Workers' Compensation Fraud

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Fraud: Workers' Compensation Fraud and Convictions

WORKERS' COMPENSATION INSURANCE FRAUD PROGRAM
In California, workers' compensation insurance is a no-fault system. Injured employees need not prove an injury was someone else's fault in order to receive workers' compensation benefits for an on-the-job injury. In addition to medical expenses being covered for injured employees, some injured workers are entitled to a portion of their wages lost due to not being able to work. These benefits make fraudulent workers' compensation claims an enticing target for criminals.

Workers' compensation insurance fraud occurs in simple to complex schemes that often require difficult and lengthy investigations. For example, an employee either inflates the extent of his/her injuries, or simply fabricates injuries altogether. At the other end of the spectrum, white-collar criminals, including doctors and lawyers, entice, pay, and conspire with other indiviuals in cheating the system through fraudulent activity and insurance companies "pick up the tab," passing the cost onto policyholders, taxpayers and the general public.

The Workers' Compensation Fraud Program was established in 1991 through the passage of Senate Bill 1218 (Chapter 116). The law made workers' compensation fraud a felony, required insurers to report suspected fraud, and established a mechanism for funding enforcement and prosecution activities. Senate Bill 1218 also established the Fraud Assessment Commission to determine the level of assessments to fund investigation and prosecution of workers' compensation insurance fraud. The funding comes from California employers who are legally required to be insured or self-insured. The total aggregate assessment for Fiscal Year 2009-10 is $51,525,700.

During Fiscal Year 2009-10, the Fraud Division identified and reported 5,728 SFCs, assigned 754 new cases, made 269 arrests and referred 280 submissions to prosecuting authorities. Potential loss amounted to $1,150,136,727.

Underground Economy Task Force
Assembly Bill 202 (Chapter. 180, Statutes of 2001) amended Unemployment Insurance Code Section 329 to add CDI as a member of the Joint Enforcement Task Force on the Underground Economy. The task force has the general purpose of coordinating enforcement activities and sharing information for combating tax evasion problems and the failure to pay wages that are legally due. The Fraud Division is charged with investigating insurance fraud, which includes the crimes of intentional misrepresentation of payrolls and employee staffing in order to obtain lower rates for workers' compensation insurance.

Studies suggests that the aggressive anti-fraud campaign by the Department, the district attorneys, the insurance industry and California employers continues to play a substantial role in reducing crime and helps lower workers' compensation premiums for employers statewide.

District Attorneys' Workers' Compensation Program
In Fiscal Year 2009-10, the district attorneys reported a total of 682 arrests, which also included the majority of Fraud Division arrests. During the same time frame, district attorneys prosecuted 1,339 cases with 1,506 suspects, resulting in 593 convictions. Restitution of $120,977,446 was ordered in connection with these convictions and $73,501,711 was collected during Fiscal Year 2009-10. The total chargeable fraud was $370,320,520, representing only a small portion of actual fraud since many fraudulent activities had not been identified or investigated.

Program for Investigation and Prosecution of Workers' Compensation Insurance Fraud Regulations

WORKERS' COMPENSATION CONVICTIONS Effective January 1, 2005, Assembly Bill 2866 (Frommer) enacted Insurance Code Section 1871.9 requiring the posting of all workers' compensation fraud convictions to the CDI website.

Please select the month/year you would like to view:

2007 Workers' Compensation Convictions

2008 Workers' Compensation Convictions

2009 Workers' Compensation Convictions

(a) The name, case number, county or court and other identifying information with respect to the case. (b) The full name of the defendant. (c) The city and county of the defendant's last known residence or business address. (d) The date of conviction. (e) A description of the offense. (f) The amount of money alleged to have been defrauded. (g) A description of the punishment imposed, including the length of any sentence of imprisonment and the amount of any fine imposed.

The information required to be posted under this section shall be maintained on the department Web site for a period of five years from the date of conviction or until the department is notified in writing by the person that the conviction has been reversed or expunged.

Note: If new documentation has been received that in any way affects the conviction information contained herein, please forward that documentation with an explanation to the Bureau Chief, Workers' Compensation Program, 9342 Tech Center Drive, Suite 100, Sacramento, CA 95826. A determination to make any changes will be made within sixty (60) days of receipt of the information.