In California, workers' compensation laws follow a no-fault system. Workers do not have to prove that someone else was at fault for their injury to receive benefits. If injured at work, they can receive money to cover their medical expenses and lost wages.
Workers' compensation fraud is a serious crime in California, provided for by various statutes, including Insurance Code 1871.4, Penal Code 550, and Penal Code 549. The offense wastes taxes, raises the cost of goods, and can even put establishments out of business. Fraud can also cause financial trouble for legitimate workers injured on the job.
If you are accused of workers' compensation fraud, you should speak with an experienced criminal defense attorney. At California Criminal Lawyer Group, we can help you build a strong defense and protect your rights if you are facing a fraud charge in Fresno, CA.
Definition Of Worker’s Compensation Fraud Under California Law
As mentioned above, workers' compensation fraud is a serious offense under California law, and several statutes address this issue. Insurance Code 1871.4, Penal Code 550 PC, and Penal Code 549 PC are California's primary statutes that identify, prosecute, and punish workers' compensation fraud.
Insurance Code 1871.4
According to Insurance Code 1871.4, workers' compensation fraud occurs when you knowingly make or cause to be made a false or fraudulent statement or representation to obtain or deny workers' compensation benefits. Below are elements of an Insurance Code 1871.4 violation:
- You deliberately deceive the system by making false statements or representations, hiding relevant information, or manipulating evidence.
- Your fraudulent actions aim to secure undeserved employee benefits or wrongfully deny rightful benefits to eligible workers.
- You know or understand the fraudulent nature of your actions and the intent to deceive for personal gain.
The scope of workers' compensation fraud covers various parties involved, including employees, employers, medical professionals, and insurance companies. The following are legal definitions of terms to help you better understand the scope of workers' compensation:
Workers’ Compensation Benefits
Workers' compensation insurance operates on a "no-fault" system, meaning that benefits are generally available regardless of who was at fault for the claimant’s injuries. This coverage provides vital support for employees who suffer work-related injuries or illnesses. The specific benefits that workers' compensation insurance pays for can include the following:
- Medical treatment related to work-related injury or illness. This includes doctor visits, hospital stays, surgeries, medications, and rehabilitation services.
- Disability benefits to replace a portion of the lost wages in cases where an employee's injury or illness prevents them from working temporarily or permanently.
- Vocational rehabilitation services. These help employees acquire new skills and find alternative employment if an injury or illness prevents them from returning to their previous job.
- Death benefits are paid to employees’ dependents to cover funeral expenses and provide financial support in tragic cases where a work-related injury or illness leads to the death of an employee.
Note that workers who sustain on-the-job injuries can only ask for worker's compensation. This means injured employees cannot take legal action against their employers in a regular California court for injuries sustained at the workplace.
For example, Milcah, an employee at a legal firm, chooses not to use the ergonomic chair provided by her employer and instead brings her own folding chair to work. As a result of her extensive typing duties, Betty develops severe carpal tunnel syndrome, leading to an extended absence from work and the need for physical therapy for her recovery.
Although it can be argued that Betty is at fault for her injury due to her refusal to utilize the ergonomic chair, her employer's workers' compensation insurance policy covers her despite the no-fault nature of the system. Consequently, the insurer provides compensation for her therapy expenses and lost wages.
Statement Or Representation
A "statement or representation" encompasses various acts or items that can contribute to workers' compensation fraud. These acts or items involve providing evidence of harm, loss, payment, or expense. Examples of these pieces of evidence include:
- X-ray or test results.
- Hospital or doctor records.
- Payment for services.
- A bill for services.
- Proof of injury.
- A notice.
- The claimant’s oral or written statement or representation.
- Proof of medical and legal expenses.
For example, Kellen, employed as a store attendant in a mall, sustains facial and neck injuries during an attempted robbery incident. To treat her injuries, Catherine receives workers' compensation benefits, and her friend, Mitchelle, who is a chiropractor, provides the treatment.
The duo, Kellen and Mitchelle, discover an opportunity to generate additional income by submitting exaggerated bills to the workers' compensation insurer. With Kellen's awareness and cooperation, Mitchelle proceeds to present invoices for more frequent treatments than Kellen actually receives.
According to Insurance Code 1871.4, these invoices qualify as "statements," leading to the conclusion that both Kellen and Mitchelle committed workers' compensation fraud.
“Material” Statement Or Representation
A statement is considered "material" when it has the potential to influence the outcome of a claim or impact the benefits received. Instances when a statement is considered material if it provides information about things that are:
- Related to or reasonably crucial for the insurance company's claim investigation.
- Likely to directly and significantly impact the investigation and assessment of the claim.
For example, Monicah sustains a knee injury in a car accident unrelated to her job, and subsequently, she suffers another knee injury when hit by an electric cart at her workplace.
Later on, Monicah applies for and successfully obtains workers' compensation benefits for her work-related injury. However, Monicah deliberately keeps her earlier, non-work-related knee injury undisclosed from both the doctors and the insurance company involved in her claim.
The prior injury is of significance as it could have influenced the insurer's decision-making process. If it was determined that Monicah's previous injury played a role in her knee problems following the work-related incident, it could have resulted in a reduction or denial of her benefits.
Consequently, Monicah's failure to disclose the prior injury is considered material to the insurer's investigation, rendering her guilty of workers' compensation fraud.
False Or Fraudulent statements
A false or fraudulent statement refers to providing inaccurate or misleading information with the intent to deceive or obtain undeserved benefits. It involves deliberate falsehoods and manipulations aimed at exploiting the system.
Below are examples of false or fraudulent statements by employees:
- Providing fictitious medical records or invoices for treatments that were never received.
- Concealing a pre-existing medical condition relevant to the workers' compensation claim.
- Double dipping by receiving workers' compensation benefits while actively working another job.
- Providing false information about employment status or income to qualify for higher benefits.
- Misrepresenting the severity of an injury to obtain higher compensation.
- Falsely claiming an injury occurred at the workplace when it happened elsewhere.
On the other hand, employers can also engage in workers' compensation fraud, often taking one of the following common forms:
- Intentionally reporting lower employee wages or fewer employees to pay lower insurance premiums.
- Wrongly categorizing employees as independent contractors to avoid providing workers' compensation coverage.
- Denying valid workers' compensation claims or interfering with an employee's right to file a claim.
California Penal Code 550 PC
Penal Code 550 PC encompasses various provisions that target fraudulent activities related to workers' compensation. These provisions often overlap with those for California health care fraud. Acts that this statute prohibits are:
- Aiding, abetting, or conspiring with others to commit workers' compensation fraud.
- Prohibiting the offering, receiving, or soliciting of illegal payments or benefits in exchange for patient referrals related to workers' compensation cases.
- Knowingly presenting false or fraudulent claims for payment under a workers' compensation insurance policy. It includes intentionally submitting false information, fabricated documents, or misleading evidence to support a claim.
If doctors are found guilty of workers' compensation fraud or similar offenses, they could be subject to medical license suspension and regular criminal punishments.
California Penal Code 549 PC
Under California PC 549, both business owners and employees can be held accountable for committing workers' compensation fraud. Examples of PC 549 violations include:
- Business owners or employers who engage in fraudulent practices, including intentionally misclassifying employees as independent contractors to avoid providing coverage or falsifying payroll records to underreport wages and lower insurance premiums.
- Employees who exaggerate the extent of their injuries, misrepresent the circumstances under which the injury occurred, or submit false medical documentation to support their claims.
Doctors, chiropractors, and other healthcare providers are frequently accused of committing workers' compensation fraud when participating in a scheme involving commercial bribery or kickbacks. This scheme is designed to exploit the workers' compensation system.
Potential Sentencing, Penalties, and Consequences For Workers' Compensation Fraud
Below are the potential repercussions you could be subject to for committing this offense:
Insurance Code 1871.4 Penalties
Workers' Compensation Fraud under Insurance Code 1871.4 is considered a "wobbler" offense. The prosecution could charge it as either a misdemeanor or a felony.
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Misdemeanor Sentences
If convicted of a misdemeanor workers' compensation fraud offense, the potential penalties include summary probation, serving up to one year in county jail, restitution to the fraud victim(s), and fines not exceeding $150,000.
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Felony Penalties
In more severe cases, workers' compensation fraud can be prosecuted as a felony. Felony convictions carry harsher penalties, such as serving a two, three, or five-year jail term under California’s realignment program, fines not exceeding $150,000, and restitution to the fraud victim(s).
Penal Code 550 penalties
Similar to Insurance Code 1871.4, Penal Code 550 considers workers' compensation fraud a wobbler offense. Prosecutors have the jurisdiction to charge a PC 550 violation as a misdemeanor or a felony.
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Potential Misdemeanor Penalties
Misdemeanor workers' compensation fraud can lead to penalties including probation, county jail time of up to one year, restitution, and fines not exceeding $10,000.
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Possible Felony Penalties
Felony convictions can result in imprisonment in state prison for two, three, or five years, fines not exceeding $50,000 or twice the fraud proceeds, and felony probation.
However, there is an exception if the total amount of the fraud is $950 or less within twelve consecutive months, which includes adding up multiple claims. In such situations, a PC 550 violation is considered a misdemeanor. The possible penalties include a maximum of six months in county jail and a fine of up to $1,000.
Penal Code 549 Penalties
A Penal Code 549 violation is a "wobbler" for the first offense. So the prosecution could charge the violation as either a misdemeanor or a felony. For the second, third, and subsequent offenses, the crime is considered a felony. If found guilty, possible penalties include:
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Misdemeanor Penalties
Misdemeanor sentences for this offense can include:
- County jail time of up to one year.
- Fines not exceeding $50,000 or twice the fraud proceedings, whichever is greater.
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Felony Penalties
As a felony, it carries the following penalties:
- A jail term of 16 months, two years, or three years.
- A fine not exceeding $50,000 or twice the fraud proceedings, whichever is greater.
Workers’ Compensation Fraud And Professional Discipline In California
Professionals such as doctors, nurses, and pharmacists can face disciplinary actions and the potential revocation of their licenses if they commit workers' compensation fraud in California.
Nurses who engage in fraudulent activities related to workers' compensation claims can face severe disciplinary action. The California Board of Registered Nursing (BRN) has the authority to investigate complaints and take disciplinary measures against nurses found guilty of fraud.
Depending on the severity of the offense, disciplinary actions can range from probation and license suspension to license revocation. The BRN aims to protect the public by ensuring nurses adhere to ethical and legal standards in their professional practice.
Similarly, pharmacists involved in workers' compensation fraud can also face professional discipline. The California State Board of Pharmacy is responsible for investigating complaints and taking appropriate disciplinary action against pharmacists found guilty of fraudulent activities.
These actions include probation, suspension, or revocation of the pharmacist's license. The board upholds professional standards and regulations to safeguard the integrity of the pharmacy profession and protect the welfare of patients.
Civil Penalties For Workers’ Comp Insurance Fraud
Civil penalties can be imposed for workers' compensation insurance fraud in California based on specific acts, including:
- Knowingly making false or fraudulent statements.
- Submitting forged or altered documents, such as medical records or employment records, to support a fraudulent claim can result in civil penalties.
- Deliberately misrepresenting your employment status, such as by concealing additional sources of income or claiming to be unemployed while working, can lead to civil penalties.
- Unlawfully dividing a single workers' compensation claim into multiple claims to increase benefits or deceive the insurance system can trigger civil penalties.
- Assisting or conspiring with others to commit workers' compensation insurance fraud, such as helping to fabricate evidence or orchestrating fraudulent claims.
The actions listed above could result in the following:
- Civil penalties of not less than $4,000 and not exceeding $10,000 for every illegitimate compensation claim.
- As a consequence of the fraud, a workers' compensation insurer may be required to pay an assessment up to three times the total amount of medical treatment or medical-legal expenses they originally paid.
Note that if you have a criminal history, you may face an additional civil penalty of four thousand dollars ($4,000) for every fraudulent service. This penalty serves as a deterrent and acknowledges the seriousness of repeat offenses.
Fighting Workers' Compensation Fraud Charges
When facing workers' compensation fraud charges in California, you want to mount a strong defense to protect your rights and interests. A skilled attorney experienced in handling fraud cases can be your ally in navigating the complex legal process. They will analyze the evidence, challenge the prosecution's case, and strive to secure the best possible outcome for you.
The defense strategies your lawyer could use include the following:
There Is Insufficient Evidence That You Committed Workers’ Compensation Fraud
In the case of workers' compensation fraud allegations, you should carefully examine the evidence the prosecution presents. If there is insufficient evidence to prove your involvement in fraudulent activities, it can be a solid basis for your defense.
Your attorney should thoroughly analyze the evidence, review the documentation, interview witnesses, and unearth any inconsistencies or weaknesses in the prosecution's case. Challenging the sufficiency of the evidence aims to cast doubt on your alleged participation in the fraudulent scheme and prove your innocence.
You Did Not Act With Knowledge Or Fraudulent Intent
In your defense, one potential argument is that you did not act with knowledge or fraudulent intent. Proving this requires demonstrating that you were unaware of any fraudulent scheme or deceptive actions related to your workers' compensation claim.
Your attorney should thoroughly investigate the circumstances surrounding your case, review the evidence presented by the prosecution, and interview relevant parties to establish that your actions were not driven by fraudulent motives.
Also, your defense team should present compelling evidence and persuasive arguments and strive to show that you lacked the requisite intent to commit workers' compensation fraud.
Related Crimes to Workers' Compensation Fraud
Workers' compensation fraud involves various related crimes that may be charged alongside or in connection with the primary offense. These crimes can further compound the legal consequences and penalties you face if accused of workers' compensation fraud.
Grand Theft, Penal Code 487
Per California PC 487, grand theft occurs when you unlawfully take or steal someone else's property or assets, such as money, goods, or services, with a value above $950. The prosecution must prove that stealing was done without the owner's consent and with the intent to permanently deprive them of their property.
Misdemeanor grand theft is punishable by up to one year in county jail, while felony grand theft can result in prison sentences ranging from 16 months to two or three years. You can raise several defenses against grand theft charges at trial, including:
- Challenging the prosecution's evidence and demonstrating inconsistencies or lack of proof.
- You can claim you are a victim of mistaken identity if you can prove beyond a reasonable doubt that you are not the perpetrator.
- You had the owner's consent or permission to take the property.
- You may argue that you never intended to permanently deprive the property owner. For example, you could have believed you had a legitimate claim or ownership rights over the property.
Forgery, Penal Code 470
Forgery is a criminal offense covered under California Penal Code 470. The crime involves the intentional act of altering, counterfeiting, or falsifying a document or signature with the intent to defraud, deceive, or injure another person or entity. This can include forging checks, contracts, identification documents, or financial records.
To establish a case of forgery, the prosecution must prove the following elements:
- You altered, counterfeited, or falsified a document, signature, or other written instrument.
- You intended to defraud, deceive, or injure another person or entity by passing off the forged document as genuine.
- You knew that the document or signature was false or altered.
Forgery is a wobbler offense in California, meaning the prosecution could charge you with a misdemeanor or a felony. This crime has similar penalties to grand theft. Misdemeanor forgery carries potential penalties of a maximum of one year in jail, while felony forgery can result in significant prison sentences ranging from 16 months to three years.
Possible defenses to a PC 470 violation are:
- You did not intend to deceive or defraud another person or entity. You may claim that the alleged forgery was a mistake or that you had permission to make the alterations.
- You were unaware that the document or signature was forged or altered, demonstrating their lack of knowledge of its falsity.
- Your defense attorney can challenge the prosecution's evidence by demonstrating inconsistencies or a lack of proof regarding the alleged forgery, which can be a defense strategy against forgery charges.
Perjury, Penal Code 118
Perjury occurs when an individual intentionally makes a false statement while under oath, such as during a court proceeding, deposition, or sworn affidavit. The false statement can be in the form of oral or written testimony.
Before the court can find you guilty, the prosecution must prove beyond a reasonable doubt the following elements:
- You made a statement under oath or under penalty of perjury, either orally or in writing.
- Your statement was false and known to be false when it was made.
- The false statement was material to the matter at hand, meaning it had the potential to impact the outcome of the proceeding.
Perjury is considered a felony offense in California. The penalties for perjury include potential imprisonment in state prison for two, three, or four years. If you are facing charges of perjury, you need to mount a solid defense using the following legal defenses:
- Asserting that your false statement was not material to the matter at hand and, therefore, should not be considered perjury.
- You may argue that you made a genuine mistake initially and subsequently took steps to rectify it if the defendant later corrects or clarifies their false statement.
- You did not intend to deceive or provide false information. You may also assert that any inconsistencies or inaccuracies in their statements were unintentional or resulted from a misunderstanding.
Find a Criminal Lawyer Near Me
At California Criminal Lawyer Group, we have many years of experience defending people accused of fraud crimes. We know that workers' compensation fraud can have serious consequences, even for innocent people.
If you are accused of workers' compensation fraud in Fresno, CA, even if you have an actual injury, you should contact us immediately at 559-712-8377. We can help you understand your rights and build a strong defense. You do not have to plead guilty because the police are investigating you.
