How To Report Workers' Compensation Fraud in California

How to Report Workers' Compensation Fraud in California
6
min read
February 19, 2021

Workers’ compensation insurance exists for a reason; it protects your business in the event one of your employees suffers a work-related injury or illness.


But what if that injury or illness isn’t legitimate? Unfortunately, there are ways for employees to take advantage of their workers’ compensation benefits—and those fraudulent claims can lead to a variety of issues, including penalties, higher insurance premiums, and even legal trouble.


But what, exactly, is workers’ compensation fraud? What are the penalties in the state of California? And if, as a business owner, you suspect workers’ comp fraud, what do you do—and how should you report it?

What Is Workers’ Compensation Fraud?

A workers’ compensation insurance policy provides compensation (including wage replacement and covering medical costs) to employees in the event that they suffer an injury or illness related to their job, work, and place of employment. Workers’ comp insurance coverage is a must for ill or injured employees because it ensures they get the compensation they need to cover costs while they’re out of work—and it’s a must for employers because it protects them from legal action and ensures that they don’t have to cover those costs themselves (which would, in most cases, put their business at serious risk).


Fraud happens when someone—whether that’s an employee, an employer/policyholder, or a medical provider—makes a false workers’ compensation claim, makes false statements, or is found to be falsifying information to the insurance company for financial gain.


There are a few different types of workers’ comp insurance fraud, including:


Workers’ Comp Fraud Penalties in California

Under California law, the penalties for being convicted of workers’ comp fraud will vary by fraud cases; depending on the circumstances involved (including the scope of the fraudulent activity, the amount of money involved, and the claimant/defendant's criminal background), the fraud could be charged as either a misdemeanor or a felony. 


If the workers’ comp fraud is prosecuted as a misdemeanor, defendants could be facing up to one year in jail and up to $150,000 in fines or double the dollar amount of the insurance fraud—whichever figure is higher. If the district attorney’s office decides to pursue felony charges, defendants could find themselves facing even more jail time—up to 5 years in some cases.


Depending on the situation, defendants could find themselves facing additional legal issues related to their workers’ comp fraud (like additional insurance fraud charges) and may be required to pay restitutions to the insurance company—or, in other words, to pay back the money they received as a result of their fraudulent workers’ compensation claims.

How To Report Workers’ Compensation Fraud

If there’s suspected fraud happening with one of your employees (for example, if they make a claim saying they got injured on a job site—but there’s no evidence to support that and other workers dispute the employee’s version of events), you’re going to want to report that fraud.


There are a few steps you’ll need to take in order to report workers’ comp fraud, including:


Workers’ Compensation Insurance Fraud Red Flags

Not sure what to be on the lookout for when it comes to workers’ compensation fraud? While you often can’t be completely sure that an employee is making fraudulent claims, there are red flags you should be on the lookout for, including:


If You See Workers’ Comp Fraud, Report It

As a business owner, it’s your responsibility to make sure that you’re operating your business in an honest and ethical way—and the same goes for your employees. If you suspect an employee of workers’ comp fraud, it’s important to report that fraud to the proper authorities—and make sure you’ve done everything you can to prevent your insurance company from being defrauded.

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