Insurance Code 1871.4 - Workers' Compensation Fraud
Workers' Compensation Fraud is a serious crime in the state of California. It involves, among other things, intentionally misrepresenting or lying about an injury to obtain workers' compensation benefits, such as medical care or lost wages.
This type of fraud violates California Insurance Code 1871.4 and carries potentially steep penalties if you are convicted.
Workers' compensation is insurance that will pay employees for an injury or a disability that occurred in the workplace. Thus, fraud occurs when you receive or attempt to receive payment directly related to a workers' compensation claim you were not entitled to receive.
Insurance Code 1871.4 says, “(a) It is unlawful to (1) Make a knowingly false or fraudulent material statement for the purpose of obtaining or denying any compensation, as defined in Section 3207 of the Labor Code. (2) Present knowingly false or fraudulent written or oral material statements. (3) Knowingly assist, abet, conspire with, or solicit a person in an unlawful act under this section. (4) Make a knowingly false or fraudulent statement regarding entitlement to benefits with the intent to discourage an injured worker from pursuing a claim.”
As noted above in the definition, you can violate California workers' compensation fraud laws in various ways. For example, it's a crime to knowingly make false statements or encourage others to make false statements to receive benefits.
It's also a crime to submit a claim for healthcare treatment for a real injury when the doctor did not treat your injury. Further, it's illegal to submit multiple claims for the same treatment or the same injury. Let's review this state law in more detail below.
What Constitutes Workers' Compensation Fraud?
Generally speaking, compensation fraud occurs when someone provides false or fraudulent information or attempts to manipulate the payment of workers' compensation benefits in an unauthorized manner. Employees, employers, physicians, and others can commit workers' compensation fraud.
Any of the following behaviors are considered a crime under this law:
- Making false or fraudulent statements or representations to obtain or deny workers' compensation benefits;
- Making false or fraudulent statements or representations in support of or opposition to the paying of workers' compensation benefits;
- Making false or fraudulent statements about eligibility to discourage someone from filing a valid workers' compensation claim;
- Assisting or conspiring with others to commit workers' compensation fraud;
- Soliciting others to commit worker's compensation fraud.
What Are Some Examples?
EXAMPLE 1: David trips and falls while working at his job, twisting his ankle. Although his injury is non-debilitating, David lies and claims that the injury is excruciating and prevents him from working.
He collects workers' compensation for medical care and time off work. However, because David has misrepresented the extent of his injuries, he collected more benefits than he was entitled to, and he could be charged with workers' compensation fraud.
EXAMPLE 2: George operates a small trucking company. One of his employees gets injured at work and files a workers' compensation claim.
Fearing that his insurance premiums will go up, George tells his insurance carrier that he is exaggerating the extent of his injuries so that they will deny his claim. As a result, George has made a false statement to get a workers' comp claim denied, and he can be charged with a crime under Insurance Code 1871.4.
EXAMPLE 3: Gina is injured on the job and goes to a physical therapist, Angela, for rehabilitation. Angela agrees to submit inflated claims to workers' compensation for Gina's treatment, and the two will split the additional benefits.
Gina and Angela can be charged with fraud under Insurance Code 1871.4 for conspiring to defraud workers' compensation.
What Are Other Fraud-Related Crimes?
Workers' compensation fraud overlaps with other fraud crimes, and in some instances, a defendant might be charged with additional crimes under these laws. These are discussed below.
Submitting Fraudulent Insurance Claims – Penal Code 550 PC
This law falls under the category of insurance fraud and makes it a crime for a physician or healthcare provider to file fraudulent claims to obtain payment from workers' compensation.
This may include filing workers' comp claims for services not provided to the patient, filing multiple claims for the same service, etc.
Referring or Soliciting Business for Fraud Purpose - Penal Code 549 PC
It's a crime in California to willfully refer or solicit someone to do business with an entity knowing they are filing fraudulent claims—but if workers' compensation benefits are at stake, this action can also classify as workers' compensation fraud.
For example, suppose a medical provider refers someone to a specialist in exchange for a kickback, knowing and intending that the second provider will file fraudulent workers' comp claims. In that case, both providers may be charged with workers' compensation fraud.
What Are the Penalties for INS 1871.4?
A violation of Insurance Code 1871.4 is a "wobbler" offense, meaning it can be charged either as a misdemeanor or a felony, depending on the facts and circumstances of the case.
- For misdemeanor offenses, the maximum jail time is one year in county jail.
- For felony offenses, the penalty is two years, three years, or five years, in state prison.
Whether the crime is charged as a misdemeanor or felony, a conviction for workers' compensation fraud also carries some severe financial penalties. These include:
- A fine of $150,000 or double the dollar value of the fraud, whichever is greater; and
- Restitution to any victims of the fraudulent act.
In addition, if you're convicted, you could also face civil penalties of up to $10,000 for each illegal claim presented—and if you have prior convictions, you could face additional fines of $4000 per item or service involved in the fraud.
What Are the Defenses Against INS 1871.4?
Our California criminal defense attorneys can use various strategies on your behalf against workers' compensation fraud charges. Every case is unique and will first require a thorough review of the details.
However, the most common legal defenses are discussed below.
Perhaps we can argue that you had no knowledge or intent to defraud. The primary element of the crime that the prosecutor must prove is that you knew your statements were false actions fraudulent.
Perhaps we can argue that you made a careless mistake and did not intend to defraud. The burden of proof is placed on the prosecutor beyond a reasonable doubt.
Perhaps we can argue that there is Insufficient evidence to obtain a conviction. Like most fraud-related cases, workers' compensation fraud typically involves complex, detailed reports from doctors or health care professionals. Perhaps we can find a weakness in the prosecutor's evidence.
Perhaps we can negotiate with the prosecutor prefiling to persuade them from filing formal charges, called a “DA reject.” Contact us by phone or through the contact form for a case evaluation. Eisner Gorin LLP is based in Los Angeles, CA.