insurance fraud in california

Fraud is defined as deceit or trickery perpetrated for profit or to gain some unfair or dishonest advantage.
One of the types of fraud is insurance fraud. Insurance Fraud may include the following cases (but are not limited to):
– receive insurer’s compensation by deception or abuse of trust
– concealment of important information at the conclusion of , or in the period of insurance
– refusal of the insurer to indemnify without due arising from the law and the rules of insurance.

Many people consider that fight against insurance fraud concerns only insurance companies. That is not true. Insurance fraud can also affect the amount of insurance premium. Thus, the more such crimes occur, the more we pay for insurance. Moreover, if the commission of insurance fraud is proven, the insurance company has the right to:
– refuse to pay the insurance indemnity
– demand through the courts to return losses.

In today’s complex economy, insurance fraud obtains various forms. Below, The Margarian Law Firm will introduce you the main elements of the California Insurance Fraud Law. In the resources of our site you can find detailed information about different kind of financial crimes and fraud in California.

1. Definition of Insurance Fraud
2. Insurance Fraud Legislation
3. Common types of California Insurance Fraud
a) Automobile property fraud law
b) Disability, Life, and Healthcare Fraud Law
c) Property and Casualty Fraud Law
d) Workers’ Compensation Fraud Law
4. Punishment of Fraud
5. Legal Defenses to California Fraud Accusations
6. Related Articles

In addition, we are ready to provide answers to your initial questions concerning fraud charges in California for free.

You may file your request online, by telephone or by mail. 818-553-1000

1. What is Insurance Fraud in California?

Insurance fraud is an act committed with the intent to fake an event which will result in a claim for compensation of insured object. At first sight, receiving compensation would seem lawful according to the insurance policy. Mostly, insurance fraud are stated when an insured individual or entity make exaggerated or false claim in order to receive compensation for injury and losses that they did not suffer. Law enforcement agencies prosecute salesmen, insurance agents, lawyers, doctors and people in position of trust, that is to say everyone who can benefit from insurance through making exxagertaed and false claims of injury or losses can be subject to responsibility.

Insurance fraud can also be committed in various ways. For example, unlicensed or bogus insurance coverage can be sold to unsuspecting clients or an insurance agent can steal insurance premiums paid by clents.
Depending on the specific circumstances of each case, such kind of unlawful act may be handled as:
– an administrative action by the Department
– a criminal matter by the Fraud Division.

Typically, there are two types of insurance fraud:
– “hard fraud”
A person deliberately fakes an event which results in illegally collecting of money from insurance company. For example, a person can cause an accident, theft, arson on purpose. It should be mention that nowadays origanized crime rings work to develop these schemes in order to steal millions of dollars.
– “soft fraud”
Any person can lie a little bit to the insurance company in order to raise the amount of insurance claim. People consider that it is harmless and there are no legal consequences for such “white lies”. However, soft fraud is prosecuted and, in addition, it makes insurance costs higher for everyone.

Under California law, the insurance fraud can be prosecuted when:
– The suspect had the intent to defraud. It means that the prosecutor has to prove that the defendant committed knowlingly an act to defraud.
– The act must be completed. Only a misrepresentation is not sufficient to convict a person.
– Actual loss is not required. It is sufficient that the offender committed an act and he or she had the intent to defraud.
2. Insurance Fraud Legislation

Insurance fraudulent claims cost billions of dollars annually. Schemes of insurance fraud develop from year to year and occur in all areas of insurance. Thus, insurance fraud is a serious problem for citizens and government. Different state agencies work to deter fraudulent conduct in order to prostect social integrity of the country. The legal measures of anti insurance fraud are stated in the California Penal Code Sections 548, 548, 550.
There are serious legal consequnences for insurance fraud, including prison time, fines and restitution.
Additionally, the fight against insurance fraud is enforced by the provisions of Chapter 12 of the California Insurance Code (also known “Insurance Frauds Prevention Act”), and California Labor Code Section 3700.5.

In order to prove the guilt of the defendant, the prosecution must prove the following facts:
1. The intent to defraud for the purpose of gaining some material advantage over that person or a business;
2. This purpose has been accomplished by some false statement, false representation of fact, wrongful concealment or suppression of truth, or by any other artifice or act designed to deceive.

3. Common types of California Insurance Fraud

Insurance Fraud is a serious criminal charge which can result in severe penalties. It can be brought against either a business (a business cannot be subjected to jail or prison time, but it can face substantial fines)
Generally, insurance fraud is differed in the following lines of insurance:
– Auto Insurance Fraud Law
– Disability, Life, and Healthcare Fraud Law
– Property Fraud Law
– Workers’ Compensation Fraud Law

a) Auto-Insurance Fraud Law

California Department of Insurance has its own division which handles the cases related to auto-insurance fraud. Auto-insurance fraud as all other insurance fraud types can be soft and hard. In the table below you can see examples of soft and hard auto-insurance fraud in order to compare them.

b) Disability, Life, and Healthcare Fraud Law
People often try to simulate or fake disability or death to claim life insurance. Fraudsters can sometimes appear again a few years after the accident pretending to have a loss of memeory. Example: John had a big amount of debts. He committed a pseudocide. His wife received money but he turned up two years later claiming to have no memory of past period. Most probably, if he faked the death, he would be convicted of insurance fraud.
The number of insurance fraud increases and that is why in the United States, Congress adopted the Helath Insurance Portability and Accountability Act of 1996. Act set forth insurance health care fraud as a federal crime and the commission of this crime is punishable up to 10 years in prison and in addition the convicted can face significant financial penalties.

c) Property Fraud Law
People often try to destroy their property in order to obtain insurance payment. The motions can be various, such as:
– The payment would be hire than the cost of property if it would be sold;
– On the ruined territory, it is planned to build a new house;
– Etc.
Generally, a big number of property insurance violations involve arson. The reason is that the fire destroys all evidence.
Example: The famous Moulin Rouge in Las Vegas has been struck by arson twice during last ten years.

d) Workers’ Compensation Fraud Law

The Workers’ Compensation Fraud Program was established in 1991 under Senate Bill 1218. Pursuant to this law, workers’ compensation fraud a felony, insurers are required to report suspected fraud, and a mechanism should be developed for funding enforcement and prosecution activities.

Injured employees have no need to prove that an injury pccured of someone else’s fault in order to receive compensation injuries on the job. In general, worker’ compensation covers medical treatment and the workers obtain a portion of the wages lost due to their inability to work for certain period. These benefits are the targer of fraudulers who want to benefit from them.

The most common examples of workers compensation fraud are:
– False claim of a work place injury when it did not tak palce;
– False claim of injury;
– Receiving workers compensation while they have healed and yet able to work;
– Assisting another person to commit aforementioned offenses;
– Etc.

3. What penalties can I face if I commit insurance fraud in California?

The Department of Insurance has various divisions. The largest among them is The Fraud Division. It investigates and arrests persons who commit insurance fraud.
The defendant can face harsh penalties for violating California’s insurance fraud laws, including jail or prison time, fines, or even loss of professional license. Insurance fraud can be charged whether as a misdeminor or a felony, that is to say Califronia insurance laws are “wobbler”. Generally, soft fraud (i.e., exaggerated injuries in an accident) is considered to be a misdeminor, meanwhile hard fraud (i.e., faking the death of a person) is almost always a felony. In addition, the penalties depend on the criminal history of the offender and other specific circumstnaces of the case, such as money obtained, lieu of the commission of the fraud etc.
In the table below, you can find the list of penalties for California Insurance Fraud.
Misdeminor (any or all of the penalties)
Felony(any or all of the penalties)
– Summary probation

– up to one (1) year in a county jail

– a fine of from $1000 up to $50,000 or double the amount of the fraud
– Summary probation
– from sixteen (16) months to five (5) years in the state prison ( the court may also impose additional and consecutive two (2) year sentence for every prior conviction of fraudulent auto insurance claims)
– a fine of from $ 10,000 up to $50,000 or double the amount of the fraud
– where applicable, the court may impose the suspension or revocation of the health care certificate or license

Finally, fraud crimes:
– are considered to be moral triptude crimes under California law and it can lead to removal of legal resident aliens or deportation;
– can result in asset forfeiture if it is authorized under California Law.
Fortunately, you may expungue your California criminal record if you are eligible pursuant to California expungment requirements.

4. Legal Defenses to California Fraud Accusations

Your California defense attorney can use various legal defenses in order to reduce or dismiss the insurance fraud charg, including(but are not limited to).
False accusations
Plea bargain and dismissals
Lack of knowledge
– Etc.

6. Related Articles

Fraud Offense

California Theft Crimes

Identity Theft

Dealer Fraud

Mail Fraud

Credit Fraud

Security Fraud

Telemarketing Fraud

Wire Fraud

Tax Evasion

Mortgage Fraud

Have insurance fraud questions about your specific circumstances?

We are a client-centered professional law firm. When The Margarian Law Firm  accepts your California fraud case, you can put your mind at ease. We handle every aspect of your case, from the very start through the very last court hearing, all for a flat fee agreed upon before we begin. Do not hesitate to contact us!

You may file your request online, by telephone or by mail. 818-553-1000

Copyright © 2014 The Margarian Law Firm. All Rights Reserved.