Workers' compensation insurance is a no-fault system in California. To receive workers' compensation benefits for an on-the-job injury, an injured employee does not require proving that an injury was another person’s fault. Apart from the medical costs that injured employees incur, some employees who suffer injuries at work are also eligible to recover a portion of lost wages resulting from the injuries. Unfortunately, workers’ compensation insurance is prone to fraud. This is why California established the Workers’ Compensation Fraud Program. The legislature made workers’ compensation fraud a felony that could lead to severe punishment. You should never try to fight workers' compensation fraud charges alone. If you face workers’ compensation fraud charges, the Chula Vista Criminal Attorney can create a convincing defense against your charges.

Workers’ Compensation Fraud In California

Fraudulent workers’ compensation claims can be an enticing target for criminals. Workers’ compensation insurance fraud often happens in complex schemes that require lengthy and complicated investigations. Workers can exaggerate or even fabricate injuries. White-collar criminals, including lawyers and doctors, entice, pay, and conspire with others to defraud the system by over-treating, creating exaggerated or false claims, and overprescribing addictive and harmful drugs. Insurers pick up the tab, passing the expenses on to the public, policyholders, and taxpayers.

In California, the Workers’ Compensation Fraud Program was established in 1991. The workers' compensation fraud program funding comes from California employers who lawfully need to be self-insured or insured. The legislation started the Fraud Assessment Commission to ascertain the level of assessments for fraud investigation and prosecution of workers' compensation insurance fraud. The legislature advises the insurers to report suspected fraud and establish a way for funding enforcement and prosecution acts.

The workers’ compensation fraud in California involves providing misleading or false information to obtain benefits you are not lawfully eligible for. The activities in California that are regarded as workers’ compensation fraud include:

  • Soliciting, accepting, or referring any business from a person, knowing that the person intends to commit workers’ compensation fraud
  • Knowingly presenting or making a fraudulent or false material statement for either denying or obtaining workers' compensation benefits.
  • Submitting a claim for a health care benefit covered by workers' compensation that was not used
  • Making a fraudulent or false statement about eligibility for benefits to discourage injured workers from claiming benefits
  • Preparing or submitting multiple claims for payment of a health care benefit covered by workers’ compensation insurance, all for the same injury.
  • Knowingly aiding, abetting, or participating in a conspiracy to commit workers' compensation fraud.

Statutes In California That Cover Workers’ Compensation Fraud

There are various statutes in California that outline workers’ compensation fraud. They include:

Referring Or Soliciting Auto Insurance Fraud Business — Penal Code 549

As outlined by California PC 549, a worker or a business owner could commit workers’ compensation fraud by:

Soliciting or referring any form of business to or from an entity, with the knowledge or a reckless disregard for whether the entity or the individual intends to commit workers' compensation fraud. For example, this form of workers' compensation fraud is often charged against chiropractors, doctors, or other healthcare professionals who engage in kickbacks or commercial bribery to take advantage of the workers' compensation system. 

This law applies to any:

  • a person acting in their capacity
  • firm
  • a person acting in their capacity as a public or private employee
  • corporation
  • association
  • partnership

It is a wobbler crime in California for anyone to violate Penal Code 549. The prosecutor could charge you with a misdemeanor or a felony. If the prosecutor charges you with a misdemeanor, you could face the following penalties:

  • a fine that does not exceed $50,000 or twice the amount of fraud, whichever is greater
  • a jail term that does not exceed one year in a county jail
  • a misdemeanor or summary probation

If the prosecutor charges you with a felony, you could face the following penalties:

  • a fine that does not exceed $50,000 or double the amount of the fraud, whichever is greater
  • formal or felony probation
  • a jail term of 16 months, two years, or three years 

Your second or subsequent charge for violating PC 549 will be an automatic felony, and you will face the above felony penalties.

Defenses To Penal Code 549 Charges

If you face charges for violating the California PC 549, you can fight the accusations by raising a legal defense. A good defense could always have your charge dismissed or even reduced. Some of the defenses you could present include:

Coerced Confession

According to California law, the law enforcers are not supposed to use overbearing measures to coerce a confession. However, if you can prove that the law enforcers coerced you into a confession, the court could exclude the confession from the evidence or drop the case altogether.

No Knowledge Of Submission

Under Penal Code 549, you are only guilty of violating this law if you act with the knowledge that a business or person will submit a fraudulent insurance claim. Therefore, it is often a lawful defense to prove that you did not act with this requisite knowledge.

Falsely Accused

In California, it is common for people to face criminal charges based on false accusations. Many people are falsely accused out of anger, jealousy, and revenge. It is a lawful defense for you to allege that someone else accused you falsely of violating Penal Code 549.

Healthcare Fraud — Penal Code 550

In California, various forms of workers ’ compensation fraud defined under Penal Code 550 overlap with California healthcare fraud. For example, this statute makes it an offense if you do the following:

  • Knowingly present multiple claims for payment of the same workers' compensation healthcare benefit with intent to defraud.
  • Knowingly make or cause to be made any false or fraudulent claim for payment of a healthcare benefit covered by workers’ compensation insurance.
  • Knowingly submit a claim for a healthcare benefit covered by workers’ compensation insurance that was not used by the claimant.

 Employees or applicants can commit this form of workers’ compensation fraud. However, at times, doctors and other medical experts who offer treatment covered by workers’ compensation insurance can also commit this offense. For instance, a patient could submit multiple insurance claims for one procedure. On the other hand, a doctor could bill for unnecessary services or engage in upcoding where the doctor bills for more expensive medical services than the ones a patient received.

The state and federal government agencies are mandated to investigate California healthcare fraud cases. The agencies that are involved include:

  • The Drug Enforcement  Administration (DEA)
  • State Healthcare Fraud Prevention Units
  • The Federal Bureau of Investigation (FBI)
  • State Medical Fraud Control Units
  • The Department of Health and Human Services Office of Inspector General (HHS-OIG)
  • Local Medicare and Medicaid services departments 
  • The Department of Justice (DOJ) Healthcare Fraud Strike Force
  • A state’s attorney general office

Taxpayers in California are advised to report fraud by utilizing the HHS-OIG fraud hotline. 

Usually, you can know that the federal or state agencies are investigating you for fraud through:

  • Civil investigative demand
  • Search warrant
  • Grand jury subpoena
  • Grand jury target letter
  • Grand jury subject letter

Penalties For Penal Code 550 Charges

Under PC 550, workers' compensation fraud concerning healthcare benefits is a wobbler offense. The possible misdemeanor penalties you could face include:

  • a fine that does not exceed $10,000
  • a misdemeanor probation
  • a jail term that does not exceed one year in a county jail

The possible felony penalties include:

  • a fine that does not exceed $50,000
  • felony probation
  • a jail term of two, three, or five years in a county jail

The exception could be if the fraud amounts to $950 or less. In this case, workers’ compensation fraud Penal Code 550 is often charged as a misdemeanor. The possible punishment you could face includes:

  • A fine that does not exceed $1,000
  • A jail term that does not exceed six months in a county jail

Defenses To Penal Code 550 Charges

Your criminal defense attorney could draw upon various legal strategies to help you challenge accusations of healthcare fraud. The common defenses you could use include:

Violation Of A Constitutional Right

Often, you can contest a fraud case by proving that the law enforcers violated one of your constitutional rights. For instance, perhaps the police did the following:

  • Failed to read your Miranda rights
  • Conducted an illegal search or seizure
  • Coerced a confession
  • Stopped or arrested you without probable cause

The court could drop or reduce your healthcare fraud charges if the above allegations are true. 

Lack Of Knowledge

You are only guilty of this crime if you act knowingly. You can't face the charges for this fraud unless you know that the claim you submitted was fraudulent or that you prepared a document to submit with a false claim. You can allege that you did not act with this knowledge.

No Intent To Defraud

You must act with criminal intent to be guilty of health care fraud. If you face charges for this crime, you will only be guilty if you intend to defraud a medical insurance company for some type of healthcare benefits. Therefore, it is often up to you to prove that you did not act with fraudulent intent. You could have committed the fraud by accident.

Insurance Code 1871.4

Insurance Code 1871.4 is the primary workers' compensation fraud law. Under this law, workers’ compensation fraud is defined as follows:

  • Making or causing to be made a fraudulent or false statement concerning entitlement to compensation benefits, intending to deter an injured worker from claiming the benefits of pursuing a claim.
  • Making or causing to be made a fraudulent or false material statement or representation to obtain or deny any workers' compensation benefits.
  • Knowingly aiding and abetting or conspiring with someone else to commit any act of workers’ compensation fraud.
  • Presenting or causing to be presented a  fraudulent or false written or oral material statement in support of or in opposition to a claim for workers’ compensation benefits.

''Workers' compensation'' is a private insurance policy employers must pay. If an employee suffers injuries on the job, the insurance company will pay benefits for the following:

  • Death benefits to the children, spouse, or other dependents if the employee dies from a work-associated injury or illness
  • Medical care
  • Permanent disability to cover lost wages if the employee is not able to go to work again after the accident
  • Temporary disability payments to cover lost wages if the employee is unable to work while recovering

A ‘’statement or representation’’ constitute the following:

  • Proof of medical-legal expenses
  • An oral or written statement or representation by the claimant
  • X-ray or test results
  • A notice
  • Hospital or doctor records
  • Proof of injury
  • Payment for services
  • A bill for services
  • Any other proof of loss, injury, expense, or payment

A statement is regarded as ''material'' if it presents the message on subjects that:

  • Could bear directly and significantly on the investigation and evaluation of the claim
  • Is reasonably relevant/significant  to the insurer’s  claim investigation

A fraudulent or false statement is any misleading statement or concealment of a material fact or statement intended to make someone act to their detriment. Knowingly concealing a material fact is regarded as a form of a fraudulent or false statement or representation. Under workers’ compensation law, fraudulent or false statements can take various forms:

  • Illegally working while receiving workers’ compensation benefits
  • Faking an injury
  • Collecting benefits for the same injury from more than one employer
  • Lying about the extent of an injury
  • Denying having filed previous claims
  • Claiming that a non-work-associated injury is work-associated
  • Failing to disclose a prior injury

Employers can also make fraudulent or false statements or representations, thus violating Insurance Code 1871.4 workers ’ compensation frauds. Some forms of workers’ compensation fraud committed by employers include:

  • Lying to an employee about the extent of benefits to discourage them from submitting a claim
  • Lying to their insurer regarding the number of workers
  • Misrepresenting  a worker’s job duties

Penalties For Insurance Code 1871.4 Charges

Workers’ compensation fraud is a wobbler crime under Insurance Code 1871.4. The prosecutor could charge you with a misdemeanor or a felony, depending on your criminal history and the circumstances of the charges. If the prosecutor charges you with a misdemeanor, you could face the following penalties:

  • Restitution to any parties who were the victims of the fraud
  • Misdemeanor or summary probation
  • A fine that does not exceed $150,000 or double the amount of fraud, whichever is greater
  • A jail term that does not exceed one year in a county jail

If the prosecutor charges you with a felony, you could face the following penalties:

  • Restitution to any parties who were the victims of the fraud
  • Felony or formal probation
  • A fine that does not exceed $150,000 or double the amount of the fraud, whichever is greater
  • A jail term of 2, 3, or 5 years in jail as per California’s realignment program

Professional Discipline And Workers’ Compensation Fraud In California

California pharmacists, doctors, and nurses facing allegations of being involved in workers’ compensation fraud need to be worried regarding professional licenses. For doctors in California, any criminal charge for a crime that is ‘’substantially associated’’ with a doctor's duties, qualifications, or functions can trigger professional discipline. Several forms of workers' compensation fraud, for instance, billing for service not rendered, could fall into this class. Nurses can sometimes suffer license revocation and discipline because of a workers' compensation fraud charge. A pharmacist license could also be revoked if workers' compensation fraud is charged.

Civil Punishment For Workers’ Compensation Insurance Fraud

In California, the law imposes hefty civil fines for some forms of workers’ compensation fraud. The fines apply to defendants who do the following:

  • Knowingly participate or operate in a service that, for-profit, refers patients to obtain medical or medical-legal services covered by workers' compensation
  • Willfully misrepresent any fact to obtain workers' compensation insurance at a lower rate than the proper rate. Most employers commit this form of workers’ compensation fraud
  • Knowingly solicit, offer, accept, pay, or receive any illegal commission, rebate, refund, or other compensation for referring or soliciting clients for services covered by workers’ compensation insurance
  • Present or cause to be presented any knowingly fraudulent or false statement in support of, or in opposition to, any claim for workers' compensation benefits for either obtaining or denying those benefits
  • Knowingly conspire with or assist someone else to do any of the above

Any of the above accusations could lead to the following punishment:

  • An assessment of up to three times the amount of the medical treatment  or medical-legal expenses paid by a workers’ compensation insurer because of fraud
  • A civil penalty of at least $4,000 and $10,000 for each illegal claim for compensation

Additionally, if the defendant has a previous felony charge for workers’ compensation fraud according to Insurance Code 1871.4 or Penal Code 549, the defendant could face an additional civil punishment of $4,000. This penalty could be for each service or item concerning the fraud.

Defenses Against Workers’ Compensation Fraud Charges

If you face workers compensation fraud charges in California, you and your criminal defense attorney could consider the following defenses:

No Prove That You Committed Workers’ Compensation Fraud

Most California workers' compensation insurance charges constitute a complicated set of facts. Typically, these facts include highly technical and, at times, conflicting doctor's reports, medical diagnoses, and other proof that can be hard for you and juries to understand. However, the prosecutor cannot capitalize on this complexity and ambiguity to charge you unjustly. A competent attorney in criminal cases can single out the weaknesses in the prosecution's case and help you create the most substantial proof of your innocence.

You Did Not Act With Fraudulent Intent Or Knowledge

Under California law, you are not guilty of fraud unless you acted with fraudulent intent or knowledge that a particular behavior or statement was fraudulent or false. At times, your careless mistake could be regarded as a possible fraud by an insurance investigator and reported to the authorities. The prosecutor has the burden to provide sufficient evidence that you were aware you were submitting a fraudulent or false statement and did not simply make a mistake. If you hire an experienced criminal defense attorney, the attorney could be able to cast doubt on these allegations and lead to a not-guilty verdict in a jury trial or have your charges dropped.

Offenses Related to Workers' Compensation Fraud In California

Perjury — Penal Code 118

You could be guilty if you deliberately give false information while under oath. In addition, you could face charges for both perjury and workers' compensation fraud if you knowingly lie while being deposed or in a formal declaration. Often, perjury is charged as a felony crime that could lead to a jail term of two, three, or four years. 

Forgery — Penal Code 470

Forgery in California constitutes engaging in the following with intent to commit fraud:

  • Faking, altering, or presenting as genuine a false financial document
  • Signing another person’s name
  • Changing or falsifying a legal document 
  • Faking a seal or someone else’s handwriting; for instance, if you fake a physician's signature on a report about an injury and use that report to receive workers' compensation benefits, you could face charges for both forgery and workers' compensation fraud.

Forgery is charged as a wobbler crime in California. You could face a jail term of one year in a county jail for a misdemeanor. You could also face a jail term of 16 months, 2, or 3 years for a felony conviction.

Find A Criminal Defense Attorney Near Me

You should consult a competent criminal defense attorney for guidance if you face workers' compensation fraud charges. A skilled criminal defense attorney with experience understands the punishment that could result from a workers' compensation fraud conviction. Unfortunately, many innocent persons in California face false accusations of fraud because of over-ambitious insurance investigators, even if they have actual injuries that keep them from work. At Chula Vista Criminal Attorney, we understand that you do not have to plead guilty just because you were arrested. With decades of experience, we will ensure you receive a fair judgment. Contact us at 619-877-6894 and talk to one of our attorneys.