California Penal Code § (Section) 550(a) – Submitting Fraudulent Insurance Claims
California Penal Code (CPC) §550(a) – Submitting Fraudulent Insurance Claims – Penal Code Section 550 makes it illegal to submit a fraudulent insurance claim. The statute addresses illegal claims on all types of insurance contracts, including auto insurance fraud and health care fraud, and criminalizes presenting multiple claims for payment of the same health care benefit. The law even makes it illegal to prepare a false document with the intent of submitting it in a fraudulent insurance claim.
If you're convicted under CPC §550(a), you face up to five years in a state prison and/or a fine of up to $50,000, or double the amount of the fraud, whichever is greater.
What Does California Penal Code §550(a) (Submitting Fraudulent Insurance Claims) Prohibit?
In sum, to be guilty of Submitting Fraudulent Insurance Claims under California Penal Code §550(a):
- You must act personally or aid and abet someone else; AND,
- You must submit a false or fraudulent insurance claim; AND,
- You must know the claim is false; AND,
- You must intend a fraud.
Defining “Submitting Fraudulent Insurance Claims” Under California Penal Code §550(a)
To convict you under CPC §550(a), the prosecutor must prove the following beyond a reasonable doubt:
- YOU ACTED OR AIDED OR ABETTED… You acted or aided and abetted someone else, or you solicited someone else to act, or you conspired with someone; AND,
- PRESENTED A FRAUDULENT CLAIM[1]: You presented a fraudulent claim for injury, vehicle theft or damage, or health care benefits[2] (including benefits not used and inaccurate charges); OR,
- MULTIPLE CLAIMS: You presented multiple claims to more than one insurer; OR,
- YOU PREPARED… A DOCUMENT: You prepared, or made, or signed or subscribed a document with the intent to use it or allow it to be presented to support a false claim; AND,
- CLAIM WAS FALSE OR FRAUDULENT: You knew that the claim was false or fraudulent; AND,
- INTENDED TO DEFRAUD[3]: You intended to defraud when you acted.
Note: To be guilty under the statute, it isn't necessary that anyone actually be defrauded or suffer a financial, legal, or property loss.
Example: Defendant Dick prepares an official looking health insurance claim template on his home computer. He plans on making a false claim to defraud LA Healthcare Company. But Dick is arrested before he can use it. He's charged under CPC §550(a)(5). Dick insists that he can't be convicted because he never even used the template, much less took money from LA Healthcare Company. Is Dick correct?
Conclusion: Dick created an electronic writing. He intended on using it to defraud a health insurance company.He knew the claim he'd be making was false. These are the elements of the crime as charged. Dick believes that he had to at least produce a document of some kind, if he's to violate the law. But Subpart (5) of CPC §550(a) also makes it illegal to create a writing for fraud purposes. Dick is incorrect.
Penalties For Submitting Fraudulent Insurance Claims Under CPC §550(a)
Submitting Fraudulent Insurance Claims can be charged as a felony or a misdemeanor, depending on whether the claim was worth more than $950. This makes Submitting Fraudulent Insurance Claims a “wobbler”[4] under California criminal law. If you are convicted of the felony form, the penalty may be:
- A term of up to five (5) years in a state prison; OR,
- A fine of up to $50,000 (fifty-thousand dollars); OR,
- Both a fine and imprisonment.
If you're convicted of the misdemeanor form of Submitting Fraudulent Insurance Claims, the penalty may be:
- A term of up to one (1) year in a county jail; OR,
- A fine of up to $10,000 (ten-thousand dollars); OR,
- Both a fine and imprisonment.[5]
As stated previously, if you're convicted of felony Submitting Fraudulent Insurance Claims, the penalty may be up to five (5) years in a state prison, a fine of up to $50,000 (fifty-thousand dollars), or both a fine and imprisonment. Conviction of the misdemeanor form can result in one (1) year in a county jail, a fine of not more than $10,000 (ten-thousand dollars), or both a fine and imprisonment.[6]
Defenses Against California Penal Code §550(a) – Submitting Fraudulent Insurance Claims
Three common defenses against a charge of Submitting Fraudulent Insurance Claim under CPC §550(a) are:
The Accusation Is False
Example: Defendant Damian's very expensive car is wrecked. He submits a claim to Reseda Insurer for damages. Damian's very expensive guitar is destroyed in the same accident. He submits a separate claim to the same company. The company concludes that Damian must be trying to defraud it, owing to the size of the claims. It charges Damian under CPC §550(a). He that insists he's innocent. Is Damian guilty?
Conclusion: Damian, as the facts make clear, was in an accident that wrecked his car and destroyed his guitar. These are the facts of his case. The size of Damian's claims doesn't necessarily make his claims false or fraudulent. In fact, there're no necessary relationship between the size of an insurance claim and its truthfulness. Thus, Damian is innocent. The accusation is false.
You Didn't Know The Claim Was False
Example: Defendant Darrian grows up believing she has boxing gloves used by Joe Louis.[7] The insured gloves are destroyed in a fire. She makes a claim on them. But Westwood Insurance Company sees the gloves on sale in an auction. It turns out Darrian never had the real items. They have Darrian arrested and charged under §550(a). She swears she didn't know her gloves weren't authentic. Is she guilty?
Conclusion: Defendant Darrian grew up being told she had valuable items. The facts convey no reason she should've doubted the story. Considering she would think they're valuable, it would also make sense she insured the gloves and made a claim when they were damaged. Darrian thus submitted a false claim without knowing what she was doing. She is innocent. Darrian didn't know the claim was false.
You Were Forced To Submit The Claim
Example: Defendant Dominic conspires to submit a false auto insurance claim. He plans to participate in an arranged car accident. But then he thinks better of the scheme and refuses. Partner, however, threatens to kill Dominic if Dominic doesn't carry out their plan. Dominic participates in the accident. Now Dominic has been charged under §550(a). He says he was forced to break the law. Is he innocent?
Conclusion: Dominic did not participate in the accident willingly. He was compelled to do so owing to a threat on his life. Forcing him to do anything under these circumstances is known as use of duress. Duress overcomes free will in situations like this. As such, it renders him blameless for carrying out the fraud plan. Therefore, Dominic is innocent. He was forced to submit the claim.
Health Care Fraud: In Brief
Health care fraud is a crime that typically occurs to defraud an insurer for purposes of undue financial gain. However, health care systems, and even individual physicians, have been targets as well. Whenever you knowingly and intentionally defraud, or attempt to defraud, any health care provider for services or treatment, you violate state law. The same is true if you seek money or property owned by any healthcare benefit program.
Typically, health care fraud is committed by: 1) Submitting fraudulent claims; 2) Submitting multiple claims for the same injury; 3) Creating a writing as part of a fraudulent claim scheme; 4) Submitting claims for benefits that were never received; or, 5) Submitting undercharges without correction. If you commit any of the forms of health care fraud, you should consult a qualified criminal defense attorney as soon as possible. The attorneys at the Kann California Law Group are prepared to help you present the best possible defense to any allegation of health care fraud.
Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County for more information. Your call will go directly to a lawyer – and that is guaranteed.
Related Offenses
Note: The crimes below are described generally as “related” because they're frequently charged with CPC §550(a) and/or have common elements the prosecutor must prove beyond a reasonable doubt.
The California Penal Code includes several offenses related to Submitting Fraudulent Insurance Claims, such as: Destruction of Insured Property (CPC §548(a)), Referring or Soliciting Fraudulent Business (CPC §549), Illegal Compensation for Referrals (CPC §551(a)), False Report of a Vehicle Theft (CVC [California Vehicle Code] §10501(a)), Welfare Fraud (WIC [Welfare & Institutions Code] §10980), Making a False Statement to Alter a Benefit (Unemployment Insurance Code [UIC] §2101), and Worker's Compensation Fraud (Insurance Code [INS] §1871.4(a)).
Destruction of Insured Property
Destruction of Insured Property (CPC §548(a)) involves willfully damaging, destroying, hiding, abandoning, or disposing of insured property with intent to defraud the insurer. The statute is particularly well suited to prosecuting claims in which automobiles are abandoned or damaged. The law applies to damaged property irrespective of whether an accused person owns the property in question.
If you're convicted of Destruction of Insured Property, the penalty may be:
- A term of up to five (5) years in a state prison; OR,
- A fine of up to $50,000 (fifty-thousand dollars); OR,
- Both a fine and imprisonment.[8]
You can find more information in the California White Collar Crimes Defense Attorneys section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer – guaranteed.
California Criminal Jury Instructions – Destruction of Insured Property
To convict you under CPC §548(a), the prosecution must prove the following beyond a reasonable doubt:
You injured, or destroyed, or hid, or abandoned, or disposed of property that was insured against
loss or damage from theft, or embezzlement, or any casualty other than fire. When you did it, you intended to defraud or prejudice the insurer.
Example: Defendant Derrick hides his car just long enough to make a claim for its disappearance. His claim is paid. His act is later discovered and he's charged under CPC §548(a). He insists that he can't be prosecuted under the statute because he didn't really destroy insured property. Is Derrick correct?
Conclusion: Derrick did everything the statute requires for conviction. While Section 548(a)'s jury instructions refer specifically to “destruction,” the statute itself includes hiding insured property long enough to make a fraudulent claim for its loss. Derrick did the latter and was caught. He is incorrect.
Referring or Soliciting Fraudulent Business
Referring or Soliciting Fraudulent Business (CPC §549) occurs whenever any corporation, or any person acting as an employee, solicits, accepts, or refers any business knowing that the purpose of the referral is fraudulent. The statute also applies to those acting with reckless disregard for whether the individual involved intends to commit fraud. The statute is related to Submitting Fraudulent Insurance Claims because a false insurance claim can involve illegal referral or solicitation, permitting the prosecution to charge you with both in the same trial.
Since Referring or Soliciting Fraudulent Business can be charged as a felony or a misdemeanor, the crime is a “wobbler”[9] under California law. If you're convicted of felony Referring or Soliciting Fraudulent Business, the penalty may be:
- A term of up to three (3) years in a state prison; OR,
- A fine of up to $50,000 (fifty-thousand dollars), or double the amount of the fraud, whichever is greater; OR,
- Both a fine and imprisonment.[10]
California Criminal Jury Instructions – Referring or Soliciting Fraudulent Business
To convict you under CPC §549, the prosecution must prove the following beyond a reasonable doubt:
In your individual capacity, or in your capacity as a public or private employee, you solicited, accepted, or referred any business to or from any individual or entity. You also knew, or recklessly disregarded whether, the individual or entity for or from whom the solicitation or referral was made, or who was solicited or referred, intended to violate Section 550 of the Penal Code or Section 1871.4 of the Insurance Code.
Example: Defendant David works for Auto Dealership. He knows that Friend manages Competing Dealership. He asks Friend to hide a car for David on Friend's lot. David intends on reporting the car to his insurance company in a fraudulent claim. Friend tells police of the scheme. Now David faces charges under CPC §549. David insists he can't be guilty; Friend never took the car, after all. Is he innocent?
Conclusion: David solicited a transaction with the specific intention of making a fraudulent claim punishable under CPC §550. These are the elements of the charge. The act of criminal solicitation[11] doesn't require completion of the crime solicited; one need only propose the crime with the specific intention of completing it. David, therefore, is guilty.
Illegal Compensation for Referrals
Illegal Compensation for Referrals (CPC §551(a)) makes it unlawful for any auto repair dealer, contractor, or its employees to offer fees to any insurance agent, broker, or adjuster for referring an insured for repairs under a policyholder's physical damage or automobile collision coverage. The law also makes it illegal to pay (or offer to pay) for a referral from a contractor for repairs or for replacement of a structure covered by a residential or commercial insurance policy.
Illegal Compensation for Referrals can be charged as a felony or a misdemeanor, depending on whether the claim was worth more than $950. This makes Illegal Compensation for Referrals a “wobbler”[12] under California criminal law. If you're convicted of the felony form, the penalty may be:
- A term of up to three (3) years in a state prison; OR,
- A fine of up to $10,000 (ten-thousand dollars); OR,
- Both a fine and imprisonment.[13]
California Criminal Jury Instructions – Illegal Compensation for Referrals
To convict you under CPC §551(a), the prosecution must prove the following beyond a reasonable doubt:
You, an auto repair dealer, contractor, or one its employees, offered fees to an insurance agent, broker, or adjuster for referring an insured for repairs under a policyholder's physical damage or automobile collision coverage or you paid, or offered to pay, for a referral from a contractor for repairs or for replacement of a structure covered by a residential or commercial insurance policy.
Example: Defendant Dominica, a contractor, tells Housing Contractor that she can repair houses at a cheaper rate than the rest of the market. She then promises they'll “share the savings” if Housing Contractor employs Dominica for Housing Contractor's repairs. Housing Contractor reports her for violating §551(a). Dominica says she never got a referral – and, thus, can't be guilty. Is she correct?
Conclusion: Dominica offered a form of payment – a share of money saved from using her cheaper services – in exchange for referrals from Housing Contractor. She herself was a contractor at the time she made the offer. These are the elements of the crime. The mere offer of compensation is all that is required to violate the law, not the actual receipt of a referral. Dominica is incorrect. She is guilty.
False Report of a Vehicle Theft
False Report of a Vehicle Theft (CVC [California Vehicle Code] §10501(a)) involves making or filing a false report of the theft of a vehicle that has to be registered under the Vehicle Code, with intent to deceive.
False Report of a Vehicle Theft can be charged as a felony or a misdemeanor, depending on whether the claim was worth more than $950. This makes False Report of a Vehicle Theft a “wobbler”[14] under California criminal law. If you are convicted of the felony form, the penalty may be:
- A term of up to three (3) years in a state prison;[15] OR,
- A fine of up to $10,000 (ten-thousand dollars); OR,
- Both a fine and imprisonment.[16]
You can find more information in the California Property Crime Defense Attorneys section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer – guaranteed.
California Criminal Jury Instructions – False Report of a Vehicle Theft
To convict you under CVC §10501(a), the prosecution must prove the following beyond a reasonable doubt:
With intent to deceive, you made or filed a false report of the theft of a vehicle that had to be registered under the Vehicle Code.
Example: Defendant Dawn files a false report of the theft of her riding lawn mower. She collects money for it from her insurer. After this, her mower is discovered by Insurer's Employee. Dawn is arrested and charged under CVC §10501(a). She insists that she can't be guilty under the statute. Is Dawn correct?
Conclusion: Dawn filed a false report of a theft with intent to deceive. This is illegal under the statute. But the law applies only to vehicles which must be registered with a law enforcement agency by direction of the California Vehicle Code. Lawn mowers, whether ridden or otherwise, do not require such registration. Dawn, therefore, is correct (although she can be prosecuted for the false claim).
Welfare Fraud
Welfare Fraud (WIC [Welfare & Institutions Code] §10980(a)) occurs when anyone knowingly makes a false statement or representation or fails to disclose a material fact in order to obtain aid, or when anyone does so to obtain aid or continue to receive aid to which he or she is not entitled. The same applies if that person tries to receive a larger amount than that to which he or she is legally entitled. The crime is related to Submitting Fraudulent Insurance Claims because a fraudulent welfare claim can be part of a scheme to profit from false claims, permitting the prosecution to charge you with both in the same trial.
If you're convicted of Welfare Fraud, the penalty may be:
- A term of up to six months in a county jail; OR,
- A fine of up to five hundred dollars ($500); OR,
- Both a fine and imprisonment.[17]
California Criminal Jury Instructions – Welfare Fraud
To convict you under WIC §10980(a), the prosecution must prove the following beyond a reasonable doubt:
You knowingly made a false statement or representation or failed to disclose a material fact in order to obtain aid, or you attempted to obtain aid or continue to receive aid to which you are not entitled, or you tried to receive a larger amount of aid than you're legally entitled to receive.
Example: Defendant Dee Dee files for support under the California WIC Program.[18] She says she has two twelve-year-old's living under her roof. This is true. She doesn't disclose that one is Sister's Son, both of whom live with her, nor does she reveal that Sister already receives WIC support for her son. Dee Dee is caught. She points out that she's a mother with her own son, as she said. Is she guilty under §10980(a)?
Conclusion: Dee Dee made a false statement to a state government program in order to receive a greater amount in aid than she would've received if she'd told the truth. This is all the statute requires. While she told the truth about her own son, this doesn't excuse the fact that she failed to tell the truth about Sister's Son when she applied to the California WIC Program. Therefore, Dee Dee is guilty.
Making a False Statement to Alter a Benefit
Making a False Statement to Alter a Benefit (Unemployment Insurance Code [UIC] §2101(a)) involves presenting a false statement, knowingly failing to disclose a material fact, or using a false name, false social security number, or false ID to change a benefit or benefit payment. The law applies irrespective of whether the false statement is made to benefit its maker or another person.
If you're convicted of Making a False Statement to Alter a Benefit, the penalty may be:
- Any penalty prescribed for a violation of the California UIC; OR,
- Any penalty prescribed by federal law for violation of unemployment insurance law, training allowance law, trade readjustment allowance law, or the provisions of any other allowance law of the federal government; OR,
- Prosecution under both state and federal law.[19]
California Criminal Jury Instructions – Making a False Statement to Alter a Benefit
To convict you under UIC §2101(a), the prosecution must prove the following beyond a reasonable doubt:
You knowingly made a false statement or representation or failed to disclose a material fact in order to obtain aid, or you attempted to obtain aid or continue to receive aid to which you are not entitled, or you tried to receive a larger amount of aid than you're legally entitled to receive.
Example: Defendant Davida knows that she'll lose her California unemployment benefits when it's discovered she is no longer injured and unable to walk. She submits paperwork including an image of herself with a cast on her leg. The state concludes that she's trying to obtain aid to which she's no longer entitled. They charge her under UIC §2101(a). She says a picture isn't a “false statement.” Is she guilty?
Conclusion: Davida knowingly submitted an image that falsely portrayed her as injured so that she could continue to take state benefits. These are elements of the charge. Pictures are counted as a form of “representation” for purposes of the statute; a literal statement isn't required. Davida submitted a fraudulent self-representation in order to continue taking benefits. Davida is guilty, on these facts.
Worker's Compensation Fraud
Worker's Compensation Fraud (Insurance Code [INS] §1871.4(a)) occurs whenever anyone makes one of a number of different kinds of false statements in order to obtain benefits as an injured worker. The law applies, furthermore, if you make a statement to discourage an injured worker from pursuing a benefit. Knowingly assisting, abetting,[20] conspiring with, or soliciting a person to do anything prohibited under the statute is also made illegal under INS Section §1871.4(a).
Since Worker's Compensation Fraud can be charged as a felony or a misdemeanor, the crime is a “wobbler”[21] under California law. If you're convicted of felony Worker's Compensation Fraud, the penalty may be:
- A term of up to five (5) years in a state prison; OR,
- A fine of up to $150,000 (one-hundred-fifty-thousand dollars) or double the amount of the fraud, whichever is greater; OR,
- Both imprisonment and a fine.[22]
Note: You'll be ordered to pay restitution if you're convicted under this Code Section, including restitution for any medical evaluation or treatment you obtained or provided.
California Criminal Jury Instructions – Worker's Compensation Fraud
To convict you under INS §1871.4(a), the prosecution must prove the following beyond a reasonable doubt:
You made one of a number of different kinds of false statements in order to obtain benefits as an injured worker or you made a statement to discourage an injured worker from pursuing a benefit or you knowingly assisted, abetted, conspired with, or solicited a person to do anything prohibited under the statute.
Example: Defendant Demi is a physician who asks Patient to pretend to be injured. Demi will support her claim. Then Demi says that Friend and Demi will split anything Friend receives from the state Worker's Compensation fund. Friend makes the claim and is charged with fraud. She reveals that Demi solicited her. Demi insists she can't be charged with the crime; she never filed any sort of claim. Is Demi correct?
Conclusion: Demi conspired with Friend to make a fraudulent Worker's Compensation claim so that Friend would obtain benefits to which she wasn't entitled. Demi provided the medical support for the scheme. These are the elements of the crime. That Friend made the claim instead of Demi is a function of conspiracy; only one had to file the claim itself. But both are guilty, on these facts. Demi is incorrect.
What Can I Do If I'm Charged With Submitting Fraudulent Insurance Claims?
The State of California regards Submitting Fraudulent Insurance Claims as a serious offense. If you're charged with Submitting Fraudulent Insurance Claims, it's essential that you retain a skilled, dedicated criminal defense attorney as soon as possible. Your rights, freedom, and livelihood are at stake.
Remember, a professional criminal defense attorney may be able to:
- Negotiate a lesser charge in a plea bargain;
- Reduce your sentence;
- Or even get charges dismissed completely.
The attorneys at the Kann California Law Group have an excellent understanding of the local courts and an extensive knowledge of California's criminal justice system. We can represent you in Ventura, Santa Clarita, Los Angeles, Encino, Pasadena and many other Southern California cities.
If you or someone you know has been arrested for, or charged with, Submitting Fraudulent Insurance Claims, our attorneys will analyze the facts of your case and plan a strategy that will help you obtain the best possible outcome.
Contact the Kann California Law Group today to schedule your free and confidential consultation.
[1] “A person claims, makes, or presents a claim for payment by requesting payment under a contract of insurance for a loss or injury health-care benefit.” See California Criminal Jury Instructions 2000 (CALCRIM) (2020).
[2] “A claim for payment of a health-care benefit includes a claim submitted by or on behalf of the provider of a workers' compensation health benefit defined in the Labor Code.” See above.
[3] “Someone intends to defraud if he or she intends to deceive another person either to cause a loss of money, or goods, or services, or something else of value, or to cause damage to, a legal, financial, or property right.” See above.
[4] See “Wobbler Law and Legal Definition” definition at UsLegal.com.
[5] See California Penal Code [CPC] §550 (c) (2) (A).
[6] See above.
[7] See “Joe Louis” at Wikipedia.org.
[8] See CPC §548 (a).
[9] See Endnote 4.
[10] See CPC §549.
[11] See “Criminal Solicitation Law and Legal Definition” at USLegal.com. (“The crime of criminal solicitation is the actual soliciting, or seeking to engage another to commit a crime, not the subsequent commission of a crime. Therefore, a defendant can be convicted of soliciting, even though the person refuses and the solicited crime is never perpetrated, as long as the intent that that crime be committed is present.”)
[12] See Endnote 4.
[13] See CPC §551 (c).
[14] See Endnote 4.
[15] See California Vehicle Code [CVC] §10501 (b).
[16] See CPC §672.
[17] See Welfare and Institutions Code [WIC] §10980 (a).
[18] See “How WIC Helps” at Myfamily.wic.ca.gov.
[19] See UIC §2101 (a).
[20] See “Aid and Abet Law and Legal Definition” at USLegal.com.
[21] See Endnote 4.
[22] See Insurance Code [INS] §1871.4 (b).
