Workers' Comp Fraud

The California Law treats the workers' compensation through the no-fault system. With the system, employees don’t need to prove that an injury was another person’s fault to get compensated. That way, anyone can get workers’ compensation provided that they show the injury occurred at their place of work.

The no-fault system has attracted massive abuse from different people who tend to fake injuries just to get compensated. These frauds are commonly referred to as workers compensation fraud. People who conduct these fraudulent acts makes it very difficult to investigate and incriminate someone. On one end, an employee may fake and even exaggerate injuries to get compensation. On the other hand, doctors and lawyers may be used in executing the claims. For instance, the doctors authenticate the injuries and use their pharmacist to recommend medication at even exaggerated rates, while lawyers may fight to prove that the injuries were on-job.

According to statistics released by the fraud division in 2016, over 6000 frauds were reported, and only 489 arrests were made with 209 others forwarded to the prosecution. In total, over $200 billion were lost that year through the workers’ compensation fraud. The government has been instrumental in curbing these frauds. In 1991 for instance, the legislature passed the Workers’ fraud program. In this program, they declared the workers’ compensation fraud a felony and gave insurers a responsibility to investigate and report all the suspected frauds. Moreover, they established a Fraud Assessment commission that would determine the extent of fraud and fund all the prosecutions.

Every employer in California should pay a workers’ insurance policy to cover all employees. In case of an on-job injury, the employee gets benefits for the following:

• Medical care: This includes all tests, consultation, and prescriptions done or given to the employee as a result of their injury;
• Temporary disability: This is compensation for all the lost wages during the recuperation period;
• Permanent disability: These are payments for all the wages lost in case the accident caused permanent damages such that the employee cannot work again;
• Death benefits: If the accident led to death, the money is given to the spouse, children and other lawful dependents of the employee. An attorney is involved in helping to determine the deceased close relatives;
• Vocational rehabilitation;
• Any other payable compensation in the on-job policy of an insurance company.

If you get these compensation benefits, you automatically give up all the rights to sue your employer. These terms mean that any lawsuit for damages through the personal injury policy is null and void. However, if you don’t get these benefits, you are free to sue the employer.

All Workers compensation frauds can attract either a criminal or civil penalty depending on their severity.

Criminal Penalties for a Workers Compensation Fraud

1. Insurance Code 1871.4 Penalties

This is one of the criminal repercussions of committing a workers comp fraud. Under this penal code, you are found guilty if:

• You knowingly present fake materials or make fraudulent statements to help you get compensated;
• You deliberately make a false statement through writing or verbally to support or deny an insurance claim;
• You intentionally aid, assist or conspire with any party to solicit funds from an insurer.

This offense is a wobbler. Wobbler offenses are commonly charged as a felony or misdemeanor based on the defendant’s criminal record and the circumstances leading to the case. If the offense is charged as a misdemeanor in California, one gets the following penalties:

• Up to one year in county jail;
• Payments of up to double the amount involved in the fraud or a one fifty thousand dollars ($150000) fine. The court picks the higher amount among the two;
• Compensation to all parties involved in the fraud, including the employer.

If the case is a felony, the following penalties can be imposed:

• Two, three, or five years imprisonment with respect to the California Realignment program;
• A payment of up to double the amount involved in the fraud or a total fine of one fifty thousand dollars ($150000). This is up to the court to decide, depending on the higher of the two;
• Restitution of funds to all the parties in the case.

2. Penalties Under Penal Code 550

There are different angles to workers’ compensation frauds. This penal code helps to cover all health care benefits from the scam. Being a wobbler, defendants are either charged with a misdemeanor or a felony. If taken as a misdemeanor, the following are the penalties:

• Misdemeanor probation can be given
• A jail term of up to a year in county jail
• A ten thousand dollars ($10,000) fine or the courts can ask you to pay up to double the amount involved in the fraud, the greater of the two is considered
• All the above charges

If treated as a felony, the following penalties are imposed:

• Felony probation can be provided
• Two, three or five years imprisonment
• A fifty thousand dollars fine ($50000) or the courts can ask you to pay up to double the amount involved in the fraud, the greater of the two is considered
• Or all the above charges

The only exceptions come if the total fraud amount is less than nine hundred dollars ($950). This includes all the claims relating to the fraud within one year. In such a case, the penal code 550 compensation insurance fund treats it as a misdemeanor. The penalties may include:

• A six months jail term in county jail;
• A total fine of one thousand dollars ($1000); or
• Both the above penalties depending on the defendant’s criminal record.

3. Penal Code 549 Penalties

This Penal Code applies to the other parties involved in the fraud. It incriminates anyone who solicits, advice or accepts to conduct business with a person who is planning to commit a compensation fraud. The case is a misdemeanor for first-time offenders, while for second-time and subsequent offender, it becomes a felony. For a misdemeanor, the following are the penalties:

• A one-year jail term in county jail;
• A sum of fifty thousand dollars ($50,000) fine or repayment of up to double the stolen benefits, the two are compared, and the courts take the higher value;
• In some cases, both the penalties are given.

As a felony, the offense is punishable in the following ways:

• A sixteen months jail term imprisonment;
• Two or three years imprisonment together with a fifty thousand dollar ($50000) fine or double the total amounts involved in the fraud, whichever is more.

4. Penalties to Professionals Involved in the Worker’s Compensation Fraud in California

For this fraud to be successful, professionals like doctors, pharmacists and nurses must play a role. All the professionals who assist in the fraud’s success are subject to professional disciplinary actions. Different commissions regulating these fields should chip in and revert their licenses before the court deals with them legally. In most cases, if your license is revoked, it may take you more than a year to revert; in some cases, it can go on forever.

Civil Penalties for the Compensation Frauds

The law can pass civil penalties on specific workers’ compensation fraud cases. Under the California labor code section 3820, an employer is free to file a lawsuit against employees filing false compensation claims. In the case of an employee, civil penalties can be subjected to employers who fail to compensate them for any injuries at the workplace. Civil penalties have been significant in combating the widespread cases of workers compensation frauds. The charges apply only when:

• An employer presents false facts to reduce the workers' compensations or even get total employee compensation scrapped;
• Employees knowingly present fraudulent or false statements to support or oppose claims in the workers' compensation benefit. This is mainly to evade compensating the party or inflating the compensation in whole;
• One knowingly gives, receives, pays or participates in any unlawful workers’ compensation plan, with an attempt of fraud;
• You are deliberately participating in giving services or referring a patient for them to obtain all the medical covers given by the compensation policy;
• Conspiring or assisting any other party to do any of the above.

If you are found guilty with any of the above claims under the Labor code section 3820, the following punishments can be given:

• A civil fine ranging from four thousand dollars ($4000) to ten thousand dollars ($10000) for all unlawful claims on the workers’ compensations;
• Restitution of up to three times the total treatment expenses as provided by the insurer;
• In case of a criminal conviction, the law may require you to pay up to four thousand dollars ($4000) more for every false claim outlined in your lawsuit;
• Other offenses associated with the workers' compensation frauds.

Grand theft

The penal code 487 of California on grand theft is a common crime that is related to workers comp fraud. According to this section, one commits a grand theft if she/he fraudulently takes property worth more than nine hundred and fifty dollars ($950). Most of the cases on workers compensation fall under theft by pretense which is a type of grand theft. Being a wobbler offense, grand theft in this circumstance can be treated as a misdemeanor or felony. As a misdemeanor, a defendant can be jailed for up to one year in county jail. The felony sentence, on the other hand, can get you in prison for up to sixteen (16) months, two, or three years.

Moreover, workers comp fraud can fall under petty theft by false pretense if a person fraudulently takes property that is worth less than 950 dollars. While this offense is not as harsh as grand theft, you may still find yourself in jail for committing petty theft by false pretense or trick.

Forgery

Under the penal code 470 of California, forgery is a combination of the following acts with an intention to commit fraud:

• Signing under another person’s name
• Faking someone else’s handwriting or a seal for fraud purposes
• Altering the information in a legal document
• Presenting false financial documents

In the case of a workers’ compensation fraud, if you use a fake doctor’s signature, test reports or you present falsified financial documents, you may be charged with both forgery and compensation fraud. Being a form of a wobbler, forgery attracts similar penalties as grand theft.

Perjury

Perjury under the penal code 118 PC is an offense committed when a party gives false information after taking an oath. If an insurer proves that you signed a formal declaration or you deliberately lied during depose, you are charged with both Workers’ compensation fraud and perjury. The same may apply if you continue providing false information to the courts even after taking an oath. A perjury offense is always treated as a felony and can attract a sentence of up to two, three or four years in prison.

Evidently, a workers comp fraud case can subject you to additional penalties for the related charges, and that’s why you need an attorney to help you build a strong defense strategy.

Workers’ Compensation frauds are rampantly growing in California. In that regard, the government, the Insurance Department of California, the courts, and insurance carriers have generated maximum resources to help root out these crimes. They even have specialized investigation units which are always on undercover missions to help unveil employers and workers attempting to commit such frauds. Therefore, before your case gets to the prosecution, there must be enough evidence gathered by these agencies. To save yourself from such claims, you require the assistance of experienced legal experts. Your legal team can consider the following defenses:

You were unaware of the fraudulent attempt

The court can find you guilty of a workers’ compensation fraud if you knew that a statement you made was false or you were wholly involved in the fraud intent. Any simple mistake you make when filing your suit to the insurance company can be easily detected by their investigator and used in the prosecution. It is then up to the prosecution to prove beyond reasonable doubt that you were directly involved in the fraud, by evaluating the evidence. If you work with an experienced attorney, she/he should try to bring doubts that you may not have been aware of any fraud. You are freed depending on how well they present your case.

There is no tangible evidence that you committed the fraud

In most occasions, the presence of substantial evidence, like fraudulent financial statements, medical records, and faked signatures can fully incriminate you of fraud. However, with the right defense, you can prove that the information provided is fake. The Attorney should attempt to collect enough evidence to counter the evidence provided by the prosecutor. If they prove that the information is false, you would have no case to answer.

There are several terms that you will encounter while filing your compensation suit. Some of these terms are:

Statements

A statement is a proof given either by mouth or in writing regarding the compensation. A statement includes notice, an injury, medical expenses proof, payments and bills of service, tests and x-ray results, doctors records, etc.

Material statements

This is any tangible evidence that assists the insurance investigator to get more information on the fraud.

Fraudulent or false

This is any false testimony, statement, or details given with regards to the workers’ compensation fraud. The statement can be from either the employers or employee’s end. There are different forms of frauds including:

• Exaggerating an injury
• Lying that a non-work injury occurred in the line of duty
• Any other faked statement, whether financial, medical report or test
• Giving false information about the number of employees in your agency
• Faking the employee’s duties in the company
• Giving false information to the employees concerning the compensation amount with the aim of discouraging them

While the law gives workers the right to proper compensation for workplace-related injuries, there is a growing number of workers comp fraud cases. These cases affect both the employees and employers since both parties can be charged with compensation fraud. Thus, it should be your priority to seek legal representation if you are facing these charges. If you are in Vista or the greater North County of California, you can contact the Vista Criminal Attorney Law Firm at 760-691-1551 if you need legal representation.