Any person, group or entity who operates as an automotive repair dealer, its contractors, its employees, or agents that offers an insurance company, its broker, agents or affiliates a fee, commission, profit agreement or consideration for a referral of an insured vehicle owner to its auto repair company for vehicle repair that is insured by that vehicle owner’s insurance policy.
Yes. Auto insurance fraud occurs when an insurance company, its agents, adjusters, or its consumers deliberately deceive the insurance process for an illegitimate gain the insurance company is not otherwise entitled. The auto repair dealer desires to pay the insurance company a commission or fee to send its insured drivers to it for repair services that are covered by that insurance company. The repair company is not entitled to the services because it did not procure them itself. More important is that the insurance company cannot have an unaffiliated, unlicensed entity or person pay them a fee for an activity the insurance company is entitled by law to do for its clients.
The most basic incentives desired in committing auto insurance fraud are:
An auto collision service provider can pay an incentive to an insurance company for multiple clients, and provide those clients with substandard parts, then bill the insurance company standard rates. This allows each party to pocket the difference and make each client a repeat customer for defective service for profit.
The auto repair company can estimate the damages without a risk adjuster and pay the insurance company to allow the service provider to continue repairs without an estimation. This allows the service provider to induce service by providing a discount to the insured for cost repairs, or cash, to allow the insured to save on deductibles, out of the presence of the risk adjuster. The rate of service was then established by the service provider and not the insurance company creating an illegal market.
The insured will get referred to an auto repair company who in turn pays the insurance company for the new client. The insurance company not only receives the referral fee, but also gets the option to deny coverage for parts not associated with the accident if its risk adjusters deem it necessary. In addition, the auto repair company has the option to replace standard parts with discount, junk or defective parts without the insured’s knowledge and bill the insured premium or standard rates for services. The incentive is also the insurance company’s need to open more facilities and get more customers. This can lead to a profit scheme between the insurance company and auto repair company. The fee of referrals can also be paid to the risk adjuster to not be present for inspection or to file a fictitious report using the prices established by the service provider with the insurance company’s knowledge. This deviates from the standards established by state and federal law.
A violation of Penal Code 551 PC can be charged as a misdemeanor or felony. If the fraud does not exceed $950 dollars, it is a misdemeanor with the option of confinement not exceeding 6 months in jail. If the fraud does exceed $950 dollars it is a felony with confinement ranging from 16 months, 1, 2, or 3 in prison with fines not exceeding $10,000 dollars.
If you are arrested for a violation of Penal Code 551 PC, call Law Mart today for a free consultation.
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