Workers’ Compensation Fraud

Workers’ Compensation Fraud has become a hot topic in California. Even before the passage of new laws revamping workers’compensation benefits in the state, prosecutors statewide began developing specialized units to handle the increased submission of fraud claims by insurance company special investigative units. The state has added to the prosecution’s arsenal by giving money to those offices that prosecute these cases. As a result, prosecutors all over the state are stepping up enforcement of laws aimed at preventing fraudulent activities against both individuals, known as “applicants,” employers, medical personnel, chiropractors, attorneys, and individuals known as “cappers,” “steerers,” or “runners.” These cases are generally prosecuted as felonies under various Insurance, Labor, Penal, and Business & Professions statutes.

Applicant Fraud

In applicant fraud cases, the employee is alleged to have lied about a material fact to get insurance benefits or the insurance company allegedly relied upon this lie when awarding disability benefits to the applicant. Sworn testimony at a deposition in the course of a workers’ compensation proceeding is usually offered in evidence against the defendant. In this situation, the applicant faces not only charges of grand theft, applicant fraud, and forgery, but also perjury or attempt perjury as well. Insurance company special investigative units conduct the initial investigation and covertly videotape the applicant over a period of time to show that the applicant’s claimed disability is either non-existent or greatly exaggerated. These video tapes are known as sub rosa investigations.

Employer Fraud

Employer fraud cases generally stem from an audit of the employer’s records to determine if the employer has provided accurate information about the number and type of employees working for the employer, the employee’s risk category, and the employer’s payroll. Sometimes these cases are submitted after an employee is injured on the job and the employer makes efforts to avoid the workers’ compensation system. Under California law, employers are required to post notice in a conspicuous place that they carry workers’ compensation insurance. Employers charged with workers’ compensation fraud are generally charged with grand theft, insurance fraud, misrepresentation of payroll, perjury, and other crimes. If the employer is a corporation both the corporation and some officers are charged with the crimes.

Medical Care Providers, Chiropractors, and Attorneys

More and more, these professionals have been targeted as alleged purveyors of workers’ compensation fraud. It is now the norm for attorneys, chiropractors and other medical providers to be the subject of “sting operations”. In these cases, insurance company special investigative units, the Department of Insurance, and district attorney offices conduct undercover operations to discover alleged fraud. Undercover investigators, posing as injured individuals, visit these professionals and begin a claim for false benefits. They create a fictitious employer and even generate actual payments to the investigated professional from the participating insurance company. Law enforcement is looking for false coding, knowledge that the claim is actually false, overbilling and the use of cappers, runners or steerers. Individuals prosecuted for these crimes are generally alleged to have violated Insurance Code sections 750 (illegal kickbacks); Business Code sections 650, 810, 2261, 2262, 2264, 2273, 6106.6, and 17200; Labor Code sections 3215, 3219, 3761, and 4628; and Penal Code sections 182, 186.2, 186.3, 470, 471.5, 474, 484, 487, 549, 550, 551, and 653(f). Violators can also be prosecuted for violations of the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), Mail Fraud and violations under professional codes such as the Chiropractic Act. Conviction carries a significant risk of losing your professional license, in addition to prison or jail sentence.

Experienced Workers’ Compensation Fraud Attorney

Criminal law attorney Ed Flores prosecuted workers’ compensation cases for three years with the Orange County District Attorney’s office. He was responsible for heading sting operations, prosecuted applicant and employer fraud cases, and worked directly with insurance company special investigative units and the California Department of Justice in the prosecution of these cases. He has given seminars on workers compensation fraud. As a defense attorney he has successfully defended individuals and professionals charged with these offenses.

If you are being investigated for, or charged with, any type of workers’ compensation fraud it is essential that you contact an attorney immediately. Contact or call our office today.