When you are employed, your employer understands the risks that come with the job. This makes your employer buy workers’ compensation insurance to cover and compensate you should you be injured while working. Workers’ Compensation fraud is a type of insurance fraud connected to the benefits you would receive if injured at work.
Accidents at the workplace happen, resulting in injuries that require medical treatment and sometimes different forms of compensation. When this happens, an employee can seek damages from their employer or their insurance provider.
Unfortunately, as you claim your damages, you may be accused of fraud. This happens if you are suspected of presenting fraudulent claims concerning your injuries. This is an offense severely punished in California and requires an aggressive defense. If charged with this offense, contact the San Jose Criminal Attorney Law Firm to help you fight these allegations.
Defining workers’ Compensation Fraud According to California Law
In California, several laws describe fraud in workers’ compensation. Understanding what workers’ compensation fraud entails is critical to understand what each of these laws entails.
Insurance code (IC) 1171.4
This statute is the main one that discusses workers’ compensation fraud in California. According to this law, you are guilty of compensation fraud as a worker when you do one of the below:
- Making or facilitating the making a fraudulent or false material required for you to obtain workers’ compensation benefits or denying them
- Presenting or facilitating a statement that you know is fraudulent or false to gain workers’ benefits or deny them. The statement can be oral or written
- Knowingly helping and facilitating for another person or colluding with them to carry out a workers’ fraudulent compensation act
- Making a fraudulent or false statement on the benefits entitlement, to discourage or dissuade the deserving worker from seeking their damages or claim
While defining this law, various terms have been used that need a better understanding. Here, we discuss these terms in greater detail to enable a clearer understanding of the law.
This is a type of insurance policy obtained privately by employers to protect them against work-related liabilities. If you sustain injuries at your workplace or while working, the cover compensates you for:
- Cost of medical care or treatment
- Temporary disability compensation. This is the amount you are compensated if, due to the injury, you cannot work until you heal from them
- Permanent disability benefits. Sometimes injuries at the workplace or during work can be catastrophic, rendering you unable to work for the rest of your life. If this happens, the workers’ compensation policy pays you to cover the wages you lose when unable to work.
- Death compensation or benefits. Accidents can result in the untimely death of a worker or an illness that is work-related. In this case, the surviving family receives compensation for their death.
If you sustain injuries at your workplace, the law limits you to seek compensation through the workers’ compensation policy, but not to sue your employer. The policy on workers’ compensation adheres to the no-fault system. Under the system, if you are injured at work or suffer an illness because of the work environment, the law does not require you to prove fault to receive your compensation.
For instance, you work at a research company where part of your work is to type research findings. The company has a furnished office, meaning it provides seats, among other furniture. However, you feel their seats are uncomfortable for your type of work, and you decide to buy a seat that you feel is comfortable. Unfortunately, as you are working one day, the seat gives in and breaks, sending you to the floor. The impact of the fall is so severe your back is hurt, and you require a few days of physiotherapy and to recover.
Arguably, the accident is your fault because you refused to use the seats provided by your employer. However, under a workers’ compensation policy, the injury is compensable because of the no-fault theory. The insurance provider must pay you damages you incur following therapy, medical treatment, and the lost income.
Representation or Statement
A representation or statement comes in various ways that include:
- A written or oral representation or statement by you as the claimant
- A notice to indicate an injury occurred
- Anything that proves you sustained the injury or showing the injury
- An invoice or bill for the services you have procured out of the injury
- Evidence that you paid for the said services
- A doctor's or hospital's report
- Results from tests carried out or from the medical procedures such as X-rays conducted
- Any proof that shows you suffered the injury and the losses incurred and also any payments you made regarding the injury
For instance, you work at a restaurant as a waitress. One day, as you serve a client, you accidentally slide on the wet floor sustaining injuries to your back and leg. From the injuries, a doctor recommends physiotherapy. Your friend Charles is a physiotherapist and offers the services to you. You proceed to seek compensation for the physiotherapy treatment you need.
However, your friend tells you that you can make money and share it out of the treatment. He advises that you inflate the bills by claiming you came for more therapy sessions than you did.
With your full knowledge, Charles submits the bills to receive payments that he hopes to share with you. These bills are statements proving treatment according to IC 1871.4. In this case, you and Charles are violating the law and can be convicted on workers’ compensation fraud charges.
Material Representation or Statement
A statement is said to be material if it presents or communicates on issues that are:
- Relevant to the investigation by the insurer on the claim or demand and
- Could influence significantly to the valuation and investigation of your claim
For instance, years back, you were involved in a traffic accident that left your shoulder injured. You received treatment for it, but sometimes, you have occasional discomfort. While at work one day, you slide, and the same shoulder is injured again. You apply to receive compensation because you suffered the misfortune at work. You neglect to tell the doctor or insurance provider that you had earlier sustained an injury on the same shoulder during the whole process, but the injury was not work-related.
If the insurance provider had known of the past injury, it would have been a basis for them to decide the benefits they received. The knowledge can also result in denying your claim if the prior injury contributed to your current discomfort.
Therefore, it is material for the insurance provider to know about your prior injury while conducting their investigation before awarding your benefits. Withholding this critical information from the insurer amounts to workers’ compensation fraud, which you can be convicted for.
Fraudulent or False
A statement is considered falsified or fraudulent if the facts therein are untrue. If you conceal any material facts discussed above, intending to persuade an individual to act in a bad manner, it is fraudulent.
Fraudulent or false statements are in many forms in workers’ compensation cases. You can also be accused of making fraudulent or false statements when:
- You fake an injury
- Lying on how extensive the injury is
- Claiming an injury you received from somewhere else is a work-related one
- Declining to disclose an injury you sustained in your past
- Denying that you previously filed claims
- Receiving damages for the injury from another employer's insurance by claiming the injury happened at their workplace
- Unlawfully continuing to work while you continue to claim compensation benefits
For instance, every Wednesday after work with your friends, you are an employee who plays football.
One day during your game, you fall and injure your shoulder. The following day you go to work and pretend to have sustained an injury to earn compensation benefits. This act is unlawful and represents workers’ compensation fraud because he passed non-work-related injury as an injury from the workplace.
Another example of worker compensation fraud would be when an employee is injured and fakes the extent of their injury. In this case, Grace works as a driver for a particular company. While carrying on her duties, she sustains injuries and claims she needs a walker to move around and a caregiver for primary care. Because she was injured at work, the insurance provider gives her medical benefits to last her a lifetime and pays for the in-house caregiver.
Over time, rumors surface that she is well and enjoying life contrary to her claim, and further, she works at a different company. On hearing this, the insurance provider launches investigations where she is videotaped working as a driver in another company and even partying.
In both these cases, you and Grace are guilty of workers’ compensation fraud in California. If prosecuted, you will need an experienced attorney representing you to avoid the harsh penalties.
Can Employers Commit Workers’ Compensation Fraud?
Yes. Employers can be prosecuted for violating IC 1871.4. Employers commit this offense in various ways that include:
- Lying to the insurance provider about the employees they have
- Misrepresenting the job description of employees
- Misleading a worker about their benefits to dissuade them from making claims if they sustain an injury
For instance, you own a restaurant, and Paul is your employee that falls and breaks their leg at the restaurant. Paul is relatively new to the restaurant compared to other employees. Because of the injury, Paul has to incur medical expenses and even miss work for some time as he recovers from the injury. In this case, Paul is entitled to workers’ compensation benefits, but you discourage him from claiming that being a new employee, he doesn’t yet qualify under the policy you have.
You do this because with every claim, your insurance premiums increase, and you want to avoid that. If you do this, you are guilty of violating IC 1871.4 in California.
PEN 550 in California
PEN 550 is the law that describes various workers’ compensation fraud types overlapping healthcare fraud in California. Under this statute, you commit a crime when you:
- Knowingly or intentionally make or facilitate the making of a fraudulent and false claim to receive payment from healthcare benefit that is also covered under workers’ compensation policy
- Knowingly and intentionally present a claim for healthcare benefit while it is already covered under workers’ compensation and the claimant never used it
- Knowingly and intentionally present several claims for the same issue to earn more benefits with you intend to defraud
Under this type of compensation fraud, various players can commit the offense. Employers, employees, doctors, and other medical practitioners can commit this offense.
For instance, Luke is a medical doctor who provides services to persons who sustain injuries from their workplace. Unknown to the patient, he submits inflated bills to the workers’ employer's insurance provider by claiming to have provided some services, yet it is not valid. He aims to defraud the insurance company, which is fraud and a criminal offense under PEN 550. Doctors that find themselves charged with this offense risk standard legal penalties if convicted and losing their license to practice.
PEN 549 in California
If you own a business or are an employee, you can be charged with violating PEN 549 in California. Under this law, you will be prosecuted for committing workers’ compensation fraud when you:
- Solicit, accept or refer business to an entity or person
- Knowingly or with careless disregard of whether the entity or person plans to carry out a workers’ compensation fraud
In most cases, fraud under PEN 549 is prosecuted against chiropractors, doctors, or health care practitioners that commit bribery or kickbacks designed to profit or benefit from workers’ compensation schemes.
For instance, a pharmaceutical company has a particular drug it has developed to manage chronic pain. Their representative pays some doctors kickbacks if they prescribe the drug to their patients, a majority receiving benefits under the workers’ compensation scheme.
The pharmaceutical company aims to earn handsomely from the sale of a particular drug. If this is found out, all the doctors that accepted kickbacks to push the drug are guilty of fraud under PEN 549. The reason for this charge is their reckless reference of business to the pharmaceutical company without caring that they were committing fraud under the workers’ compensation scheme.
Penalties If Convicted for Workers’ Compensation Fraud
If you commit workers’ compensation fraud, the offense is a wobbler under IC 1871.4. You will be prosecuted on felony or misdemeanor charges based on the offense's circumstances and your criminal background. If you are prosecuted and convicted on misdemeanor charges, the penalties you are likely to receive include:
- Summary probation lasting between three and five years
- A year of county jail incarceration or less
- A fine not exceeding $ 150,000 or two times the amount defrauded, whichever amount is greater of the two
- Restitution to the entities that suffered from the offense
If you face felony prosecution and receive a conviction, the likely penalties include:
- Formal probation lasting between three and five years
- County jail incarceration according to the realignment program for two, three, or five years
- A fine not above $ 150,000 or two times the fraud amount, depending on the greater one of the two
- Compensating the parties that suffered from the fraud
Penalties for PEN 550
If the fraud was committed concerning healthcare benefits, according to PEN 550, the offense is a wobbler. A misdemeanor conviction will earn you:
- A summary probation
- A year of county jail incarceration or less
- A fine not exceeding $ 10,000 alongside the jail time or instead of it
If the offense is prosecuted as a felony, the likely penalties include:
- Formal probation ranging from three to five years
- County jail time lasting two, three, or five years
- A fine not exceeding $ 50,000 or two times the fraud amount, whichever is higher. This is charged in addition to or instead of the jail time sentence.
Under this statute, an exception exists if the sum of the defrauded amount is not above $ 950. This amount includes a total sum of all the claims made in twelve months consecutively. In this case, the offense under PEN 550 is a misdemeanor with a penalty of six months or less county jail time. You can be ordered to pay a fine of $1,000 on top of the jail time or instead of it.
Penalties for Violating PEN 549
If you violate this law as a first offense, it is charged as a wobbler. A repeat of the crime for a second or other subsequent times makes it a felony. If convicted as a misdemeanor, you serve up to a year in county jail. The court can also ask you to pay $50,000 in fine or two times the defrauded amount, whichever is higher. This fine can be paid in addition to the jail sentence or instead of it.
If the offense is prosecuted under felony charges, you could serve time in prison for sixteen, twenty-four, or thirty-six months. You can also be asked to pay $ 50,000 in fine or two times the defrauded amount, depending on the greater one. The fine, in this case, is paid in addition to or instead of the jail sentence.
Disciplinary Action for Health Professionals Found Guilty of Workers’ Compensation Fraud
Doctors, pharmacists, or nurses accused of this type of fraud will face disciplinary action from their professional bodies. If you are convicted of a criminal offense related to your duties or functions, it always attracts a disciplinary action. The most adverse consequence of a conviction, in this case, is the suspension or complete revocation of your practicing license. If this happens, it means besides the legal penalties you suffer, you will not practice your profession again.
Defenses to Workers Compensation Fraud
In California, workers’ compensation fraud is said to be growing at an alarming rate. This has resulted in insurance providers and law enforcement agencies committing substantial resources to identify and prosecute the offenses.
Unfortunately, this notion has resulted in many individuals being accused wrongly of the offense and earning a conviction if not well represented. If you find yourself charged with this type of fraud, your best course of action is to hire a defense attorney to challenge the allegations. Faced with these charges, your lawyer will study the case and formulate defenses. Some defenses commonly used for this offense include:
Your Actions were not Intentionally Designed to Defraud
For a prosecutor to have you convicted of this offense, they must determine some aspects of the crime. You will not receive a conviction if:
- You never knew a statement you issued or your conduct would be perceived as fraudulent or false or
- You had no fraudulent intent
Careless mistakes often land people in a lot of trouble. If you made a mistake, it could be assumed as intent to defraud when it was not. When this is reported to law enforcement agencies, you face prosecution for an offense you never intended to or knew you were committing.
However, the prosecutor must prove beyond any doubt that you committed the offense knowingly and to defraud the scheme. On the other hand, your lawyer will aggressively work to instill doubt in the prosecutor's case by pointing out that your actions were not intentional, nor did you know they would amount to fraud. If the jury is convinced, your charges are dropped.
Cases involving worker compensation fraud are based on various complicated facts. These facts are often technical and conflict doctor's reports that would be challenging to understand as a defendant or jury. However, the law does not allow prosecutors to take advantage of the ambiguity to have you convicted unfairly.
But, an experienced defense lawyer can find weaknesses surrounding these complex facts and use them to your advantage. If the prosecutor lacks sufficient evidence, the jury will set you free from the allegations.
Find a San Jose Criminal Attorney Law Firm Near Me
Workers’ compensation fraud cases carry severe penalties when one is convicted. Equally, the allegations can be faced on falsehoods and misunderstandings. However, a lack of aggressive defense can have you wrongly convicted or facing harsh penalties that you would have avoided. At San Jose Criminal Attorney Law Firm, we understand these allegations' complex nature and your need for a fair representation. Call our office at 408-622-0204 to discuss and strategize on your defense.