Workers' compensation fraud laws are covered under California Insurance Code 1871.4 and Penal Code Sections 549-550.
Workers' compensation is a type of insurance that will pay employees for an injury or a disability that occurred at the workplace.
Thus, the white collar crime of workers' compensation fraud occurs when you:
- receive payment, or
- attempt to receive payment,
- directly related to a workers' compensation claim,
- for which you were not entitled to receive.
You could violate California' workers' compensation fraud laws in a variety of ways.
For example, it's a crime to knowingly making false statements, or encourage another person to make false statements in order to receive benefits.
It's also a crime to submit a claim for healthcare treatment for an actual injury, when the doctor didn't actually treat your injury.
Another example is submitting multiple claims for the same treatment on the same injury.
In Los Angeles County, a common example of workers' compensation fraud includes situations where someone claims to have suffered an injury at work, but in fact, they were not even injured.
Another common example is a situation where someone claims they sustained an injury at work, but in fact, they were actually injured outside the workplace.
Yet another very common situation is when someone claims they sustained a serious injury at work and collecting workers' compensation benefits, but in fact, the injury was minor and they are actively working a new job at the same time they are collecting benefits.
Most types of workers' compensation fraud cases are “wobblers,” meaning the prosecutor can file the case as either a misdemeanor or felony crime.
If you have been accused of worker's compensation fraud, you need to contact the Los Angeles criminal defense lawyers at Eisner Gorin LLP.
Don't make any statements to police or investigators. Let our attorneys review the details in order to plan an effective strategy on your behalf.
Now that we have covered a general overview of workers' compensation fraud, let's take a more thorough review of the legal definitions, penalties, and defenses below.
Legal Definition of California Worker's Comp Fraud
California Insurance Code 1871.4 is the primary statute used for prosecuting workers' compensation fraud cases, which is covered in the False and Fraudulent Claims Act. It's legally described as follows:
- "Knowingly making a false or fraudulent statement, written statement, or material representation, in order to obtain insurance benefits. Knowingly assisting, aiding, conspiracy, or soliciting a person to recover insurance benefits without cause."
Workers' compensation is a type of insurance policy that employers have to pay. If they are injured at work, the insurance policy will help them with the cost of medical care, current lost wages, permanent disability, and death benefits.
It's important to note that workers' compensation is designed as a “no-fault” system, meaning the employee is not required to prove their injury was another person's fault in order to receive benefits.
Typically, injured workers can't pursue a civil suit against their employer for an injury. They are limited to the benefits in the workers' compensation policy.
Thus, when they claim and injury and knowingly make false statements, they can be charged with workers' compensation fraud. In the legal description above, a statement or representation includes oral or written statements, medical bills, and hospital records, among others.
See related: Workers' Compensation Fraud Convictions.
False or Fraudulent Statements
Clearly, there are a wide range of ways someone could make false or fraudulent statements that would violate workers' compensation laws under California Insurance Code 1871.4.
If you apply for benefits, you could commit a crime if:
- You claim a non-work-related injury as work-related;
- You claim a fake injury;
- You exaggerate the extent of your injury;
- You willfully failed to disclose a prior injury;
- You deny that you filed previous claims;
- You collected benefits for the same injury from multiple employers;
- “Double dipping” – working another job while receive benefits.
It's important to note that employers can also commit workers' comp fraud by making false or fraudulent statements.
For example, they lie or misrepresent to the insurance company about an employee's job duties, or lie to employee about their benefits.
Legal Penalties Workers' Comp Fraud
Under California Insurance Code 1871.4, workers' compensation fraud is known as a “wobbler,” meaning you could be charged with either a misdemeanor or felony offense.
Typically, the Los Angeles County prosecutor will base their decision on the specific circumstances of your charges and criminal history.
If you are convicted of a misdemeanor violation of workers' compensation fraud, the legal penalties include:
- Up to one year in a Los Angeles County jail,
- A fine up to $50,000, or two times the amount of fraud,
- Restitution to employer and insurance company.
If you are convicted of a felony offense of workers' compensation fraud, the legal penalties include two to five years in a California state prison, a fine of $150,000 or double the amount of fraud, and restitution to employer and insurance company.
Civil Penalties for Workers' Comp Fraud
Under California Labor Code Section 3820, employers could pursue civil damages if an employee files a fraudulent workers' compensation claim.
If you have been found guilty of violating Labor Code Section 3820, the penalties could include a civil fine between $4,000 and $10,000 for every false claim of workers' compensation and a civil fine up to 3 times the amount of the medical expenses paid by the insurer.
A criminal conviction could require you pay up to $4,000 more per each false claim in your civil suit.
California Penal Code Section 549
California Penal Code Section 549 describes how a business owner or their employees can commit the offense of workers' compensation fraud.
It's a crime to solicit, accept, or even refer a business to or from another person or entity knowing that with reckless disregard for whether they will commit workers' compensation fraud under Penal Code Section 550 or Insurance Code 1871.4.
Typically, this type of workers' compensation fraud is filed against doctors, chiropractors or any other type of health care professional who becomes engaged in a kickback scheme to collect money from the workers' compensation system.
Penal Code is also a “wobbler” on the first offense, but a felony crime for additional offenses.
If convicted of a misdemeanor, the legal penalties includes up to one year in a Los Angeles County jail, a fine up to $50,000, or two times the amount of fraud.
A felony conviction carries 16 months, 2 or 3 years in a California state prison, and the same fine as a misdemeanor above. Additionally, any heath care professional convicted of workers' compensation fraud will face internal and professional discipline as well.
California Penal Code Section 550
Under PC 550, it's a crime to knowingly make a false claim to receive health care payments that are covered by workers' compensation insurance.
It also prohibits making multiple claims for payment on the same workers' compensation health care benefit with the specific intent to defraud.
This type of workers' compensation fraud can be committed by either an employee, or health care professional. Again, Penal Code 550 is a wobbler. A misdemeanor conviction carries up to one year in jail, and a fine up to $10,000.
A felony conviction will carry up to five years in jail, and a fine up to $50,000, or double the amount of fraud.
Legal Defenses for Workers' Compensation Fraud
Our Los Angeles criminal defense attorneys can use a variety of strategies on your behalf against charges of workers' compensation fraud.
Each case is unique and will first require a thorough review of the details. However, the most common legal defenses include:
No knowledge or intent to defraud – The key element of the crime that must be proven by the prosecutor is that you knew your statements were false and fraudulent. In some cases of workers' compensation fraud, our attorneys might be able to argue you simply made a careless mistake and there was no specific intent to defraud.
It's important to note the burden of proof is placed on the prosecutor, beyond reasonable doubt. In other words, if our attorneys can cast reasonable doubt, you have a chance at avoiding a conviction.
Insufficient evidence – Like most fraud related cases, workers' compensation fraud typically involves complex detailed reports from doctors or health care professionals. In some cases, our attorneys could present a successful argument there is simply insufficient evidence beyond a reasonable doubt.
Our law firm has a track record of success defending clients in fraud related cases as we know how to find weakness in the prosecutor's evidence.
Contact our Criminal Defense Law Firm
If you are facing allegations of committing workers' compensation in violation of California Insurance Code 1871.4, or Penal Code Sections 549-550, your next step is to call the Los Angeles criminal defense attorneys at Eisner Gorin LLP.
As you can see from the information above, a conviction could result in harsh civil or criminal consequences.
Additionally, a conviction will impact your future job opportunities. Early intervention into your case by our law firm can be critical to the outcome of your case.
Contact us at 877-781-1570 to review your case.
Related Pages: Health Insurance Fraud