California's workers' comp laws provide for workers who have sustained workplace injuries. The law dictates the provision of money to cover the worker's lost income for the period they will be out of work, and medical bills, among other losses. However, the workers' compensation system is also subject to fraud by healthcare providers, employers, and employees. In fact, workers' comp fraud incidents have surged in California, making the relevant authorities take a strict stance on the matter.

Consequently, workers' comp fraud is a crime that is harshly persecuted and punished. If you have been charged, you will be looking at severe consequences, including incarceration, hefty fines, probation, and professional discipline. Therefore, you must move quickly and seek legal help before your situation escalates. At California Criminal Lawyer Group, we understand how a workers' comp fraud conviction can affect your life. We will therefore dedicate our time and resources to protect your legal rights and fight aggressively to obtain the best possible outcome for your case, including a charge dismissal or reduction. You can reach us anytime for help. We serve clients charged with fraud crimes in Santa Ana, including workers' compensation fraud.

The Legal Meaning of Workers’ Comp Fraud

Workers’ comp is an insurance system that every employer is mandated to have and pay for, which provides insurance coverage for rehabilitation, lost wages, medical care, temporary disability, permanent disability, and death benefits due to injuries suffered by workers on the job. It is a no-fault system where the injured worker need not prove the employer’s negligence to obtain benefits, nor can insurance payment be denied due to the employee’s own negligence.

Workers' comp fraud is a scheme to defraud insurers regarding workers' comp benefits. As we mentioned, defrauding the system could be done by the employe, health care provider, or employer and involves:

  • Falsifying documents
  • Fabrication of injuries to collect benefits or payments
  • Stating various falsehoods

Several different state laws address workers’ comp fraud. They are Insurance Code (INS) 1871.4, Penal Code (PC) 550, and PC 549.

Insurance Code 1871.4

INS 1871.4 is the state’s primary workers’ comp fraud law. This law defines workers’ comp fraud as involving yourself in any of these:

  • Knowingly making/causing someone else to make a fraudulent or false material representation or statement to obtain or deny any workers’ compensation benefits
  • Knowingly presenting/causing someone to present a fraudulent or false oral/written material statement to oppose or support a workers’ compensation benefits claim
  • Knowingly conspiring or aiding & abetting another party to commit a workers’ comp fraud act.
  • Knowingly making/causing someone else to make a fraudulent or false statement regarding entitlement to workers’ comp benefits, intending to discourage or prevent an injured employee from claiming comp benefits or filing a claim.

Injured employees are generally restricted to pursuing workers’ comp benefits, meaning they cannot file a civil lawsuit against their employer for workplace injuries. 

A representation/statement includes, without limitation:

  • A written/oral representation/statement by the injured worker (claimant)
  • Test or x-ray results
  • Doctor or hospital records
  • Payment for services
  • A bill for services
  • Proof of injury
  • Evidence of medical expenses
  • A notice
  • Any other proof of injury, loss, payment, or expense

Material representation or statement is a statement/representation that conveys info on topics that:

  • Could affect and be essential to the evaluation and investigations of the workers’ comp claim
  • Are reasonably pertinent to the insurance company’s investigations of the workers’ comp benefit claim

A fraudulent or false statement means any untrue statement or a statement/concealment of material facts intended to cause a party to act to their detriment.

Fraudulent or false statements take many forms under workers' comp law. An applicant for the comp benefits (the injured worker) may make a fraudulent or false statement by:

  • Double-dipping (unlawfully working while collecting compensation benefits)
  • Receiving benefits for one injury from multiple employers
  • Denying that they have filed previous claims
  • Not reporting a previous injury
  • Alleging that an injury not work-related is work-related
  • Being dishonest about the severeness of their injury
  • Faking their injury

An employer can also violate INS 1871.4 by making fraudulent/false representations or statements. Common types of workers' comp fraud employers usually commit are:

  • Lying to a worker about the amount in comp benefits to deter them from filing a claim
  • Misrepresenting a worker's job duties
  • Lying to the insurer about how many employees they have

Penal Code 549

Under PC 549, an employee or business owner can commit workers' comp fraud by:

  • Referring, accepting, or soliciting any business from or to any entity or person
  • Knowing that or with wanton disregard for whether the entity or person plans to commit workers’ comp fraud.

Usually, this type of workers' comp insurance fraud is prosecuted against chiropractors, doctors, or other medical care providers that involve themselves in a commercial bribery scheme or kickbacks designed to take advantage of the workers' comp system.

Penal Code 550

PC 550 describes various workers' comp insurance fraud forms that overlap with health care fraud. This statute criminalizes doing any of these:

  • Knowingly presenting several claims for payment of the same workers' compensation health care benefits intending to defraud
  • Knowingly submitting an insurance claim for health care benefits covered by workers' compensation insurance that the claimant did not use.
  • Knowingly making/causing someone else to make any fraudulent or false claim for payment of health care benefits covered by workers' compensation insurance.

This type of workers' compensation fraud is committed by applicants/employees. However, it could also be committed by physicians and other health care professionals who administer treatment covered under workers' comp insurance. Doctors pronounced guilty of this or other forms of workers' comp insurance fraud could lose their license to practice medicine apart from the standard criminal consequences.

Here are various instances to demonstrate workers' comp fraud:

  • Brigitte is an employer. She lies about the facts of her worker's workplace injury to prevent that worker from collecting workers' comp benefits because it would increase her premium for workers' compensation insurance.
  • Mrs. Brown alleges she has debilitating back pains because she slipped on a wet floor at her office and fell. Due to this, she collects workers' compensation benefits for lost wages. However, in reality, Mrs. Brown's back pains are minor, and she has taken a new job secretly while also receiving benefits.
  • Tom is a physician specializing in treating patients with workplace injuries. He regularly presents bills to workers' compensation insurance for treatments patients did not receive or need.

Insurance Provider Investigation for Workers' Compensation Fraud

Most offenses are investigated only by police officers. However, investigations for workers' compensation fraud are often commenced by the insurer. Insurers providing workers' comp coverage for employers have a financial interest in lowering workers' compensation fraud that healthcare providers, employers, and employees commit.

Several red flags may alert the insurer to the likelihood of fraud. They include:

  • Employee visits multiple physicians for diagnosis of an injury
  • An employee has debts or financial problems
  • An employee has numerous previous workers' compensation claims
  • Injury occurring right after the worker returns from vacation
  • Disgruntled worker with a recent workplace or demotion conflict
  • The injury is inconsistent with the work or workplace duties
  • A worker is incapable of providing details concerning what transpired during the accident
  • Suspicious or inconsistent explanation of the accident

Insurance providers may require investigators to surveil injured workers to catch them doing physical activities inconsistent with whatever injury they reported. This could include strenuous work, going on vacations, or playing tennis while allegedly having injuries that cannot allow them to work.

Insurance company investigators have additionally been keeping an eye on the worker's social media platforms to identify fraud signs in the past few years. People frequently post messages and pictures on Facebook, Twitter, and other social media platforms without knowing who may be monitoring them. This may reveal an injury happening in another place that is not the workplace or going to parties when they claim to be bed-ridden.

These investigators might contact the DA and law enforcement to file criminal charges against the workers' compensation fraud suspect. The insurer may also file a claim in civil court against the suspect to seek compensation related to the fraud.

Defending Against Workers' Compensation Fraud Charges

Workers' comp fraud is among California's fastest-spreading kinds of insurance fraud. Consequently, insurance carriers, the California Department of Insurance, and DA's offices across the state are using many resources to uncover fraudulent claims. Special investigative units (SIU) often conduct undercover surveillance and sting operations to catch employers or workers who game the system.

This vigilance and sometimes politically-incited law enforcement officers often result in people being accused falsely. If charged with workers' comp fraud, you want to hire a lawyer to help you argue a defense strategy. Legal defenses the attorney can help you argue include:

Insufficient Evidence of Committing Workers Comp Fraud

Conflicting medical findings or diagnoses may trigger fraud allegations.  For instance, say you state that you suffered mental anguish or an injury such as carpal tunnel diagnosed by a healthcare provider, but a doctor hired by the insurance company suggests you are fabricating or malingering your condition. In this case, the prosecution will find it difficult to prove you perpetrated fraud.

Similarly, if your doctor charged the insurance company for treatments you did not undergo, you could have been entirely unaware of the activity.

You Did Not Have Fraudulent Intent/You Lacked Knowledge

Intent and knowledge are critical elements of workers' comp fraud crime and are often challenging to prove. Regardless, the prosecution must prove you intended to defraud or knowingly made a false statement.

Frequently, an insurance investigator will consider a careless error on your end as possible fraud and report it to law enforcement. However, the burden lies upon the prosecutor to show beyond any doubt that you were aware you were presenting a fraudulent/false claim and you did not merely commit a mistake.

For example, someone else might have seen you fall some days before a workplace accident made you sustain injuries for which you submitted an insurance claim. The previous fall was only minor and led to no injuries, yet a witness says they saw you fall and were hurt.

The insurance claim application form mentions you did not have a previous injury. Your failure to mention your previous incident has now made you face charges for defrauding the insurance company by consciously making an untrue statement concerning a previous injury to the same body part.

You can argue that you did not have any fraudulent intent since you did not receive any medical treatment for the prior fall and did not tell anybody you were hurt, so failing to disclose it should be deemed fraudulent.

Additionally, you might have misinterpreted some info in the questions asked or on the insurance claim form and innocently answered in a manner the investigator misinterpreted as intentionally lying.

Your lawyer may be capable of poking holes in the prosecution's proof of you knowingly filing a fraudulent/false claim and having the charges dropped or the jury obtaining a 'not-guilty' verdict.

False Allegations

Most people are wrongly accused of committing workers' compensation fraud after the insurer claims the worker is faking their injury. Most injuries are hard to diagnose or prove to the insurer. This includes most back, neck, or head injuries and soft tissue injuries. Only because the worker cannot provide proof of injury does not imply they are not in severe pain and incapable of working.

In particular cases, a physician may recommend that the injured worker tries to do exercises to assist them in recovering from their injuries. The insurer or their investigators might videotape the worker walking or swimming to prove the worker is not hurt, which will directly conflict with the doctor's advice.

Penalties for Workers' Compensation Fraud

Workers comp fraud is punished according to the law you are accused of violating as follows:

INS 1871.4 Consequences

Workers' comp fraud under INS 1871.4 is a wobbler. A wobbler is an offense that a prosecutor can charge as a felony or misdemeanor based on the case facts and the accused's criminal record.

When prosecuted as a misdemeanor, workers' comp fraud under INS 1871.4 is punishable by:

  • Misdemeanor probation
  • One year in jail
  • Restitution to the fraud victims
  • $150,000 in fines or twice the fraud amount, whichever is higher

If convicted of a felony under INS 1871.4, the potential punishments are:

  • Felony probation
  • Restitution to the fraud victims
  • $150,000 in fines or twice the fraud amount, whichever is higher
  • Two, three, or five years in jail under the state's realignment program

PC 549 Consequences

549 PC workers' compensation fraud is considered a wobbler for the first offense and a felony for the second or subsequent offenses. If convicted of a misdemeanor, you will face one year in jail and up to $50,000 in fines or twice the fraud amount, whichever is higher. And if convicted of a felony, you will face sixteen months, two or three years in prison, and up to $50,000 in fines or twice the fraud amount, whichever is higher.

PC 550 Consequences

Workers' compensation fraud concerning health care benefits per 550 PC is also prosecuted as a wobbler. Possible misdemeanor consequences under this statute are:

  • Summary probation
  • One year in jail
  • $10,000 in fines

The felony punishments for this kind of workers' comp fraud include:

  • Two, three, or five years in prison under
  • Felony probation
  • Up to $50,000 in fines or twice the fraud amount, whichever is higher

An exception is when the total fraud amount is 950 dollars or less (including the accumulated numerous claims over twelve consecutive months). If that is the case, 550 PC workers' comp fraud is a misdemeanor offense. Possible penalties are a maximum of six months in jail and a fine not exceeding $1,000.

If you have a prior felony conviction for workers' comp fraud under PC 539 or INS 1871.4, you will be subject to an additional civil penalty of 4,000 dollars for every service/item concerning which the fraud occurred.

Workers' Comp Fraud and Professional Discipline

California nurses, doctors, and pharmacists accused of engaging in workers' comp fraud naturally have to be worried about professional punishment.

For California physicians, a conviction for a crime considerably linked to the duties, functions, or qualifications of a doctor can result in professional discipline. Most types of workers' comp fraud (for instance, billing for unrendered services) could be considered to fall under this categorization.

Nurses may also be subject to license revocation and nurse discipline (in given cases) due to a conviction of workers' comp fraud.

Pharmacists must also be concerned about the impact of a workers' compensation fraud conviction on their professional license.

Expunging a Workers' Compensation Conviction Record

You could seek post-conviction relief by petitioning for your INS 1871.4, 550 PC, or 549 PC conviction record to be expunged. An expungement petition is filed under PC 1203.4. If you expunge your conviction record, you can comfortably state under oath that you have never been arrested or found guilty of that crime. Your expunged criminal record will not reflect on public records databases. Therefore, private employers or landlords who conduct regular criminal background checks will not see any conviction on your criminal record.

However, an expungement will not entirely delete your criminal conviction record because the public or government employers and agencies can access private databases. Courts can also use your expunged criminal conviction to increase your sentence should you commit another felony.

Crimes under INS 1871.4, PC 550, or PC 549 are wobblers. Even if you have been found guilty of a felony under PC 550, PC 549, and INS 1871.4, you will likely face only a  jail sentence, qualifying the crime for expungement. That is untrue for any felony conviction under INS 1871.4, where an offender faces a state prison sentence. Serving a state prison sentence disqualifies a conviction for expungement.

Crimes Related to Workers' Compensation Fraud

Other California offenses frequently prosecuted along with or instead of workers' comp fraud include:

Grand Theft Under PC 487

Like many fraud offenses, workers' comp fraud often overlaps with PC 487 grand theft. Grand theft is the unlawful taking of property worth 950 dollars or more. Workers' comp fraud cases often satisfy the legal description of theft through false pretense, a type of California grand theft.

PC 487 violation is a wobbler. The sentence for a misdemeanor conviction is one year in jail. The possible felony sentence upon a conviction is sixteen months or two or three years in prison.

Perjury Under PC 118

You are guilty of perjury if you intentionally give false info while under oath. You may be prosecuted under workers' comp fraud and perjury law if you intentionally lie in a formal declaration, or while being deposed, as part of an insurance company's investigations into workers' comp benefits.

Perjury is a straight felony, and a conviction will subject you to two, three, or four years in prison.

Forgery Under PC 470

Forgery refers to performing any of these intending to defraud:

  • Signing another person's name
  • Faking another person's handwriting or a seal
  • Falsifying or changing a legal document
  • Altering, faking, or submitting as genuine a false financial document

Thus, if, for instance, you fake a physician's signature on a report concerning an injury and then use the report to claim workers' comp benefits, you could be prosecuted under both forgery and workers' compensation fraud law.

Forgery is considered a wobbler crime and is punished similarly to grand theft.

Find an Expert Santa Ana Criminal Attorney Near Me

At California Criminal Lawyer Group, we have decades of fraud crime defense experience and understand the consequences of a workers' compensation fraud conviction. Many innocent individuals are wrongly accused of workers' comp fraud due to fervent insurance investigators despite having actual injuries that prevent them from carrying out their duties. If you have been arrested for, charged with, or are under investigation for workers' compensation fraud in Santa Ana, contact us immediately at 714-844-4151. You need not plead guilty only because the authorities are unto you.