California's workers' compensation laws provide for employees who are injured on the job. Workers' comp provides medical coverage and money to cover the employee's lost income for the time they are out of work. However, workers' comp is also subject to fraud by employees, employers, and healthcare providers. The penalties for workers' comp fraud can include jail time, fines, and restitution.
Under California Insurance Code 1871.4, it is unlawful to:
- Knowingly make a false or fraudulent material statement or material representation for the purpose of obtaining or denying any workers' compensation;
- Knowingly present a false or fraudulent written or oral material statement in support of, or in opposition to, a claim for compensation for the purpose of obtaining or denying any workers' compensation;
- Knowingly assist, abet, conspire with, or solicit a person in an unlawful act under this section; or
- Knowingly make a false or fraudulent statement with regard to entitlement to benefits with the intent to discourage an injured worker from claiming benefits or pursuing a claim.
Workers' Compensation Fraud in California
Workers' compensation can take many forms in California. The most common type of workers' comp fraud involves an employee falsely claiming benefits under workers' comp. However, workers' comp fraud may also involve employers attempting to deny employee claims, doctors or chiropractors billing for unprovided services, or a conspiracy between employees and doctors to defraud the workers' comp system.
Examples of workers' comp fraud may include:
- Claiming an injury that happened somewhere else occurred in the workplace
- Faking an injury
- Exaggerating an injury
- Filing multiple workers' comp claims
- Unreported work while receiving workers' comp
- Employers classifying workers as independent contractors to avoid paying workers' comp insurance
- Chiropractors billing for care they never provided
- Doctors inflating the cost of care provided to injured workers
- Hospitals paying kickbacks for patient referrals to commit fraud
Workers' comp fraud may be charged as a crime under California Insurance Code 1871.4; however, workers' comp fraud may also invoke other criminal charges, including common criminal fraud, identity theft, healthcare insurance fraud, and theft.
Penalties for Workers' Comp Fraud
The penalties for workers' comp fraud depend on a number of factors, including the type of fraud involved, the scope of the fraud, and the amount of money involved. Penalties also vary based on the defendant's criminal history.
Workers' comp fraud is a wobbler in California. This means it could be charged as a misdemeanor or as a felony, depending on the specific situation. As a misdemeanor, workers' comp fraud is punishable by up to 1 year in jail and a fine of up to $150,000, or double the amount of fraud, whichever is greater.
Workers' comp fraud is often charged as a felony, which includes possible jail time of 2, 3, or 5 years in prison and a fine of up to $150,000, or double the amount of fraud, whichever is greater.
In addition to jail time and fines, a conviction for workers' comp fraud may also require restitution to the victims. This may mean repaying hundreds of thousands of dollars in unlawfully received benefits to the insurance company.
Insurance Company Investigations for Workers' Comp Fraud
Most crimes are investigated solely by law enforcement. However, workers' comp fraud investigations are often started by the insurance company. Insurance companies that provide workers' compensation coverage for employers have a financial interest in reducing workers' comp fraud committed by employees, employers, and healthcare providers.
There may be a number of “red flags” that alert the insurance company to the possibility of fraud. This includes:
- Inconsistent or suspicious explanation of the accident
- Employee cannot provide details of what occurred during the accident
- The type of injury is not consistent with the workplace or work duties
- Disgruntled employee with recent demotion or workplace conflict
- Injury occurs right after the employee returns from a vacation
- Employee has multiple prior workers' comp claims in the past
- Employee has financial problems or debts
- Employee goes to multiple doctors for an injury diagnosis
Insurance companies may have investigators conduct surveillance on the injured employee to try and “catch” them participating in physical activity inconsistent with the reported injury. This may include playing tennis, strenuous yard work, or going on vacation while reportedly suffering an injury that keeps them from working.
In recent years, investigators have also been looking into the employee's social media to identify signs of fraud. People often post pictures and messages on facebook or other social media without thinking about who might be watching. This could show an injury occurring somewhere other than work or going out partying when they complained they were bed-ridden.
Insurance investigators may contact law enforcement and the district attorney to bring criminal charges against the person suspected of committing workers' comp fraud. The insurance company may also bring a civil claim against the individual to seek damages related to the fraud.
Workers' Comp Fraud by Doctors and Chiropractors
Many doctors, chiropractors, hospitals, and healthcare providers can also be involved in workers' comp fraud. This often involves fraudulently reporting a disabling injury to continue treatment of the individual, overbilling for services, providing unnecessary care, or billing for care that was never provided.
When doctors or chiropractors commit workers' comp fraud, it generally involves more than one patient. It may involve a scheme with kickbacks for referrals and dozens of patients.
In addition to the criminal and civil penalties for workers' comp fraud by doctors or other healthcare providers, a doctor may lose their job and lose their license to practice medicine as a result of a conviction for fraud.
Workers' Compensation Fraud Defenses
Many people are falsely accused of workers' comp fraud after the insurance company alleges the employee is faking the injury. Many injuries are difficult to diagnose or “prove” to the insurance company. This includes soft tissue injuries and many head, neck, or back injuries. Just because you cannot see evidence of the injury does not mean the employee is not in serious pain and is unable to work.
In some cases, a doctor may tell the injured employee to try and get exercise to help them recover from their injury. The insurance company may videotape the employee swimming or walking to show the employee is not injured, which is directly in conflict with the medical advice they were given.
There are a number of possible defenses available to individuals facing workers' comp fraud charges. Talk to your East Bay criminal defense attorney about your case and what defenses are available to you.
Experienced Criminal Defense Attorney Representation
Lynn Gorelick has more than 30 years of criminal defense experience and understands the penalties involved with workers' comp fraud. Many innocent people are falsely accused of fraud because of overzealous insurance investigators, despite having real injuries that keep them from working. If you are facing a workers' comp fraud investigation anywhere in the East Bay, contact Lynn Gorelick understands you do not have to plead guilty just because you were arrested.