Accused of insurance fraud after one claim

Picture a parent with a steady job and no record who files a claim after a car accident. Months later, a letter arrives from an investigator, or a detective calls, and suddenly that person is being accused of a crime.

If that is you, take a breath. This is exactly the kind of case Marcus E. DeBose focuses on, and it is one he cares about. Insurance fraud allegations often land on people who have never been inside a courtroom, and the fear is real: losing a job, savings, a professional license, standing in the community and possibly freedom. This page explains, in plain language, how insurance fraud defense works in San Diego, what the law actually says, and what you can do right now to protect yourself.

What insurance fraud means in California

California's main insurance fraud law is Penal Code section 550. It is a long statute with two main parts. Subdivision (a) is mostly about false or fraudulent claims themselves. Subdivision (b) is mostly about false or misleading statements and hidden facts connected to a claim or a policy. Which part a prosecutor relies on can change how serious the case is, so it is one of the first things an attorney looks at.

Subdivision (a): false or fraudulent claims

In general terms, subdivision (a) makes it a crime to knowingly do things such as:

• Present, or cause someone else to present, a false or fraudulent claim for payment of a loss or injury, including under an insurance policy
• Present more than one claim for the same loss or injury with the intent to defraud
• Cause or take part in a vehicle collision or accident for the purpose of presenting a false or fraudulent claim
• Present a false or fraudulent claim for the theft, destruction, damage or conversion of a motor vehicle, a vehicle part or the contents of a vehicle
• Prepare, make or sign a document with the intent that it be used to support a false or fraudulent claim
• Make false or fraudulent claims for health care benefits, including claims for services that were not used, or more than one claim for the same benefit

Subdivision (b): false statements and concealment

Subdivision (b) reaches statements rather than the claim as a whole. Generally, it covers knowingly presenting or preparing a written or oral statement, in support of or in opposition to a claim, that contains false or misleading information about a material fact. It also covers concealing, or knowingly failing to disclose, an event that affects someone's right to an insurance benefit or the amount of that benefit, and certain false statements made to obtain a motor vehicle policy. Helping, soliciting or conspiring with someone else to do these things can also be charged.

The word material matters. A wrong detail that has nothing to do with whether or how much the insurer pays is very different from a statement that goes to the heart of the claim.

Related laws

Other statutes sometimes appear alongside Section 550. Penal Code section 548, for example, addresses destroying, hiding or disposing of insured property with the intent to defraud the insurer, such as a vehicle reported stolen that was in fact given away or abandoned. Prosecutors may also file general theft or fraud charges, which are explained on our white collar crimes page. Workers' compensation cases have their own law, covered below.

Felony, wobbler or misdemeanor

This is usually the first question people ask, and the honest answer is: it depends on the subdivision charged and, for some parts of the law, the amount involved. In California, a wobbler is an offense that can be charged and sentenced either as a felony or as a misdemeanor. A straight felony can only be a felony as charged.

Because the classification depends so much on how a case is charged, the choice of code section is often a negotiation point. A case filed as a straight felony under subdivision (a) can sometimes be resolved with a plea to a different charge that is a wobbler or a misdemeanor, depending on the facts and the prosecutor's position. And when a wobbler is involved, Penal Code section 17(b) can allow a judge to treat it as a misdemeanor, either at sentencing or later. Our felony defense page explains how those reductions generally work.

Possible penalties for a felony fraud conviction can include probation, fines, restitution and, in some cases, custody. The law allows large fines in fraud cases, and they can be tied to the amount of the alleged fraud. A person who already has a prior felony insurance fraud conviction can face stricter limits on probation. Exactly what applies in your case is a conversation to have with an attorney who has read the complaint.

Workers' compensation fraud

Workers' compensation fraud is generally charged under Insurance Code section 1871.4. In broad terms, it makes it a crime to knowingly make a false or fraudulent material statement or representation for the purpose of obtaining or denying workers' compensation benefits. That second part is worth noticing. The law applies to employers and others who make false statements to defeat a valid claim, not only to injured workers.

For employees, the allegations we see often involve:

• Whether an injury happened at work or somewhere else
• Statements about pain and physical limits compared with later surveillance video or social media
• Working another job, or doing physical activity, while receiving temporary disability benefits
• Prior injuries to the same body part that were not mentioned

Many of these cases depend on short video clips taken by an investigator. A few minutes of footage on a good day may not reflect how a person feels most of the time, and medical records often tell a more complicated story than the investigation report. Section 1871.4 is a wobbler, so it can be charged as a felony or a misdemeanor. Employers and business owners can face separate laws dealing with payroll and premium reporting, which raise different issues.

Who usually gets accused, and how

The person on the other side of the desk in an insurance fraud consultation is rarely a career criminal. More often it is a working parent, a small business owner, a nurse, a teacher or a student with a clean record. Many are frightened and embarrassed, and many are convinced it is all a misunderstanding they can clear up with one phone call. That instinct is understandable, and it is also the one that most often makes things harder.

After a car accident

Auto claims are the most common setting. Investigators look at things such as whether damage existed before the accident, whether repair estimates and invoices match the work, who was really driving, whether injuries and treatment line up with the collision, and whether a policy was bought or changed shortly before the reported date of loss. A rental car bill, a body shop's paperwork or a passenger's statement can all become part of the picture, even if you never saw those documents.

After a theft or burglary

Theft claims often turn on lists of property, receipts and timing. A claim that includes an item that was sold earlier, or values that seem high, can draw scrutiny. Very often the explanation is a hurried list made on a bad day, estimated values, or a family member's mistake.

After property damage

Water, fire and storm claims raise questions about the cause of the damage, when it happened, and what was damaged before. Contractors and public adjusters sometimes prepare paperwork that the policyholder signs without reading closely.

Staged accidents, in general terms

Some insurance fraud cases involve allegations of an organized scheme, such as a collision that was planned in advance. Those cases often include several people, and a person who was a passenger or a late addition may have known far less than others. Where you fit in the story, and what you actually knew, can matter a great deal.

How investigations start

Most insurance fraud cases do not begin with an arrest. They usually start quietly, inside the insurance company, and can build for months before anyone is charged.

1. The insurer's special investigations unit. Insurers have special investigations units, often called SIUs, that review claims flagged as unusual. An SIU investigator may ask for documents, call witnesses, pull prior claims history or order surveillance.
2. Mandatory reporting. California law generally requires insurers that believe a fraudulent claim is being made to report it to the California Department of Insurance. That means a report can be made even when the insurer has not decided anything about your claim.
3. Department of Insurance detectives. The Department of Insurance has investigators who are sworn peace officers. They may interview you, contact your employer, or request records from banks, medical providers and repair shops.
4. The district attorney. Department of Insurance funding supports insurance fraud prosecution units in district attorney offices around California, and the San Diego County District Attorney's Office has prosecutors who handle these cases. A case may be presented to them for a filing decision.

Fraud cases can also be filed long after the claim. For many fraud offenses, the time limit for filing charges generally runs from when the offense was discovered rather than when the claim was made, so a quiet period does not mean the matter is over. Our blog post on what to do during an insurance fraud investigation walks through the early stage in more detail.

Signs a claim is under review

• The insurer asks for more documents than usual, such as bank statements, phone records or prior repair invoices
• Payment is delayed without a clear reason, or a letter mentions a "reservation of rights"
• You are asked to sit for an examination under oath
• The claim is denied with a reference to misrepresentation or concealment
• Friends, a former employer or a repair shop mention that someone called asking about you

None of these mean a criminal case is coming. They are signals that it is time to get advice before the next conversation.

Recorded statements and examinations under oath

This is where many otherwise strong cases are damaged. Insurance policies usually include a duty to cooperate with the insurer's investigation. That cooperation can include a recorded statement over the phone, or an examination under oath, which is a formal question-and-answer session with an attorney for the insurer and a court reporter. You answer under penalty of perjury, and a transcript is made.

Why this is difficult

You face two risks at once. Refusing to cooperate can affect your claim under the policy. But anything you say can be shared with the Department of Insurance and prosecutors, and small inconsistencies between what you said in a recorded call, what you wrote on a form and what you say months later under oath are often the backbone of a fraud case. Your right to remain silent applies to questioning by the government. An insurance company is a private business, so the rules work differently there, which is why this choice deserves careful thought.

How an attorney can help

• Deciding whether a statement or examination is in your interest at all
• Reviewing the policy, the claim file and your own documents before any testimony
• Communicating with the insurer about scheduling, scope and documents
• Discussing whether to pursue, amend or withdraw a claim, keeping in mind that withdrawing a claim may not end an investigation into what was already submitted

If a detective rather than the insurer contacts you, the situation is clearer. You have the right not to answer questions and the right to an attorney. Politely saying that you would like to speak with an attorney first is not an admission of anything.

Intent to defraud and what must be proven

An insurance claim that turns out to be wrong is not automatically a crime. In general, prosecutors must prove that a person acted knowingly and, for most charges, with the intent to defraud, meaning an intent to deceive someone in order to cause a loss of money or property or harm to a legal or financial right. For statement-based charges, they generally must also show the false or misleading information related to a material fact. A claim does not have to be paid for a charge to be filed. The focus is usually on what was submitted, and why.

Issues an attorney often reviews

• Honest mistakes. Claims are often made under stress, sometimes days after a frightening accident. Wrong dates, estimated values and mixed-up details are common.
• Who wrote what. Adjusters fill in forms over the phone. Body shops, medical offices, contractors and public adjusters create paperwork. A document in the file is not necessarily your statement.
• Language and understanding. If English is not your first language, or the policy terms were never explained, the meaning of a statement can be very different from what the report suggests.
• The surveillance. Video can be brief, selective, and missing context about medication, good days and bad days.
• The investigation itself. How the statements were taken, whether records were complete, and whether the claim history was read correctly.
• The amount. Under some parts of the law the amount at issue affects whether a charge can be a felony, so the numbers deserve close review.

Exaggeration is a sensitive area. A person who rounds up a value or describes pain in strong words is not necessarily committing a crime, but a statement that is knowingly false about something that matters can be charged. Where a particular case falls on that line is exactly the kind of question to discuss privately with an attorney.

Before charges are filed

The period before charges can be the most valuable time in an insurance fraud case. Prosecutors are still deciding whether to file, what to file and whether a case is a felony at all. Pre-filing representation means having an attorney involved during that stage.

What pre-filing work can look like

• Communicating with the investigator or the prosecutor so that you are not interviewed without counsel
• Gathering documents that explain what happened, such as repair records, medical records, receipts, texts and photos
• Presenting context about your life: your work history, your family, your record, and how the claim came to be made
• Addressing the money in a careful way, when it makes sense, without making admissions
• If charges are filed, arranging to appear in court in an orderly way, where possible, rather than being surprised by an arrest

None of this can promise a particular decision. In some cases, though, early work can influence whether charges are filed, or which ones.

Should I pay the money back now?

Many people want to return the money right away, as a way of showing good faith. That instinct is decent, and repayment can matter later. But a payment made in a hurry, especially one paired with a letter or a signed form, can be read as an admission that the claim was fraudulent. It can also be applied in ways you did not expect. If repayment makes sense, it is usually better handled through your attorney, at the right time and in the right form, so that it helps your case rather than hurts it.

What to do this week

1. Do not give any statement to an insurer, investigator or detective until you have spoken with an attorney.
2. Do not contact the body shop, the doctor's office, a contractor or a witness to "line things up." It can look like something it is not.
3. Keep every document: the policy, the claim, photos, receipts, emails and texts. Do not delete or alter anything.
4. Stay off social media about the accident, the injury or the claim.
5. Write a private timeline for your attorney while your memory is fresh.
6. Do not repay money or sign anything the insurer sends without advice first.

If a case is filed in San Diego

Insurance fraud cases are prosecuted in San Diego County Superior Court. Depending on where the claim arose and how the case is assigned, hearings may take place at the Central Courthouse downtown or at one of the regional courthouses in El Cajon, Chula Vista or Vista. Marcus also appears in southwest Riverside County at the Southwest Justice Center in Murrieta.

The general steps

1. Arraignment. You are formally told of the charges, enter a plea, and the court addresses release conditions. Our post on what to expect at arraignment explains this first hearing.
2. Discovery and review. The defense receives the investigation file, which in fraud cases can be large: claim files, recorded statements, transcripts, financial and medical records, and video.
3. Pretrial conferences. The attorneys discuss the evidence and possible resolutions with each other and the court.
4. Preliminary hearing, in felony cases. A judge decides whether there is enough evidence to hold the case for trial.
5. Motions. The defense may challenge evidence or how it was obtained.
6. Trial or resolution. Many cases resolve by agreement. Others go to a jury.
7. Sentencing, if there is a conviction, including any restitution.

Fraud cases often take longer than other criminal cases because of the volume of records. That time can be useful when it is used to understand the file and build the story of what really happened.

Why local experience matters

Each courthouse in San Diego County has its own rhythm, and prosecutors who handle fraud cases look at files in their own ways. An attorney who has spent years in these courtrooms understands how a case is likely to be received, which information tends to matter to a filing deputy, and when it is worth pushing back. Marcus has been appearing in San Diego courts since 2001, and that familiarity helps him advise clients realistically about what to expect.

Ways a case can be resolved

Every case is different, but depending on the facts and your history, outcomes discussed in insurance fraud cases may include:

• No charges filed, sometimes after pre-filing work
• Dismissal, when the evidence of intent is weak or the facts tell a different story
• A reduced charge, such as a wobbler or a misdemeanor in place of a straight felony
• Diversion, where available. If a case is charged or reduced to a misdemeanor, a judge may have authority to offer misdemeanor diversion under Penal Code section 1001.95, and a case can be dismissed after the conditions are completed. Service members and veterans may have additional options, see military diversion.
• A negotiated plea with terms that protect your job, license or immigration status as much as possible
• Trial, when that is the right choice

Restitution

In California, a court generally orders a person convicted of a crime to pay restitution for the economic losses of the victim, and in insurance fraud cases the insurer is often treated as the victim. Restitution can include amounts the insurer paid on the claim and, in some cases, other losses. The amount is often contested, and it is a separate question from guilt. Paying money back does not automatically end a criminal case, but restitution is frequently part of negotiations, and how and when it is offered can matter. Insurers may also deny the claim, cancel a policy or pursue civil remedies, which run separately from the criminal case.

Jobs, licenses and immigration

For many people, the consequences outside the courtroom are the ones that keep them awake at night. A fraud conviction is treated by many employers and agencies as a question of honesty, which is why protecting your future often shapes the strategy from the first day.

Employment

Fraud convictions can appear on background checks. Jobs that involve handling money, financial records, patients, vulnerable people or government contracts can be especially sensitive.

Professional licenses

Nurses, doctors, pharmacists, real estate agents, contractors, insurance agents and many other licensed professionals in California answer to licensing boards that may consider criminal convictions, especially those related to dishonesty. Some licenses come with reporting duties. People who work in the insurance industry can face particular problems. Tell your attorney about any license you hold or plan to apply for, because the specific charge and wording of a plea can make a real difference.

Immigration

If you are not a United States citizen, an insurance fraud case deserves extra care. Fraud offenses are often treated as crimes involving moral turpitude under federal immigration law, and fraud cases involving larger losses can carry especially severe immigration consequences. The code section, the stated amount of loss and the exact plea language can all matter. California law requires defense attorneys to advise non-citizen clients about these consequences, and Marcus works with clients to understand them before any decision is made. Hablamos español.

Other consequences

Security clearances, military careers, student status and future insurance coverage can all be affected. Each of these is a reason to involve an attorney early rather than late.

If you are a parent

Parents often ask whether they are about to be taken away from their children in handcuffs. In many insurance fraud cases, an arrest at home is not necessarily how things unfold, and where charges are filed an attorney can often work to arrange a court appearance in an orderly way. Many people continue working and caring for their families while the case is pending. Keeping your routine steady, and letting your attorney handle communication with investigators, can make a frightening period more manageable.

Clearing your record afterward

For many clients, the long view matters most. California offers several kinds of record relief that may be available after an insurance fraud case:

• Expungement under Penal Code section 1203.4, which can allow a person who completed probation to withdraw a plea and have the case dismissed
• Felony reduction under Penal Code section 17(b), for wobblers
• Relief under Penal Code section 1203.41, for some felony sentences served in county jail
• Arrest record sealing under Penal Code section 851.91, when an arrest did not lead to a conviction

Record relief can help a great deal with private employers, but it does not erase a case for every purpose. It generally does not remove immigration consequences, and some licensing agencies may still ask about it. Our record sealing and expungement page explains the options in more detail.

Working with Marcus

Marcus E. DeBose has been defending San Diego clients since he was sworn in to the State Bar of California in December 2001. Early in his career he carried a caseload of 125 felony cases at one time, and he has won multiple "Not Guilty" verdicts at jury trial. Since 2016 he has been a partner at Tegnelia & DeBose, APC, the firm behind Email My Lawyer.

His approach starts with a long first conversation. Marcus wants to understand what happened, why the claim was made the way it was, and who you are outside this accusation. Many of his clients have never been in trouble before, and insurance fraud is a case type close to his heart because it so often involves good people at the worst moment of their lives. He then tells that story to the prosecutor and the judge.

• You work with Marcus directly, and you have direct access to him, day or night.
• Free consultations in person at the Mission Valley office, or by phone or Zoom.
• Bilingual in English and Spanish. Hablamos español.
• Courts throughout San Diego County, plus the Southwest Justice Center in Murrieta.

If an insurer, an investigator or a detective has contacted you, or you have a court date, book a free consultation before you say anything else. You can learn more about Marcus, or read about criminal defense in San Diego more broadly.

This page is general information about California law, not legal advice for your situation. Every case is different, and past results do not guarantee a similar outcome.