On April 28, 2009, Harold Galvez the owner of G and H Auto Repair was charged with insurance fraud by the San Bernardino County District Attorney’s Office. The Bureau of Automotive Repair (B.A.R.) began an investigation in December 2008 when Galvez' auto body business was performing auto insurance repair work without a State Auto Dealer Repair license.
The B.A.R. was tipped off when a consumer contacted that agency and requested that their vehicle be inspected after being repaired at Galvez' business. The consumer felt the repairs to their vehicle were suspicious and possibly fraudulent in nature. Investigators from the B.A.R. determined Galvez had charged the insurance company for new factory parts, but instead used cheaper aftermarket parts for the repairs. Galvez pocketed the excess funds of over $3,400, which he had received from AAA for the new parts. B.A.R submitted the investigation to the DA’s Auto Insurance Fraud Unit. Mr. Galvez was arrested at his business and bail was set at $50,000.
Attorney Comments: Remember, in California any fraud over $400 is a felony. Insurance fraud is prosecuted more aggressively than other fraud since insurance companies have their own investigators and turn over complete prosecution packages to the D.A.'s Offices. If there is any type of insurance investigation, it needs to be handled carefully. Moreover, businesses that bill insurance should have compliance plans in place to have a safe harbor against fraud charges. Billing mistakes and errors can happen -- but it will be necessary to prove there was no fraudulent intent. An effective compliance plan can help prove lack of intent to defraud.
Any questions or comments should be directed to: firstname.lastname@example.org. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings.