Workers' compensation is an insurance system designed to offer employees injured on the job financial support for the lost salary, medical bills, and rehabilitation costs without considering their fault or negligence in the injury. In return for the no-fault system, the employee surrenders their right to directly file a lawsuit against the employer for negligence or losses incurred. When the system works properly, it is a win for all parties.
Nevertheless, employers are wary that some workers can fake injuries or illnesses to obtain financial compensation and take time off. These actions amount to workers' compensation fraud and are prevalent in Anaheim. Workers, medical practitioners, and employers are commonly charged with fraud offenses. The California Criminal Lawyer Group will defend you aggressively if you have been accused of workers' insurance fraud.
California Workers' Compensation Benefits Fraud at a Glance
California runs a workers' comp program that compensates employees whenever they fall sick or sustain injuries on the job or while performing an activity outside the workplace for the employer's benefit. The insurance program provides medical treatment for work-related illness or injury. It offers financial help for lost wages, disabilities, rehabilitation, or even death, for the employee's family to live comfortably under the new normal.
When you submit a claim for benefits, you are ineligible for or deliberately submit misleading information, incomplete or false claims to defraud the workers' comp benefits scheme and obtain illegal benefits; you commit workers' compensation fraud. An employer commits this offense when they give false statements to deny you rightful benefits. Healthcare professionals commit crimes when they provide incorrect information in medical reports for you to obtain benefits for nonexistent injuries or illnesses.
Several statutes that define and address workers' compensation benefits fraud are discussed below.
Insurance Code (IC) 1871.4
In California, the primary statute that defines workers' fraud is IC 1871.4. Under the law, you commit this fraud crime when:
- You make or cause someone to create a fraudulent statement necessary to receive or deny workers' benefits.
- You submit or cause another party to present an oral or on paper fraudulent statement to obtain or deny workers' insurance benefits.
- You deliberately assist and cause someone else or conspire with someone else to engage in any conduct of workers' benefits fraud.
- You make or facilitate somebody else to make an untrue statement about their entitlement to insurance benefits to discourage them from seeking benefits or filing a claim.
Several terms are used in law to define workers' insurance benefits fraud. To help you understand the offense better, our lawyers at the California Criminal Lawyer Group have discussed these terms below:
Workers' Compensation Insurance Benefits
Workers' comp is a private coverage policy employers purchase for job-related liabilities. The policy is a requirement of the law and offers the following benefits to the injured workers:
- Medical treatment costs.
- Temporary disability benefits that provide coverage for lost income for the time you are away from work.
- Permanent incapacity benefits. These provide coverage for the inability to work after sustaining permanent injuries that prevent you from resuming your duties.
- Death compensation. The benefits go to your descendants or estate after untimely work-related death.
When pursuing workers' benefits, you have no obligation under the statute to demonstrate the employer was at fault. The law provides for a no-fault system. Nevertheless, you cannot sue your boss if you obtain workers' compensation benefits.
Making a Statement
A report or representation includes a comprehensive collection of behavior or activities like:
- Billing for services purchased due to the injury.
- Services payment evidence.
- A notice showing an injury happened.
- A jotted or oral report by the injured employee.
- A physician's report.
- Hospital records.
- Medical test results or x-rays.
- Any other proof of harm, payment, expense, or loss.
A material representation is any fact or detail practically relevant and directly significant to the analysis or inquiry into your insurance claim.
For example, you were in a car accident and hurt your shoulders years ago. You receive treatment for the injury but occasionally experience discomfort on the affected shoulder. Years later, you are involved in a slip-and-fall accident at work, and your shoulder is hurt again. Because the accident happened on the job, you apply for compensation. Still, you fail to disclose to your physician or employer's insurer that the shoulder had been previously injured before the work incident.
If the insurer was aware of the previous harm, they could have relied on the information to decide your compensation. Besides, they could have used the knowledge of the last injury on the shoulder to deny your claim on the basis that the pre-existing injury and not the slip and fall are the cause of your current pain.
Therefore, even though you risk a reduction in compensation amount or claim denial, you must divulge information about the previous injury during investigations. Failure to disclose this crucial information is workers' benefits fraud and can attract criminal charges and convictions.
Deliberately Making an Untrue Statement
A fraudulent statement is any verbal or written material that you make to the insurer, knowing it is false and intended to obtain unfair benefits for yourself. The false information is designed to deny eligible workers their benefits if you are the employer. Other acts that make up false statements are:
- Failure to disclose a pre-existing injury.
- Exaggerating about the level of your injury.
- Illegally working another job while claiming workers' insurance benefits.
- Staging a mishap or faking an illness or injury.
- Alleging an injury that occurred outside of your workplace happened at work.
- Obtaining damages for your harm from another employer's insurer by alleging you sustained injuries at their workplace.
- Denying having claimed workers' benefits in the past.
- Lying to your insurer about the number of workers.
- Giving a false account to the insurer about the duties performed by your employees.
- Misrepresenting facts to discourage or deter a worker from claiming compensation.
Your intentions when making the fraudulent statement and whether the false information was material is crucial in your compensation fraud case. The prosecutor can only secure a conviction if they demonstrate that the false statement was not a mistake but that you had motives to defraud. Also, the prosecutor must show the fraudulent information would have affected the claim approval or amount.
California PC 550
PEN 550 criminalizes several types of workers' benefits fraud. And because some insurance benefits cover medical costs, PC 550 overlaps with or applies to medical care fraud. In PEN 550, you engage in a fraud offense when:
- You willfully make or facilitate someone to submit a fake claim to obtain medical benefits provided for under a workers' insurance scheme.
- You deliberately claim medical care compensation while the same is provided for under the workers' comp system.
- You intentionally submit several claims for the same job-related injury or illness covered under the workers' comp scheme to commit fraud.
In this statute, many parties can be liable for the fraud offense. These parties include:
- Other healthcare practitioners.
When you are a physician, doctor, or other medical professional who independently presents or colludes to submit an untrue claim, the consequences can be devastating. On top of the criminal penalties, you risk losing your practicing license, either temporarily or permanently.
Under PC 549, a business proprietor or a staff commits workers' compensation benefits fraud when they:
- Accept, solicit, or refer trade to a company or organization.
- Knowing well or with thoughtless disregard that the party intends to use the information to commit a crime.
Most individuals convicted under this statute include:
- Other medical care practitioners take bribes or kickbacks intending to give unfair profits or financial benefits from the workers' insurance scheme.
Workers' Compensation Benefits Fraud Investigations
The police and the prosecutor can investigate the alleged fraud, but your employer's insurer usually conducts the investigations. These companies are interested in each claim filed because a fraudulent one comes at a cost to them, and they end up losing money or having reduced profit margins. If your boss's insurer suspects that your claim is fraudulent, they will look for the following red flags:
- Suspicious or varying reports or statements about the accident.
- A worker being unable to provide information about the events leading to the accident.
- The injury you are seeking compensation for is not related to or in line with the duties you perform at your workplace.
- Filing a claim after a demotion or disagreeing with the employer.
- An injury happens right after you have resumed work from a holiday or leave.
- You have previously filed several claims.
- Filing a compensation claim while in the middle of a debt or financial crisis.
- Visiting several physicians for the diagnosis of a single injury.
Insurers are thorough when it comes to investigating claims. If the suit has red flags, they will follow it up immediately and conduct their investigations. Nowadays, people post almost every detail of their lives on social media. Insurance companies can monitor these accounts to establish if the injuries you seek compensation for happened at work or elsewhere. Also, when you claim to be confined to bed yet you frequent entertainment joints, insurers can find these details in your social accounts and report the matter to law enforcement.
Once the insurer has confirmed their suspicion, they can contact the police to gather evidence sufficient to convince the prosecutor to file criminal charges. Besides, the insurer can pursue civil action for the financial harm relating to the fraudulent workers' compensation claim.
Workers' Compensation Insurance Fraud Penalties
The penalties for fraud in workers' compensation insurance programs vary depending on the statute you are charged under.
Penalties in Insurance Code 1871.4
When you defraud the workers' compensation system in IC 1871.4, the crime is chargeable as a wobbler. Contingent on the fraud's extent and your criminal record, the prosecutor can prefer misdemeanor or felony charges. If the desired count is a misdemeanor and you are convicted, the penalties are as follows:
- Informal or summary probation ranging from thirty-sixty to sixty months.
- Twelve months of jail incarceration.
- Hefty monetary court fines of at most $150,000 or twofold the fraud amount, whichever of the two is higher.
- Victim restitution.
When charged with a felony and you receive a sentence, the penalties are:
- Formal or felony probation ranging from 36 to 60 months.
- 24, 36, or 60 months of jail incarceration.
- Monetary court fines of at most $150,000 or twofold the fraud figure. The court will order you to pay the most significant amount.
- Victim reimbursement for the fraud.
Looking at these penalties, you will realize that you will be convicted to a jail sentence even for a felony conviction. This is because under Assembly Bill (AB) 109, felony offenses without violence are sentenced to jail sentences to make it possible to expunge or erase the record. An expungement would not be possible if you were sentenced to state prison.
PEN 550 Penalties
If the workers' fraud applies to medical care benefits, the crime is filed under PEN 550 as a wobbler. A misdemeanor sentence attracts the following penalties:
- Misdemeanor probation.
- Twelve months of jail incarceration.
- Monetary court fines of at most $10,000 alongside or in place of the jail sentence.
When charged as a felony, a PEN 550 violation will result in the following penalties:
- Felony probation of 36 to 60 months.
- Jail sentence of 24, 36, or 60 months.
- A maximum monetary court fine of $50,000 or twofold the fraud total. The court will demand payment for the highest amount of the two. The financial court fine is on top of or in place of the jail sentence.
It would help if you understood that there is an exemption under PC 550. When the total amount of fraud committed in 12 months is at most $950, you will face misdemeanor charges, whose conviction attracts a maximum jail sentence of half a year. Besides, the judge can impose $1,000 court fines alongside or in place of jail incarceration.
PEN 549 Penalties
A violation of PC 549 is charged as a wobbler if it is your first time. However, when you have a prior offense and are subsequently arrested for the same, it is chargeable as a direct felony.
A misdemeanor under PC 549 attracts a one-year jail sentence and a court fine of at most $50,000, or twofold the fraud figure; you pay the more significant of the two. The monetary court-imposed fine is instead of or alongside your jail term.
As a felony, a PEN 549 violation attracts a jail sentence ranging from 16 to 36 months. The fine is the same as that imposed on a misdemeanor offense.
As a physician, nurse, or pharmacist in Anaheim, you should be worried when charged with workers' insurance benefit fraud because you will face professional disciplinary action and criminal penalties.
For a physician, any sentence for a crime relating to their qualifications, responsibilities, or functions will lead to professional discipline. Fraud in the workers' compensation program falls into one of these categories and can attract a professional penalty. Nurses and pharmacists also risk professional license revocation when convicted of defrauding the workers' insurance scheme.
Viable Legal Defenses
At the California Criminal Lawyer Group in Anaheim, we understand the police, DA, and other government agencies are alert to workers' compensation benefit fraud because of the prevalence of the crime. Their objective is to protect taxpayers and employees, who are meant to benefit from the insurance scheme.
Nevertheless, you can face the charges despite the false allegations. Simple mistakes when filing the claim can be construed as fraud, leading to criminal charges. If you are wrongfully accused of this form of fraud, we are ready to protect your freedom and rights using the following defense strategies:
Lack of Fraudulent Intent
The prosecutor secures workers' insurance fraud convictions by demonstrating your intent to defraud. They must show that you falsified a declaration or participated in fraudulent behavior. The court will find you innocent if you were not aware a representation you made or behavior you engaged in is perceived as false or did not plan to defraud.
Your lawyer can argue that you made a thoughtless mistake that insurance investigators assumed was intended to engage in fraud and reported the matter to the police, leading to criminal charges. If the lawyer provides sufficient evidence to instill reservation in the jurors' minds that your conduct was intentional, the fraud charges against you will be dropped.
The facts involved in workers' compensation insurance fraud cases are complex. The sheer volume of the evidence can seem impressive, but the proof could be insufficient to prove beyond a reasonable doubt that you are guilty of the crime. The evidence in the case is highly methodological, and medical reports and diagnoses could be conflicting, making it difficult for the court to decipher. Luckily, prosecutors cannot use this ambiguity to secure a conviction. Nevertheless, your attorney can exploit this to identify flaws in the evidence and prove that the proof presented is inadequate to convict you of the fraud crime.
Defenses for Employers
As a boss faced with allegations of committing fraud against the workers' compensation insurance scheme, you can argue in your defense that the worker you are alleged to have defrauded is an autonomous contractor and, therefore, not eligible for workers' compensation benefits. An independent contractor does not take instructions from the employer, and their payments are free of withholdings. The charges will be dropped when you demonstrate that the worker is an independent or autonomous contractor.
If the charges are based on allegations of reducing insurance premiums under the scheme, you can argue that the risks in the work environment have been reduced. The cost of an insurance policy hinges on the type of duties and business activities employees perform. If the job is not risky, the insurance payments will be affordable. Nevertheless, the insurance payments will be hefty if the risk is significantly high. Therefore, when you face charges because of lowered insurance premiums, you can cite the employee's job or the nature of your business as a defense.
Several crimes are related to workers' insurance benefits fraud, and the prosecutor can file them together or separately. These offenses include:
According to PEN 470, it is illegal to:
- Sign another individual's name.
- Counterfeit a seal or someone else's handwriting.
- Falsify or alter a legal paper.
- Fake, change, or submit a forged document as honest.
A prosecutor will charge you with forgery and workers' insurance fraud when you forge a physician's signature on a health report and use it to acquire insurance benefits.
Per PEN 118, you commit perjury by deliberately divulging false material under oath. The prosecutor will prefer perjury in PEN 118 and workers' insurance fraud charges when you testify under oath that you incurred injuries after a slip and fall accident at work. Still, the evidence gathered shows the mishap happened elsewhere, in a bar while drunk, and not at your workplace, as you claim. The lie will expose you to PEN 118 violation charges. Also, deliberately giving false information in an official declaration during an insurance investigation of your claim will result in perjury charges.
Workers' insurance benefits fraud overlaps with or applies to PEN 487 grand theft. A PEN 487 violation occurs when you take, without consent, someone's property valued at more than $950. Workers' insurance benefits fraud typically meets the definition of theft by false pretenses.
Grand theft is charged as a wobbler. A misdemeanor conviction attracts twelve months in jail or 16 to 36 months for a felony sentence.
Find an Experienced Fraud Crimes Lawyer Near Me
The offense of workers' benefits fraud is severely punished when you receive a conviction. Unfortunately, some charges are based on false allegations or honest mistakes, leading to wrongful convictions that are avoidable with an aggressive defense. At California Criminal Lawyer Group in Anaheim, we have the grit and knowledge to contest the charges and secure a charge dismissal or reduction. Contact us today at 714-766-0965 for a no-obligation consultation.