As an employee in California, you are exposed to many risks at your workplace. Your employer understands this and has a legal obligation to purchase worker’s comp insurance to provide coverage in the event of on-the-job injuries or illnesses. Worker’s comp coverage adopts a no-fault system, meaning you do not need to prove negligence to obtain damages. If the injuries are work-related, you receive compensation. The insurance provides coverage for lost income and medical expenses.

However, as you file your worker’s comp claim, you could be accused of fraud if relevant authorities suspect your claim is fraudulent. Workers’ compensation fraud is a serious offense that is severely punished, considering taxpayers lose a lot of money while some companies close down. You and your employer could also lose money due to fraud.

Not everybody charged with this fraud is guilty, meaning you could be wrongfully convicted. Therefore, you need to defend against the charges aggressively, and the best way to do this is by consulting Los Angeles Criminal Attorney.

Overview of Workers’ Comp

To precisely understand workers' compensation fraud, it is crucial to understand the meaning of workers’ compensation. Workers’ comp is a state-run type of insurance privately acquired by employers to protect them against liabilities stemming from workplace injuries or illnesses. When your employees obtain injuries working for the benefit of your company, this private insurance program will provide coverage for the following:

  • Medical expenses
  • Temporary disability damages
  • Permanent disability compensation
  • Death benefits

Temporary disability benefits are paid to employees for the lost wages during the period they could not go to work because of the injuries.

When an accident or disease acquired at work or in the line of duty prevents a worker from ever working again, they are entitled to permanent disability damages. The policy pays for the wages an employee could have earned until retirement had they not sustained the catastrophic injuries.

Sometimes, workplace injuries can cause the demise of an employee. When this happens, the spouse, children, or their estate are entitled to death benefits.

Workers’ comp insurance policy will benefit you greatly as an employer because once the insurer pays the injured worker any of these damages, they cannot pursue civil action against you in court.

Furthermore, employees benefit from the scheme because if they can show the injuries were sustained at work or when performing an activity for the employer's benefit, they are not required to prove fault to obtain compensation.

For example, you work for an accounting firm, where most of your time is spent at the office desk. The firm has furnished the office with furniture. Nonetheless, the seats provided are not very comfortable to sit on the whole day, so you decide to purchase yours that is more comfortable. Sadly, one day as you are working, the seat breaks and causes you to fall, sustaining serious back injuries that require extensive treatment and several days off work.

Under the circumstances, the accident is your fault because you are the person that refused to use the seats provided by the employer and opted to purchase yours. Nonetheless, you are still eligible for workers' compensation benefits because it adopts a no-fault system. The insurance company will pay for your medical treatment, physiotherapy, and lost wages.

Executing Fraudulent Worker’s Comp Claims

There are numerous ways of commissioning worker’s comp fraud. Cases of filing fraudulent claims are on the rise and involve all professions, including doctors and attorneys. You fake a work-related injury, then visit a claim mill, usually a medical or referral center known for engaging in these fraudulent schemes. These facilities refer you to a doctor who falsely diagnoses you with a work-related condition. Once you have been diagnosed, the doctor refers you to an attorney involved in the scheme to help you recover fraudulent damages.

Similarly, you can have a genuine claim for workplace injuries, but the medical doctor fraudulently increases the cost of treatment to maximize profits. Other medical practitioners will even treat you for injuries or conditions that do not exist to make more money.

Also, employers engage in fraudulent worker’s comp schemes by lying to an insurer about the sum of employees, giving a false job description of a worker, or misleading an employee about their benefits to deter them from filing a claim.

For example, instead of disclosing to the insurer that the worker in question is a roofer, you can state that they work in the office to reduce the premiums you pay for the workers' compensation coverage.

It is a state requirement that particular employers purchase workers' compensation coverage to help to protect workers in the event of an injury. To comply with these state laws, you must provide the relevant authorities with proof of a valid workers' compensation policy.

It’s not only medical professionals, attorneys, employers, and workers who engage in this fraud. You can be charged with the offense even if you are an insurance company owner or worker. You will be charged with fraud if you make a false statement to deny an eligible candidate workers' compensation benefits.

As an employee, you engage in fraudulent compensation claims by faking your workplace injuries or their severity. Additionally, when you fail to disclose a previous claim, lie a non-work-related injury is job-related, or participate in any illegality when seeking compensation, you will be guilty of fraud charges.

Legal Definition of California Workers’ Comp Fraud

Several statutes define the offense of engaging in fraudulent workers’ compensation claims. These statutes are:

  1. Insurance Code (IC) 1871.4

IC 1871.4 is California's primary statute that addresses workers' compensation fraud. Per the code section, it is illegal for an employer to engage in any fraudulent activity aimed at denying a genuine claim. As an employer, you will face fraud counts in this statute when you prepare or facilitate someone else to make a false claim to deny a worker a legitimate claim for injuries stemming from the job. The law criminalizes submitting or facilitating the submission of purposefully false material statements to support or oppose a claim for workers' compensation reimbursements.

Also, you will be guilty of an IC 1871.4 violation when you aid or collude with at least one person to deny a legitimate claim from an injured worker illegally. Additionally, if you intentionally prepare a false statement about benefits eligibility to prevent an eligible employee from filing a legitimate claim, or if you direct another person to do so, you risk legal repercussions.

  1. California PEN 550

PC 550 highlights various forms of fraud that apply to medical fraud. The section addresses fraud commonly committed by employees. Per PEN 550, it is illegal for you, as an employee, to knowingly prepare or facilitate another individual in preparing a false claim for healthcare benefits covered under the workers' compensation policy coverage.

Purposefully presenting a healthcare claim for treatment services covered under workers' compensation but never used is also a crime. Submitting multiple claims for the same workplace injury or illness also amounts to fraud.

A violation of PEN 550 is not limited only to workers or applicants. This type of fraud is also committed by medical professionals when they submit false benefits claims on their own or work with applicants to do so. If you are a medical practitioner or healthcare worker engaging in this fraud, a conviction will result in the temporary or permanent loss of your practicing license.

  1. California PEN 549

You will face charges for PEN 549 violations if you are a worker or an employer who accepts or solicits business from an individual or organization. You will face these charges if you know the person or company intended to engage in workers' compensation fraud.

People commonly charged under this statute include doctors, chiropractors, or medical professionals who obtain kickbacks to aid fraudulent claims.

Workers’ Compensation Elements

Just because you have been accused of workers' compensation fraud does not mean you are guilty. The prosecutor has the burden of proving beyond a reasonable doubt that you engaged in a crime. To earn a conviction, the prosecutor must prove the following:

  • You made a false, lacking, or fraudulent statement or representation
  • You knew your claim was false
  • You planned to obtain financial benefits by swindling the compensation scheme

The benefits the prosecutor needs to show you were obtained by cheating the program are:

  • Medical expenses compensation
  • Temporary and permanent disability compensation
  • Death benefits

The prosecutor is not interested in proving the negligence of the person who caused the injuries because workers' compensation is a no-fault system. However, they must show that your claim is untrue because it was not made while performing duties for the employer's advantage at work or elsewhere.

The declaration made on the application forms to receive benefits serves as the necessary proof in this situation. Also, the prosecutor needs a medical report and expenses, X-ray outcomes, and evidence of lost wages to prove you are guilty.

The prosecutor will prove that you made a false representation in the application forms if:

  • You fake onsite injury or illness
  • Your injury is non-work related
  • You lie about the extent of the injuries
  • Fail to divulge an injury you obtained in the past
  • Deny that you have been previously injured
  • Obtain compensation from more than one employer
  • Double dipping, whereby you continue working while receiving workers’ comp

The majority of worker's compensation claims are determined by your intent when you submitted your application and whether or not you provided a true or complete statement or representation. The prosecution must establish that you deliberately intended to gain unfair advantages from the scheme, which was not an accident. Once more, they must demonstrate that the false information you provided was untrue or deficient and could have had an impact on whether the claim would be approved or what damages would be awarded.

For example, you and your friends play rugby every day after work. One day, you fall while playing, sustaining severe shoulder injuries. The next morning, you report to work and pretend that the injury occurred due to a slip and fall at the workplace to obtain workers' compensation benefits. Your actions amount to fraud because you lied that an injury obtained elsewhere is work-related.

The statement the prosecutor refers to during prosecution includes the following:

  • An oral or jotted statement by the claimant
  • A notice indicating the time of the injury
  • Proof that demonstrates or shows the harm sustained
  • Invoice or bill for services you procedure following the illness or injuries stemming from work
  • Proof of payment for the procured services
  • A detailed medical report
  • Test or X-ray results
  • Any other proof of loss injury, or expenses

Assume you are a waitress at a local bar. One day, while serving a customer, you slip on a wet floor and suffer back injuries. You visit your physician for a medical examination, and they recommend physiotherapy. Luckily, your spouse is a physiotherapist, and they offer the services for free. Nonetheless, they suggest you can make money by overbilling for the services provided.

With your consent, the spouse submits the invoice for the services offered. Under IC 1871.4, the invoice is a statement or representation. And since it is false and intended to obtain more benefits than you deserve, you can be charged with and convicted of defrauding the workers' compensation scheme.

Workers’ Comp Fraud Penalties

A charge for workers' compensation fraud is commonly filed as a misdemeanor or a felony. The outcome depends on the specifics of your case, the amount of the claim, and your criminal history. Besides, the judge imposes penalties per the statute you are accused of violating.

IC 1871.4 Violation Penalties

As an employer charged with fraud under this statute, the prosecutor can file misdemeanor or felony counts because the offense is a wobbler. If the preferred charge is a misdemeanor, a conviction is punished as follows:

  • At most one year in jail
  • Misdemeanor probation
  • Monetary court fines of no more than $150,000 or double the defrauded amount, whichever is higher
  • Complete restitution to the entities that incurred losses due to your crime

On the other end, a felony attracts:

  • Three to five years of formal probation
  • 24, 36, or 60 months of jail incarceration
  • The exact monetary court fine as those of a misdemeanor
  • Full restitution of the affected entities

PEN 550 Fraud Penalties

Both workers and healthcare professionals commit a PEN 550 violation. When prosecuted as a misdemeanor, fraud attracts:

  • A maximum of one year in jail
  • Informal probation
  • Monetary court fines of no more than $10,000

A felony PC 550 violation attracts the following legal penalties:

  • 24, 36, or 60 months in jail
  • Felony probation
  • A $50,000 court fine or two times the amount you are accused of defrauding

It would be best to understand that fraud under PEN 550 is usually a misdemeanor when the fraud committed over twelve months is worth $950 or less. Under these circumstances, a conviction attracts a jail sentence of up to half a year or a monetary fine of up to $1,000. If the fraud money exceeds $950, the offense is a wobbler.

PEN 549 Fraud Penalties

When healthcare professionals solicit, accept, or refer businesses knowing that an individual intends to defraud the workers' compensation scheme, they are charged under this statute. A first-time PEN 549 violation is a wobbler, while a second or subsequent offense is a felony. The punishment for a misdemeanor includes:

  • Twelve months in jail
  • Court fine of $50,000 or twice the fraud amount

As a felony, a PC 549 conviction is punishable by 16, 24, or 36 months in jail. Also, the court can impose a fine equal to that of a misdemeanor sentence.

Healthcare Professionals' Disciplinary Action

When medical practitioners like nurses, doctors, or pharmacists are accused of aiding or conspiring to defraud the workers' compensation scheme, disciplinary action is taken. If you are found guilty of overbilling or billing for healthcare services that weren't provided, you will be subject to professional disciplinary action as a healthcare worker. The corrective action involves permanent or temporary license suspension or revocation.

Civil Consequences

You can be subject to civil penalties for fraud in addition to the court's fines, imprisonment, and restitution. Usually, the circumstances that lead to arrest and criminal charges for workers' compensation fraud also expose you to civil consequences.

The possible civil penalties include the payment of a monetary fine ranging from $4,000 to $10,000 for each false claim for workers' compensation benefits.

Similarly, the court can impose a monetary fine of three times the medical treatment or legal expenses incurred by the workers' compensation insurer for your offense.

Lastly, if you have a prior conviction for workers' compensation fraud under IC 1871.4 or PEN 549, the court will impose a civil fine of $4,000. The fine is imposed for each service paid for by the insurer through a false claim.

Legal Defenses

The punishment for workers' compensation fraud is severe because it involves hefty fines, restitution, jail time, and professional discipline. Even if you are wrongfully accused, you risk these penalties, hence the need to take these charges seriously. At the Los Angeles Criminal Attorney, we are eager to investigate your case and devise effective defense strategies in order to achieve a favorable outcome. Some of the defenses your attorney can use to defeat the charges are:

  1. You Lacked Fraudulent Intent or Knowledge

Like in other fraud cases, intent is a key element of the case that the prosecutor must establish. The prosecution must demonstrate that you were aware you were making a false statement and that you knew it was done to obtain unauthorized workers' compensation benefits. In light of this, you are not guilty of fraud if a secretary or assistant prepared the documents on your behalf and was not aware that the statements were false.

Additionally, you can claim that your employer gave you the information to use on the statements and assigned you the task of preparing the documents. Under the circumstances, you will face charges with your employer. However, your attorney at Los Angeles Criminal Attorney can contend that you were unable to confirm the veracity of the statements you were drafting, which would result in the count being reduced or dismissed.

Consequently, even if you were aware that some information in the statements submitted with your application forms was incomplete or false, you can argue that it was an honest mistake and you never intended to defraud the workers' compensation scheme. When filling out application forms for a claim, mistakes are frequently made; your attorney can use this to your advantage.

  1. Inadequate Evidence for a Conviction

The evidence submitted in workers' compensation fraud is technical, difficult to decipher, and often contradicts the medical report. Prosecutors can take advantage of this complexity and falsely accuse you of fraud. The evidence against you can seem credible, considering its sheer volume. Still, if you take the time to point out the facts, you will be surprised that they are insufficient to satisfy the evidentiary standard beyond a reasonable doubt.

Since the law guards against wrongful conviction, the court permits your attorney to assess the evidence used against you and determine its reliability. A lawyer will find flaws in the presented technical evidence and use them to convince the jury that the evidence against you is insufficient to support a conviction. The jury will dismiss the case against you if the evidence is insufficient. Alternatively, the prosecutor can agree to a plea bargain where you plead guilty to a lesser offense.

  1. The Fraudulent Statement Was Not “Material”

Your lawyer can contend that even though you provided false information to support your claim, it had no bearing on the decision to approve it, or could not have increased the benefits granted, so it did not constitute fraud. For you to be found guilty, the false information you provide must be pertinent to approving your claim or increasing the claim amount.

Find an Experienced Fraud Crimes Attorney Near Me

Employees, business owners, and medical practitioners can all face workers' compensation fraud charges. If you face the charges, you should know that a conviction attracts severe consequences. However, a criminal charge does not necessarily mean you will be sentenced. The Los Angeles Criminal Attorney can help you defeat the charges. Call us today at 424-333-0943 for a free case evaluation if you are accused of these counts.