Charged with workers' compensation fraud? We can help.
Our California criminal defense lawyers1 represent employees, employers, attorneys, doctors, and pharmacists accused of this crime.
As former district attorneys and police investigators, we bring decades of experience investigating, prosecuting--and now defending--insurance fraud cases. If you're facing charges, we urge you to visit us for a free consultation.
In the article below, we will address the following:
If, after reading this article, you would like more information, we invite you to contact us at Shouse Law Group.
Workers' compensation is a social insurance program that began in the 1920s. In California, this insurance is a "no-fault" system. This means that a person may collect workers' compensation insurance anytime he/she is injured on-the-job, regardless of whether he/she is at fault for the injury. The program's purpose is to help expedite benefits to injured workers and to avoid costly legal disputes.2
However, because of this "no-fault" program, people began taking advantage of the system. This led the California Senate to create the Workers' Compensation Fraud Program in 1991, which made workers' compensation fraud a felony. By the year 2000, workers' compensation was the fastest growing type of insurance fraud in the nation.
As a result, the California Department of Insurance, insurance carriers, and district attorneys' offices throughout the state poured many resources into revealing fraudulent claims. Special investigation units who conduct undercover sting operations and undercover surveillance investigations (known as "sub rosa" investigations) diligently investigate California workers' compensation cases.
Workers' compensation fraud (often referred to as workers' comp fraud) is a form of insurance fraud. According to the California Department of Insurance, insurance fraud occurs whenever "someone knowingly lies to obtain some benefit or advantage to which they are not otherwise entitled or someone knowingly denies some benefit that is due and to which someone is entitled".
California workers' compensation fraud laws apply to everyone involved in an illegal transaction. This includes those who
- directly and actively participate in the alleged scheme,
- aid and abet others,
- solicit others to participate, and
- conspire with others
to collect insurance benefits fraudulently.3 California workers' compensation fraud is therefore a sort of generic term that covers a wide variety of fraudulent conduct.
This includes knowingly.and with the intent to defraud.
- making a false or fraudulent claim for payment of a health care benefit,
- submitting a claim for a health care benefit which was not used by or on behalf of the injured worker,
- presenting multiple claims for payment of the same health care benefit, or
- paying less than is deserved for a particular health care benefit.4
There are many different ways to violate California's workers' compensation insurance fraud laws. The following are brief descriptions of some of the most common.
Applicant fraud (that is, fraud by the alleged injured employee)
Applicant fraud can take a variety of forms. These types of cases involve applicants (that is, employees who are claiming to be injured) who
- fake an injury (or lie about the extent of their injury),
- claim that a non-work injury is work-related,5
- fail to disclose a prior injury,6
- deny filing previous claims,
- collect benefits for the same injury from more than one employer, and/or
- illegally work while receiving workers' comp benefits.
This last issue is quite common. When someone receives workers' compensation insurance, the idea is that they are too disabled to work. However, many people "double dip". This means that they receive insurance payments and secure other employment so that they can continue to receive workers' comp payments and collect a pay-check.
Not only will this type of fraud result in criminal penalties, but it will also result in a revocation of benefits and -- most likely -- termination of your current employment.
Depending on the circumstances, the applicant can also face penalties under
- Penal Code 487 PC California's grand theft law,
- Penal Code 470 PC California's forgery law, and/or
- Penal Code 118 PC California's perjury laws.
Carrier fraud takes place when the insurance carrier makes false statements about a workers' eligibility to collect payments in an effort to pay reduced benefits.
Claim mills or provider fraud
"Claim mills" is the term for organized workers' compensation fraud rings. These rings are comprised of chiropractors, doctors, attorneys, and those they employ (known as "runners", "steerers", or "cappers") who aid in the recruitment of people to file fraudulent claims.
These people are sent to medical and legal offices whose employees are in on the scheme. The employees then submit these phony claims to the insurance office.
There are also times when providers (that is, doctors, chiropractors, etc.) receive legitimate claims, but then illegally render unnecessary treatment, overbill for services, or bill for services that weren't performed.
Depending on the circumstances, this type of workers' comp fraud can also lead to charges for
- California health care fraud,
- Medi-cal fraud, and/or
- California prescription fraud, as well as a variety of other charges under
- California's Insurance Code (such as illegal kickbacks),
- California's Business and Professions Code, and
- California's Labor Code.
Employer fraud generally involves cases where an employer
- lies about the number of his/her employees,
- misrepresents an employee's job duties (for example, stating that an employee who is responsible for heavy lifting and moving is a clerical worker),
- retaliates or threatens to fire or punish an employee who seeks to recover workers' comp benefits,7 or
- doesn't carry workers' compensation insurance (which is required by law),
in order to pay lower (or no) insurance premiums. Depending on the facts of the case, the employer may face the same additional charges as those listed under "applicant fraud".
The good news is that a number of legal defenses apply to workers' compensation fraud that an experienced California criminal defense lawyer can present on your behalf.
The following are examples of some of the most common.
You didn't knowingly participate in the alleged fraud
Regardless of the specific type of workers' comp fraud prosecutor's charge you with, they must prove that you knowingly participated in the fraud before they can convict you.8
It therefore follows that if you didn't know about the alleged fraud, you aren't guilty of this offense. This defense works best if you are allegedly involved in a "mill" or other "group" position where you are not the applicant.
You didn't have the specific intent to defraud
Similarly, before the prosecutor can convict you of workers' compensation insurance fraud, he/she must prove that you intended to defraud the insurance carrier.9 This means that if you
- honestly believed you were allowed to work while simultaneously receiving benefits,
- overbilled a client by mistake,
- mistakenly reported an employee's position,
- genuinely believed that your injuries were more severe than they actually were, or
- engaged in any other behavior that was not intentionally fraudulent,
then you should be acquitted of this charge.
You are innocent / falsely accused
Of course, if you are innocent of the charge(s), that is the ultimate defense. Perhaps you were falsely accused because the police assumed you were "guilty by association". Perhaps it is a case of mistaken identity where someone else in your office was involved in the illegal activity, but you were falsely arrested for his/her wrongdoing. Perhaps someone pointed the finger at you to cover up his/her own criminal culpability.the possibilities are endless.
As Newport Beach criminal defense attorney Zachary McCready10 explains, "There are an infinite number of reasons why a person can be falsely accused of a crime. And as a law firm comprised of former cops and prosecutors, we know the most effective ways to investigate the truth and reveal false accusations for what they are."
Although 1991 legislation made most instances of California workers' compensation fraud a felony, there are also instances that may be alternatively prosecuted as misdemeanors.
If the amount of the alleged fraud is $950 or less, the crime is a misdemeanor. If convicted, you face up to six months in a county jail and a maximum $1,000 fine.11
If the amount exceeds $950, the crime is what's known as a "wobbler". Prosecutors have the option of charging wobblers as either misdemeanors or felonies. If convicted of this wobbler as a misdemeanor, your potential jail time increases to a maximum one-year sentence and your fine increases to a maximum $10,000.12
If the amount of the alleged fraud exceeds $950.or exceeds $950 in any 12-month consecutive period.and prosecutors elect to charge you with the felony, a conviction carries a
- two, three, or five-year California state prison sentence, and either
- a maximum $50,000 fine (and, under certain circumstances, up to $150,000), or
- double the amount of the fraud, whichever is greater.13
In addition, a workers' compensation fraud conviction will most likely result in
- a revocation or suspension of any California professional license,14
- ineligibility to receive or retain any paid benefits,15
- possible repayment of benefits,16 and
- your personal information and record of conviction being published online on the California Department of Insurance's website for five years (less if you receive an expungement under California's expungement laws).17
Finally, if you are convicted of a second or subsequent offense involving any California insurance fraud crime, you face longer state prison sentences and stiffer fines.18
Call us for help.
If you or loved one is charged with workers' compensation fraud and you are looking to hire an attorney for representation, we invite you to contact us at Shouse Law Group. We can provide a free consultation in office or by phone. We have local offices in Los Angeles, the San Fernando Valley, Pasadena, Long Beach, Orange County, Ventura, San Bernardino, Rancho Cucamonga, Riverside, San Diego, Sacramento, Oakland, San Francisco, San Jose and throughout California.
Additionally, our Las Vegas Nevada criminal defense attorneys are available to answer any questions about Nevada's workers' compensation fraud laws. For more information, we invite you to contact our local attorneys at one of our Nevada law offices, located in Reno and Las Vegas.19
You may also find helpful information in our related articles on California Insurance Fraud; How Criminal Convictions Affect California Professional Licenses; California Health Care Fraud; Medi-Cal Fraud; California Prescription Fraud; Penal Code 487 PC California's Grand Theft Law; Penal Code 470 PC California's Forgery Law; Penal Code 118 PC California's Perjury Law; and Legal Defenses.
Additional Online Resource:
Addresses California's workers' compensation fraud laws.
1Our California criminal defense attorneys have local Los Angeles law offices in Beverly Hills, Burbank, Glendale, Lancaster, Long Beach, Los Angeles, Pasadena, Pomona, Torrance, Van Nuys, West Covina, and Whittier. We have additional law offices conveniently located throughout the state in Orange County, San Diego, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.
3California Penal Code 549 PC -- False or fraudulent claims against insurers; solicitation, acceptance or referral of business; penalties and restitution. ("Any firm, corporation, partnership, or association, or any person acting in his or her individual capacity, or in his or her capacity as a public or private employee, who solicits, accepts, or refers any business to or from any individual or entity with the knowledge that, or with reckless disregard for whether, the individual or entity for or from whom the solicitation or referral is made, or the individual or entity who is solicited or referred, intends to violate Section 550 of this code or Section 1871.4 of the Insurance Code [that is, California's workers' compensation fraud law] is guilty of a crime, punishable upon a first conviction by imprisonment in the county jail for not more than one year or by imprisonment in the state prison for 16 months, two years, or three years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, or by both that imprisonment and fine. A second or subsequent conviction is punishable by imprisonment in the state prison or by imprisonment in the state prison and a fine of fifty thousand dollars ($50,000). Restitution shall be ordered, including restitution for any medical evaluation or treatment services obtained or provided. The court shall determine the amount of restitution and the person or persons to whom the restitution shall be paid.")
See also California Penal Code 550 PC -- False or fraudulent claims or statements; prohibited acts. ("(a) It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following.(6) Knowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit. (7) Knowingly submit a claim for a health care benefit that was not used by, or on behalf of, the claimant. (8) Knowingly present multiple claims for payment of the same health care benefit with an intent to defraud. (9) Knowingly present for payment any undercharges for health care benefits on behalf of a specific claimant unless any known overcharges for health care benefits for that claimant are presented for reconciliation at that same time. (10) For purposes of paragraphs (6) to (9), inclusive, a claim or a claim for payment of a health care benefit also means a claim or claim for payment submitted by or on the behalf of a provider of any [California] workers' compensation health benefits under the Labor Code.")
See also California Insurance Code 1871.4 -- California's workers' compensation fraud law. ("(a) It is unlawful to do any of the following: (1) Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any compensation, as defined in Section 3207 of the Labor Code. (2) Present or cause to be presented a knowingly false or fraudulent written or oral material statement in support of, or in opposition to, a claim for compensation for the purpose of obtaining or denying any compensation, as defined in Section 3207 of the Labor Code. (3) Knowingly assist, abet, conspire with, or solicit a person in an unlawful act under this section. (4) Make or cause to be made a knowingly false or fraudulent statement with regard to entitlement to benefits with the intent to discourage an injured worker from claiming benefits or pursuing a claim. For the purposes of this subdivision, "statement" includes, but is not limited to, a notice, proof of injury, bill for services, payment for services, hospital or doctor records, X-ray, test results, medical-legal expense as defined in Section 4620 of the Labor Code, other evidence of loss, injury, or expense, or payment. (5) Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any of the benefits or reimbursement provided in the Return-to-Work Program established under Section 139.48 of the Labor Code. (6) Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of discouraging an employer from claiming any of the benefits or reimbursement provided in the Return-to-Work Program established under Section 139.48 of the Labor Code. (b) Every person who violates subdivision (a) shall be punished by imprisonment in a county jail for one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code, for two, three, or five years, or by a fine not exceeding one hundred fifty thousand dollars ($150,000) or double the value of the fraud, whichever is greater, or by both that imprisonment and fine. Restitution shall be ordered, including restitution for any medical evaluation or treatment services obtained or provided. The court shall determine the amount of restitution and the person or persons to whom the restitution shall be paid. A person convicted under this section may be charged the costs of investigation at the discretion of the court. (c) A person who violates subdivision (a) and who has a prior felony conviction of that subdivision, of former Section 556, of former Section 1871.1, or of Section 548 or 550 of the Penal Code, shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (b). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. (d) This section may not be construed to preclude the applicability of any other provision of criminal law that applies or may apply to a transaction.")
See also California Labor Code 3200, et seq.
4California Jury Instructions, Criminal (CALJIC 16.075) Fraudulent Claims for Health Care Benefits -- A Misdemeanor. See also CALJIC 15.41.3 Fraudulent Health Care Insurance Claims -- Misdemeanor or Felony.
5Tensfeldt v. Workers' Comp. Appeals Bd. (1998) 66 Cal.App.4th 116, 119-120. ("On Friday, February 4, 1994, Tensfeldt's crew had a total of three job assignments, which they completed early, around 2:30 p.m. Upon completion, Lynch drove Tensfeldt and another crew member to a City gymnasium where they joined other water department employees to play basketball. Apparently this recreational activity had taken place on other Friday afternoons when work assignments were completed before the end of the work day. During the course of playing basketball, Tensfeldt injured his left knee when he jumped for a rebound and landed on the foot of another player. He was carried out of the gym and driven back to the main water department yard by other employees. He claims that other employees urged him to lie about how the injury occurred because they did not want to get in trouble. Tensfeldt then reported the injury and filed the fraudulent claim alleging that he had dislocated his knee on the job that day when he jumped out of a compressor truck. City accepted the claim. Medical treatment and temporary disability indemnity were provided until rumors surfaced regarding the truth..On April 18, 1994, after reviewing the police investigative reports, City terminated all benefits.He admitted for the first time that he had falsely reported the injury and, in fact, was hurt while playing basketball.On November 29, 1994, Tensfeldt entered a plea of nolo contendere in the criminal case to one count of misdemeanor insurance fraud in violation of section 1871.4(a)(1).")
6People v. Gillard (App. 4 Dist. 1997) 57 Cal.App.4th 136, summary. ("Defendant was convicted of three counts of violating Ins. Code 871.4, subd. (a)(1) (making false or fraudulent statements for the purpose of obtaining workers' compensation benefits), based on his failure to disclose a prior injury, and one count of violating Pen. Code 118, subd. (a) (perjury).")
7Crown Appliance v. Workers' Comp. Appeals Bd. (2004) 115 Cal.App.4th 620, 627. ("Based on substantial evidence that Sanchez treated Wong poorly after his industrial injury, that she believed he was faking his disability, and that she wanted to dismiss Wong since he returned to work on light duty, the WCAB acted within its authority in finding that Crown fired Wong in retaliation for filing a workers' compensation claim.")
8California Jury Instructions, Criminal (CALJIC 16.075) Fraudulent Claims for Health Care Benefits -- A Misdemeanor. See also CALJIC 15.41.3 Fraudulent Health Care Insurance Claims -- Misdemeanor or Felony.
10Newport Beach criminal defense attorney Zachary McCready defends clients accused of violating California's workers' compensation insurance fraud laws throughout Orange County, including Fullerton, Anaheim, Newport Beach, Santa Ana, Irvine and Westminster.
11California Penal Code 550(c) PC -- False or fraudulent claims or statements; prohibited acts, ("(c) (1) Every person who violates paragraph (1), (2), (3), (4), or (5) of subdivision (a) is guilty of a felony punishable by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or five years, and by a fine not exceeding fifty thousand dollars ($50,000), or double the amount of the fraud, whichever is greater. (2) Every person who violates paragraph (6), (7), (8), or (9) of subdivision (a) is guilty of a public offense. (A) When the claim or amount at issue exceeds nine hundred fifty dollars ($950), the offense is punishable by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, or by both that imprisonment and fine, or by imprisonment in a county jail not to exceed one year, by a fine of not more than ten thousand dollars ($10,000), or by both that imprisonment and fine. (B) When the claim or amount at issue is nine hundred fifty dollars ($950) or less, the offense is punishable by imprisonment in a county jail not to exceed six months, or by a fine of not more than one thousand dollars ($1,000), or by both that imprisonment and fine, unless the aggregate amount of the claims or amount at issue exceeds nine hundred fifty dollars ($950) in any 12-consecutive-month period, in which case the claims or amounts may be charged as in subparagraph (A).")
14California Business and Professions Code 810 -- False or fraudulent claims; disciplinary action. ("(b) It shall constitute cause for revocation or suspension of a license or certificate for a health care professional to engage in any conduct prohibited under Section 1871.4 of the Insurance Code [that is, California's workers' compensation fraud law] or Section 549 or 550 of the Penal Code.")
See also California Business and Professions Code 6106.5 -- Insurance claims; fraud. ("It shall constitute cause for disbarment or suspension for an attorney to engage in any conduct prohibited under Section 1871.4 of the Insurance Code or Section 550 of the Penal Code.")
See also California Business and Professions Code 1003 -- Employment of runners, cappers, steerers to procure patients; unprofessional conduct. ("(a) Except as otherwise allowed by law, the employment of runners, cappers, steerers, or other persons to procure patients constitutes unprofessional conduct. (b) A licensee of the State Board of Chiropractic Examiners shall have his or her license to practice revoked for a period of 10 years upon a second conviction for violating any of the following provisions or upon being convicted of more than one count of violating any of the following provisions in a single case: Section 650 of this code, Section 750 or 1871.4 of the Insurance Code [that is, California's workers' comp fraud law], or Section 549 or 550 of the Penal Code. After the expiration of this 10-year period, an application for license reinstatement may be made pursuant to subdivision (c) of Section 10 of the Chiropractic Act.")
15 California Insurance Code 1871.5 -- Compensation obtained through fraud. ("Any person convicted of workers' compensation fraud pursuant to Section 1871.4 or Section 550 of the Penal Code shall be ineligible to receive or retain any compensation, as defined in Section 3207 of the Labor Code, where that compensation was owed or received as a result of a violation of Section 1871.4 or Section 550 of the Penal Code for which the recipient of the compensation was convicted.")
16California Insurance Code 1871.4, California's workers' compensation law, endnote 3, above, subsection (b).
17California Insurance Code 1871.9 -- Internet Web site postings; criminal violator information. ("The department shall post all of the following information on its Internet Web site for each person, as defined in Section 19, convicted of a violation of this article, Section 11760 or 11880, Section 3700.5 of the Labor Code, or Section 487 or 550 of the Penal Code, if the violation involved workers' compensation insurance, services, or benefits: (a) The name, case number, county or court, and other identifying information with respect to the case. (b) The full name of the defendant. (c) The city and county of the defendant's last known residence or business address. (d) The date of conviction. (e) A description of the offense. (f) The amount of money alleged to have been defrauded. (g) A description of the punishment imposed, including the length of any sentence of imprisonment and the amount of any fine imposed. The information required to be posted under this section shall be maintained on the department's Web site for a period of five years from the date of conviction or until the department is notified in writing by the person that the conviction has been reversed or expunged [pursuant to California's expungement laws].")
18California Penal Code 549 PC, endnote 3, above.
See also California Insurance Code 1871.4, California's workers' compensation fraud law, endnote 3, above.
19Please feel free to contact our Nevada criminal defense attorneys Michael Becker and Mike Castillo for any questions relating to Nevada's workers' compensation laws. Our Nevada law offices are located in Reno and Las Vegas.