California Insurance Fraud Charges And Penalties + Statute Of Limitations

Views: 4920

Insurance Fraud in California is defined by the act of providing dishonest information or performing an illegal activity for the purpose of gaining something of value that he or she would not have otherwise obtained. There are three main types of insurance fraud, including:

Unemployment Insurance Fraud- Penal Code §§ 2101 and 2102

Unemployment insurance fraud is characterized by the receipt of unemployment benefits in which an individual is not entitled to. This may occur when an individual is working, receiving a pension or receiving worker’s compensation, and accepting unemployment benefits simultaneously.  This also includes cases involving false information on an application.

Auto Insurance Fraud- Penal Code Section Penal Code Section 500, 548, 549, 550, 551 PC

Auto insurance fraud is characterized by an act that is performed to obtain money illegally from an insurance company. This includes filing a claim that a vehicle was stolen or involved in an accident when such did not occur. This also includes filing a claim when the accident actually occurred at a previous date. This may also include a physician, lawyer, or other professional referring an injured party to an auto repair shop.

Health Insurance Fraud

Health insurance fraud is characterized by an individual or company that frauds an insurer, insurance company, or a government plan. This includes a medical provider that attempts to obtain more money through double-billing or filing duplicate claims for the same service, filing claims for services never provided, billing for services not covered by an insurer’s policy, and even providing kickbacks for referrals. Patients may commit healthcare insurance fraud by falsifying information.

Laws and Penalties

Anyone who is convicted of California insurance fraud is subject to serious consequences that relate to the type of insurance and the nature of the criminal activity, as follows. The precise statute of limitations varies, depending upon the nature of the criminal activity.

Unemployment Insurance Fraud- Misdemeanor or Felony 

Depending upon specific criteria, unemployment insurance fraud may be charged as a felony or misdemeanor. The criteria include the facts of the case, age, criminal history, and employment history.


  • Maximum sentence is a year in county jail.
  • $25,000 fine.
  • If the fraud is less than $950.00, maximum sentence is 6 months in jail and a fine of $1000.00
  • If the fraud was more than $950.00, a sentence of one year in county jail and a fine of $10,000.00 is possible.


  • Minimum term is sixteen months in state prison and the maximum is five years.
  • Fines up to $50,000.00.

Auto Insurance Fraud- Misdemeanor or Felony 

Depending upon specific criteria, auto insurance fraud may be charged as a felony or misdemeanor. The criteria include the facts of the case, professional obligations, and criminal history.


  • Up to one year county jail sentence.
  • Fines
  • Probation
  • Loss of professional license possible.


  • Up to five years in prison.
  • Fines up to $10,000.00.
  • Full restitution possible.
  • Probation
  • Loss of professional license possible.

Healthcare Insurance Fraud

Penal Code 550(a) PC prohibits most forms of health care and medical billing fraud in California There are specific federal laws for making false claims in a Medicaid or Medicare (18U.S.C. section 287), making false statements (18U.S.C. section 1001), as well as, any related activity. Claims may be considered a “wobbler” (either a misdemeanor or felony) if the money in question exceeds $950.00.


  • If no more than $950.00.
  • Up to six months in county jail.
  • And/or a fine of up to $1000.00.


  • Fine of up to $50,000 or double the amount of the fraud.
  • And/or a sentence of county jail for up to five years.
  • And/or probation.

Federal law involves both civil and criminal penalties for health care insurance fraud.  

  • Prison for making false statements up to five years per offense.
  • If bodily injury results, the prison term may extend to up to twenty years to life.
  • If individual, fines mat be up to $250,000 per offense. If a company, fines may be up to $500,000 per offense.
  • Restitution may be required in the amount of money illegally acquired.
  • Probation.

Insurance Fraud Defenses

To be convicted of insurance fraud, it must be proven that one had the intent and knowledge to defraud the individual or company. If your actions were the same as how a reasonable person would act in the same situation, you may not be convicted of insurance fraud. The issue of complexity in these cases and the defendant’s background are extremely important in California insurance fraud cases.

A good defense lawyer may be able to dispute the charges against you and prove your innocence. Your lawyer will likely subpoena records, witnesses and experts to dispute the charges against you. It is crucial to hire a good defense lawyer for such a serious offense.

Insurance Fraud Case Examples

  • Bristol-Myers Squibb Insurance Fraud – A California state agency charged Bristol-Myers Squibb with insurance fraud due to the accusation that Bristol-Myers made payments to select physicians, targeting and profiting on the private insurance industry. Bristol-Myers Squibb also settled with federal and state governments in the amount of $515 million for allegations of kick-backs that defrauded Medicare and Medicaid.
  • Blue Cross/Blue Shield and Medicaid vs. Dr. Gautam Gupta – Dr. Gautam Gupta had allegedly submitted claims to Blue Cross/Blue Shield and Medicaid for unnecessary procedures, and those not performed to total $25 million in fraudulent health insurance claims.
  • Michael Jackson’s Invalid Insurance Policy – Michael Jackson did not disclose prescription drugs on his Lloyds of London insurance application. Thus, Lloyds of London is alleging deception on Michael Jackson’s part and filed suit to invalidate the insurance policy.
  • Three Dozen Suspected of Auto Insurance Fraud – In April 2012, Federal law enforcement agents and New York City police detectives arrested more than three dozen people alleging that the group was involved in an insurance fraud scheme, totaling nearly $280 million.
  • Fraudulent Unemployment Benefits Payments Totaled $3.3 Billion In 2011: Paper – A recent report from the St. Louis Federal Reserve sited that fraudulent unemployment Benefits Payments totaled $3.3 Billion in 2011; the largest portion of dollars were received by those still working.