BILL NUMBER: SB 1988 CHAPTERED 09/29/00 CHAPTER 867 FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2000 APPROVED BY GOVERNOR SEPTEMBER 28, 2000 PASSED THE SENATE AUGUST 30, 2000 PASSED THE ASSEMBLY AUGUST 28, 2000 AMENDED IN ASSEMBLY AUGUST 25, 2000 AMENDED IN ASSEMBLY AUGUST 18, 2000 AMENDED IN ASSEMBLY AUGUST 11, 2000 AMENDED IN ASSEMBLY JULY 6, 2000 AMENDED IN ASSEMBLY JUNE 15, 2000 AMENDED IN SENATE MAY 31, 2000 AMENDED IN SENATE MAY 22, 2000 AMENDED IN SENATE MAY 2, 2000 AMENDED IN SENATE APRIL 13, 2000 AMENDED IN SENATE APRIL 10, 2000 AMENDED IN SENATE MARCH 29, 2000 INTRODUCED BY Senator Speier FEBRUARY 25, 2000 An act to amend Sections 650, 803.5, 2273, 6106.5, and 6153 of, to add Sections 1003, 1004, 2220.6, 2417, and 6106.6 to, and to add and repeal Article 10 (commencing with Section 9889.25) of Chapter 20.3 of Division 3 of, the Business and Professions Code, to amend Sections 750, 1872.1, and 1872.7 of, to add Section 758 to, to add Article 4.5 (commencing with Section 1874.85) and Article 4.6 (commencing with Section 1874.90) to Chapter 12 of Part 2 of Division 1 of, and to add and repeal Section 1874.91 of, the Insurance Code, to amend Sections 549 and 550 of the Penal Code, and to add Section 10904 to the Vehicle Code, relating to insurance fraud, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1988, Speier. Insurance fraud. (1) The Automotive Repair Act provides for the licensing and regulation of automotive repair dealers, including auto body repair shops, by the Bureau of Automotive Repair in the Department of Consumer Affairs. This bill would require the bureau to undertake a pilot program under which the bureau would inspect insured vehicles that have undergone auto body repair for the purpose of identifying work that has not been done according to specifications in the final invoice. This bill would require the pilot program to be completed by June 30, 2003, and would require a report to the Legislature by September 1, 2003. The bill would appropriate $100,000 from the Vehicle Inspection and Repair Fund to the Department of Consumer Affairs for allocation to the Bureau of Automotive Repair for the implementation of this pilot program. (2) The Medical Practice Act, the Chiropractic Act, and the State Bar Act provide for the licensing and regulation of physicians, chiropractors, and attorneys, respectively. Under these and other related insurance fraud provisions, certain activities involving the engaging of runners, cappers, steerers, or other persons to procure patients or clients are a crime, and with respect to physicians and attorneys, are grounds for disciplinary action. This bill would increase the penalties for these violations, as specified, thereby imposing a state-mandated local program. This bill would require a person licensed under the Medical Practice and Chiropractic Acts to have his or her license to practice the profession revoked for a period of 10 years upon the 2nd conviction or upon conviction of multiple counts, as specified, of certain insurance fraud offenses. This bill would provide that engaging in any conduct prohibited under specified provisions related to false or fraudulent insurance claims or statements shall constitute cause for disbarment or suspension of an attorney from the State Bar. This bill would require the applicable licensing boards to investigate a licensee against whom an information or indictment has been filed that alleges a violation of specified provisions prohibiting conduct involving false or fraudulent insurance claims or statements, if the district attorney does not otherwise object to initiating an investigation. This bill would also require a business organization that holds itself out to the public as an organization practicing medicine, or that a reasonably informed person would believe is engaged in the practice of medicine, to be owned and operated only by physicians, with certain exceptions, as specified. This bill would also require a district attorney to notify the State Board of Chiropractic Examiners whenever a chiropractor is charged with a felony, as specified. (3) Existing law provides for the licensing and regulation of insurers by the Insurance Commissioner. Existing law provides for the funding of various activities relating to insurance fraud through assessments on insurers, including an assessment of $1,000 annually per insurer to fund the costs of administration and operation of the Bureau of Fraudulent Claims in the Department of Insurance. This bill would increase that assessment to $1,300. This bill would require insurers that issue automobile liability or collision policies to inspect a statistical sampling of the vehicles for which claims are approved for auto body repairs to determine whether the work paid for was appropriately done, as specified. This bill would require an insurer issuing auto policies to provide each insured with an Auto Body Repair Consumer Bill of Rights developed by the department containing specified elements. This bill would authorize the Insurance Commissioner to declare a region of the state as an auto insurance fraud crisis area, which declaration would be in effect for no more than 2 years unless extended by the commissioner, thereby providing for various steps to be taken by insurers with regard to the payment of auto insurance claims. This provision of the bill would remain in effect only until January 1, 2006, unless extended. This bill would also provide for a doubling of fines applicable to certain insurance fraud offenses committed in an auto insurance fraud crisis area. (4) This bill would enact other related provisions. This bill would state the intent of the Legislature with respect to this act, which would be known as the Anti-Auto Theft and Insurance Fraud Act of 2000. (5) This bill would require the provisions relating to the powers and duties of the State Board of Chiropractic Examiners, which was created by an initiative statute, to be submitted to the voters for approval consistent with that initiative statute. (6) This bill would provide that the changes proposed by this bill to Section 650 of the Business and Professions Code, Section 750 of the Insurance Code, and Section 549 of the Penal Code shall not become operative if AB 2594 is also enacted and becomes operative, on or before January 1, 2001, as specified, and that bill also amends those sections. (7) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares that auto theft, auto body repair fraud and other forms of auto insurance fraud, including staged accidents, cause great economic harm and personal suffering to the people of California. The cost of this theft and fraud has been estimated to be at least $1 billion annually and may be in excess of $9 billion annually. According to the Bureau of Automotive Repair, 39 percent of the work it inspects involves fraud, and according to the California Highway Patrol, insurance fraud and auto theft are linked to organized crime. Accordingly, the Legislature has determined that it is necessary to increase efforts by state agencies to combat this type of fraud and to require insurers to strengthen their antifraud efforts. SEC. 2. This act shall be known and may be cited as the Anti-Auto Theft and Insurance Fraud Act of 2000. SEC. 3. Section 650 of the Business and Professions Code is amended to read: 650. Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code, the offer, delivery, receipt, or acceptance by any person licensed under this division of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest or coownership in or with any person to whom these patients, clients or customers are referred is unlawful. The payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement shall not be unlawful if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided by the recipient to the payor. Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code and in Sections 654.1 and 654.2, it shall not be unlawful for any person licensed under this division to refer a person to any laboratory, pharmacy, clinic (including entities exempt from licensure pursuant to Section 1206 of the Health and Safety Code), or health care facility solely because the licensee has a proprietary interest or coownership in the laboratory, pharmacy, clinic, or health care facility; provided, however, that the licensee's return on investment for that proprietary interest or coownership shall be based upon the amount of the capital investment or proportional ownership of the licensee which ownership interest is not based on the number or value of any patients referred. Any referral excepted under this section shall be unlawful if the prosecutor proves that there was no valid medical need for the referral. "Health care facility" means a general acute care hospital, acute psychiatric hospital, skilled nursing facility, intermediate care facility, and any other health facility licensed by the State Department of Health Services under Chapter 2 (commencing with Section 1250) of Division 2 of the Health and Safety Code. A violation of this section is a public offense and is punishable upon a first conviction by a fine not exceeding fifteen thousand dollars ($15,000), or by imprisonment in a county jail for not more than one year, or by imprisonment in the state prison, or by both the fine and the imprisonment in a county jail or in the state prison. A second or subsequent conviction for a violation of this section is punishable by imprisonment in the state prison, or by a fine not exceeding fifteen thousand dollars ($15,000), or by both that fine and imprisonment. SEC. 4. Section 803.5 of the Business and Professions Code is amended to read: 803.5. (a) The district attorney, city attorney, or other prosecuting agency shall notify the Medical Board of California, the California Board of Podiatric Medicine, the State Board of Chiropractic Examiners, or other appropriate allied health board, and the clerk of the court in which the charges have been filed, of any filings against a licensee of that board charging a felony immediately upon obtaining information that the defendant is a licensee of the board. The notice shall identify the licensee and describe the crimes charged and the facts alleged. The prosecuting agency shall also notify the clerk of the court in which the action is pending that the defendant is a licensee, and the clerk shall record prominently in the file that the defendant holds a license from one of the boards described above. (b) The clerk of the court in which a licensee of one of the boards is convicted of a crime shall, within 48 hours after the conviction, transmit a certified copy of the record of conviction to the applicable board. Where the licensee is regulated by an allied health board, the record of conviction shall be transmitted to that allied health board and the Medical Board of California. SEC. 5. Section 1003 is added to the Business and Professions Code, to read: 1003. (a) Except as otherwise allowed by law, the employment of runners, cappers, steerers, or other persons to procure patients constitutes unprofessional conduct. (b) A licensee of the State Board of Chiropractic Examiners shall have his or her license to practice revoked for a period of 10 years upon a second conviction for violating any of the following provisions or upon being convicted of more than one count of violating any of the following provisions in a single case: Section 650 of this code, Section 750 or 1871.4 of the Insurance Code, or Section 549 or 550 of the Penal Code. After the expiration of this 10-year period, an application for license reinstatement may be made pursuant to subdivision (c) of Section 10 of the Chiropractic Act. SEC. 6. Section 1004 is added to the Business and Professions Code, to read: 1004. The State Board of Chiropractic Examiners shall investigate any licensee against whom an information or indictment has been filed that alleges a violation of Section 550 of the Penal Code or Section 1871.4 of the Insurance Code, if the district attorney does not otherwise object to initiating an investigation. SEC. 7. Section 2220.6 is added to the Business and Professions Code, to read: 2220.6. The board shall investigate any licensee against whom an information or indictment has been filed that alleges a violation of Section 550 of the Penal Code or Section 1871.4 of the Insurance Code, if the district attorney does not otherwise object to initiating an investigation. SEC. 8. Section 2273 of the Business and Professions Code is amended to read: 2273. (a) Except as otherwise allowed by law, the employment of runners, cappers, steerers, or other persons to procure patients constitutes unprofessional conduct. (b) A licensee shall have his or her license revoked for a period of 10 years upon a second conviction for violating any of the following provisions or upon being convicted of more than one count of violating any of the following provisions in a single case: Section 650 of this code, Section 750 or 1871.4 of the Insurance Code, or Section 549 or 550 of the Penal Code. After the expiration of this 10-year period, an application for license reinstatement may be made pursuant to Section 2307. SEC. 9. Section 2417 is added to the Business and Professions Code, to read: 2417. (a) Any type of business organization that holds itself out to the public as an organization practicing medicine, or that a reasonably informed person would believe is engaged in the practice of medicine, shall be owned and operated only by one or more licensed physicians and surgeons. This section does not apply to hospitals, or private, nonprofit medical clinics licensed pursuant to Chapter 1 (commencing with Section 1200) of Division 2 of the Health and Safety Code or entities exempt from licensure pursuant to Section 1206 of the Health and Safety Code. The Director of the State Department of Health Services may exempt other business organizations from the requirements of this section, upon application to the director and upon submission of evidence that it is in the public interest to provide that exemption, as determined by the director. (b) A physician and surgeon who knowingly practices medicine with a business organization not owned or operated in compliance with subdivision (a) shall have his or her license to practice permanently revoked. SEC. 10. Section 6106.5 of the Business and Professions Code is amended to read: 6106.5. It shall constitute cause for disbarment or suspension for an attorney to engage in any conduct prohibited under Section 1871.4 of the Insurance Code or Section 550 of the Penal Code. SEC. 11. Section 6106.6 is added to the Business and Professions Code, to read: 6106.6. The State Bar shall investigate any licensee against whom an information or indictment has been filed that alleges a violation of Section 550 of the Penal Code or Section 1871.4 of the Insurance Code, if the district attorney does not otherwise object to initiating an investigation. SEC. 12. Section 6153 of the Business and Professions Code is amended to read: 6153. Any person, firm, partnership, association, or corporation violating subdivision (a) of Section 6152 is punishable, upon a first conviction, by imprisonment in a county jail for not more than one year or by a fine not exceeding fifteen thousand dollars ($15,000), or by both that imprisonment and fine. Upon a second or subsequent conviction, a person, firm, partnership, association, or corporation is punishable by imprisonment in a county jail for not more than one year, or by imprisonment in the state prison for two, three, or four years, or by a fine not exceeding fifteen thousand dollars ($15,000), or by both that imprisonment and fine. Any person employed either as an officer, director, trustee, clerk, servant or agent of this state or of any county or other municipal corporation or subdivision thereof, who is found guilty of violating any of the provisions of this article, shall forfeit the right to his office and employment in addition to any other penalty provided in this article. SEC. 13. Article 10 (commencing with Section 9889.25) is added to Chapter 20.3 of Division 3 of the Business and Professions Code, to read: Article 10. Auto Body Repair Inspection Pilot Program 9889.25. The bureau shall implement a pilot program known as the Auto Body Repair Inspection Pilot Program, pursuant to which the bureau shall inspect insured vehicles that have been subject to auto body repairs for the purpose of identifying work that has not been done according to specifications in the final invoice. The pilot program shall be conducted between July 1, 2001, and June 30, 2003. 9889.26. Under the pilot program, the bureau may accept requests from the registered owner of an insured vehicle for the bureau to inspect a vehicle that has been subject to auto body repairs. Requests may be submitted by mail, by a toll-free telephone number, and via the Internet. The bureau shall, to the extent possible, accept requests in a manner to enable all areas of California to participate in the pilot program. 9889.27. The bureau shall select a vehicle for participation in the pilot program based on the vehicle meeting each of the following criteria: (a) The auto body repairs to the vehicle were completed within 120 days of the request to participate in the pilot program. (b) The repair bill was in excess of two thousand five hundred dollars ($2,500). (c) The owner of the vehicle is willing to provide access to the vehicle. (d) Bureau personnel and resources to conduct an inspection are available. 9889.28. (a) An insurer, upon request by the bureau, shall provide to the bureau documents and other necessary information related to an inspection to be performed under this article, pursuant to Sections 1874.1 and 1874.2 of the Insurance Code. The information provided in this regard shall be subject to Section 1872.5 of the Insurance Code. (b) If, as the result of an inspection, any civil, criminal, or administrative action is taken against an auto body repair shop, the order or judgment shall include a requirement for restitution to the insurer that paid the claim. 9889.29. The bureau shall report to the Legislature on the results of the pilot program on or before September 1, 2003. 9889.30. This article shall become inoperative on January 1, 2004, and as of that date is repealed, unless a later enacted statute deletes or extends that date. SEC. 14. Section 750 of the Insurance Code is amended to read: 750. (a) Except as provided in Section 750.5, any person acting individually or through his or her employees or agents, who engages in the practice of processing, presenting, or negotiating claims, including claims under policies of insurance, and who offers, delivers, receives, or accepts any rebate, refund, commission, or other consideration, whether in the form of money or otherwise, as compensation or inducement to or from any person for the referral or procurement of clients, cases, patients, or customers, is guilty of a crime. (b) (1) A violation of subdivision (a) is punishable upon a first conviction by a fine not exceeding fifteen thousand dollars ($15,000), or by imprisonment in a county jail for not more than one year, or by imprisonment in the state prison, or by both the fine and the imprisonment in a county jail or in the state prison. (2) A second or subsequent conviction of violating subdivision (a) is punishable by imprisonment in the state prison, or by a fine not exceeding fifteen thousand dollars ($15,000), or by both that fine and imprisonment. (c) Nothing in this section shall prohibit a licensed collection or lien agency from receiving a commission on the collection of delinquent debts nor prohibits the agency from paying its employees a commission for obtaining clients seeking collection on delinquent debts. (d) Nothing in this section is intended to limit, restrict, or in any way apply to the rebating of commissions by insurance agents or brokers, as authorized by Proposition 103, enacted by the people at the November 8, 1988, general election. SEC. 15. Section 758 is added to the Insurance Code, to read: 758. (a) It is unlawful for an insurer to require an auto body repair shop registered pursuant to Sections 9884 and 9889.52 of the Business and Professions Code, as a condition of participation in the insurer's direct repair program, to pay for the cost of an insured's rental vehicle that is replacing an insured vehicle damaged in an accident, or to pay for the towing charges of the insured with respect to that accident. However, the insurer and the auto body repair shop may agree in writing to terms and conditions under which the rental vehicle charges become the responsibility of the auto body repair shop when the shop fails to complete work within the agreed-upon time for repair of the damaged vehicle. (b) A registered auto body repair shop that is denied participation in an insurer's direct repair program may report a denial to the department, which shall maintain a record of all those denials for the purposes of gathering market conduct information. An insurer, upon the request of the department, shall disclose the fact that a denial was made. (c) Any insurer that conducts an auto body repair labor rate survey to determine and set a specified prevailing auto body rate in a specific geographic area shall report the results of that survey to the department, which shall make the information available upon request. The survey information shall include the names and addresses of the auto body repair shops and the total number of shops surveyed. SEC. 16. Section 1872.1 of the Insurance Code is amended to read: 1872.1. (a) There is created within the Bureau of Fraudulent Claims an advisory committee on automobile insurance fraud and economic automobile theft prevention, investigation, and prosecution, as provided in this chapter. The committee shall be composed of the Chief of the Bureau of Fraudulent Claims, a representative from the Department of Justice, the Department of Motor Vehicles, the Division of Investigation of the Department of Consumer Affairs, the Department of the California Highway Patrol, the Bureau of Automotive Repair, the Parole and Community Services Division of the Department of Corrections, the State Bar of California, the Medical Board of California, the State Board of Chiropractic Examiners, two representatives from local law enforcement agencies, one of whom shall be a prosecutor, and representatives of three insurers assessed pursuant to Section 1872.8, and a representative of a labor organization with members in the automotive repair business. (b) The commissioner shall select representatives from local law enforcement agencies from names submitted from local law enforcement agencies. The commissioner shall select one insurer representative from each of the following three categories from nominees submitted by insurers in each category: one representative of insurers with average annual automobile liability premiums in California of less than one hundred million dollars ($100,000,000) in the preceding three years; one representative of insurers with average annual automobile liability premiums in California between one hundred million dollars ($100,000,000) and seven hundred million dollars ($700,000,000) in the preceding three years; and one representative of insurers with average annual automobile liability premiums in California exceeding seven hundred million dollars ($700,000,000) in the preceding three years. At least one insurer representative shall be employed by an insurer having its principal headquarters in California. Members appointed by the commissioner shall serve at the pleasure of the commissioner. Representatives from other agencies shall be selected by the agencies represented. (c) The advisory committee shall elect one of its members annually to chair its meetings. The chair shall conduct quarterly meetings of the committee in California and at such other times as he or she deems appropriate. Members of the committee shall serve without compensation except for expenses incidental to attendance at meetings called by the chair. A report of the committee's activities shall be included in the report required under Section 1872.9. (d) The purpose and goals of the advisory committee are as follows: (1) Recommend to the Bureau of Fraudulent Claims and other appropriate public agencies and private sector entities ways to coordinate the investigation, prosecution, and prevention of automobile insurance claims fraud, including economic automobile theft. (2) Provide assistance to the bureau towards implementing the goal of reducing the frequency and severity of fraudulent automobile insurance claims (adjusted for population growth and inflation) of 20 percent in urban areas and 10 percent in rural areas of the state within a 24-month period from the effective date of this chapter by utilizing resources set forth in Section 1872.8. (3) Assure that preventive, investigative, prosecutive, and data collection efforts undertaken by the bureau pursuant to this chapter are efficient, cost-effective, and complement similar efforts undertaken by law enforcement agencies and insurers. (4) Make recommendations for inclusion in the bureau's annual report required by Section 1872.9. SEC. 17. Section 1872.7 of the Insurance Code is amended to read: 1872.7. The costs of administration and operation of the Bureau of Fraudulent Claims shall be borne by all of the insurers admitted to transact insurance in this state. The commissioner shall divide those costs among all of those insurers, assessing each company an identical amount adequate to provide the funds for each fiscal year of operation of the bureau. However, the assessment for each company shall not exceed one thousand three hundred dollars ($1,300) in each fiscal year. All moneys received by the commissioner from insurers pursuant to this section shall be transmitted to the Treasurer to be deposited in the State Treasury to the credit of the Insurance Fund. All moneys that are deposited in the fund after receipt by the commissioner from insurers pursuant to this section are to be exclusively used for the support of the Bureau of Fraudulent Claims. To the extent the assessments against insurers made pursuant to this section are not sufficient to fund the entire operations of the bureau, other moneys appropriated to the department, if available, may be used, at the commissioner's discretion, to fund those operations not covered by the assessments. The total budget of the bureau shall be as determined annually in the Budget Act. SEC. 18. Article 4.5 (commencing with Section 1874.85) is added to Chapter 12 of Part 2 of Division 1 of the Insurance Code, to read: Article 4.5. Insurer Inspections 1874.85. Except as provided in subdivision (b), an insurer that issues automobile liability or collision policies shall inspect vehicles for which it has approved a claim for the cost of auto body repairs, either during the repair process or after the work has been completed, and the number of vehicles inspected shall be a statistical sampling sufficient to demonstrate to the department the insurer's efforts to reduce fraudulent auto body work during a calendar year. 1874.86. Each insurer subject to this article shall report annually to the department on the following: (a) The number of vehicles inspected pursuant to Section 1874.85 and the percentage that this number represents of the total number of vehicles for which it paid a claim for the cost of auto body repairs in the prior calendar year. (b) The results of the inspections, including the nature of any fraud uncovered, and whether or not legal action was pursued. The department shall make the information provided pursuant to this section available to the California Highway Patrol and the Bureau of Automotive Repair. 1874.87. (a) Each insurer subject to this article shall provide each insured with an Auto Body Repair Consumer Bill of Rights either at the time of application for an automobile insurance policy or following an accident that is reported to the insurer. If the insurer provides the insured with an electronic copy of a policy, the bill of rights may also be transmitted electronically. (b) The bill of rights shall be a standardized form developed by the department with the purpose of presenting easy-to-read facts for auto insurance consumers. The content of the bill of rights shall be determined by the department, and at a minimum, shall contain information about all of the following: (1) A consumer's right to select an auto body repair shop for auto body damage covered by the insurance policy and that an insurer may not require this work to be done at a particular auto body repair shop. (2) The consumer's right to be informed about auto body repairs made with new original equipment crash parts, new aftermarket crash parts, and used crash parts. (3) The consumer's right to be informed about coverage for towing services, and for a replacement rental vehicle while a damaged vehicle is being repaired. (4) Toll-free telephone numbers and Internet addresses for reporting suspected fraud or other complaints and concerns about auto body repair shops to the Bureau of Automotive Repair. (c) The department shall consult with the Bureau of Automotive Repair in determining the information to be contained in the bill of rights. SEC. 19. Article 4.6 (commencing with Section 1874.90) is added to Chapter 12 of Part 2 of Division 1 of the Insurance Code, to read: Article 4.6. Auto Insurance Fraud Crisis Areas 1874.90. The commissioner may declare any region of the state as an auto insurance fraud crisis area upon making a finding that auto insurance fraud is endemic to the area. That declaration of an auto insurance fraud crisis area shall be in effect for not more than two years, unless extended or renewed by the commissioner. Auto insurance fraud is endemic to an area if the commissioner determines that organized automobile fraud activity exists in the area and contributes significantly to the cost of automobile insurance in that area. 1874.91. (a) An insurer shall report all claims made in an auto insurance fraud crisis area that are filed within 90 days of the issuance of an automobile insurance policy to the Statistical Analysis Bureau, or its successor. The commissioner shall have the authority to establish, by regulation, the information about claims that shall be reported by insurers. (b) The commissioner shall have the authority to adopt an alternative to the 90-day standard established in subdivision (a), and shall not be required, notwithstanding any other provision of law, to disclose the standard in effect at any given point in time. Any document directly relating to any action by the commissioner under this article shall be exempt from disclosure under Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code. (c) This section shall remain in effect only until January 1, 2006, and on that date is repealed, unless a later enacted statute that is enacted before January 1, 2006, deletes or extends that date. SEC. 20. Section 549 of the Penal Code is amended to read: 549. Any firm, corporation, partnership, or association, or any person acting in his or her individual capacity, or in his or her capacity as a public or private employee, who solicits, accepts, or refers any business to or from any individual or entity with the knowledge that, or with reckless disregard for whether, the individual or entity for or from whom the solicitation or referral is made, or the individual or entity who is solicited or referred, intends to violate Section 550 of this code or Section 1871.4 of the Insurance Code is guilty of a crime, punishable upon a first conviction by a fine not exceeding fifteen thousand dollars ($15,000), or by imprisonment in a county jail for not more than one year, or by imprisonment in the state prison for 16 months, two years, or three years, or by both the fine and the imprisonment in a county jail or in the state prison. A second or subsequent conviction for violating this section is punishable by imprisonment in the state prison, or by a fine not exceeding fifteen thousand dollars ($15,000), or by both that fine and imprisonment. SEC. 21. Section 550 of the Penal Code is amended to read: 550. (a) It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following: (1) Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury, including payment of a loss or injury under a contract of insurance. (2) Knowingly present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer, with an intent to defraud. (3) Knowingly cause or participate in a vehicular collision, or any other vehicular accident, for the purpose of presenting any false or fraudulent claim. (4) Knowingly present a false or fraudulent claim for the payments of a loss for theft, destruction, damage, or conversion of a motor vehicle, a motor vehicle part, or contents of a motor vehicle. (5) Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim. (6) Knowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit. (7) Knowingly submit a claim for a health care benefit that was not used by, or on behalf of, the claimant. (8) Knowingly present multiple claims for payment of the same health care benefit with an intent to defraud. (9) Knowingly present for payment any undercharges for health care benefits on behalf of a specific claimant unless any known overcharges for health care benefits for that claimant are presented for reconciliation at that same time. (10) For purposes of paragraphs (6) to (9), inclusive, a claim or a claim for payment of a health care benefit also means a claim or claim for payment submitted by or on the behalf of a provider of any workers' compensation health benefits under the Labor Code. (b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following: (1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact. (2) Prepare or make any written or oral statement that is intended to be presented to any insurer or any insurance claimant in connection with, or in support of or opposition to, any claim or payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact. (3) Conceal, or knowingly fail to disclose the occurrence of, an event that affects any person's initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled. (4) Prepare or make any written or oral statement, intended to be presented to any insurer or producer for the purpose of obtaining a motor vehicle insurance policy, that the person to be the insured resides or is domiciled in this state when, in fact, that person resides or is domiciled in a state other than this state. (c) (1) Every person who violates paragraph (1), (2), (3), (4), or (5) of subdivision (a) is guilty of a felony punishable by imprisonment in the state prison for two, three, or five years, and by a fine not exceeding fifty thousand dollars ($50,000), unless the value of the fraud exceeds fifty thousand dollars ($50,000), in which event the fine may not exceed double of the value of the fraud. (2) Every person who violates paragraph (6), (7), (8), or (9) of subdivision (a) is guilty of a public offense. (A) Where the claim or amount at issue exceeds four hundred dollars ($400), the offense is punishable by imprisonment in the state prison for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or by both that imprisonment and fine, unless the value of the fraud exceeds fifty thousand dollars ($50,000), in which event the fine may not exceed double the value of the fraud, or by imprisonment in a county jail not to exceed one year, by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine. (B) Where the claim or amount at issue is four hundred dollars ($400) or less, the offense is punishable by imprisonment in a county jail not to exceed six months, or by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine, unless the aggregate amount of the claims or amount at issue exceeds four hundred dollars ($400) in any 12-consecutive-month period, in which case the claims or amounts may be charged as in subparagraph (A). (3) Every person who violates paragraph (1), (2), (3), or (4) of subdivision (b) shall be punished by imprisonment in the state prison for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), unless the value of the fraud exceeds fifty thousand dollars ($50,000), in which event the fine may not exceed double the value of the fraud, or by both that imprisonment and fine; or by imprisonment in a county jail not to exceed one year, or by a fine of not more than one thousand five hundred dollars ($1,500), or by both that imprisonment and fine. (d) Notwithstanding any other provision of law, probation shall not be granted to, nor shall the execution or imposition of a sentence be suspended for, any adult person convicted of felony violations of this section who previously has been convicted of felony violations of this section or Section 548, or of Section 1871.4 of the Insurance Code, or former Section 556 of the Insurance Code, or former Section 1871.1 of the Insurance Code as an adult under charges separately brought and tried two or more times. The existence of any fact that would make a person ineligible for probation under this subdivision shall be alleged in the information or indictment, and either admitted by the defendant in an open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. Except when the existence of the fact was not admitted or found to be true or the court finds that a prior felony conviction was invalid, the court shall not strike or dismiss any prior felony convictions alleged in the information or indictment. This subdivision does not prohibit the adjournment of criminal proceedings pursuant to Division 3 (commencing with Section 3000) or Division 6 (commencing with Section 6000) of the Welfare and Institutions Code. (e) Except as otherwise provided in subdivision (f), any person who violates subdivision (a) or (b) and who has a prior felony conviction of an offense set forth in either subdivision (a) or (b), in Section 548, in Section 1871.4 of the Insurance Code, in former Section 556 of the Insurance Code, or in former Section 1871.1 of the Insurance Code shall receive a two-year enhancement for each prior felony conviction in addition to the sentence provided in subdivision (c). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. Any person who violates this section shall be subject to appropriate orders of restitution pursuant to Section 13967 of the Government Code. (f) Any person who violates paragraph (3) of subdivision (a) and who has two prior felony convictions for a violation of paragraph (3) of subdivision (a) shall receive a five-year enhancement in addition to the sentence provided in subdivision (c). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. (g) Except as otherwise provided in Section 12022.7, any person who violates paragraph (3) of subdivision (a) shall receive a two-year enhancement for each person other than an accomplice who suffers serious bodily injury resulting from the vehicular collision or accident in a violation of paragraph (3) of subdivision (a). (h) This section shall not be construed to preclude the applicability of any other provision of criminal law or equitable remedy that applies or may apply to any act committed or alleged to have been committed by a person. (i) Any fine imposed pursuant to this section shall be doubled if the offense was committed in connection with any claim pursuant to any automobile insurance policy in an auto insurance fraud crisis area designated by the Insurance Commissioner pursuant to Article 4.6 (commencing with Section 1874.90) of Chapter 12 of Part 2 of Division 1 of the Insurance Code. SEC. 22. Section 10904 is added to the Vehicle Code, to read: 10904. The commissioner may develop a public education campaign to deter participation in auto insurance fraud and to encourage reporting of fraudulent claims. SEC. 23. The sum of one hundred thousand dollars ($100,000) is hereby appropriated from the Vehicle Inspection and Repair Fund to the Department of Consumer Affairs for allocation to the Bureau of Automotive Repair for the purposes of Article 10 (commencing with Section 9889.25) of Chapter 20.3 of Division 3 of the Business and Professions Code. SEC. 24. Sections 5 and 6 shall not become operative until approved by the voters. The Secretary of State is hereby directed to place those provisions on the ballot of the next statewide election for approval by the voters in accordance with applicable provisions of law. SEC. 25. (a) If Assembly Bill 2594 is also enacted and becomes operative on or before January 1, 2001, and that bill amends Section 650 of the Business and Professions Code, then Section 3 of this bill shall not become operative. (b) If Assembly Bill 2594 is also enacted and becomes operative on or before January 1, 2001, and that bill amends Section 750 of the Insurance Code, then Section 14 of this bill shall not become operative. (c) If Assembly Bill 2594 is also enacted and becomes operative on or before January 1, 2001, and that bill amends Section 549 of the Penal Code, then Section 20 of this bill shall not become operative. SEC. 26. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.