California workers' compensation laws help employees who suffer injuries at workplaces get compensated. Compensation allows employees to recoup the money spent on seeking medical care. It also covers the money an employee loses in terms of lost income for the period spent out of work after an injury. However, workers' compensation fraud is prevalent in California, and the common perpetrators are employees, healthcare providers, and employers. The state imposes hefty penalties for people who commit this fraud. Penalties could include restitution, fines, and jail time. Orange County Criminal Defense Attorney Law Firm assists people who are facing fraud charges in California to fight the charges.

California Law On Workers' Compensation Fraud

California PC 1871.4 prohibits the crime of workers' compensation fraud. You can violate this law if you:

  • Knowingly and intentionally make a false or fraudulent statement with the intent of unlawfully obtaining or denying someone else their compensation.
  • You present a false or fraudulent oral or written material supporting or opposing a claim for compensation with the intent of denying someone else or obtaining workers' compensation.
  • Knowingly or intentionally conspire with, or assist another person in violating under PC 1871.4.
  • Knowingly or intentionally, make a false or fraudulent statement regarding a person's entitlement to benefits, intending to discourage an injured worker from seeking compensation.

The most common form of fraud in California entails employees who make false claims for benefits under California workers' compensation. However, it is typical for the fraud to involve employers who attempt to deny employees the compensation they deserve. For instance, an employer could classify a worker as an independent contractor to avoid paying workers' compensation insurance.

Doctors and chiropractors could commit workers' benefits fraud if they bill for services they did not provide. The fraud could also occur through a conspiracy between doctors and employees to defraud California’s workers' compensation sector.

Ways in which Employees Commit Workers' Compensation Fraud

An employee can perform workers' compensation fraud in several ways. Some of the leading ways of committing the crime are:

  • Claiming that an injury occurred at work yet, it occurred while out of work.
  • Faking an injury
  • Exaggerating the extent of the injury
  • Filing several workers' compensation claims for one injury
  • Engaging in unreported work while benefiting from workers' compensation
  • Conspiring with doctors to inflate the cost of medical care provided to you or bill for services that you did not receive

The court could charge workers' benefits fraud as a distinct crime under California Insurance Code 1871.4. You could also receive additional charges, including identity theft, health insurance fraud, theft, and many others.

Workers' Compensation Rewards/Benefits

Workers' compensation rewards include medical costs that an employee incurs when seeking treatment for the injuries suffered at the place of work. The benefits also include compensation for a temporary disability that an employee suffers. For instance, a worker could receive compensation for lost income for the period he/she stays out of work during recovery.

After suffering injuries in the workplace, an employee might not be able to resume work forever. This case could apply if an employee suffers a permanent disability. An employee who suffers a permanent disability is entitled to compensation for the inability to continue working after the injury.

If an employee succumbs to the injuries sustained at the workplace, his/her family is entitled to compensation. The employee's children, spouse, or any other qualifying relative can apply for compensation. When seeking workers' compensation, the employee does not have to prove that the injury occurred due to another party’s fault. Under California law, workers' compensation follows the no-fault system.

Investigations for Workers Compensation Fraud

Law enforcement officers and prosecutors could be solely responsible for investigating workers' compensation fraud. However, in most cases, insurance companies start investigations. Often insurance companies who provide workers' compensation coverage to organizations have an interest in the compensation claims. Fraudulent claims could lead to exaggerated claims, which are a high cost to insurance companies.

When establishing a fraudulent workers' compensation claim, insurance companies could look out for certain red flags. These include:

  • The insurance company could suspect fraud from suspicious or inconsistent reporting and explanation of the accident.
  • If an employee cannot provide the details that occurred during the accident, it could serve as a red flag.
  • If the injury outlined in a claim is not in line or consistent with the work duties or the workplace, it could be a sign of fraud.
  • A claim presented by an unsatisfied employee with recent conflicts in the workplace, including demotion, could be suspicious.
  • If an injury occurs immediately, an employee returns from a vacation or leave, the insurance company could probe the claim.
  • The insurer could suspect fraud if an employee has filed multiple claims in the past.
  • If an employee with debts or financial problems files a workers' compensation claim, the insurance company could be suspicious.
  • If an employee visits several doctors for a diagnosis of the same injury, it could be a red flag.

Most insurance companies are aggressive in conducting investigations regarding workers' compensation fraud. For instance, if the company suspects that an employee is lying about an injury, the company could privately follow the employee. The investigators will check whether the employee is engaging in strenuous work or other activities while claiming to have an injury that hinders him/her from working.

The investigators could also investigate a suspect's social media profiles to identify possible signs of fraud. It is common for people to post vital information and photos on social media without thinking about the people who view the information. Information from social media could reveal that an employee suffered injuries in another location but not in the workplace.  The social media could also expose a person who claims to be bedridden yet visits entertainment joints.

If the insurance companies suspect that a person is committing workers' compensation fraud, they could contact law enforcement officers. The law enforcement officers will then bring criminal charges against the person responsible for committing the workers' compensation fraud. In addition to filing criminal charges, insurance companies could also bring civil charges against the defendant. A civil claim allows the insurance company to get compensation for the damages related to the fraud.

Workers’ Compensation Fraud under PC 550

Various forms of workers' compensation fraud closely relate to California health care fraud under PC 550. According to this law, it is illegal to knowingly receive or cause someone else to receive a fraudulent or false healthcare benefit under the workers' compensation insurance.

The law also makes it a crime to submit a claim if the claimant did not use the outlined healthcare benefit. It is also an offense to submit multiple claims for the same healthcare benefit intending to commit fraud.  This fraud could have several perpetrators, including employees and medical practitioners.

If you are a doctor and are guilty of committing workers' compensation fraud, the consequences could be detrimental. In addition to facing criminal charges, you could end up losing your professional license. You would need a competent criminal defense attorney to help negotiate the outcome of your case.

Workers' Compensation Fraud according to PC 549

A staff or a business owner could commit workers compensation fraud under PC 549 if he/she accepts, solicits, or refers business or accepts business from certain people or entities. The charges would apply if the defendant knew that the entity or the person intended to commit fraud. These charges often apply to chiropractors and doctors who engage in fraudulent schemes to defraud the workers' compensation system.

Punishment for Workers' Compensation Fraud in California

The penalties for workers' compensation fraud vary depending on the type of fraud you commit:

  1. Consequences for a Violation under PC 1871.4

An offense under PC 1871.4 is a wobbler, according to California law. The offense could attract either a felony or a misdemeanor charge. The law gives the prosecutor the discretion to treat the crime as a felony or misdemeanor. For misdemeanor charges, the punishment includes misdemeanor probation. You could also serve up to one year in county jail. Other penalties include hefty fines not more than $150,000 or twice the fraud amount; you pay the higher of the two. Other penalties include paying restitution.

For felony convictions, the punishment includes felony probation. According to the realignment program in California, other potential consequences are imprisonment in state prison for 2, 3, or 5 years. You might also have to pay a hefty fine of not more than $150,000 or twice the fraud amount; you will pay the higher of the two. Other penalties include paying restitution.

  1. Consequences for Violations under PC 550

A violation of this law is also a wobbler offense. For misdemeanor convictions, the punishments include formal probation or sentence not more1 year in county jail. You could also pay a hefty fine, not more than $10,000. Probation is a potential consequence of felony offenses. Other potential penalties include imprisonment for 2, 3, or 5 years in county jail. You might also have to pay a hefty fine, not more $50,000 or twice the fraud amount; you will pay the higher of the two.

If the entire fraud amount is not above $950, the charges are always misdemeanors. When calculating the fraud value, the lookback period is twelve months. For such a misdemeanor, punishment includes serving jail time, not more than six months. Another potential penalty is a fine that does not exceed $1,000.

  1. Consequences for Violations of PC 549

A workers' compensation fraud under PC 549 is a wobbler offense for the first offense. However, a second or additional offense will attract a felony conviction. For misdemeanor crime, the punishment includes jail time not more than one year in county jail. You might also have to pay a fine of $50,000 or twice the fraud amount, whichever is higher.

For felony offenses, the consequences are prison sentences of 16 months, two years, or three years. You could also pay a fine of not more $ 50,000 or twice the fraud amount, whichever is more.

Professional Discipline

You should be concerned about professional discipline if you are a medical professional charged with fraud. The crime of workers' compensation fraud could trigger professional discipline.  Pharmacists could also face professional discipline.

Civil Penalties

Workers' compensation fraud might attract civil penalties under certain circumstances. Civil penalties could apply if a person or entity attempts to get workers' compensation coverage at a rate below the acceptable rate. Employers are the typical perpetrators of this offense.

The charges could also apply to a person who presents a false or fraudulent statement to support or oppose a claim for workers' compensation. The perpetrator should perform the said task to grant or deny compensation to workers. 

Intentionally receiving, offering, paying, or accepting an illegal commission, refund, rebate, or any other form of compensation to help or solicit clients/ customers for services covered by California’s workers’ compensation coverage could attract charges.

The civil penalties might also apply if you knowingly or intentionally operate or participate in a venture that refers to people to get medical or legal services covered by workers' compensation for your gain.

Intentionally conspiring with or helping another person perform any of the activities outlined above could lead to civil consequences for the crime. Committing any of the offenses attracts a civil penalty, not less than $4,000 and not more $10,000 for each illegal activity. Other penalties include an assessment not exceeding three times medical expenses or medical-legal expenses provided under workers' compensation insurer.

You could face additional civil penalties if you have had a prior felony conviction for committing a workers' compensation fraud according to PC 549 or PC 1871.4. The additional penalty is $4,000 for every item or service regarding which the workers' compensation fraud occurred.

Common Legal Defenses for Workers' Compensation Fraud

In California, workers' compensation fraud is the most popular form of fraud. Therefore, insurance companies, in collaboration with law enforcement officers, are vigilant in uncovering the offense. In case you are accused of committing workers' compensation fraud in California, Your attorney could help develop a convincing defense to fight the charges. Some common applicable legal defenses include:

Absence of a Fraudulent Intent

You can’t face fraud charges unless it is evident that you made a false statement or engaged in fraudulent conduct. It must also be apparent that at the time of committing the offense, you had fraudulent intent. At times, you could make a careless mistake without the intent to commit fraud. However, insurance investigators might conclude that you intended to commit fraud. The prosecutor must show that you were aware of your actions, and you did not make a mistake. If Your attorney could prove that your actions were not intentional, the court could drop your fraud charges.

Not Enough Evidence

Workers' compensation fraud is intricate because it revolves around many aspects. It often involves some complex facts, which could be hard to understand. Sometimes, misrepresentation of facts could arise out of the complicated doctors' reports. You might not be able to understand the complexities of specific facts of your case. It is common for prosecutors to take advantage of the compensation sector’s complexity to convict innocent people of committing fraud. Your attorney could identify weaknesses in the prosecutor's evidence and cast doubts.

Legal Defenses for Employers

If you are an employer charged with workers' compensation fraud in California, you can employ certain defenses. As an employer, you could face fraud charges if you improperly reduce workers' insurance premium costs. If a worker falls under the category of an independent contractor and not an employee, he/she is not subject to workers' compensation.

Therefore, if you are accused of defrauding a specific worker, you could point out that the worker is an independent contractor. An independent contractor is free from the control and direction of the employer. An independent contractor also receives his/her payment without any withholdings. If you can prove beyond doubt that the employee under consideration is an independent contractor, you can’t face fraud charges.

 If the prosecutor accuses you of reducing the workers' compensation insurance premium, you could point out that the business is less risky. The cost of workers' compensation insurance depends on the nature of the employee's job and the employer's business. If a job does not involve many risks, the workers' compensation insurance premium will be less. However, if a job is risky, the workers' compensation insurance premiums will be more.  For instance, the insurance premiums for an accounting employee would be lower than those of a roofing employee. Therefore, if an employer faces fraud charges regarding the insurance premiums for specific staff, the nature of the business could be a viable defense.

Hard to Diagnose Injuries

Most employees face fraud charges because insurance companies point out that they are faking injuries. However, some injuries, especially the less visible injuries, are hard to diagnose and might not be apparent to insurance companies. For instance, soft tissue injuries, back injuries, neck injuries, and head injuries are not easy to detect. A person could appear normal, yet on the inside, he/she could be in great pain and discomfort. Therefore, just because an injury is not easily visible or an employee can work, does not mean that they are not in pain.

Sometimes, your doctor or physiotherapist could advise you to undertake particular exercises to help aid the recovery process. Insurance companies are often malicious and might videotape you engaging in physical activities like walking and swimming and accuse you of faking injuries. This accusation could conflict with the advice from your doctor. Your attorney could help you fight for your rights and dismiss the evidence from insurance companies.

Related Offenses

Under California law, certain offenses are closely related to the offense of workers' compensation fraud. The prosecutor might charge the related offenses together with workers’ compensation fraud. Some of the related offenses are:

  1. Forgery

California PC 470 explains the crime of forgery. You could face forgery charges if you sign another person's name or fake a seal or another person's handwriting. The charges could also apply if you change or falsify a legal document. Forgery also entails altering, faking, or presenting a false financial statement as genuine. For instance, if you fake a doctor's signature on a medical report regarding your injury, you could be guilty of forgery. If you use the document with the forged signature to get workers' compensation rewards, you will get both forgery and fraud charges. In California, the crime of forgery is a wobbler; the prosecutor has the discretion to charge the crime as a felony or misdemeanor.

  1. Perjury

California PC 118 explains the crime of perjury. You could be guilty of this offense if you intentionally give false information while under oath. If you lie or make a false formal declaration while under investigation for workers' compensation charges, perjury charges could apply. Therefore, you would face both fraud and perjury charges.  Under California law, the crime of perjury is always a felony. The potential sentence for the crime is a sentence from two, three, or four years.

  1.  Grand Theft

The crime of workers' benefits fraud closely relates to the one of grand theft outlined under California PC 487.  You can commit grand theft if you take property worth $950  or more. Workers' compensation fraud has a similar definition as theft by pretenses. In California, grand theft is a wobbler. If charged as a misdemeanor, the penalties include jail time for one year in county jail. For felony offenses, penalties include a sentence for 16 months, two years, or three years in state prison.

Find an Orange County Criminal Defense Near Me

The crime of workers' compensation fraud attracts severe penalties. To fight the charges, you need a competent criminal defense attorney. Our competent fraud lawyers at Orange County Criminal Defense Attorney Law Firm can help you fight the charges. Contact us at 714-740-7848 and speak to an experienced attorney.