California Penal Code Section 551 PC: Unlawful Referral To An Auto Repair Dealer

1. Definition and Elements of the Crimeunlawful auto repair dealer referral

Automobile mechanics rely on having a steady stream of customers in order to make a living. Because competition is so fierce, the temptation may exist to offer kickbacks or other incentives to insurance agents in exchange for customer referrals. However, California Penal Code Section 551 PC prohibits unlawful referrals to an auto repair dealer, and conviction under this section can carry severe consequences.

To prove a defendant is guilty of this offense, a prosecutor must be able to establish the following elements:

  1. The defendant is an automotive repair dealer, contractor, or employee or agent thereof.
  2. AND the defendant offered an insurance agent, broker or adjuster a fee, commission, profit sharing, or other form of direct or indirect consideration for referring an insured to an automotive repair dealer or its employee or agent for vehicle repairs covered under a policyholder’s automobile physical damage or collision coverage.
  3. OR the defendant knowingly offered or gave a discount intended to offset a deductible required by a policy on insurance covering repairs to or replacement of a motor vehicle.
2. Related Offenses

Other similar or related offenses include:

  1. Auto Insurance FraudCalifornia Penal Code Section 550 PC
3. Examples

A man owns an auto body repair shop that is losing money due to the large number of competing shops that have opened up in the neighborhood. In hopes of stirring up additional business, the man tells his friend, who is an insurance adjuster, that he will pay him $100 for each referral that he can bring from the insurance business. The shop owner could be charged with unlawful referral to an auto repair dealer in violation of California Penal Code Section 551 PC.

In another example, an auto body shop owner meets with a man who was involved in a recent collision and whose car suffered damage. The shop owner knows the man has a $500 deductible and offers to rebate the deductible if the man opts to have the repairs done at his shop. The shop owner could also be charged with unlawful referral to an auto repair dealer in this scenario.

In a final example, an auto shop owner deals often with a specific insurance adjuster. The insurer recommends his services because the shop has a reputation for being fast and reliable. At the end of the year, the auto shop sends a gift basket of fruit to the insurance adjuster in recognition of the frequent referrals. The shop owner would not be criminally liable, as the gift basket would not be considered a fee, commission, profit sharing or other consideration but instead is a token of appreciation.

4. Defenses to Unlawful Referral to an Auto Repair Dealer

As discussed, while it is illegal to pay for referrals, there may be situations where gifts are provided to insurance adjusters that would not be considered fees, kickbacks, commissions or other forms of consideration. In these instances, the auto repair dealer would not be criminally liable.

5. Penalties

If the amount at issue is $950 or more, the crime of unlawful referral to an auto repair dealer is a “wobbler” offense that can be filed by the prosecutor as either a felony or a misdemeanor. If filed as a felony, a defendant can be sentenced to up to three years in prison upon conviction. If filed as a misdemeanor, the maximum penalty that can be imposed is a year in jail. If the amount at issue is less than $950, unlawful referral to an auto repair dealer is a misdemeanor level offense that is punishable by a maximum of six months in jail.

6. Criminal Defense for Unlawful Referral to an Auto Repair Dealer Cases

Attempting to obtain an unlawful referral to an auto repair dealer is a serious offense that can result in a felony conviction. If you are under investigation for this offense, it is crucial that you consult with a Los Angeles Criminal Defense Attorney immediately. As a former Deputy District Attorney with over 14 years of prosecutorial experience, Los Angeles Criminal Defense Lawyer Michael Kraut is highly skilled at fighting criminal offenses like this. Mr. Kraut is well known throughout the legal community for his in-depth knowledge of the criminal law and his impressive litigation skills.

For more information about unlawful referral to an auto repair dealer, and to schedule your free consultation, contact Los Angeles Criminal Defense Attorney Michael Kraut at the Kraut Law Group located at 6255 Sunset Boulevard, Suite 1480, Los Angeles, CA 90028. Mr. Kraut can be reached 24/7 at 888-334-6344 or 323-464-6453.

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