences, including the loss of their license to practice.
- Restitution: Convicted individuals may be required to pay restitution to the victim insurance company or other affected parties to cover the costs of the fraudulent claims.
Have You Been Accused of Fraud?
Insurance fraud is a serious offense in California, and the state has implemented strict laws and penalties to deter and punish those engaged in fraudulent activities. It is essential for individuals and businesses to understand these laws, comply with them, and report suspected fraud to the authorities. Preventing insurance fraud protects insurance companies and ensures that legitimate policyholders receive the coverage and benefits they deserve.
If you are accused of insurance fraud, it is important to seek legal counsel. Corrigan Welbourn Stokke, APLC, is a law firm based in Newport Beach that defends individuals accused of white-collar crimes, including insurance fraud. Our attorneys have over 100 years of combined legal experience and employ a collaborative approach to ensure their clients receive the best possible outcome.
Contact our firm for legal counsel you can depend on.